More Finnish companies attracted by India
Emerging country makes it through economic crisis relatively unscathed
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By Elina Lappalainen
The rush of businesses to China is nothing new. Now, however, more Finnish companies are going to India.
At the end of 2009 about 85 Finnish companies had set up shop in India. According to the Finnish export promotion association Finpro, they employ a total of 30,000 people.
Ilpo Sarikka, Finpro’s regional manager for India, says that the big wave of Finnish companies in India is yet to take place.
“Small companies are going there, right behind the big ones, and many of the small companies are subcontractors of the large ones”, Sarikka points out.
The development has been quite rapid. In 2002 there were just 30 Finnish companies with activities in India.
Finnish companies’ interest in India has grown from the early part of the new century. China, where companies went earlier, already has about 300 Finnish companies.
The biggest foothold in India is with software and technology companies. Companies operating in India include the mobile phone company Nokia, the data technology service company Tieto, the software company Basware, the data security company F-Secure, and the gaming company Digital Chocolate.
In addition, many industrial enterprises, such as the engineering company Wärtsilä, elevator manufacturer Kone, the steel manufacturer Outokumpu, the forest products company M-real, the engineering company Metso, and the cargo handling equipment manufacturer Cargotec are in the country.
The first to be set up in a new country is usually a sles office. There are about 34 production facilities set up by Finnish companies in India. The largest factory is the Nokia mobile telephone manufacturing plant in Chennai.
“When the sales company has operated for several years, the growth will lead to a need to bring assembly and manufacturing to the local market”, Sarikka says.
India is ranked number 133 on the World Bank list of ease of doing business. Ahead of India are countries such as Nigeria, Nepal, and Indonesia. China is 89th and Finland is 16th.
The World Bank reports that building permits, taxation, scrutiny of adherence to contracts, and launching business activities are ranked as especially difficult. On the other hand, the World Bank says that it is easier to get financing in India than in many other countries, and investors are well protected.
“India is over-mystified. It is not that much different from other places. Tenacity is needed, because the bureaucracy is often long and difficult”, Sarikka says.
Sarikka points out that regional differences inside India are considerable, and many cities and states in India are investing in advancing business activities.
“In spite of the complications of the processes, setting up an office or a company takes only a few months”, he says.
Factors making it easier to start business in India include good language skills and a high level of education among the employees. While there are several high-ranked universities in the country, there are also big differences in education.
“The authenticity of the papers of the key staff members, their backgrounds, and their resumes need to be verified. Also, the credit reports of possible partners need to be done meticulously”, Sarikka says.
Finpro advises Finnish companies to enlist the help of local personnel service companies in important recruitment efforts. By doing so, it is possible to avert many problems that someone unfamiliar with the culture might encounter when building a team.
“In a country with many cultures, many issues are sensitive, and can affect the ability of Indians to work together”, Sarikka says.
Finland exports valuable investment goods to India, such as industrial machinery and equipment. Imports from India include mostly cheap goods such as textiles. This means that the trade balance is significantly in Finland’s favour.
However, as a whole, Finland’s exports to India of just over EUR 500 million is still modest, only one per cent of all of Finland’s exports.
“India needs much high technology in every field. Infrastructure and the machinery industry are developing rapidly, so there is a big market there”, Sarikka says.
Helsingin Sanomat / First published in print 12.6.2010
ELINA LAPPALAINEN / Helsingin Sanomat
elina.lappalainen@hs.fi
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| 15.6.2010 - THIS WEEK |
 More Finnish companies attracted by India |
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