Forbes has now released their annual index on the world’s Best Countries for Business 2019. Let’s take a look at what makes Scandinavia one of the best regions in the world for business, while also observing how the focus on digitalisation and sustainability in this area makes Scandinavia a business region for the future.
The Scandinavian countries are dependent on foreign trade and they therefore keep open trade policies. They need to access foreign markets for their exports, so in return they keep low barriers for imported raw materials, products and technical solutions. The Scandinavian markets are sophisticated and mature with an openness for new products. Also known to be great test markets for new innovations due to their financial and innovative frameworks.
Sweden, Denmark and Norway are relatively small countries individually, but together they consist of 20 million consumers with a purchasing power above most other countries. The consumers are in general very tech savvy and they demand high quality in their products.
Forbes Best Countries for Business – 2019 ranking
The Scandinavian countries share many similarities in culture, demographics and demand in such a way that many companies consider Scandinavia as one market. Many domestic companies operate in all three markets, while some also have presence in neighboring Finland and the Baltic countries. It is however still important to be aware that small differences set these Scandinavian countries apart and these differences can have a negative impact if not considered by exporting companies upon a market entry.
Each country has its own specific opportunities for exporting companies, while many of the opportunities are also shared through similar demand or macro trends. These Nordic welfare states are funded by some of the highest taxation rates in the world which makes way for substantial government spending on infrastructure, construction, healthcare and the ICT infrastructure to advance the digital evolution in many industries.
The governments of the Scandinavian countries have a mutual aim to be at the forefront when it comes to using the benefits that digitalisation can bring through the industries and public services. They have laid the foundation for these developments to take place through investments in the ICT infrastructure and policies to facilitate the implementation of new technologies. The countries are well prepared for digitalisation as can be seen in the DESI 2018.
The digital evolution is moving forward quickly in Scandinavia with a specific focus from government spending and macro trends in the following industries, presented here below with a slight generalisation over the three countries:
The Scandinavian countries have some of the best healthcare systems in the world due to the substantial investments made by the governments. New state of the art hospitals have been built, and continues to be built in the region to facilitate the ongoing digitalisation of the healthcare system. Both Sweden and Denmark have been vocal in their aim to become world leaders in using innovative eHealth solutions, while Norway is also investing heavily in bringing their healthcare into the future.
The manufacturing industry is one of the most important sectors for these export dependent countries. The competitiveness has recently slipped behind other countries, due much to a higher labour cost and a slow implementation of Industry 4.0 technologies. This transition for Scandinavian manufacturing companies is expected to pick up pace in the coming years and the advanced ICT infrastructure will facilitate the implementation of these technologies.
eCommerce in Scandinavia is experiencing an exponential growth with no signs of slowing down. In 2019, Amazon is expecting to enter the Scandinavian markets. This adds to the already tough competition and many domestic retailers need to step up their E-commerce capabilities. The domestic consumers have high demands for a convenient buying journey, they are tech savvy and early adopters of new technologies which makes it an excellent place to test new innovative eCommerce solutions.
The Transportation industry is very important for the Scandinavian countries. There is a need to decrease costs and the environmental impact from transportation. Intelligent Transportation Systems are widely used to reach more efficient transportation chains and better exploitation of the transport capacity but there are room for improvements. Future Mobility is an area of much interest for the Scandinavian transportation industry for the long-term. 5G is already underway in Sweden and Norway to facilitate these technologies further.
The Scandinavian countries have set policies to achieve global leadership in eGovernment developments and the digitalisation of public services. New technologies and innovations are used in many areas to improve the efficiency and effectiveness of the countries’ services and programs. Sweden is working to become the world’s first cashless society which is expected to finalize in the coming years, while Denmark is planning to digitise their national currency to an “E-Krona” which will be based on blockchain technology.
The Scandinavian countries are at the forefront of sustainability which has become a way of life in many ways. The governments are setting up policies to push for sustainability throughout the industries and society as a whole is responding.
One of the ambitious targets that have been set is for a construction sector to be climate neutral, with closed material circuits and zero emissions of pollutants. Movements towards these goals are already on the way as large property developers and contractors are now building “plus houses” that produce more energy than they themselves use over the year. This is making way for products, materials and technical solutions that can increase the energy efficiency and decrease the environmental impact on the construction industry.
It is not only the Scandinavian governments that are pushing for sustainability as this awareness permeates throughout society where the Scandinavian consumers are getting more environmentally conscious year by year. They are demanding in bigger numbers that the products are sustainable during the whole life-cycle which is opening up for a growing market of environmentally friendly products and exporters of FMCG should keep this in mind.
Many of the industries in Scandinavia are saturated to the point that in order to enter successfully with a new product/solution it requires to either be of high quality, a price leader or a new innovation. The high competitiveness is leading to a vast number of potential business partners who are open to foreign products/solutions from exporting companies to acquire a competitive advantage in their domestic markets.
Each step of a market entry in Scandinavia should be carefully planned to best position the product/solution. Everything from analysing the competition to finding and attracting a suitable business partner requires sufficient preparations. Exporting companies who lacks the tools to prepare and execute a localised market entry plan can turn to a local intermediary for assistance.