This site uses cookies to provide a better experience. Continuing navigation accept the use of cookies by us OK

Fare affari in Svezia

 

Fare affari in Svezia

1. Swedish Economy.   

Introduction.

Swedish economy is the most important among Scandinavian Countries and it plays a major role in the world production system since many years. Sweden relies mainly upon exports, since it has a small internal market. Its competitive advantage consists of the high technological level reached by different sectors as steel industry, mechanics, chemical industry, electronics and telecommunications. Boost to innovation comes mainly from the Government, which allocates more than 3 % of the Swedish GDP to R & D activities. On those premises, Sweden was to increase the value of its natural resources: wide forest coverage is the main production source for wood and paper industries, while mining provides steel industry with its main inputs and, therefore, steel production represents the basis for ship and car manufacturing. On the overall, Swedish economy is based on service industry, which employs about 70 % of the workforce. Agriculture sector has a very limited impact on the economy, being production narrowed down by severe climate conditions.  

Agriculture and food sector.

Cultivated areas cover only 10 % of the entire territory of Sweden, while more than 50 % of it is covered by forests. Agricultural production gives employment to 1,4 % of the workforce and it is strictly linked to weather conditions. It consists mainly of fruit trees and vegetables (South part of Sweden), sugar beets and potatoes (Central and South part), pasture, dairy products and feeds (Northern area). Agriculture and food sectors are therefore extremely dependent on imports. Agricultural firms, whose average size has by time increased and whose number has diminished, are usually family owned and they are characterized by a high degree of automation. They live on state and EU subsidies. Food industry (the fourth largest industrial sector of Sweden) employs 9 % of the workforce and, when it comes to production structure, it is composed by cooperatives (i.e. Swedish Meats, Arla Foods, Cerealia). Distribution is controlled by three chains of supermarkets (i.e. ICA, COOP, Axfood) which, by means of an occult price cartel, were able to keep prices up to 20 % higher than the EU average. That oligopoly is now starting to be broken because of the entrance, into the market, of “hard-discount” chains as LIDL (Germany) and Netto (Denmark).  

Cars and trucks.

The sector gives employment to about 3 % of the workforce and it counts for 15 % of national exports. The main companies are Volvo (cars, buses and trucks), Saab (cars) and Scania (buses and trucks). It is important to remark their high concern for security and environment: with regard to security, the test centre of Volvo is responsible for all car prototypes of the mother company Ford. With regard to environment, in 2005 Saab launched range 9-5, with ethanol fuelled motors (that type of fuel is obtained from agricultural crops or wood wastes and its consumption doesn’t increase the level of carbon dioxide in the atmosphere).  

Chemicals.

From the 60’s onwards big investments were made in order to strengthen the petrochemical sector and that gave stimulus to the entire chemical industry. The sector is nowadays one of the main employers of the Country, but it exports only a limited quantity of its basic products, even if it added value is about 12 % of the total of the sector. Many companies are subsidiaries of foreign groups or they have most of their activity abroad. Akzo Nobel, Trelleborg, Perstorp, the companies within the biotechnology sector and the petrochemical units of the various petrol companies produce rubber, plastic materials ad other chemicals. AGA focused its production on gas for industrial and medical use, while Beckers produce paints. Among the main inorganic compounds produced by Sweden, the most relevant is the sulphuric acid, whose production exceeds 500.000 tons and whose use is extensive within the paper industry, the agricultural sector and in the treatment of water. Other important inorganic compounds are ammoniac, sodium clorate, selenium and arsenic. In the area of organic chemicals, production is mainly focused on solvents, plastic monomer and plastic, and about 40 % of that production is exported. Still today production capacity of oil derivatives is very low in comparison with the internal consumption, but the sector is expanding and big efforts are being done in order to increase the capacity of the existing plants.  

Defence.

The sector of armaments is characterized mainly by companies which operate in the civil sector, i.e. Ericsson, Saab, Bofors, Volvo and Nammo. Right now a deep restructuring of the corporate and shareholding structure is on the way, in particular thanks to inflow of large foreign capitals mostly from Britain and the United States.

Electromechanics.

The sector is characterized by a high degree of multinational integration and it contributes to the Swedish economy for a considerable part. In the last twenty years there was a strong growth of high technology sectors, which are characterized by high investments in research and marketing. Sweden is on the cutting edge in use and development of computer-aid systems utilized for design and production and it makes large use of industrial robot systems: that doesn’t find any comparison, given the dimensions of the Country, to other Countries. Production is strongly oriented to exports, not only because of the high share of overseas sales, but also because of the high number of Swedish companies’ subsidiaries abroad: in fact around half of the total workforce employed by the major companies works in other Countries. 8 out of 10 biggest Swedish companies belong to electronics and mechanics sectors and their headquarters are located mostly in the South and Central area of Sweden: those companies are Volvo, Electrolux; Saab, Scania, Sandvik, SKF, ABB, and Ericsson.

Pharmaceuticals.

The sector is strongly oriented towards research, which on average absorbs around 16 % of profits. The R & S field contributed to achieve important results as local anaesthetic, pacemaker, intravenous feeding, echography and artificial kidney. The most important areas of research are oncology, optics, cardiovascular zones and biotechnologies. From 1985 onwards, exports of pharmaceuticals showed a 20 % average rise each year and, for the future, that positive trend is expected to continue even strongly thanks to a steady increase in the world demand of pharmaceuticals related to the rise in the medium age. Following what is happening in many other industrial sectors, pharmaceuticals are experiencing a progressive concentration of the ownership structure by means of mergers and takeovers: as a result, there was a considerable reduction of the number of companies operating in the sector. The companies which have the monopoly of the market as well as the research are Astra (which from April 1999 is part of the group AstraZeneca after the merger with the British company) and Pharmacia (which from 2003 is part of the US multinational Pzifer.

IT.

With regard to the IT sector Sweden is one of the most advanced Countries in the production of hardware and software as well as in the provision of services and the quality standards of infrastructures. The sector was developing more rapidly than other European Countries in the private use and also in the corporate area, thanks to a very high pro-capita expenditure in R & S. More than 80 % of the population has Internet access (at home, at work, at school) and that rate is the highest in the EU and is higher than the US rate. Many Swedish and foreign companies are concentrated in the area of Stockholm, mainly in Kista, which was named “Wireless Valley” because of the presence of network centres that, in order to connect different devices, make use of radio signals, infrared lights and laser beams instead of cables.    

Wood.

Large forests cover more than 50 % of the Swedish territory: they are mainly composed by red spruce, Scots pine and birch, which all are high quality types of wood suitable for the furniture industry and building materials. With a percentage equal to 3 % of the world production, the Swedish wood industry is the first in Europe. Despite of high internal consumption, Sweden exports around 60 % of its wood production, and that counts for about 14 % of their total exports. Wood industry is characterized by many SMEs which usually operate in other sectors at the same time, as for example the food industry. On the other hand, Swedish paper industry was experiencing many mergers and today it shows a limited number of big-sized companies. The Country is today the third biggest exporter of cellulose. The two major companies, Stora and SCA, are among the most powerful Swedish industrial groups and they are also worldwide leaders. Stora merged together with the Finnish giant wood industry company Enso in 1999, thus creating the giant Stora-Enso; in 2000, it bought the rival US company Consolidated Papers and that gave it the absolute world leadership in the sector of fine paper. Other important groups are Modo Paper (which today is part of M-real, after it was acquired by the Finnish company Metsa-Serla in May 2000), the ex-state owned company Assidoman, privatised in 1994, Korsnas, Sodra Skogsagarna (company formed by 34.000 forest owners) and NCB. Moreover, Sweden is the worldwide leader in the field of wood products, materials and design; it developed a unique know-how in the field of furniture and in the production of combined materials and fire-proof wood structures. In particular IKEA, founded in 1943, is the worldwide leader in retail sales of fitted furniture and has more than 220 points of sale in 33 different Countries. The company manufactures directly its products and claims supply agreements with more than 1500 companies of 50 Countries.

Steel industry.

Mining is concentrated in the Northern area of Sweden and there are iron mines (the major mineral resource) as well as silver, lead, copper, zinc and gold mines; that sector gives employment to 1 % of the workforce. Even if Sweden is among the first producers in Europe and it has the potential to rank first in the uranium production, that sector has a minor role in the economy, since it contributes only for 1 % to total value of industrial production. From the end of 70’s onwards, the Swedish industrial production, in order to avoid a strong foreign concurrence, focused on products with a higher added value (such as products of Mechanical and telecommunication industries). Therefore, Swedish steel industry was completely restructured and its production is now concentrated on intensive research and high quality metallurgy, which led the Country to gain a worldwide leadership in some types of steel and special alloys. An important step of that process was the merger of the three main steel producers into the single group Svensk Stal AB (SSAB), which now counts for 60 % of the total steel production and for the totality of iron production. In the beginning the State was the major shareholder of that company, but today it is totally privatised. The high degree of competitiveness in the steel industry has attracted many foreign investors: in this regard the most significant deal was the merger of Avesta with the British company British Steel Stainless, thus resulting in the company Avesta Sheffield, today AvestaPolarit AB, one of the major steel producers in the world. In the sector of special steel, AvestaPolarit and Sandvik are among the main producers.
 
Telecommunications.

The borderline between IT and telecommunications companies has been narrowing little by little in the last years because of an increasing number of companies operating in both sectors at the same time. The sector, characterised by high degree of competitiveness, is ruled by Ericsson. That company, which operates in 140 Countries, is one of the main worldwide suppliers of communication solutions, especially in the management and implementation of fixed and mobile networks as well as in the advanced production of devices for radio and telecommunications. In Sweden there are more than 1200 SMEs in the ITC sector.          

2. Swedish foreign trade  

Propensity of the Country to international trade and foreign investments

Sweden has always been very open to international trade since its depends on it for its own industrial structure as well as for the size of its own economy. The intense trade flow contributes to its GDP for a large part, as confirmed by figures for 2005: exports and imports count respectively for 36,2 % (35 % in 2004) and for 30,2 % (28,3 in 2004). In 2005 there has been an increase in exports of 6,4 % with respect to 2004, which is lower than the increase of 9,3 % registered in 2004. The first 10 largest Countries of destination of Swedish exports – which overall count for 67,3 % of the total – are: USA (10,4 %), Norway (8,6 %), United Kingdom (7,7 %), Denmark (6,8 %), Finland (6,1 %), France (4,9 %), Holland (4,5 %), Belgium (4,3 %) and Italy (3,3 %) – with an increase of 6,5 % with respect to 2004. When considering the areas of destination, 71,9 % of those exports (72,2 % in 2004) are destined to Europe (EU enlarged to 25 Countries, 58,3 % in 2005 and 58,8 % in 2004), 11,9 % to North America (unchanged share in 2004) and 10,2 % (10,8 % in 2004) to Asia. When it comes to imports, figures for 2005 confirm a record growth of around 10,4 % (when the correspondent figure for 2004 was 8,4 %): that value overcomes for the first time the figure of imports for 2005. The first 10 largest Countries of consignment of Swedish imports – which overall count for 71,8 % of the total – are: Germany (18,3 %), Denmark (9,7 %), Norway (8 %), United Kingdom (6,9 %), Holland (6,8 %), Finland (6,2 %), France (5,1 %), Belgium (4 %), Italy (3,5 %) and USA (3,4%) – with an increase of 8,9 % with respect to 2004. When considering the areas of origin, 84,6 % of those imports (72,2 % in 2004) comes from Europe (EU enlarged to 25 Countries, 71,5 %), 10,2 % from Asia and 3,7 % from North America. The trade balance shows a large surplus of around 12,7 Billion Euro when the correspondent value for 2004 was 18,8 Billion Euro. When considering foreign investments, Sweden is one of the most attractive Countries in the world, especially in the following sectors: IT, electronics, biotechnologies, car industry, chemicals, food technology and wood derivatives. According to the Swedish Central Bank, the major investors in the period January-September 2005 were the following Countries: USA, Finland, Canada, Denmark, France, Austria and Germany.  

Trade and market access policies.  

A) Barriers to free trade circulation.

The Swedish market has two different kinds of barriers to products distribution.

Generic limitations:
-narrowness of the internal market, due to the low number of inhabitants (9 millions), which may limit the chance of adopting market policies based on high volumes of sales
-unequal distribution of the population on the territory, being 90 % of it concentrated in the central-south area (Stockholm, Malmo and Goteborg)
-distribution system characterized by a high degree of product specialization.  

Specific limitations:
-State monopoly on retail distribution of pharmaceuticals, wine and alcoholic products
-high tax burden on wine and alcoholic products
-oligopoly exercised by big chains of supermarkets on food products distribution. 

B)  Barriers to free circulation of services, capitals and rights of establishment of companies.

The Swedish market has no barriers since it is a EU member. Since some years, Sweden has adopted a SOLVIT center for European companies in order to promote the maximal integration of national law frameworks of the EU.    


29