Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Diverse distribution channels available in Finland allow for a variety of market strategies. Consumer goods and similar merchandise can be sold directly to retail chains, department stores, and other retail outlets, but are more often imported through wholesalers and distributors. Goods requiring specialty installation, engineering, and maintenance/after sales service are often sold through engineering service firms, consultancies and other professional service providers. Due to the small size of the Finnish market, and the interconnectedness of Finland with other Nordic markets, it is common to appoint one or more agents or distributors to cover the entire Finnish, or even Nordic, market. Agents/distributors in Finland and the Nordics often represent several foreign firms, and it can be difficult to find an agent/representative that is qualified and experienced in a given market segment that does not already represent competing products. For more details on identifying and establishing relationships with prospective agents/distributors, see the “Using an Agent to Sell US Products and Services” chapter of this report.
There are many major distribution centers located around Finland. The largest commercial airport in Finland is Helsinki Airport in Vantaa. The largest commercial seaports in Finland are Hamina-Kotka, Helsinki, and Naantali. There are no major ports of entry for road or rail. Inside Finland, most cargo is transported throughout the country by truck, with the major distribution hubs in Helsinki, Tampere, and Joensuu.
Using an Agent or Distributor
While it is not legally required to use an agent or distributor, a well-selected one can be a vital asset in uncovering and approaching commercial opportunities throughout Finland and providing the level of attention and service often expected by Finnish customers. Consumer goods and similar merchandise can be sold directly to retail chains, department stores, and other retail outlets, but are more often imported through wholesalers or trading houses. Goods requiring specialty installation, engineering, and maintenance/after sales service are often sold through engineering service firms, consultancies, and other professional service providers. Due to the small size of the Finnish market, and the interconnectedness of Finland with other Nordic markets, it is common to appoint one or more agents or distributors to cover the entire Finnish, or even Nordic, market. Agents/distributors in Finland and the Nordic countries often represent several foreign firms, and it can be difficult to find an agent/representative that is qualified and experienced in a given market segment that does not already represent competing products.
Finns tend to prefer to do business with people they know and trust. A visit to Finland to meet with prospective agents/distributors prior to doing business is often needed to assess the suitability of each prospect and to begin the process of developing the customary level of familiarity and trust. An increasing body of information available online can assist in identifying and contacting prospective agents/distributors prior to such a visit. The Finnish Commerce Federation, while on the one hand identifying itself as a lobbying organization, also serves as a central organization of 2200 companies and trade associations covering the bulk of foreign goods sold to Finnish trade and industry. It is a member of the Confederation of Finnish Industries (EK), which represents the Finnish industry through its 25 member associations, The Finnish Foreign Trade Agent’s Federation (FFTAF), provides fee-based services for creating trade partnerships with their membership of agents, distributors and importers. Additionally, Internationally United Agents and Brokers (IUCAB), provides fee-based access to its database, which serves as a B2B platform for establishing business relations between manufacturers/suppliers and commercial agents from around the world, including Finland.
Not all Finnish agents or distributors are members of the above-mentioned associations. Furthermore, many Finnish firms are circumspect and unresponsive to unsolicited approaches from overseas. To overcome challenges in the identifying and meeting prospective agents/representatives, the U.S. Commercial Service in Finland offers services to U.S. exporters such as the International Partner Search (IPS), the Gold Key Service (GKS), and other networking and matchmaking activities,
Companies wishing to use distribution, franchising, and agency arrangements need to ensure that the agreements they put into place are in accordance with EU and member state national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. The Directive establishes the rights and obligations of the principal and its agents, the agent’s remuneration, and the conclusion and termination of an agency contract. It also establishes the notice to be given and indemnity or compensation to be paid to the agent. U.S. companies should be particularly aware that according to the Directive, parties may not derogate from certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law to be applied in the event of a dispute will likely be ruled invalid by European courts.
Establishing an Office
Business Finland is the Finnish innovation funding, trade, investment, and travel promotion organization. Business Finland is fully owned by the Government of Finland.
For general business information on establishing an office in Finland, My Enterprise Finland is a public business service that provides companies with services and advice at the various stages of their lifecycle. My Enterprise Finland is a collaboration concept of the Ministry of Economic Affairs and the operator network of public services for businesses.
The Finnish franchising market is estimated to be worth over $6 billion, with 250 to 300 franchising systems operating close to 7,000 units around the country. The franchise sector employs between 40,000 to 60,000 people. As of 2019, 79 percent of franchises in Finland were domestic and 21 percent were foreign, which shows an increasing trend towards domestic brands and that chains are getting bigger. Opportunities exist in all market sectors and their shares were retail 34 percent, restaurant 25 percent and services 41 percent. As of new chains in 2019, 54 percent were in services, 18 percent in retail and 28 percent in restaurants. In 2019 the annual growth rate in terms of revenue was 6.4 percent and in 2020 is expected to be 6.2 percent, with the biggest growth in the B2B (15.3 percent) and restaurant (9.3 percent) sectors. U.S. franchise companies in Finland are mostly fast food restaurants and automotive service businesses. U.S. franchises tend to have high brand recognition among consumers. There are some legislation concerning also franchising, ex. The Finnish Franchising Association’s Code of Ethics (updated as of January 1, 2017.
Event: Franchise News Day, Helsinki, 21 September 2021.
Interested parties may contact Commercial Specialist Tiina Ketelä-Juvonen, email@example.com
The direct marketing channels most commonly used in Finland are:
• Direct mail (Unaddressed Bulk Mail and Addressed Delivery)
• Face-to-face selling
• Internet marketing
• Direct-response advertising
Direct mail is still in use, though it is not very effective. There is an increase in digital direct marketing with the expansion of eCommerce in Finland. Direct marketing campaigns are becoming more diversified and advertising is becoming more precisely segmented. Social media is used to reach new target groups, and the use of electronic messaging for marketing purposes is growing. Tailored services, omnichannel retailing, and targeted communication are closely related to the growth in eCommerce.
Companies should be aware of the Finnish Personal Data Act which requires companies to be transparent to consumers about the use of personal data. Additionally, electronic direct marketing requires express advance permission from the recipient under the Act on the Protection of Privacy Electronic Communications.
In addition, on May 25, 2018, the General Data Protection Regulation (GDPR) replaced the EU 1995 Data Protection Directive. The GDPR is broad in scope and applies to all companies who collect, process, and/or store the personal data of European citizens regardless if a company has a physical presence in Europe or directly provides goods or services to European customers. Marketing under the GDPR is regulated like any other data processing activity. See more at Complete Guide to GDPR Compliance.
The Data and Marketing Association of Finland (ASML) can assist in navigating the marketing ecosystem of Finland. ASML is a member of the World Federation of Direct Selling Associations (WFDSA).
Joint ventures and license agreements may be useful options for setting up a business in Finland. Licensing is governed primarily by general contract law, competition law, and laws regulating intellectual property rights. Product licensing agreements are quite common in Finland because of the good quality of Finnish manufacturing, the small size of the market, and the relatively high cost of transporting goods to the country. Royalties and licensing fees may be freely transferred out of Finland.
Considerations in forming a joint venture or licensing agreement include possible tax implications, local legal systems, accounting principles, special permits, and registration procedures. Companies should be aware of the Finnish Competition Act when discussing the legal requirements for joint ventures. The Competition Act is intended to protect effective economic competition from harmful restrictive practices.
Express shipping times from the United States to Finland can vary between 2-5 business days. A package from New York to Helsinki can be guaranteed to arrive in 2 business days. Times may vary due to location in Finland or the United States. A number of international express mail couriers such as DHL, FedEx, and UPS operate in Finland. There are certain items that are banned for import in Finland and these import restrictions can be found through the individual carrier’s websites.
Finland employs a de minimis value on the total purchase of the delivery for tax and duty assessments. The de minimis value for duty is EUR 150 and the de minimis value for tax is EUR 22, excluding alcohol and tobacco where duty/tax always apply. Customs duties are generally ad valorem duties, meaning that they are calculated as a percentage of the customs value. Some goods are also subject to a specific duty based, for example, on their weight or number. Customs duties are determined based on the customs tariff code under which the goods are classified.
U.S. Companies should perform appropriate due diligence on their business partners and agents. U.S. companies should be cautious in the areas of banking, insurance, investment firms, management companies, and payment institutions. They must be sure of their customers’ true identity and are obliged under the Finnish Act on Detecting and Preventing Money Laundering and Terrorist Financing to know their customers’ activities and background. The Financial Supervisory Board can assist in customer due diligence in Finland.
The U.S. Commercial Service offers a service called the International Company Profile. International Company Profile service provides you with background and financial information on companies in over 80 countries.
There are many companies which provide a variety of business and credit information services. Bisnode D&B Finland, Deloitte Finland and Suomen Asiakastieto can assist in performing due diligence services.