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Country Commercial Guides
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CHAPTER IV. MARKETING U.S. PRODUCTS AND SERVICES
Business attitude:
Over 250 subsidiaries and branches of U.S. firms are in the country, and 4,000 others are represented in the market. Trade barriers are relatively few. Although Norway is not a member of the European Union, it is affiliated with the European Economic Area (EEA) whose rules mirror practically all EU standards, rules and regulations. Market access to the EU from Norway is no major hurdle. The American Chamber of Commerce in Norway is currently expanding its services to better support the U.S. private sector representations in the country and to help welcome and introduce U.S. new-to-market firms to Norway. Meanwhile, Norway has increased its loan guarantees and has made available new investment funds specifically for Russia and Eastern European countries that could make joint venturing with Norwegian firms attractive in those markets.
The government supports free trade and non-interference. However, it should be noted that, despite reforms and cuts in many support schemes for various sectors, Norway has a long way to go, particularly in the agricultural and fisheries sectors, where state support bordering on protectionism remains strong. Norway still spends considerable amounts annually to support farmers, and subsidies by the Government can provide up to two thirds of a farmer's income.
Economic and Commercial Environment:
The Norwegian economy remains highly dependent on foreign trade, and Norwegian authorities look positively on foreign investments. There are, however, few incentives directed specifically at foreign investors. An industrial-production facility placed in an underdeveloped area would be favored by local- and central-government bodies.
Norwegian tariffs on industrial goods are relatively low, averaging around 3-6 percent, and most of Norway's trade with EU countries is conducted on a duty-free basis under the provisions of the European Economic Area (EEA). About 70 percent of Norway's exports go to the EU, which supplies three-quarters of Norway's imports.
Extensive investments in the oil sector (with lower profits than predicted) are other factors of concern. Norway's future economic development is also expected to relate to the increasing signs of bottlenecks and pressures, -such as increased shortage of skilled labor and higher wage demands.
For combined merchandise exports and imports to a single country, the United States was Norway's fifth largest trading partner after the United Kingdom, Germany, Sweden and Denmark. In 1997, U.S. exports to Norway totalled $ 2.27 billion (based on official Norwegian trade statistics, and exchange rate: $ 1.- = nok 7.40). U.S. imports from Norway totalled $ 2.73 billion, primarily due to the growing exports of petroleum products from the Norwegian offshore oil and gas industry. Taken as a trading bloc, however, the eu countries remain Norway's principal commercial partner. Also, the other nordic countries remain important trading partners.
Market Structure:
Although some 200 U.S. companies have subsidiaries in Norway (and growing), the most common way of doing business is through agents/distributors. More than 4,000 american companies are represented by Norwegian agents/ distributors with a unique but very practical and necessary sales network. Three quarters of Norway's 4.38 million people reside in southern norway, and most of the major importers and distributors are headquartered in the Oslo region, with some having sub-agents or sales offices in other major Norwegian cities. The rest of the country is made up of widely dispersed, small population centers which are expensive to serve due to long distances and high freight expenses. As there are few countrywide, multi store chains, and most retailers and distributors are small by American standards, sub-agents and secondary distribution is the standard and workable method of handling Norway's scattered northern markets. With proper market promotion and support, a good local business partner and/or an astute local office, American companies have unusually good prospects in this small but affluent market. Moreover, U.S. companies may find some licensing and joint-venture agreements and full Norwegian subsidiaries to be excellent vehicles for tapping upscale markets beyond Norway (e.g., through Scandinavia and/or the Barents region/Baltic states).
Language:
Another factor making it easy for Americans to do business in Norway is that most, indeed practically all, Norwegians speak English, or "American," well. American culture, including movies and T.V. series, is so pervasive that one might have difficulty differentiating Norway from parts of Wisconsin, Minnesota, or Washington state.
Establishing a sales subsidiary:
The process of establishing a Norwegian company is simple and generally free of restcrictions. A subsidiary may be wholly owned and a branch may conduct full business transactions. A company must have nok 50,000 ($ 6,700) as a minimum capital. This sum may be increased to NOK 100,000 ($13,400), and at least 50 percent of the board of directors must be Norwegian nationals or have lived in Norway for the last two years.
All companies establishing themselves in Norway are subject to mandatory registration through a central government agency, which also maintains open annual accounts on all Norwegian companies. A fee (NOK 3,800 = $ 500) is paid to cover handling and the cost of publication in the official Norwegian Gazette. The name and address of this agency is:
Bronnoysundregistrene
P.O. Box 1400
8901 Bronnoysund, Norway
fax: (47) 75 00 75 05
tel: (47) 75 00 75 00The acquisition of businesses must be notified to the Ministry of Industry, provided the purchase includes more than one third or more of the ownership interest in companies. This applies to companies with more than 50 employees, or if annual revenue has been in excess of NOK 5 million ($650,000) during the last eight years. The notification requirement applies whether the purchaser is Norwegian or not.
Following is a list of contacts and resources available in Norway to help a U.S. business wishing to explore the country's investment climate or compare it with other European countries.
Major international accounting firms present:
Price Waterhouse Arthur Andersen & Co. A/S P.O. Box 1205 Vika P.O. Box 228 Skoyen 0110 Oslo, Norway 0212 Oslo, Norway Tel: (47) 22 36 34 40 Tel: (47) 22 92 80 00 Fax: (47) 22 36 34 55 Fax: (47) 22 92 89 00 KPMG Peat Marwick A/S Coopers & Lybrand A/S P.O. Box 150 Bryn Havnelageret 1 0611 Oslo, Norway 0150 Oslo, Norway Tel: (47) 22 07 22 07 Tel: (47) 22 40 00 00 Fax: (47) 22 72 42 92 Fax: (47) 22 42 50 91 Ernst & Young A/S Deloitte & Touche ANS P.O. Box 6834 St.Olavs P.O. Box 5945 Maj. Plass, 0130 Oslo, Norway 0308 Oslo, Norway Tel: (47) 22 03 60 00 Tel: (47) 22 46 47 70 Fax: (47) 22 11 00 95 Fax: (47) 22 46 70 04Taxes:
Norway's tax burdens are not as heavy as many fear, and lower than the EU average. Both companies and branches are subject to income and capital tax. Income tax of 28 percent applies generally to all forms of income of corporate bodies and other entities liable to taxation. No tax allowances are provided.
A revised convention for the avoidance of double taxation between the United States and Norway came into force in 1972. It applies to national income taxes in the United States and Norway and to local income taxes in Norway. Its benefits apply both to individuals and to corporations in the two countries. The key for Norwegian taxation purposes is whether an American enterprise operates in Norway through a permanent establishment (article 4 of the convention), defined as a fixed place of business through which a resident of one of the contracting states engages in individual or commercial activity. If so, then all industrial and commercial profits made in Norway are taxable by the Norwegian government (and exempt from taxation by the United States). The identical rule applies, of course, to Norwegian-operated permanent establishments in the United States.
Advertising - radio/tv:
All major types of advertising media are available in Norway. With the exception of the state-controlled Norwegian Broadcasting Corporation's (NRK) TV and radio stations, advertising on radio and television is now fully developed and a number of nationwide and local commercial radio stations are competing in a growing market. City radio stations that broadcast during morning and evening commuter times are useful advertising vehicles.
The Norwegian television audience can now be reached via several commercial TV stations. TV 2 is a national station with excellent coverage; TV3, and Norway-based TV Norge are additional popular advertising possibilities. A minute of prime time on TV Norge costs about $ 5,000. Key Norwegian decision makers can also be reached via CNN and CNBC and BBC World, which are available in all major towns.
Publications:
Norway has an extremely high rate of newspaper readership, with circulation figures audited by the newspaper publishers' association. Extensive demographic information concerning readership is available. Distinctions are drawn between the four major metropolitan areas and other, so-called trade districts, which number about 100.
Leading Oslo papers include Aftenposten, Dagbladet and Verdens Gang. While these papers are available throughout the country, local papers, like Bergens Tidende (Bergen), Adresseavisen (Trondheim), and Stavanger Aftenblad (Stavanger) dominate their local areas. The business daily, Dagens Naeringsliv, reaches business and professional people nationwide, as does Finansavisen.
Major Norwegian business newspapers include:
Dagens Naeringsliv Aftenposten Grev Wedels Plass 9 Akersgaten 41 P.O.Box 1182 Sentrum P.O.Box 1178 Sentrum 0107 Oslo, Norway 0107 Oslo, Norway Tel: 011 (47)22 00 10 00 Tel: 011 (47)22 86 30 00 Fax: 011 (47)22 00 10 50 Fax: 011 (47)22 86 31 79
Sales to government authorities in Norway - use of agents in defense-related projects
The Commercial Service in Oslo receives many inquiries about agents and consultants in Norway for securing government defense contracts. The query normally asks about the payment of commissions/fees and the Norwegian laws, regulations or informal policies regarding such payments. Since the Norwegian market for defense related equipment is very important to American industry and we keep receiving these types of inquiries, the commercial service has provided answers to the most common questions asked:
1. There are no prohibitions (under Norwegian law, regulations or informal policy) against using sales agents to make sales of defense-related products to Norwegian government agencies. Most foreign suppliers of defense systems and equipment are represented in Norway through agents. Most agents are paid on a commission basis, and there is no limitation on the amount.
An agency arrangement is made between two independent parties (e.g. American company and Norwegian company). Some regulations in the Norwegian agency law of June 1992 are mandatory, but in general the parties are free to set up any special regulations in their agreement regarding commitments towards each other.
(Comment: in the absence of a written agreement, a standard agreement applies which tends to benefit the Norwegian party; so it is advisable to bring one's own contract and modify it in line with Norwegian conditions and regulations. End comment)
2. The commission should always be paid from the principal (e.g. successful American company) to the agent. If the use of an agent or the payment of commission is prohibited, it is permissible to engage a consultant to be paid on a flat-fee basis.
It is also permissible to use a consultant on a flat-fee basis, although this is not the usual procedure for most contracts. But in the case of very large contracts, the flat fee has been accepted in various instances.
3. There are no requirements for the agent/consultant to be a Norwegian citizen, but military authorities would normally prefer to deal with foreign suppliers through Norwegian agents or consultants.
4. There is a national "agency law" in Norway (law of 19th June, 1992, no. 56) governing the termination of an agent or agency agreement. This law is harmonized with the EU-directive of 1986 and the Norwegian law is consequently harmonized with similar laws in all western European countries (EU and EFTA countries). Termination regulations are described under paragraph 25 in subject law, and stating that an agent will be entitled to a termination period of one month for each year of an agreement, and up to six months termination period after 6 years.
In addition, the agents are normally entitled to compensation for building up market potential and/or goodwill for the principal, according to para 28. These regulations are mandatory; but can be modified somewhat if the original written agreement between agent and principal clearly states the terms and conditions for separation.
Additional information about the Norwegian agency law or the standard Nordic commercial agency agreement may be obtained from:
Federation of Norwegian Commercial and Service Enterprises (HSH)
Att: Mr.Herman Thrap-Meyer, Special Advisor
Drammensveien 30
P.O.Box 2483
0202 Oslo, Norway
Tel: 011 (47) 22 55 82 20
Fax: 011 (47) 22 55 82 25Answers to the above questions are not comprehensive and if American companies need further clarification, please consult a Norwegian law firm or call/fax the embassy commercial staff.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
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