Annual Meeting of German-Finnish Chamber of Commerce, Helsinki

Your Excellencies, Ladies and Gentlemen,

Exzellenzen, meine Damen und Herren,

It should be a relief for all of us that I will hold my speech in English.

I am delighted to see such a high level and broad audience here at the Annual Meeting. To me this demonstrates appreciation for the significant work the German-Finnish Chamber of Commerce is doing. By providing an important business hub both for Finnish and German companies, the German-Finnish Chamber of Commerce is not only serving its members, but also other stakeholders including public sector.

The global economic situation has been unstable during recent years and it is quite likely that we have many years of slow growth ahead of us. This calls for our joint efforts to promote revitalization of the economy both in business and investment promotion alike. For this common effort we do need organizations like the German-Finnish Chamber of Commerce.

I am pleased to note that the relationships between Finland and Germany are perhaps more vibrant than ever before. Finland’s EU membership of almost two decades has brought our countries very close and we have very similar views on the questions related to Europe and developing the common European market. I understand that Finland’s pragmatic and solution oriented approach is widely appreciated in Germany.

Your excellencies,

The current economic development – in Europe and particularly in Finland – is vulnerable to the developments in Russia. Finnish trade with Russia is more intensive than any other EU Member State besides Lithuania. Russia is third largest export market for Finnish enterprises and most important source for imports, mainly energy products.
The situation in Ukraine has so far not had a significant impact on the trade between Finland and Russia, although it has clearly increased uncertainty in the business climate. On the other hand the deteriorating economic situation in Russia and the devaluation of Russian ruble since last summer has already left a visible mark on our economic relations. Due to weaker Russian ruble both consumers and business sector have shifted purchases increasingly to domestic items and tourism flows to Finland has been slowing down.

The economic forecasts in Russia have been downgraded and this has already had an impact on Finland’s economic outlook. If the Ukrainian situation escalates and results in further economic sanctions, this could have a significant negative effect on Finnish economy, to the magnitude that shows also in the GDP growth and employment figures.

Ladies and gentlemen,

The Finnish economy has experiences tough times lately. Two years now our GDP has not been growing at all, in 2013 it actually decreased by 1.4 per cent.

Our economy is currently undergoing heavy structural changes mainly related to manufacturing sector. In fact between 2000 and 2012 the GDP share of manufacturing decreased in Finland most rapidly – 10 percentage points – of all EU countries which recorded average decrease of 3.3 percentage points.

The industrial restructuring in Finland has mainly been driven by mobile phone industry, which has initially been locating its’ production abroad close to growth markets. On the second phase mobile phone markets were rapidly lost to rivals in these dynamic and rapidly developing markets. The change was very intense since currently no mobile phones are produced in Finland any more.

Furthermore, the changes in demand and increased global competition have challenged our historical strongholds such as paper and metal industry. This has pushed us to react and search for new growth areas where we have competitive power on global markets. For example the forest sector is undergoing a substantial structural change. Activities are becoming more efficient, and a simultaneous renewal is going on within the sector. Alongside the traditional forest sector, new forest bioeconomy is also being developed. Finland’s forest expertise and advanced production methods provide a good foundation for that.

Many of the areas with future potential and requiring on the edge know-how are in the rapidly developing areas of cleantech and green production and energy in broad terms. Our aim is to create a globally competitive ecosystem of enterprises in these dynamic areas of the economy.

When talking about structural changes and innovative areas of future potential we should not neglect the internet and digitalization driven new industries. Based on our strong research and knowledge base on ICT, new innovative and globally competitive companies and clusters are emerging and showing the way to the number of rapidly growing young enterprises which seem to be booming in Finland right now. A good example of this is the game industry which also has attracted a number of investors abroad.

In order to tackle the difficult economic situation the Finnish government just recently decided to renew economic structures in ways that support growth and fiscal sustainability. This comprises of significant investments in growth for 2014 and 2015, totalling around EUR 300 million in both years. The main investments are allocated to promote excellence and innovation creating new, future growth as well as in transport projects that create jobs quickly.

Ladies and Gentlemen,

In a broad scope export has historically been the backbone of the Finnish economy. The dramatic slowdown in our exports since 2008 is not only due to financial crisis but can be largely assigned to implications from globalization as such. The loss of market shares and shift of production from Finland abroad coincided with the financial crisis – unfortunately.

As we all know, Germany is the engine of Europe’s economy. Germany is also one of the most important trading partners for Finland. In 2013 Germany was the second largest export country for Finland with a share of 10 per cent of the total exports of goods. In our imports Germany was a key player with a share of 13 per cent of the total imports of goods to Finland.

The ”Energiewende” is high on the German agenda of politics, economics and science. I strongly believe that Finnish companies can contribute to the German “Energiewende” with our cleantech knowledge and expertise in the near future.

The close economic connection between Germany and Finland is broader than just trading. Finnish enterprises have also actively established their business in Germany. In 2011 around 250 Finnish controlled enterprises operated in Germany, they employed more than 40 000 persons and created a turnover of close to 14 billion Euros.
The respective figures for German companies established in Finland were clearly smaller. They employed in Finland 17 000 persons and generated 8.6 billion Euros in turnover in 2012.

According to Invest in Finland, foreign direct investments in Finland started to increase in 2013. There were 213 new investments made in Finland last year, an increase of 40 % compared to the previous year.
The major source countries for investments in Finland were Sweden, Britain, the United States and of course Germany. The most investments were made in the consumer retail sector, business services, the health care and wellbeing sector, and the ICT sector.

As we all know, the government have initiated the Team Finland activity. The core aim of the Team Finland is to get improved and most beneficial internationalization services especially for SMEs. We are doing this by enhancing the co-operation among public services across ministries and various organizations.

I am pleased that Finland has gained its share of the growth in foreign direct investments. Despite the challenging global economic and competitive situation, there are always companies looking for new business opportunities in an attractive market. Finland is also a potential market for German companies. Therefore, I welcome German companies and entrepreneurs to explore the various business opportunities and excellent infrastructure that Finland can offer.

In this connection, I would like to mention Bayer Company as a successful and significant foreign investment in Finland. In 2011, the German pharmaceutical company Bayer decided to establish its Northern European headquarters in Finland. Nowadays, Bayer employs almost 800 people in Espoo and Turku and the company is among top three corporate taxpayers in Finland.

Dear audience,

I think the European integration is about smart specialization. An integrated Europe is also a way to the global market. Taking into account the natural strengths of our economies, Finland is very willing to join the global value and supply chains by giving its part to the joint undertakings. Naturally, we want to have our national champions, but we feel that we should more often get our small and medium size companies connected to the European, more and more often German-led value-chains. From our part, we are ready to study the prospects for a long-term and patient industrial co-operation. Digitalization, bio-economy and cleantech are perhaps areas where we could be a natural partner.

The German economy and its’ strength is based on strong local SMEs. Many of these are in their specific field the global market leaders. As Finnish and German business culture, mentality and state-of-the-art engineering skills and an attitude to drive for the best are quite common, there is a great potential to attract German SMEs to build strategic partnership with Finnish companies, acquire a Finnish company and hence build up the operations, make a green field investment in Finland or to enter to RDI cooperation.

As we can notice, significant business opportunities are available both in Finland and in Germany. We need to make most of them. I believe that Finnish-German co-operation benefits both our economies and our companies.

Ladies and Gentlemen,

With these words I wish you a pleasant annual meeting seminar and I hope that you will have many fruitful discussions and contribute to further development of the trade relations between Finland and Germany.
Thank you. Vielen Dank.