Global tensions impact negatively on big firms in Finland, Sweden: OP

Large companies in Finland and Sweden consider the increase in global political tensions and rising deglobalisation to have a negative impact on their business, according to a new corporate survey commissioned by OP financial group.

Finnish companies in particular consider NATO membership to bring new business opportunities, said OP in a press release on Wednesday, quoting the survey.

Geopolitical tensions hit countries such as Finland and Sweden that depend on international trade.

About 62 per cent of Finnish companies and 75 per cent of Swedish companies have stated that increased international political tensions have an adverse effect on their business.

Finnish and Swedish companies have prepared for geopolitical risks using similar methods. Of the respondents, 73 per cent had renewed their supply chains, 61 per cent emphasised assessing geopolitical risks, and almost half had withdrawn from some markets.

About 30 per cent of the respondents had transferred their production to their home country or nearby regions.

Large companies in Finland and Sweden are divided in their positions on deglobalisation, i.e. the opposite of globalisation. According to the survey, nearly half of Swedish companies and almost a third of Finnish companies do not believe deglobalisation will improve their business operations.

“Deglobalisation can benefit companies in terms of supply chain security and reducing partner risks. On the other hand, operating profits may fall if production is moved back into the country where it is more expensive, for example. Workforce availability may also become more difficult. Changes are still being made, so companies apparently view the alternative as more expensive,” said Katja Keitaanniemi, Chief Executive Officer of OP Corporate Bank.

About 40 per cent of Finnish companies responding to the survey consider NATO membership to bring new business opportunities for companies, whereas only about 20 per cent of Swedish companies think the same. Over half of Swedish companies did not consider NATO membership to provide new opportunities.

“Finland and Sweden’s NATO membership are still in different phases, which means Swedish companies may be more sceptical, while the positive aspects of membership may be emphasised in Finland. Finnish companies also consider risks related to their neighbouring country Russia to have been reduced due to membership, and Finland to have become more attractive as an investment location,” said Keitaanniemi.

Participation in the rebuilding of Ukraine is also topical among large companies. Half of the Swedish companies and a third of Finnish companies responding to the survey see business opportunities in the reconstruction of Ukraine.

Some of the companies responding to the survey are already making careful plans for participating in the reconstruction, such as market analyses and acquisitions.

A total of 100 Finnish companies and 100 Swedish companies with net sales of at least 100 million euros responded to OP’s Corporate Pulse survey.

The survey was implemented by Taloustutkimus Oy. The survey was conducted by phone in July–August 2023.