Good News from Thu, 31 May, 2012:

More services, please!

The improved functioning of the internal market and the positive development of service business at the EU level also brighten up Finland’s international service business opportunities directed at third countries. The improved functioning of the internal market and the positive development of service business at the EU level also brighten up Finland’s international service business opportunities directed at third countries.

The importance of service business is increasing. Although the share of services in Finland is somewhat smaller than average in the euro zone, Finland could potentially become a forerunner by investing in R&D related to services and service innovations.

On the basis of GDP statistics, the share of services in Finland’s business and trade set-up was around 75 per cent in 2010, while the average in the euro zone stood at close to 80 per cent.

— The facts according to the national economy figures, may, however, be misleading, Eeva Korolainen, an expert with the Confederation of Finnish Industries (EK), points out.

— For example, the share of internal services of Finnish companies’ business has increased. Activities that were previously thought of as support services are not entered in the statistics as service business and, for instance in export trade, their value is wrapped up in the overall value of the goods sold. Thus, in reality, the line between industry and services is slightly artificial.

Strong competence exists

According to EK, in terms of private consumer services and brands, Finland can be considered slightly less developed compared to other European countries, but its industrial service business is highly developed.

— For example, half or even more than half of the net sales of Kone, Konecranes, Metso and Wärtsilä stem from service business. Finnish chain stores have also entered the international playing field in recent years and have strongly invested in Russia, among other countries, Korolainen says.  

Of Finnish growth companies, approximately 70 per cent operate in the service industry, and some fifth of those are in the information-intensive service sector, such as IT, research and engineering services. At EK, this is considered to be a reflection of the strong competence and promising outlook that exists in Finland.   

A relatively new phenomenon

According to preliminary data from Statistics Finland, the value of the country’s exported services in 2011 amounted to more than 15 billion euros. Exports to the United States, Japan and Sweden grew strongly, whereas the share of exports in China and India declined.

Finland especially exports business-related services, such as R&D, architecture and engineering, IT, construction and telecommunications. Korolainen says mechanical engineering is also at the core of service exports.

The role of service innovations and digital services is growing globally. The overall value of production is increasingly made up of value attributable to, for example, R&D capital, the brand, leadership capital and various databases, i.e. new ideas and innovations.

Potential can also be found in social, health and welfare services, in education services, in business and industrial services, in the game industry and in commerce and tourism.

According to EK, systematically developing business from the perspective of services is quite a new phenomenon, and Finland is not is not lagging behind. Finland has the potential to act as a forerunner by investing in R&D work related to services and service innovations.

www.ek.fi