1. REVIEW ON THE CURRENT NORWEGIAN-FINNISH BUSINESS CLIMATE Report by NOFI, NORSK-FINSKA HANDELSFÖRENINGEN R.F. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION Presentation delivered March 18, 2016, at a joint miniseminar in Joensuu by Ane Ahnger ane.ahnger@mconpartners.com 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com1

2. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com2

3. About the report A survey was made in May 2015 in cooperation with Haaga-Helia University of Applied Sciences. Research objective was to get an overview of the trade and business relations between Finland and Norway. The survey is based on a survey from 2011 Appointed to individuals and organisations with business relations already in Norway or Finland, or companies intending to establish relationships with Norway or Finland. The report is an analysis of the survey and a guideline. 3 Basic considerations: 1.How can we increase mutual business (trade, investmets) ? 2.Business culture differences (attitudes, opinions) ? 3.How can we advance the business and do we have trade barriers ? 4.What are the recommendations for companies?. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

4. Facts & figures Investments into Finland [M€] 200720082009201020112012 Germany2,2382,9922,124,3375,734,177 Denmark4,4904,6694,8524,1323,9104,337 Estonia626090109223161 United Kingdom4,2411,3871,3111,0546431,194 Netherlands8,7627,6339,45511,34212,78315,736 Norway6893367145173621,063 Russian Federation636612751793941583 Sweden31,12834,03830,76832,84833,66334,226 United States1,3241,6536184097461,190 Import and Export 2014 [1000 €] COUNTRYImport share % of total importExport share % of total export Germany 7 746 00913,46 699 48612,0 Denmark 1 891 3933,3998 1001,8 United Kingdom1 842 7363,23 040 3735,4 Netherlands 3 652 6216,33 394 5776,1 Norway 1 630 582 2,8 1 546 837 2,8 Russian Federation8 663 48515,04 631 5328,3 Sweden 6 551 07211,46 209 02611,1 United States 2 191 1623,83 813 5866,8 Finland Total57 608 117 55 828 590 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com4

5. Facts & figures Import and Export 2014 [1000 €] COUNTRYImport share % of total importExport share % of total export Germany 7 746 00913,46 699 48612,0 Denmark 1 891 3933,3998 1001,8 United Kingdom 1 842 7363,23 040 3735,4 Netherlands 3 652 6216,33 394 5776,1 Norway 1 630 582 2,8 1 546 837 2,8 Russian Federation8 663 48515,04 631 5328,3 Sweden 6 551 07211,46 209 02611,1 United States 2 191 1623,83 813 5866,8 Finland Total57 608 117 55 828 590 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com5

6. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com6 Investments out from Finland [M€]200720082009201020112012 Germany 5,512 4,587 4,119 4,769 4,435 6,234 Denmark 600 592 648 853 1,048 1,002 Estonia 1,709 1,59 1,657 1,754 1,956 1,400 United Kingdom 1,102 1,133 1,054 1,062 1,431 2,259 Netherlands 16,579 16,533 14,49 15,695 16,708 24,525 Norway 929 880 828 1,076 2,215 2,023 Russian Federation 2,348 2,467 2,328 2,783 2,978 3,197 Sweden 16,527 14,083 21,778 25,435 25,939 29,375 United States 3,668 8,639 7,923 7,808 7,006 9,787 Investments into Finland [M€] 2007 2008 2009 2010 2011 2012 Germany 2,238 2,992 2,12 4,337 5,73 4,177 Denmark 4,490 4,669 4,852 4,132 3,910 4,337 Estonia 62 60 90 109 223 161 United Kingdom 4,241 1,387 1,311 1,054 643 1,194 Netherlands 8,762 7,633 9,455 11,342 12,783 15,736 Norway 689 336 714 517 362 1,063 Russian Federation 636 612 751 793 941 583 Sweden 31,128 34,038 30,768 32,848 33,663 34,226 United States 1,324 1,653 618 409 746 1,190

7. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com7 3 Step IT grows further by acquisitions in Norway 24.9.2015 Lojer to become Nordic market leader by acquisitions in Norway 8.9.2015 Norwegian Targovax to acquire Finnish medical start-up 12.6.2015 COMPANY NEWS: NEW R&D OFFICE Nordic Semiconductor ASA opens R&D office in Oulu Finland Oslo, Norway 2014/09/26 Citycon acquires Sektor Gruppen, a Norwegian shopping centre owner and manager CITYCON OYJ Stock Exchange Release 25 May 2015

8. Background Goals for the Survey 8 To recognize the current and overall view on business between Finland and Norway. To look more deeply into the trade barriers that were found in the previous survey. To find out more about the individual attitudes that the respondents have towards the country that they do not represent and to benchmark these findings. To identify interpersonal barriers. To discover similarities and differences in communication style. To find out if the respondents experience a sense of commonality between Finland and Norway. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

9. Profile of respondents Membership Country of residence 918.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

10. 10 Regions of Respondents in Finland and Norway 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com Norway Finland

11. Respondents’ Roles in Organisation 1118.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

12. Respondents’ Business Sectors 1218.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

13. Intercultural Business Styles 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com13

14. Communication Styles 1418.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

15. Leadership Styles 1518.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

16. ”Nordic business cultures are after all alike – but so different” THE CULTURE MAP BY ERIN MEYER Available at https://simulations.insead.edu/culture-maphttps://simulations.insead.edu/culture-map 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com16

17. Commonalities in Business, Culture and Society 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com17

18. Similarities in Society, Culture and Business 1818.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

19. Perspectives on Nations Closest to Own Business Culture Finnish view: 1) Sweden, 2) Norway, 3) Germany/Estonia, 4) Denmark Norwegian view: 1) Sweden, 2) Denmark, 3) Finland, 4) UK 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com19

20. Trade Barriers 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com20

21. Trade Barriers 21 Not at all Very Little Somewhat To a great extent 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

22. Trade Barriers (2011) 2218.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

23. Languages Used in Business Languages used with Norwegians Languages used with Finns 2318.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

24. Networking 2418.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

25. Verbal comments by respondents 2518.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

26. 26 Networking between the two countries is important not only for business but also in other arenas like media, politics, education, and so on. The respondents have clearly expressed that lack of knowledge about the other country is a factor. We have listed some interesting comments: “Knowledge of both countries” is a barrier. “Many times Norwegians do not have much knowledge of Finland. Evidently the Norwegians face a language barrier with Finns and speaking English does not always open the social contact.” “Very little knowledge and low level of interaction.” “Lack of knowledge about Finland, false picture of Finland and Finns, based on reports in media about true Finns and others who destroy our reputation.” “Finland is not on the radar at all in Norway and vv [vice versa].” 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

27. Key findings 27 Both Finns and Norwegians see each other as direct, task oriented and reliable. This is a business advantage in a global context. However, there are differences between Norwegians and Finns that it is useful to be aware of: Norwegians feel that Finns are more hierarchical, conservative and autocratic, while Finns feel that Norwegians are more relation-focused, democratic and people-oriented. Finns and Norwegians agree that they have a lot in common when it comes to business, society and culture. A sense of commonality between the two countries has been recognized, to a larger extent by Finns. This is an excellent starting point when you want to start business. It is much easier to enter a market that is similar to your own. Finns and Norwegians do not face trade barriers to a large extent. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

28. …Key findings 28 Non-Swedish-speaking respondents consider the lack of a common language a major obstacle in business communication. Swedish speaking Finns faced fewer language barriers. They communicate with Norwegians mostly in a Scandinavian language in various business situations such as meetings, email correspondence and contracts, mostly without problems. Non-Swedish-speakers typically use English. A network barrier and lack of knowledge about the other country are other barriers that scored a little higher. It is important to develop the network by working on all levels like business, education, the media and politics. To enter the Finnish or Norwegian markets takes time. Patience is a virtue for doing long-term business! 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

29. Recommendation and Guideline 29 NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION We can divide the trade relationship between Norway and Finland into three levels: (1)the interpersonal level, (2)the corporate level and (3)the governmental level. Described below are the most important generic considerations that are drivers for increasing the trade and business activity between Norway and Finland. The statements by NOFI below may directly or indirectly relate to the above-mentioned relationship levels. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

30. Recommendations and Guideline by NOFI 1. Take a Nordic approach and use the unique Nordic strengths that the countries already have. Nordic market 26 million inhabitants (GDP as Canada’s) Unexploited possibilities (e.g. energy, cleantech, ICT, cold climate know-how) Explore world market possibilities (JV, invest in/out) More R & D and education initiatives NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com30

31. Recommendations and Guideline by NOFI 2.Take a straightforward business style, learn from each other, do matchmaking and create business initiatives. Utilize common cultural synergies (cultural differences strengths) Create “the social call” Things take time (…+3…4 years) Right people on board NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com31

32. Recommendations and Guideline by NOFI 3. Be prepared to invest for long term growth. Prerequisite for trade growth (commitment) Traditional export mode might be a challenge Act locally with a Nordic approach (well considered company acquisition, win-win partnership etc.) NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com32

33. Recommendations and Guideline by NOFI 4. Encourage increased student and workforce exchange. Basic prerequisite for trade growth Stimulate workforce exchange - job rotation within companies Encourage students (far too few students)  attitude, knowledge, language… NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com33

34. Recommendations and Guideline by NOFI 5.Support SME business establishment in Norway and Finland. Challenge for SMEs (scarce resources) Establishment planning Networking Local support NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com34

35. Recommendations and Guideline by NOFI 6.Make efforts in removing business barriers especially on the interpersonal and enterprise levels. Power of social networks Cross-cultural business leadership (Nordic style) Language aspect NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com35

36. Recommendations and Guideline by NOFI 1.Take a Nordic approach and use the unique Nordic strengths that the countries already have 2.Take a straightforward business style, learn from each other, do matchmaking and create business initiatives. 3.Be prepared to invest for long term growth in business. 4.Encourage increased student and workforce exchange. 5.Support SME business establishment in Norway and Finland for export. 6.Make efforts in removing business barriers especially on the interpersonal and enterprise levels. NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com36

37. Our strengths and opportunities, Finland to Norway We have competitive cost advantage Legislation and business manners are much alike in both countries Same understanding of quality and delivery assurance Norway is located close to Finland also geographically There is a huge investment program ongoing in Norway There is a need of skilled labor and expertice in Norway to implement projects and operations => We have realistic opportunities to establish business relations and succeed in Norway if things are managed well - this requires supervision, effort and work 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com37

38. Construction BNOK 500+ national transport plan investment. Power line BNOK 7-8 annually. Double the size construction market compared to Finland. In 2014 market value BNOK 377 excl. private sector:  Business/public BNOK 102  New houses BNOK 136  Re-build market BNOK 139 Large investments in Norway – many opportunities Yards and marine technology Profitable yards, however slow motion due to low oil price Several MPV ship yards (offshore) World leader in maritime technology export MMO Frame agreements BNOK 200 investment BNOK 350 supply industry included Major opportunities in technology and manufacturing. Subsea BUSD 100 market Aker, FMC, SubseaOne in Norway 80% out of global market Fastest growing segment. Tough regulations Supply bases Rig maintenance New harbour area investments Source: NHO Næringslivets Hovedorganisasjon, Finpro 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com38

39. The future dilemma?....is it the End? 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com39

40. Norway has 3 world-leading industries (global knowledge hubs) : Oil and gas Maritime Seafood sectors EMERGING INDUSTRIES Renewable energy, the cleantech industry in general and the medical/biotechnology area, all represent interesting, emerging industries. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com40

41. About doing the home lesson and strategy work - Company specific and sector dependent Customers, market Type of business (examples): Wholesales and reseller business Subcontracting, components B2B Service- and engineering Projektitoimitukset Engineering, planning- and consultation International large scale business Planning and target? Customer segment? Our network? Competitive edge? Maturity? Market credibility? Market acceptance? Prerequisites Local agent Establishing own company, organic growth Joint-Venture partner in Norway Dedicated export sales person Acquire an existing company, competitor or synergy business Seek for a Norwegian ownership 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com41

42. CASE: Steeldone Oy A Finnish success story in the Norwegian market Oy SteelDoneGroup Ltd (SDG) est. 2004 Marketing, sales and projects for supply of steel constructions and engineering services Business growth from international markets Oil & gas industries in Russia and Norway. Demanding velded and machined constructions and equipment Assembly, installations, commissioning, maintenance and engineering services Net sales 1-10 M€, personnel 5 Several large deliveries in Barentsin region Standards (Norsok) ja registers (Achilles 2008) Sites in Oulu and Norway, Russian and Norwegian partners networks Breakthrough in 2012 Customer: AXTech A/S, Technip Norge A/S, Statoil Petroleum ASA Project: Åsgard Subsea Compression Project-Marine Operations INNOVATION AWARD ONS 2012 BILD Contact: Martti Saarela, CEO, martti.saarela@steeldone.com Steeldone is a qualified supplier in Achilles JQS - A Joint Qualification System for suppliers to the oil industry in Norway and Denmark. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com42

43. Facts about Norway – why is Norway unique ? 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com43

44. 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com44 Reference Google 20141005, Ane Ahnger GNP per capita, USD

45. Finland is the only Nordic countries with the Euro In some circumstances we may have a competitive advantage 18.3.201645© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com

46. Graph 1: Wages, salaries and employer costs in selected European countries, EU28* average, Euro18** average and Norway. These comparisons do not take into account productivity differences. Source: Eurostat online data code [lc_lci_lev] reported and last update March 26th, 2015. Costs presented refer to value of the currency in in the comparison period (© AAA). Significant differences in hourly labor costs and employers’ compulsory costs 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com46

47. Graph 2: Selected Euro indexed exchange rates as monthly average since Jan 2010. January 2010 = 100 %. Note: Norwergian Krona (NOK) has devaluated 22 % since July 2012. Source: Eurostat (© AAA). Currency devaluation brings an international competitive advantage 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com47

48. NOFI - NORSK-FINSKA HANDELSFÖRENINGEN RF. NORJALAIS-SUOMALAINEN KAUPPAYHDISTYS NORWEGIAN-FINNISH TRADE ASSOCIATION www.nofi.fi http://gatewaynorway.no/ http://www.pappila-penkkala.fi/ http://www.norja.fi/embassy/ SUOMEN SUURLÄHETYSTÖ, Oslo http://www.finland.no/ www.mconpartners.com http://www.barentsinfo.org/BC/Barentskeskus http://www.storvik.com/ 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com48

49. And finally some additional links... Nordic 100 business directory http://www.largestcompanies.fi/toplistathttp://www.largestcompanies.fi/toplistat Trade www.tradingeconomics.comwww.tradingeconomics.com Economics www.ieconomics.com/gnpwww.ieconomics.com/gnp Statistics http://www.google.com/publicdata/directoryhttp://www.google.com/publicdata/directory Nordregio – Nordic Center for Spatial Development www.nordregio.sewww.nordregio.se See also: Companies Norway http://www.grensetjansten.no/foretag-bedrift/foretag-i-norge/ http://www.proff.no/ 18.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com49

50. Discussion… …Thank you! 5018.3.2016© Ane Ahnger, NOFI Norsk-finska handelsföreningen r.f., ane.ahnger@mconpartners.com