• Innovation, Business

Developing markets offer potential to Finnish companies

“In comparison to their peers, Finnish companies are less active in the markets of developing countries. This needs to change, as there is significant potential within these markets”, asserts Pekka Voutilainen, the Ambassador for Trade and Development from the Ministry of Foreign Affairs. 

In the global arena, Finnish companies grasp an underwhelming number of opportunities as the markets of developing countries are maligned as unfamiliar and therefore risky for business. It is not enough for Finnish companies to be reputable, knowledgeable, innovative, and technologically driven in emerging markets – they must also match their peers on a worldwide level, where they are currently lagging behind.

Ministry of Foreign Affairs expert Pekka Voutilainen recommends that Finnish entities shift their focus to new, lesser-known markets, especially after the Covid-19 pandemic, as these markets are forecasted to grow rapidly.

"There may be a demand not only for purely commercial innovations but also for social innovations in developing countries."

“Finns are highly sought-after trading partners because our companies integrate responsibility – the environment and human rights in their way of working”, states Voutilainen. “Many domestic companies have an undiscovered market in developing countries, and there is significant potential there.”

The demand for total solutions and social innovations

In his expertise, Pekka Voutilainen focuses on increasing the economic activity of Finnish companies and organizations in developing countries. To push this agenda forward he poses the question - How do companies position themselves in new markets and support the emerging ones?

“Finnish innovations have a solid reputation. There is potential demand not only for purely commercial output but also for social progression in these nations. For example, improving the status of women is an important objective in many countries, and it is vital to maintain these values when conducting business with other entities.”

Continuing, there is a strong case for comprehensive solutions that help countries achieve their global goals of sustainable development. Finnish companies, however, are often unable to offer complete solutions.

"The struggle is that Finnish companies would be able to offer customers in developing countries an excellent partial solution, however, the customer chooses a supplier who can offer a sufficient overall solution," notes Voutilainen.

Support is available while commitment is required from companies

According to Voutilainen, many Finnish companies show uneasiness over investing in developing countries – fearing that the risk is too great – and as a result these companies are left out of many markets altogether. However, support and assistance are available for firms entering these markets.

“The Developing Markets Platform, created in collaboration with the Ministry of Foreign Affairs and Business Finland helps Finnish companies and local entrepreneurs promote sustainable business. The platform provides advice, contacts, and funding. Training is organized for companies that endorse sustainable development goals through Business Finland, FinnPartnership and similar organizations. You are encouraged to take advantage of TeamFinland’s network and actively connect with embassies and BusinessFinland field offices around the world."

“Central to success in developing countries is that companies look to the future on a long-term basis and commit to the market. The customer relationships and presence in the target country must be valued.”

Voutilainen recommends that companies consider international co-operation between different businesses in the form of consortia. Consortium members receive valuable peer-to-peer information on the expectations of target countries. Currently, Finland offers first-class expertise in areas such as ICT and energy and the circular economy.

“A Finnish company can offer first-class technology as part of an energy production plant, but it also requires seamless cooperation with other countries. It may be easier to obtain funding as a consortium since projects are often funded by international financial institutions.”

Voutilainen calls on companies to have persistence.

“Central to achieving success in developing countries is that companies maintain a long-term, future based outlook and commit to the market. It is not enough to make quick trades and exit, customer relationships and presence in the target country must also be valued. Success may take years or decades, but it does pay off.”

This article is part of a series where different stakeholders discuss how Global Finland can be future-proofed and what role Finnish companies play in creating sustainable societies globally. The articles are published ahead of our virtual roundtable.

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