Finnish manufacturing has internationalised rapidly in the past few years. New growth is being sought on developing markets in countries such as China and Russia.

Today internationalisation concerns companies of every size in almost all industrial sectors in Finland. The trend has been hastened in particular not only by highly advanced networking, but also the strategic desire to become established on new markets, expand the customer base and develop the company's know-how.

Growth sought in China and Russia

Finnish foreign direct investments have been more than double the global average since mid 1990s. More than 90 per cent of the investment stock resides in western industrial countries, but the proportion of developing markets in areas such as Asia, South America and Eastern Europe is growing rapidly.

The economic downturn in Europe and the USA has steered investments towards developing markets, which offer more growth opportunities. Finnish companies are seeking growth particularly in China, Russia, Poland and Brazil. During the next five years investments are expected to increase, especially in China, Taiwan, Russia and India.

This information came to light in a survey published by the Confederation of Finnish Industry and Employers on the operations of Finnish manufacturing companies in 20 countries categorised as emerging markets. Replies were sent in by 434 companies.

Operations in Finland not reduced

The survey shows that internationalisation and the growth in corporate activity abroad have, until last year at least, supported employment in Finland. In 2002 Finnish companies employed some 43,000 people in the countries included in the survey. The number is threefold compared to 1997. Most of the employees are in China and Russia.

Asia became an important market area for Finnish companies during the past decade. Finnish exports to Asia went up dramatically until the local economic crisis in 1997, after which they declined. The economic crisis, however, explains only part of the turnaround, since companies have replaced exports with local production. This is especially evident in China, which has become a clear centre for Finnish companies in Asia, attracting the technology industry and forest industry in particular.