Norwegian investors in Estonia: we are very satisfied14.07.2011, 09:40
Norwegian businessmen operating in Estonia say they are satisfied with the work of local business managers and Estonia as a production base that provided a competitive edge in terms of costs during the financial crisis, Äripäev wrote this week.
“Considering that by their profile, Norwegian companies are mainly manufacturers, Baltic operations proved very important for them during the crisis. Some companies were virtually rescued by being able to transfer production into the Baltic countries,” says Tiina Link who oversees Baltic operations for Innovations Norway, the commercial representation at the Norwegian Embassy.
“During the crisis several Norwegian companies increased production in Estonia,” she said, adding: “Changing production in Scandinavia is not s flexible, mainly because of trade unions. In Estonia and elsewhere in the Baltic countries, the wage level came down along with the financial crisis. Because of trade union resistance, a similar change in Scandinavia would have been very difficult to make if not impossible.”
A survey made by Deloitte Norway in 2008 showed that 75% of Norwegian companies were very satisfied or satisfied with their business results in the Baltic countries. Link believes that if a new similar survey were made now, the findings would be largely similar.
Norwegians are satisfied with local managers
Link says that local business managers who are working in Norwegian-owned companies in Estonia are reliable and think similarly as their Scandinavian partners. “For instance in Asia where Scandinavian companies do a lot of business, the golden rule is to have own people in charge. Also, if you look at other Baltic countries, there are notably more Norwegian business managers than in Estonia.
“When we have meetings of Norwegian-owned companies in Lithuania, we speak Norwegian. In Latvia we speak English and in Estonia we can speak Estonian because all local business managers are Estonians,” says Link.
She adds: “I can say that while Norwegians leave their Estonian subsidiaries and their managers fairly free hands, they also demand accountability and local managers have proven that they can be trusted.”
Hans Pajoma, CEO of DnB Nord Pank, noted that the bank’s Estonian management is fully responsible for developing and implementation of the local strategy, and the results.
“It is decided on site what, when and how much should be done and at what cost. Naturally, the strategy is approved in the Norwegian head office, but daily decisions do not need to be approved from Norway.”
Pajoma says that developing products and services is a two-way communication. “There are also areas that were developed only in Estonia. For instance the DnB Nord Eesti leasing system was fully developed by the local management in Estonia, using only local knowledge and expertise. The whole DnB Nord Group in Latvia, Lithuania, Poland and Denmark uses a website that was structured and visualised in Estonia,” he said, listing some of the local achievements.
Speaking of Estonian situation in general, Pajoma said that Norwegian managers appreciate the simplicity and openness in the Estonian business. “People are impressed by how Estonia emerged from the economic crisis and by the determined governance of public finances. Euro adoption is seen as another positive sign, to say nothing of the impressive simplicity and transparency of the Estonian tax system,” he added.
Kadrian Jaagund, Estonian area manager of Lindorff, a Norwegian debt collection agency, said that the company’s management trusts and supports local operations. “A successful international company knows that it is necessary to adapt the group strategy to the local situation in order to be successful. The fact that it was particularly important during the crisis to know the local situation and developments, has further increased the trust towards local managers,” she added.
Jaagund noted that on the group level there is appreciation towards the Estonian innovation, rapid reaction to market situation, openness to new solutions and products, rapid growth of the outsourcing market and flexibility of both the public and private sector.
Estonia’s IT reputation is alluring
“We have been noted also because of good internal interaction, team spirit and modernization of customer communication. In the group, Estonia is known for the high level of its e-solutions,” said Jaagund.
Norwegian IT company Indico Systems that provides secure digital storage solutions set up its research and development centre in ÜlemisteCity in Tallinn in 2009. The company’s customers are mainly state agencies including justice ministries and police departments in Scandinavian and UK. Fredrik Oestereng, CEO of Indico Systems Group, sys that the company chose in favour of Estonia after considering various other countries. “We found that Estonia was the best choice because of several reasons, including political stability, staff skilled in IT and the fact that Estonia has made a name as an IT country.”
For background: There are 300 companies in Estonia that are fully or partly owned by Norwegian capital. Thousands of companies registered in Estonia have business partners and customers in Norway. The pre-crisis level of Estonian-Norwegian trade was restored in 2010 and continues to grow. Norway is Estonia’s fifth largest foreign investors behind Sweden, Finland, Holland and Russia.