| |
|Starting a Business in Finland |
| |

[pic]

Opening a business in another country presents different and sometimes unusual challenges compared to the challenges that we are used to here in the United States. There are various market forces that need to be taken into account when considering opening a business in another country. For our project we picked Finland. In our research these are the challenges and differences we would have to deal with if we were to open a business in Finland. (Nickels) Legal and Regulatory Forces are laws, taxes, regulations and ways of conducting business. When opening a business in Finland there are general steps that should be followed. The steps to open a business in Finland are: 1. Selecting the form of business. 2. Selecting a name of the business. 3. Election of Auditor. 4. Licensed trades. 5. Start-up Notification to the Tax Administration. 6. Opening of a Corporate Bank Account. 7. Regulatory Environment in Employment Issues (OrcaWorldwide) In addition and really tied to the legal and regulatory forces are the Economic and Financial Forces. Several different types of taxes need to be taken in to consideration. Taxes for business to be considered in Finland are: 1. “TAXATION IN FINLAND: In Finland, the State, the Municipalities, the Evangelic Lutheran Church and the Orthodox Church all have the power to levy taxes.” 2. “CORPORATE INCOME TAX: Companies resident in Finland are liable to tax on their worldwide income. The general rule is that if a company is registered in Finland, it is also considered a tax resident of Finland.” 3. “VALUE ADDED TAX (VAT): Value-added tax (VAT) applies to most transactions. Businesses with annual turnover above € 8,500 must register, and voluntary registration is possible. The standard rate is 22% and a lower rate of 17% applies to basic foodstuffs and animal feed. The 8% rate applies to passenger transport, books, medicine, hotel services, barbers, hairdressers, minor repairs, and cultural events. Exports are zero-rated. Exemptions include selling or renting immovable property, financial and bank services, insurance, healthcare and education.” (OrcaWorldwide) “From the viewpoint of value-added taxation, the Tax Administration´s practice has been to examine the Start-up notice of the foreign-held operation to determine whether it should be viewed as a permanent establishment, or a fixed establishment, as it is often named for VAT purposes (Vero Skatt.)” The currency is now the Euro. “On January 1st 1999 the Finnish markka ceased to be an independent currency. One euro was equal to 5.94573 markka. At the start of 2002, the first euro denominated coins and banknotes were issued. For two months the markka coexisted with the euro until use of money in markka denominations ceased on 28.2.2002. (Mint of Finland).” “Finland is a parliamentary democracy with a multiparty political system and a president as the head of state. The head of state is the President of the Republic who is elected for a period of six years. In 2000, Finns elected their first female president, Tarja Halonen, who was re-elected in 2006. The new constitution, adopted in 2000 and further adjusted 2012, moved the political system in a more parliamentary direction, by increasing the amount of power that the parliament and the government wield. The new constitution strengthened the position of the prime minister and reduced the president’s power. The president still conducts Finland’s foreign policy together with the government, is in charge of relations with other states, and participates in international organisations and negotiations. The president is also the Commander-in-Chief of the Defence Forces. The Parliament (eduskunta in Finnish) has 200 members elected every four years. The prime minister is elected by parliament. There are 12 ministries in Finland. Each ministry is responsible for the preparation of issues that fall within the scope of the government. The are: Prime Minister's Office, Ministry for Foreign Affairs, Ministry of Justice, Ministry of the Interior, Ministry of Defence, Ministry of Finance, Ministry of Education and Culture, Ministry of Agriculture and Forestry, Ministry of Transport and Communications, Ministry of Employment and the Economy, Ministry of Social Affairs and Health, and Ministry of the Environment. (Minestry of Foreign Affairs of Finland)” There are also Physical and Environmental Forces to be considered when opening a business in a foreign country. These include such things as transportation, water and sewage systems, and technology related systems. “Finland has a well-developed infrastructure. Finland’s transportation system is based on an efficient rail and road network, supported by a wide network of freight forwarders and trucking companies. Finland's domestic distribution system for goods and services is efficient. Finland has over 50 merchant shipping ports, of which more than 10 are located on inland waterways connected to the Baltic Sea by the Saimaa Canal. Twenty-three seaports are open year round. Finnish ports, 15 of which deal with transit traffic through Finland, can handle a wide range of cargo. Finland’s telecommunications environment is one of the most advanced in Europe. Finland has also one of the highest numbers of computers per capita worldwide connected to the Internet and is the world's leading country in electronic banking (export.gov).” Lastly there are Sociocultural Forces for the business owner to take in and understand. Sociocultural includes values, beliefs, rules and institutions held by a group of people, religion, manners, customs, attitudes, language, social structure and personall communication (Nickels). There are two official languages in Finland, Finnish and Swedish. While some business paperwork is written in English it must be filled out in either Finnish or Swedish. The people in Finland are very polite, friendly, and helpful even though they are a bit introverted. They are very active people. In the business culture Finnish people are highly connected. The business culture is influenced by the huge technological development which allows them to communicate through phones and the internet, so face to face meetings are not always necessary for them (Barr). In Finland, there is an equality of the two sexes. Finland was the first European country to allow women to vote in 1906. Women have been very much involved in businesses and politics. Women can often be seen in the top senior position in business and the number increases from year to year (World Business Culture). The dress code for business in Finland is very casual and mainstream. Finns like to be unpretentious. Men are often seen in sports jackets and trousers in pastel colors. Women are also seen in trousers and not looking too “flashy.” In more hi-tech business you will see jeans and t-shirts as the dress code (World Business Culture). Finnish people are very quiet. People are expected to only talk in a meeting if they have something important to say, otherwise everyone is quiet. They are more comfortable in silence than any other country. Their body language is also limited making it difficult to read and understand. However, they do use humor extensively in business (Barr). Finns love the sauna so much so that important business meetings may be followed by a sauna where conversation is generally continued on an informal basis. Finns believe in relationship building which often takes place outside the office: in the sauna or a restaurant (kwintessential). The sauna is so common that the ratio of saunas to Finns is 1 per every 2.6 people. Finns are very high up in the music industry. That is one way they are much known around the world. HIM and The 69 Eyes are two very popular bands that come from Finland. They are known for folk, classical, and popular contemporary music such as rock, pop, jazz, hip hop, and metal. The band HIM even created their own genre of music known as Love Metal . There are many different festivals in Finland. There are the usual music and film festivals. They also have a festival much Oktoberfest. Their sports festivals however are a little interesting. They have a Mobile Phone Throwing festival, Wife Carrying Festival, Air Guitar Festival, and a World Sauna Championship (2camels). In Finland, great value is place on speaking openly and plainly, so much so that “a man’s word is his bond”, verbal commitments are considered as agreements and treated just like a written contract. “Finns accept what others say as face value. Finns are direct communicators, so you can expect your colleagues to tell you what they think rather than what you want to hear, and professional differences are not viewed as personal attacks.” (kwintessential) It is important to remember to think before you speak when doing business in Finland as your words will be taken very seriously. Equally important in establishing your business is filling out the proper forms and properly regesturing your business, as skipping a step could stop your business in its tracks.

Works Cited

2camels. 2012. Web. 3 December 2012.

Barr, Greg. Diary of a British Expatriate in Finland. 29 April 2010. Web. 27 November 2012.

export.gov. 7 April 2011. Web. 25 November 2012.

kwintessential. n.d. Web. 1 December 2012.

Minestry of Foreign Affairs of Finland. 3 November 2008. Web. 25 November 2012.

Mint of Finland. n.d. Web. 6 December 2012.

Nickels, W.G., McHugh, J.M., McHugh, S. Understanding Business. New York: McGraw Hill, 2013. Print.

OrcaWorldwide. 2012. Web. 6 December 2012.

Vero Skatt. 16 September 2010. Web. 27 November 2012.

World Business Culture. 2012. Web. 22 November 2012.