Is it possible to manufacture electrical tools in Finland and export them to the Chinese market? It sure is, at least if the manufacturer is called Mirka and hails from Ostrobothnia, the region with the highest export rate in Finland.
Abrasives manufacturer Mirka has managed a feat that few other Finnish or West European companies have achieved; to manufacture electrical tools in a high cost country and sell them to China. No wonder that Mirka’s CEO Stefan Sjöberg is often asked how it is possible that the company’s production of abrasives and tools remains in Finland, despite the fact that almost everything is for export. The explanation he provides is the same that many other Ostrobothnian export companies would give:
“We have built up an expertise in this region, which makes it possible to develop unique products and solutions. Competitiveness is not gained through low wages, but instead through technology, innovation and streamlined processes,” Sjöberg explains.
Mirka is a good example of what could be described as the Ostrobothnian export wonder. Over 70 per cent of the industrial production in the region is exported, which is a Finnish record.
All three major cities in the region, Vaasa, Jakobstad and Kokkola, have their own special business structure, which in each case is well suited for foreign trade. The largest cluster of energy technology companies in the Nordic countries is located in Vaasa, and the city exports everything from engines to wind power components. Although only 2 per cent of the Finnish population lives in Vaasa, the city still accounts for a stunning 30 per cent of Finland’s total exports in energy technology.
Kokkola, on the other hand, is home to the largest cluster of inorganic chemistry in the Nordic countries, producing various kinds of metals and other raw materials. Last but not least there is Jakobstad (in Finnish Pietarsaari), which has long been Finland’s most industrialised city. The city itself, as well as the rural area surrounding it, is home to a large number of medium-sized export companies, many of whom have excelled and become highly ranked within their special niches areas. Yachts and abrasives, as well as paper and timber, are just a few examples of products exported from the region.
Together, these three urban regions are Finnish champions in exports. Over 70 per cent of the industrial production is exported, whereas the corresponding figure for the whole country is 50 per cent.
“Competitiveness is not gained through low wages, but instead through technology and innovation.”
Due to such excellent statistics, the Ostrobothnia Chamber of Commerce has started to call its home region ‘Export Finland’.
“The whole country benefits from the export companies in Ostrobothnia as they bring money to Finland. Finland is and has always been dependent on exports, because we are a small country with a small domestic market”, says Juha Häkkinen, CEO of Ostrobothnia Chamber of Commerce.
For many decades, Finland’s foreign trade rested on the forest industry’s shoulders, and the country exported mainly pulp and paper. In the 1990s, Nokia entered the scene and made Finland a high-tech country with mobile phones as the new export hit.
Today, both the forest industry and Nokia’s golden days are over. According to Stefan Sjöberg, Finland was earlier too dependent on a few large companies.
“What drives foreign trade today is not large listed companies, but so-called hidden champions; SMEs that are often family-owned, and therefore are investing in the long term. In Ostrobothnia, we have plenty of such companies”, says Sjöberg.
There are also other explanations for the Ostrobothnian export successes, many of them historical. In coastal Ostrobothnia, export has been a part of life and business since time immemorial. Farmers along the coast practised international trade early on. Tar burning and exports played a big role in the 17th century, while important merchant fleets were built up in the 18th and 19th centuries.
Ostrobothnia’s bilingualism is another factor explaining its readiness for export. Finnish- and Swedish-speakers form two groups of nearly the same size.
“The linguistic and cultural proximity to Sweden, Finland’s main export country, means that Ostrobothnians have been able to sell their products in Sweden pretty much the same as on their home market. A successful entry into the first export country makes it easier to step further into the world”, explains Peter Boström, Chairman of the Board of the Ostrobothnia Chamber of Commerce.
Emigration is another historical factor. When times were hard, Ostrobothnians emigrated in search of work, especially to the USA and Sweden. When times improved, they returned home with new skills and ideas, which they turned into business.
Confidence in the region is still strong today, and in a smaller society networks are being formed naturally and flexibly. In an export-oriented business climate, small subcontractors become a part of the quality culture characteristic of global industry. Smaller players therefore get a push from larger ones out in the world and thus, exporting becomes a lifestyle.
Stefan Sjöberg’s tips for how to get started with exports:
- Choose a niche where you can be the best in the world
- Don’t try to compete with price; rather develop unique products
- Develop sales with the same dedication as you develop products
- Think outside the box; sometimes innovations can be made outside the core business
- Be prepared for the fact that internationalisation takes time and that you will be travelling a lot.