Appendix B. INDUSTRY BEST PROSPECTS - BP II. BEST PROSPECTS 1. ELECTRONIC COMPONENTS 2. COMPUTER SOFTWARE 3. AIRCRAFT AND PARTS 4. FRANCHISING 5. COMPUTERS AND PERIPHERALS 6. INDUSTRIAL CHEMICALS 7. TELECOMMUNICATIONS EQUIPMENT 8. POLLUTION CONTROL EQUIPMENT 9. TRAVEL AND TOURISM SERVICES 10. LABORATORY SCIENTIFIC INSTRUMENTS 11. MEDICAL EQUIPMENT 12. AGRICULTURAL PRODUCTS High Priority - beverages: wine, spirits, micro-brewery beer; snack foods: health snacks, nuts, corn chips; convenience foods: frozen orange juice, TexMex items; pet food for dogs and cats Medium Priority - fresh fruits/vegetables: apples, pears, grapes, avocadoes; preserved - canned fruits; food grains: rice; convenience foods - microwavable items like popcorn; seafood: salmon, frozen crayfish (Swedish style) FINLAND A) Rank of sector: 1 B) Name of sector: ELECTRONIC COMPONENTS C) Industry sector code: ELC D) Total market size (US $ millions): - 1993 723 - 1994 895 - 1995 1,027 E) Total production: - 1993 240 - 1994 264 - 1995 290 F) Total exports: - 1993 177 - 1994 194 - 1995 213 G) Total imports: - 1993 660 - 1994 825 - 1995 950 H) Imports from the U.S.: - 1993 137 - 1994 171 - 1995 213 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: Bulk components cover about 60 percent and special components about 40 percent of Finland's total electronic components market. There are three major competitors: the United States with an import market share of 21 percent followed by Japan (18 percent) and Germany (13 percent). United States suppliers are strong in the special components field, which are viewed by Finns to be on the cutting edge of technology, whereas Japanese are strong in bulk components, where price plays a more important role. Germany supplies mainly electro-mechanical components to the Finnish market. Germany's import market share to Finland decreased by 10 percent in 1993, whereas the United States increased its market share by 5 percent and Japan by 4 percent during the same period. Germany's drop in imports was due to product development which aims to decrease use of electro- mechanical components. These components have low durability which is why they are subject to continual replacement. Local production in the electronic component field is very low covering mainly manufacture of printed circuits, switches and electrical connectors. Electronic components represent 35 percent of Finland's total electronics market. Imports of electronic components to Finland are divided into the following products by market share: integrated circuits (52 percent), passive components (21 percent), discrete semiconductors (13 percent), electro mechanical components (10 percent) and screens (4 percent). In 1993, growth of imports was especially strong in integrated circuits (+92 percent) and semiconductors (+58 percent). Finnmark devaluations have helped produce strong growth in exports of electronics and companies such as ICL Personal Systems and Nokia (buys approximately half of all components) have been able to increase their exports substantially. This in turn has increased imports of electronic components, which are used mainly by these two large Finnish manufacturers. Depending on the development of Finnish exports of electronics, it is expected that imports of electronic components will increase by about 15 percent during the next three years. However, import of products such as semiconductors and integrated circuits, where United States companies have a substantial market share are expected to increase by 30-40 percent over the same period. When Finland joins the EU, import duties on certain electronic components, such as integrated circuits and semiconductors will increase from the present duty free level to 9-14 percent although Finland may be granted duty suspensions on products which are in short supply in the EU. Due to changes in recent years in the emerging economies of the Baltic States, Finland is in an excellent position to serve these markets as well. List of most promising subsectors: Integrated circuits - 1995 estimated market size: $430 million FINLAND: A) Rank of sector: 2 B) Name of sector: COMPUTER SOFTWARE C) Industry sector code: CSF D) Total market size (US $ millions) : - 1993: 453 - 1994: 503 - 1995: 559 E) Total local production: - 1993: 120 - 1994: 138 - 1995: 159 F) Total exports: - 1993: 35 - 1994: 40 - 1995: 46 G) Total imports: - 1993: 368 - 1994: 405 - 1995: 446 H) Imports from the U.S.: - 1993: 331 - 1994: 364 - 1995: 400 I) Exchange rates used: - 1993: 5.7 - 1994: 5.5 - 1995: 5.5 Comments: The United States, with an import market share of 90 percent, is the number one supplier of standard, non-customized application software. Competition for new-to-market computer software companies is strong and comes from already established U.S. companies, such as Microsoft, Word Perfect, Lotus, Borland etc. Locally produced software, mainly tailor-made business software and "Team" office software manufactured by ICL Data, account for about 10 percent of the total Finnish computer software market. ICL Data (formerly part of Nokia Oy) is a subsidiary of the British company ICL, which is ultimately owned by Fujitsu of Japan. ICL Data's "Team" computer software was developed in Finland. About 80 percent of Team software is exported, mainly to Sweden, Great Britain, Germany and France. The company has also managed to win market share from Japan and the United States. In 1993, exports of ICL Data's Team software increased from FIM 100 (USD 18) million to FIM 155 (USD 28) million representing about half of Finland's total computer software exports. Since the trend in the Finnish computer market, like everywhere else is towards downsizing, an increasing number of companies are converting from mainframes to smaller computers with network capabilities. For this reason software for mainframes has declined. This development has also increased the use of micro computer software. In 1994, the computer software market is expected to increase by about 20-30 percent in volume, but due to discounting, the dollar growth is estimated at about 10 percent. Finland's economy shows signs of improvement, and since exports are booming, industry, especially the electronic industry, is expected to increase investments in smaller, user friendly computers, thus increasing market potential for computer software. However, the public sector, banks, insurance companies are still holding back on their investments. Special application software, such as group software for PCs (E- mail, forms processing, common data basis, document management, etc.), and specialized, high-tech software such as CAD/CAM products for PCs that allow extensive information management, have excellent market potential in Finland. Due to the changes in recent years in Russia and the Baltic countries, Finland also serves as an excellent gateway to these emerging markets. List of most promising subsectors: Application software - 1995 estimated market size: $108 million CAD applications for PCs - 1995 estimated market size: $48 million FINLAND: A) Rank of sector: 3 B) Name of sector: AIRCRAFT AND PARTS C) ITA industry sector code: AIR D) Total market size (US $ millions): - 1993 270 - 1994 (e) 285 - 1995 (e) 335 E) Total local production (US $ millions): - 1993 50 - 1994 (e) 55 - 1995 (e) 55 F) Total exports (US $ millions): - 1993 20 - 1994 (e) 20 - 1995 (e) 20 G) Total imports (US $ millions): - 1993 240 - 1994 (e) 250 - 1995 (e) 300 H) Imports from U.S. (US $ millions): - 1993 152 - 1994 (e) 158 - 1995 (e) 208 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: The United States is the most important supplier of aircraft and parts in Finland. Imports from the United States totalled $152 million in 1993, of which $103 million was spent on civil aircraft and $44 million on aircraft parts and engines. The United States dominates the market with an import market share of 63 percent in 1993, followed by the United Kingdom (19 percent market share), Sweden (3 percent) and Germany (2 percent). In 1993, there were a total of 1,265 aircraft in Finland: 725 airplanes, 364 gliders, 76 helicopters and 100 other light aircraft. The U.S. share of this market is mainly based on McDonnell Douglas' market position in Finland. In 1993, McDonnell Douglas delivered to Finnair a third MD-11 worth $100 million, and a fourth MD-11 will be delivered in 1994. The civilian market is currently dominated by Finnair, the national airline, and its subsidiaries. The military is the only other major player in the aircraft and parts subsector. Although there is a small and efficient private sector, together Finnair and the military are the most important driving forces behind the market. The total market for aircraft and parts is estimated to increase annually by 15 percent. This increase is primarily explained by McDonnell Douglas' fighter deal with the Finnish Air Force. McDonnell Douglas will deliver a total of 57 F/A-18 fighters and seven trainer planes in 1995-2000. The fighter deal is estimated at $3 billion. The trainers, of which the first ones will be delivered in 1995-96, will be assembled in the United States. All 57 fighters will be assembled in Finland by Valmet Aviation Industries. Valmet Aviation Industries is the main domestic manufacturer of aircraft and parts in Finland. In 1992-93 Valmet delivered ten Redigo trainer planes to the Finnish Air Force. Local production will increase in the future as Valmet starts to assemble F/A-18 fighters in Finland as part of offsets. Finnair's possible fleet renewal, worth $425 million, is another major procurement in the future. Because of new noise regulations, Finnair would have to replace its fleet of DC-9's or at least change the engines by the end of this century. So far, U.S. McDonnell Douglas and Boeing Corporation, German-Dutch Fokker and Pan-European Airbus have offered their aircraft to Finnair. As a result, competition from third countries is expected to increase in the future. Increased business activities in the former Soviet Union is also expected to boost the need for Finnish aviation services, especially services for which small aircraft are needed, such as air taxi, air ambulance, and freight forwarding services. The total market for small aircraft and parts in 1993 is estimated at $40 million, which is expected to increase by 10-15 percent within the next three years. Local trade sources predict a purchase of 2-3 new jets for 8-19 passengers within the next 2-3 years. In addition, a purchase of another two to three used jets of similar size is possible. In addition to opportunities in the small aircraft and parts sector, most of the opportunities are more suited to smaller sized companies, which can provide spare parts or operate as subcontractors to major U.S. suppliers. Good quality-price ratio, reliability as well as technical support are important criteria in the market. List of most promising subsectors: Parts for civil and military aircraft - 1995 estimated market size: $44 million Small aircraft and parts - 1995 estimated market size: $40 million FINLAND: A) Rank of sector: 4 B) Name of sector: FRANCHISING C) ITA industry sector code: FRA D) Total sales (US $ millions): - 1993 310 - 1994 (e) 360 - 1995 (e) 400 E) Total sales of local establishments (US $ millions) - 1993 230 - 1994 (e) 265 - 1995 (e) 290 F) Foreign sales of local establishments (US $ millions) - 1993 0 - 1994 (e) 0 - 1995 (e) 5 G) Sales of foreign owned establishments (US $ millions) - 1993 80 - 1994 (e) 95 - 1995 (e) 115 H) Sales of U.S. owned establishments (US $ millions): - 1993 65 - 1994 (e) 80 - 1995 (e) 100 I) Exchange rates used: - 1993 5.7 - 1994 (e) 5.5 - 1995 (e) 5.5 Comments: According to a survey of the Finnish Franchise Association, there were a total of 49 franchise chains in Finland with a total sales volume of $310 million in 1993. Local trade sources predict that the number of outlets as well as the sales volume will increase at a rate of 10 percent during the next 2-3 years. The increase is explained by the expansion of franchising as a business concept - franchising involves lower risks for companies expanding their operations. For this reason, traditional Finnish chains, especially restaurants and various service chains, have started to close down outlets of their own and expand through franchising. The biggest number of chains are retail sales (13 chains) and rentals and services (15 chains). These two sectors are also expected to have the biggest increase in the number of outlets in Finland. However, the largest increase in sales volume is predicted for food and beverage franchising, which has expanded rapidly in Finland over the past few years. In 1993, there were 14 foreign chains in Finland, five of which are U.S. origin. U.S. franchise chains represent about 80 percent of the sales volume of all foreign owned franchise chains, which is due to a few, well known fast food chains. The remaining U.S. chains are in the car rental business. The expansion of U.S. fast food franchisers will increase the sales volume of U.S. chains by about 20 percent, which is more than the average in Finland. According to local trade sources, all U.S. franchisers with an international name have market opportunities in Finland. The Finnish market for pizza and hamburger chains is saturated, but ethnic fast food, sandwich and salad bars, and health food restaurants offer sales opportunities for U.S. companies. Various services (printing shops, messenger services) also offer potential for U.S. companies, if local business practices are taken into consideration. List of the most promising subsectors: Food and beverage franchising - estimated 1995 market size: $130 million Business services franchising - estimated 1995 market size: $35 million FINLAND: A) Rank of sector: 5 B) Name of sector: COMPUTERS AND PERIPHERALS C) Industry sector code: CPT D) Total market size (US $ millions): - 1993 1,030 - 1994 1,093 - 1995 1,168 E) Total production: - 1993 860 - 1994 990 - 1995 1,138 F) Total exports: - 1993 680 - 1994 782 - 1995 890 G) Total imports: - 1993 850 - 1994 885 - 1995 920 H) Imports from the U.S.: - 1993 255 - 1994 266 - 1995 276 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: With about a 30 percent import market share, the United States is the leading external source of computers and peripherals. The computer market declined considerably in 1991-1992 due to the recession. However, in 1993 there were signs of a recovery and total imports of computers and peripherals increased by about two percent in value. The increase in volume was much more due to considerable discounting. Local sources forecast an average annual growth rate of about four percent over the next three years. Competition in this sector comes mainly from the already established American suppliers in the local market. Like everywhere else in the world, Finland's computer industry is converting from mainframes to smaller, user friendly computers with network capabilities. There is already pressure in different industry sectors to invest in new computers. While Finnish industry has held back on its investments, the focus on the market has been the current boom to buy micro- computers for home use. With about 55 percent of the total import market, U.S. microcomputer manufacturers are in a very strong position in Finland. The total microcomputer market is comprised of 60 percent business and 40 percent for home use. The business market for microcomputers has declined by approximately 20 percent in price, but not in actual units, whereas the home user market has been growing at a rate of 15 percent annually and is estimated to reach $48.2 million in 1994. The decline in the business market for microcomputers is attributed to the economic recession. Unemployment in Finland is high and as a result, there has been a resurgence of small businesses (people going into business for themselves), and thus a marked increase in microcomputers for home use. In 1992, for the first time ever, Finland's exports of microcomputers were larger than imports. ICL Personal Systems (owned by British ICL) microcomputers, which are manufactured in Finland, has taken advantage of the lower Finnmark value to increase its exports. ICL Personal Systems estimated production for 1994 is 300,000 units. ICL enjoys a 19 percent market share of Finland's total microcomputer market. Only about 10 percent of local production stays in Finland. Other companies which are represented in domestic production and/or assembly include Mikrolog and several very small operations primarily assembling Asian clones. Mikrolog bought the Osborne brand name from the U.S. parent in 1986 and has an assembly plant of PCs, mainly for business use located in Karkkila, about 31 miles northwest of Helsinki. It should be noted that Finnish manufacturing and/or assembly is comprised primarily of U.S. made components. Thus, a so called domestic microcomputer in Finland is actually about 50 percent American. Mobile computing (PCs + cellular phones) are considered to be the future trends in Finland's computer industry. The demand for computers and peripherals in Russia and the Baltic countries has began to grow, providing distributors in Finland with new future market potential. List of most promising subsectors: Computer peripherals - 1995 estimated market size: $380 million Local area networks - 1995 estimated market size: $75 million Microcomputers for home use - 1995 estimated market size: $48.2 FINLAND: A) Rank of sector: 6 B) Name of sector: INDUSTRIAL CHEMICALS C) Industry sector code: ICH D) Total market size (US $ millions) : - 1993: 1,044 - 1994: 1,105 - 1995: 1,138 E) Total local production: - 1993: 730 - 1994: 773 - 1995: 796 F) Total exports: - 1993: 323 - 1994: 352 - 1995: 363 G) Total imports: - 1993: 637 - 1994: 684 - 1995: 705 H) Imports from the U.S.: - 1993: 50 - 1994: 57 - 1995: 59 I) Exchange rates used: - 1993: 5.7 - 1994: 5.5 - 1995: 5.5 Comments: The total Finnish market for chemicals was $6.7 billion in 1992. In 1994, an increase of about 2 percent is expected in total production. Investments are still expected to stay on a low level due to general overcapacity and market saturation. However, an upturn in investments in the pulp, paper and metal industries, the major end-users of industrial chemicals in Finland, is expected to begin this year. This is due to strong exports in these sectors. It is estimated that the industrial organic chemicals sector has better growth potential than industrial chemicals as a whole. Imports accounted for about 60 percent of Finland's total industrial chemicals market in 1993. A decline in 1993 of 10 percent in the total market size only slightly affected chemical imports. Germany, with an import market share of 15.7 percent, is the number one supplier of industrial chemicals followed by the Netherlands (15.3 percent), Russia (13.3 percent) and the United States (7.9 percent). Artificial sweeteners account for about 40 percent of the total imports from the U.S., U.S. companies having a 93 percent import market share of this product line. The total market for industrial chemicals is expected to increase by seven percent in the next three years. However, the market growth for industrial organic chemicals is estimated at ten percent, with the U.S. share increasing slightly more (12 percent) during the same period. The main reason for the Netherlands' strong position in the import market is that Neste Oy, a Finnish state-owned international oil and chemical company, has production plants in the Netherlands. Competition in this sector comes from the domestic companies such as Neste, Kemira, Cultor, Alko and AGA which hold a strong position in the market. Finnish chemical companies, which have long experience doing business in the former Soviet Union and the Baltic countries, can offer American companies useful assistance to penetrate markets in the region. Currently, industrial chemicals are to a great extent free of duty. However, when Finland joins the European Union (EU), the duty rates on chemicals that are imported from outside the EU and EEA (European Economic Area) countries will increase to 2 - 15 percent, the present EU import duty level, without any transition periods. This is expected to have a negative effect on American exporters of chemicals. On the other hand, duties on value-added specialty chemicals will decrease due to EU lower tariff levels, which is expected to increase U.S. market potential. List of most promising subsectors: Industrial organic chemicals - 1995 estimated market size: $528 million. Artificial sweeteners - 1995 estimated market size: $23.5 million. FINLAND: A) Rank of sector: 7 B) Name of sector: TELECOMMUNICATIONS EQUIPMENT C) Industry sector code: TEL D) Total market size (US $ millions) : - 1993: 1,850 - 1994: 1,997 - 1995: 2,163 E) Total local production: - 1993: 2,470 - 1994: 2,717 - 1995: 2,990 F) Total exports: - 1993: 1,235 - 1994: 1,385 - 1995: 1,525 G) Total imports: - 1993: 615 - 1994: 665 - 1995: 698 H) Imports from the U.S.: - 1993: 58 - 1994: 63 - 1995: 66 I) Exchange rates used: - 1993: 5.7 - 1994: 5.5 - 1995: 5.5 Comments: New legislation, which became effective at different stages in 1994, made Finland one of the comprehensively deregulated and open telecommunication markets in the world. Both the volume of phone lines and the volume of telephones is among the densest in the world. Finland has also taken over the position of the world's top user of mobile telephones. Telecommunications technology in Finland is highly advanced. A major factor behind this has been competition between Finland's service providers. There are two key players in Finland's telecom services: state- owned Telecom Finland and 46 user-owned local telephone companies. On March 1, 1994, Telivo Oy, a subsidiary of a state owned power company Imatran Voima (IVO), also entered the telecom market to provide internal long distance service. At the beginning of March, Telivo began to operate limited international service to Sweden, Norway, the United Kingdom, Russia and the Baltic countries (market share up to 5 percent). At present, Telecom Finland has the only full international operator license in Finland. However, international traffic will be opened up to competition at the beginning of July, 1994. At present the United States has a 9.5 percent import share of telecommunications equipment. The strongest competitors are Sweden (20 percent), Japan (18 percent) and Germany (14 percent). The total market for telecommunications equipment is expected to increase by 10-15 percent in volume within the next three years. The growth in dollars is considerably less over the same period due to price discounting. Major opportunities for American companies are in the fields of: network connections, voice processing, LAN connections, data communication equipment, video conference systems, multimedia, etc. The new Video-on-demand service (VOD) offers U.S. companies potential in the Finnish market to provide subscriber equipment and central stations for VOD. The Helsinki Telephone Company (HTC) is responsible for piloting and conducting feasibility studies for Video-on-demand (VOD) service over telephone networks to homes in Helsinki. The project called "Diamond" will run for two years as a part of the European Commission's RACE (Research and technology development in advanced communications technologies in Europe) program. List of most promising subsectors: Voice processing equipment - 1995 estimated market size: $12 million Data communications equipment - 1995 estimated market size: $43 million Cellular telephones and infrastructure - 1995 estimated market size: $345 million Video conference systems - 1995 estimated market size: $10 million Multimedia - 1995 estimated market size: $20 million Video-on-demand - 1995 estimated market size: $10 million FINLAND: A) Rank of sector: 8 B) Name of sector: POLLUTION CONTROL EQUIPMENT C) Industry sector code: POL D) Total market size (U.S dolls millions) : - 1993 495 - 1994 545 - 1995 600 E) Total local production: - 1993 550 - 1994 615 - 1995 680 F) Total exports: - 1993 300 - 1994 340 - 1995 380 G) Total imports: - 1993 245 - 1994 270 - 1995 300 H) Imports from the U.S.: - 1993 25 - 1994 28 - 1995 31 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: The total Finnish market for environmental protection and control equipment, which includes air pollution control equipment, water and waste water treatment and waste management, is estimated at $545 million in 1994, with the United States import market share at 10 percent. Due to an easing of the recession, this market sector is expected to increase by 10 percent during the next three years. Exports of Finnish environmental products, mainly boilers, diesel engines and waste water equipment, account for about 55 percent of total production and are expected to grow at an annual rate of 12 percent due to increased exports of the Finnish companies Ahlstrom (circulation fluidized bed - CFB - and pyroflow boilers) and Tampella Oy (circulation fluidized bed - CFB - boilers). Besides these companies, one of the biggest local producer is Wartsila Diesel Oy (speed diesel engines for shipbuilding and power plants). Imports cover about 50 percent of the total environmental protection and control equipment market with an expected growth rate of 10 percent during the next three years. Imports from the U.S. are expected to be slightly higher, 12 percent, due to accelerating demand for air pollution control and waste management equipment. Waste management, waste treatment and recycling are booming due to a new waste law, which became effective January 1, 1994. The new law is stricter in the waste management sector than the former one. U.S companies already have a considerable share of the waste management market in Finland. In order to penetrate the Finnish waste management market and Eastern European markets through Finland, U.S. companies should consider buying into the local market. New prospects include a gas power plant, the POVO Gasification Combined Cycle Power Plant in Porvoo, about 80 miles northeast of Helsinki ($363 million). Neste, the Finnish oil company, is building the plant, which is to be located near its existing refinery. The POVO plant covers 20-30 percent of environmental investments to be made in 1994. About 70 percent of the plant's construction services and equipment will be sourced from Finland. The plant should be in operation in autumn 1998. This project offers U.S. companies financing and equipment possibilities. The Finnish paper companies Serla Forestry, Metsaliitto and United Paper Mills have laid the groundwork for a pulp factory in Rauma. This project is estimated at $545 million and offers foreign companies potential in supplying environmental control equipment. The Helsinki Metropolitan Area Council (YTV) is also expected to launch a biowaste treatment project this year, an investment valued at about $40 million. The largest Finnish government environmental program focuses on the principal environmental problems in and around St. Petersburg, Karelia and Estonia is called the "East Europe Project" valued at ($2.6 billion). The program offers U.S. companies, in cooperation with Finnish companies, significant possibilities in the fields of technical consulting, contracting, direct equipment deliveries, training, investments and especially, in financing (for detailed information see ISA submitted 10/93). List of most promising subsectors: Air pollution control equipment - 1995 estimated market size: $129 million Waste management, waste treatment and recycling - 1995 estimated market size: $218 million. FINLAND: A) Rank of sector: 9 B) Name of sector: TRAVEL AND TOURISM SERVICES C) ITA industry sector code: TRA D) Total sales (US $ millions): - 1993 2,550 - 1994 (e) 2,700 - 1995 (e) 2,700 E) Domestic travel (US $ millions) - 1993 2,100 - 1994 (e) 2,200 - 1995 (e) 2,200 F) Revenues from incoming travel (US $ millions) - 1993 1,350 - 1994 (e) 1,400 - 1995 (e) 1,400 G) Foreign destination sales (US $ millions) - 1993 1,800 - 1994 (e) 1,900 - 1995 (e) 1,900 H) U.S. destination sales (US $ millions): - 1993 122 - 1994 (e) 127 - 1995 (e) 127 I) Exchange rates used: - 1993 5.7 - 1994 (e) 5.5 - 1995 (e) 5.5 Comments: Total departures from Finland to countries abroad increased by 2 percent, to 5.4 passengers in 1993. This was mainly due to increased popularity of travel to neighboring countries, especially Sweden and Estonia. Sea traffic increased by 10 percent to 3.2 million departures, whereas the number of package tours sold in Finland declined from 0.8 million to 0.5 million. As a result, total expenditure on foreign travel decreased by 5 percent in 1993. Because of decreasing consumer spending, the value of foreign travel is expected to drop in 1994, but an upward trend is expected in 1995. The United States continues to be the most popular long haul destination for Finns with about 70,000 departures in 1993. The recession in Finland has affected U.S. destination sales as well as popular Mediterranean destinations. According to preliminary information, the number of departures to the United States decreased by 17 percent in 1993, and departures to Greece decreased by 35 percent, to Spain by 17 percent, and to Turkey by 15 percent. The decreased number of departures to the United States was mainly due to lower package tour sales, which are affected by a charter tax and a devalued Finnmark. However, there is a strong upward trend in business travel (10-15 percent increase) because of Finland's booming export-oriented industries. Individual travel (visiting friends & relatives - segment) and incentive travel are expected to remain stable in the future. New York and Florida are the most popular destinations in the United States. California has increased in popularity, especially now that Finnair, the national airline, has two direct flights a week from Helsinki to San Francisco during the summer months. Finland has also strongly promoted itself as a gateway to the U.S. in the Baltic States and Russia. As a result, tour operators and airlines in Finland have managed to increase the number of Baltic and Russian citizens traveling to the United States via Helsinki. From the beginning of May 1994, Delta Air Lines extended its New York-Helsinki flight to St. Petersburg, Russia. Delta flies from Helsinki to St. Petersburg four times a week, thus cutting the flying time to St. Petersburg by five hours versus its Frankfurt route. List of most promising subsectors: Business travel - 1995 estimated market size: $40 million FINLAND: A) Rank of sector: 10 B) Name of sector: LABORATORY SCIENTIFIC INSTRUMENTS C) ITA industry sector code: LAB D) Total market size (US $ millions): - 1993 178 - 1994 (e) 182 - 1995 (e) 182 E) Total local production (US $ millions): - 1993 160 - 1994 (e) 165 - 1995 (e) 165 F) Total exports (US $ millions): - 1993 90 - 1994 (e) 95 - 1995 (e) 95 G) Total imports (US $ millions): - 1993 108 - 1994 (e) 112 - 1995 (e) 112 H) Imports from U.S. (US $ millions): - 1993 28 - 1994 (e) 29 - 1995 (e) 29 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: The total market for laboratory and scientific instruments in Finland is estimated at $178 million in 1993. The market consists of laboratory apparatus & furniture, analytical instruments, optical instruments & lenses, and measuring and controlling devices. The majority of these products is sold to the public sector, principally hospitals and health centers (clinical research) and research laboratories at universities and research centers. The public sector accounts for approximately 70-80 percent of the total market. The remaining 20-30 percent consists of research laboratories in the food processing industry, medical industry, pulp and paper industry, and chemical industry. Imports account for about 60 percent of the total market. The United States continues to be the main external supplier in Finland with an import market share of 26 percent, followed by Germany (19 percent), Japan (9 percent), Great Britain (6 percent), and Sweden (4 percent). U.S manufacturers have the biggest market share in medical research and biotechnology, where U.S. research and development is particularly strong. The German Boehringer-Mannheim and the Japanese Hitachi are the major competitors for U.S. suppliers. The market for laboratory & scientific instruments decreased by about 20 percent in 1992-93, which was due to the decrease in local production using such instruments. Local production consists mainly of 15-20 small and medium sized companies, such as Kone Instruments (clinical research, food processing, waste management) and Labsystems (clinical research). Industry sources predict an increase in demand for 1995-96, as replacement investments can no longer be delayed. However, possible budget cuts affecting the Finnish health care system may prolong the stagnation in the market. As a result of postponed investments, after-sales-service and maintenance work has become more important for suppliers and importers of laboratory scientific instruments. Biotechnical and medical research applications continue to be the best prospects for U.S. suppliers. However, industry sources point out that it is essential for U.S. manufacturers to use international or European standards, as standardization and certification (ISO 9000) is expected to be more widely practiced in the future. List of the most promising subsectors: Laboratory scientific equipment for biotechnical research - estimated 1995 market size: $27 million FINLAND: A) Rank of sector: 11 B) Name of sector: MEDICAL EQUIPMENT C) ITA industry sector code: MED D) Total market size (US $ millions): - 1993 197 - 1994 (e) 205 - 1995 (e) 205 E) Total local production (US $ millions): - 1993 258 - 1994 (e) 268 - 1995 (e) 268 F) Total exports (US $ millions): - 1993 245 - 1994 (e) 255 - 1995 (e) 255 G) Total imports (US $ millions): - 1993 184 - 1994 (e) 192 - 1995 (e) 192 H) Imports from U.S. (US $ millions): - 1993 41 - 1994 (e) 42 - 1995 (e) 42 I) Exchange rates used: - 1993 5.7 - 1994 5.5 - 1995 5.5 Comments: The total market for medical equipment is estimated at $197 million in 1993. Imports accounted for 93 percent of the local demand, and totalled $184 million in 1993. The United States became the main supplier country in 1993 with a market share of 22 percent, followed by Germany (15 percent), Sweden (9 percent), Great Britain (8 percent), and Japan (7 percent). The market for medical equipment is expected to remain stable, even though there is an increasing pressure to update old equipment in public hospitals. Possible budget cuts in public funding may postpone these investment further into the future. Finns look for the latest available technology in the market. Modern MIS (mini invasive surgery) is already commonly used in local hospitals, resulting in lowered occupancy rates in hospitals. Also, the need to improve efficiency in hospitals has increased the use of MIS technology in Finland. The MIS technology includes products such as MIS instruments, scopes, light sources, insulators, and video endoscopes. The market for MIS technology is expected to increase in the future offering potential for U.S. suppliers. Another best prospect for U.S. companies are medical electronics used in cardiology, as heart disease is very common in Finland. Local production is estimated at about $260 million in 1993, consisting mainly of dental equipment, anesthesia monitors, magnetic resonance imaging equipment, specialized x-ray equipment, and chemical analyzers. As Finland is too small to serve as the principal market for such specialized products, about 95 percent of local production is exported. Exports has increased rapidly during the last few years because of the depreciation of the Finnish Mark. All medical electronic equipment sold in Finland must comply with the International Electrotechnical Commission standards IEC-601- 1. VTT (Technical Research Center of Finland) has so far performed the required tests in Finland. If Finland becomes a member of the European Union by 1995, local tests are no longer needed, as it is enough that the standard has been acquired in one EU country. - List of most promising subsectors: Medical Electronics - 1995 estimated market size: $60 million C. SUMMARY AGRICULTURAL FACT SHEET A. AREA AND POPULATION Total Area 338,145 Kms2 Cultivated 2.5 Million Ha. No. of Farms 172,280 Av. Farm Size 15 Ha. cropland Total Population 5.1 Million; Rural 38 percent Working Population 2.5 Million; in Agriculture 8 percent B. AGRICULTURAL TRADE 1988-92 1992 1993 --------------Million U.S.Dollars-------------- Agr. Imports From All Countries 1,319 1,339 1,229 Agr. Exports To All Countries 720 727 865 Agric. BOT - 599 - 612 - 364 Agr. Imports from USA 113 106 98 Agr. Exports to USA 75 50 81 Agric. BOT w/USA - 38 - 56 - 17 % Agr. Imports from USA 8.6 7.9 8.0 % Agr. Exports to USA 10.4 6.9 9.3 C. MAIN AGRICULTURAL IMPORTS AND VALUE (MILLION U.S. DOLLARS) Coffee $130; Bananas $55; Tobacco $38; Soybeans $36; Apples $34; Raw sugar $25. MAIN AGRICULTURAL EXPORTS AND VALUE (MILLION U.S. DOLLARS) Furskins, raw $104; Cheese $74; Oats $56; Butter 22. KEY AGRIC. PRODUCTS PRODUCED OF TRADE INTEREST (PRODUCT, 000 M.T., % SELF-SUFFICIENCY) Oats 1,202 187%; Cheese 75 139%; Butter 57 154%. Source: Board of Customs, Finland Official Statistics 1993 1993 AGRICULTURAL AND FOREST PRODUCT TRADE SUMMARY FINLAND Imports Exports Commodity Total From U.S. U.S. Commodity Total To U.S. U.S. ----$ Million---- percent ----$ Million----percent Agricultural products: Agricultural products: Coffee 130 - - Furskins, raw 104 5 5 Bananas 55 - - Chocolate candy 80 - - Dog & Cat Food, can. 39 2 5 Cheese 74 17 23 Tobacco 38 24 63 Oats 56 44 79 Soybeans 36 23 64 Vodka 30 5 17 Table wines 34 2 6 Butter 22 - - Apples 34 3 9 Pure fructose 20 0 0 Chocolate Candy 31 - - Pork 18 1 6 Raw Sugar 25 - - Biscuits 18 - - Oranges 25 0 0 Barley 16 0 0 Orange juice 24 - - Malt 13 0 0 Tomatoes, fresh 22 0 0 Beef 10 1 10 Wheat 16 6 38 Sugar, refined 10 0 0 Cheese 16 - - Whey 9 0 0 Fishmeal 16 0 0 Wheat 8 0 0 Flower bulbs 15 - - Eggs, in shell 7 0 0 Corn Flakes & sim. 14 - - Berries, frozen 6 0 0 Furskins, raw 14 - - Non-fat dry milk 4 0 0 Rice 12 7 58 Sausages 4 0 0 Grapes 9 1 11 Rapeseed oil 2 0 0 Cocoa paste 7 0 0 Dry whole milk 1 0 0 Prunes 6 5 83 Others 353 8 2 Raisins 6 5 83 Total 865 81 9 Almonds 6 4 67 Pears 5 - - Seafood 3 1 33 Cotton, raw 1 1 99 Live horses 1 - - Others 589 14 2 Total 1,229 98 8 Forest products: Forest products: Pulpwood, chips, Pulpwood, chips, lumber 248 9 4 lumber 1,171 1 - Processed wood prod. Processed wood prod. incl. plywood 51 - - incl.plywood 579 20 3 Pulp & paperwaste 74 3 4 Pulp & paperwaste 513 4 1 Paper & paperprod. 290 6 2 Paper & paperprod. 5,822 452 8 Total wood prod. 663 18 3 Total wood prod. 8,085 477 6 GRAND TOTAL 1,892 116 6 GRAND TOTAL 8,950 558 6 Net Trade, Total $7.1 Billion Net Trade, USA Total $0.44 Billion Source: Board of Customs, Microfiche, December 1993, and Foreign Trade, December 1993 FINLAND - Foreign trade in food and agricultural products, 1992 and 1993 SITC Imports Exports Code Commodity group 1993 1992 1993 1992 US Total US Total US Total US Total ------ Million FIM ------- ------ Million FIM ----- 00 Live animals 1 18 4 29 0 5 0 19 0l Meat & meat products 0 27 4 31 8 333 9 252 02 Dairy products & eggs 0 137 - 98 95 815 84 622 03 Seafood 6 476 3 454 1 75 1 68 04 Grain & products 84 467 59 382 256 758 53 508 05 Fruit & vegetables 153 2,329 163 2,097 17 350 14 138 06 Sugar & products 1 337 2 248 10 310 5 290 07 Coffee, tea, spices 5 1,169 4 826 2 665 1 330 08 Feed, excl. grains 14 405 7 342 0 50 0 25 09 Miscellaneous foods 8 465 9 441 6 347 3 129 ll Beverages 12 358 8 336 35 383 27 218 l2 Tobacco & products 141 294 111 247 0 78 0 74 2l Hides & skins, unprep 2 147 1 118 30 698 24 496 22 Oilseed 132 232 95 219 0 1 0 - 263.1.0 Cotton, raw 1 1 4 4 0 0 0 0 4 Fats & oils 2 168 1 125 1 82 1 87 Total Million FIM 562 7,029 475 5,997 461 4,950 222 3,256 Total US$ Million 98 1,229 106 1,339 81 865 50 727 US Share, percent 8.0 7.9 9.3 6.8 Average rate of exchange in 1993 US$1.00 = FIM 5.72 Average rate of exchange in 1992 US$1.00 = FIM 4.48 Source: Board of Customs Official Statistics of Finland, December 1993