Overview
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, distributors, and agents. Goods requiring specialty installation, engineering, and maintenance/after sales service are often sold through engineering service firms, consultancies, and other professional service providers. 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, Hanko, and Naantali harbors. 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. For more information, please see Sales Channels (trade.gov)
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 umbrella organization for about 7000 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 Finnish industry through its 19 member associations, Trade Partners Finland (TPF), 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, fully owned by the Government of Finland.
For general business information on establishing an office in Finland, My Enterprise Finland-Suomi.fi 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 Employment and the operator network of public services for businesses.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Franchising
The Finnish franchising market was $6 billion, with 250 to 300 franchising systems operating close to 9,000 units around the country, in 2021. The franchise sector employs more than 100,000 people. As of 2021, 80 percent of franchises in Finland were domestic and 20 percent were foreign. In the past years the share of domestic brands has increased, and chains are getting bigger. Opportunities exist in all market sectors and their shares in 2021 were retail 17 percent, restaurant 27 percent and services 56 percent (B to C 42 percent, B to B 14 percent). Slowly but surely services have been taking more share in the total franchising market. 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. The Finnish Franchising Association’s Code of Ethics (updated as of January 1, 2017) impacts and helps regulate franchising in Finland. Otherwise, there is no Finnish legislation relevant specifically to franchising. Finland otherwise follows EU legislation.
Event: Franchise News Day, Helsinki, September 26, 2023.
Information
Interested parties may contact Commercial Specialist Tiina Ketelä-Juvonen, tiina.ketela@trade.gov
Direct Marketing
The direct marketing channels most commonly used in Finland are:
Direct mail (Unaddressed Bulk Mail and Addressed Delivery)
- Telemarketing
- Face-to-face selling
- Internet marketing
- Direct-response advertising
- Catalogs/brochures
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 widely used. Tailored services, omnichannel retailing, and targeted communication are closely related to the growth in eCommerce.
In Finland, the GDPR is supplemented by the Data Protection Act, which entered into force on January 1, 2019 and repealed the old Personal Data Act (523/1999). 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. In addition, the GDPR required amendments to other legislation such as the Act on the Protection of Privacy in Working Life (759/2004) as amended in 2019, the Criminal Code (39/1889) (‘the Criminal Code’), the Act on Enforcement of Fines (672/2002), and the Act on Grey Economy Information Unit (1207/2010.
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/Licensing
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 Delivery
Express shipping times by airmail 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. The EU abolished VAT de minimis of 22 Euro as of July 1, 2021. 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 on weight or number. Customs duties are determined based on the customs tariff code under which the goods are classified.
Due Diligence
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 Preventing Money Laundering and Terrorist Financing to know their customers’ activities and background. The Financial Supervisory Authority can assist in customer due diligence in Finland.
The U.S. Commercial Service offers an International Company Profile service (ICP). ICP service provides background and financial information on companies in over 80 countries.
Many companies provide a variety of business and credit information services, like Bisnode D&B Finland, Deloitte Finland, and Suomen Asiakastieto, any of which can assist in performing due diligence services.