Address by Foreign Trade Minister Jari Vilén at a Finnish-Japanese trade seminar

29 July, 2002 Lahti, Finland

Ladies and Gentlemen, Dear Friends

I would like to thank the organisers for giving me the opportunity to stress the importance of our trade with Japan and foreign trade in general. I hope that this presentation and the presentations of the other speakers here today will be of use to you. It is a great pleasure to share this podium with Ambassador Hasegawa, whose embassy is working tirelessly to develop the relations between our countries, and Member of the House of Counsellors, Mr Marutei Tsurunen, who is a living example of the many ties that bind our countries. I would also like to thank all of you present at this event for coming.

“Foreign trade is important for Finland”. This is a well-known and often repeated fact in Finland: Around 40% of our GDP is linked to foreign trade. The fact that international trade is important to the world as a whole is not always remembered. This is somewhat strange, since our foreign trade depends on the openness and even well-being of foreign and international markets.

Finland’s EU-membership secures our access to regional markets and gives us more influence in the international negotiating tables. Japan has also taken steps to secure markets in regional trade: Her free-trade agreement with Singapore and the so-called Chiang Mai-agreement on reciprocal support in the Asian currency markets are first steps in closer economic cooperation in East-Asia. There is already a proposal for a free-trade area consisting of Japan, China, South-Korea and the ASEAN countries of South-East Asia. On the global level there is the liberalisation of world trade through the WTO process, which both Finland and Japan wholeheartedly support.

Japan is, after the United States, our biggest trade partner outside of Europe. Japanese imports have carved a sizeable presence in the Finnish market (for example, cars and office machinery) and during the last decades Japan has run a sizeable surplus in our bilateral trade. This situation seems to be changing slowly: Our exports are still growing, but imports have receded. Last year our exports to Japan grew about 5% to 900 million euros but imports from Japan shrank 22% to 1.6 billion euros.

The trade and economic relations between Finland and Japan are more diverse than many people realise. During the last decades, the ICT sector has leaped to the limelight in our economic relations and for an obvious reason: Finland and Japan are leading nations when it comes to telecommunications. A less-known story is the importance of Japanese components to the Finnish telecommunications industry: almost half of our imports from Japan were components for Finnish products. On the other hand, only 5% of our exports to Japan were telecommunication products.

Some of the products Finnish companies make for the Asian markets are produced in Asia, but these figures clearly show, that a major part of our trade, and especially our exports, have very little or nothing to do with the ICT sector. This gives me a chance to highlight some other Finnish success stories and potential growth sectors in Japan.

First, the least known: The so-called welfare and aging society sector.

A new Finnish-Japanese care and service housing project for the elderly was initiated last spring in the city of Sendai and should be finished in a couple of years. This is the first time that this Finnish concept -a modern care and service house with the latest of information technology- has been exported. The potential for this kind of cooperation is enormous in Japan, where the population is aging rapidly, but were the average life-expectancy is high.

Second, the most traditional: The forestry sector.

About a half of our exports to Japan last year were of this sector: High-quality paper, timber and even whole wooden houses. As a matter of fact, there is a Japanese owned sawmill at Mikkeli merely a hundred kilometres from here that exports most, if not all of its production to Japan. Finnish log houses are appreciated for their high quality and strength –we must not forget that Japan has had many earthquakes. We hope that the positive trend continues in this sector and new products enter the Japanese market.

Third, the metal industry sector.

Cooperation between Kone corporation and Toshiba gives a splendid example of Finnish-Japanese cooperation and the possibilities this gives in the growing Chinese markets. This kind of cooperation where Finnish know-how and Japanese resources and contacts in Asia meet, could be a good example for other industries as well.

These sectors are not the only ones where possibilities await. Others, to name just a few, are environmental technology, biotechnology and even functional foods. Virtually any good product with the right price has a chance, as Japan offers the second biggest national market in the world with a lot of buying power. But all products face heavy competition, entering the market is expensive and the market also has high quality- and style awareness. The Japanese market cannot be cracked with half-measures and a half-finished product range. On the other hand, a well-planned campaign with a good, competitive product can bring early returns.

Many wonder, if the state of the Japanese economy is going to impede their efforts to enter the local market. To them I can assure that especially the market for consumer goods is still vibrant even if the national economy has not developed as positively as hoped. And even there seems to be change for the better: The Japanese economy seems to be bottoming out and small growth has been forecasted. More over, Prime Minister Koizumi has stressed the importance of regulatory reform, which should make trade easier between Japan and other countries. Mr Koizumi has personally welcomed foreign investment to Japan.

Another thing, which invites greater precence in the Japanese markets and wider cooperation with Japanese companies is the ever increasing interest shown by Japanese companies for cooperation with foreign enterprises. This interest is not confined only to Japan, but also encompasses cooperation in third markets.

This has also brought a response from the foreign business community: A major survey (initiated by the Embassy of Finland) by the foreign chambers of commerce in Tokyo noted that 77% of the polled companies planned on increasing their activities in Japan.

As anyone can see, there is a lot of untapped potential in our economic and trade relations. I think that more contacts could be made and these relations could be developed quicker, if there were more flights between Helsinki and Tokyo. At this moment Finnair is allowed only two flights per week to Tokyo.

Another matter, which could enhance the development of our economic relations would be better information about the economic situation in and possibilities offered by Japan. Unfortunately, none of the major Finnish newspapers or other media are represented in Japan. It is indeed fortunate that occasions like this give me the possibility to reach new groups that are interested in Finnish-Japanese trade.

Finally, I wish you all the best of luck in your business endeavours, whether it is exporting to, or importing from Japan. The government can try to make the passage of the businesses easier, but it is up to you to clinch a deal. But then the rewards are also yours, and the rewards offered by the Japanese market can be enormous.

Thank You