Market Profile: Sweden
Expanding your core business by entry into new territories is an effective way to scale a company. When entering a new market, most realize that extensive research of market size, competitor profiles, and product fit are all essential. However, it’s common to underestimate how much impact general factors such as demography, macroeconomics, business environment and technology have on the overall market potential. The following is a general market profile summary for the Swedish market.
Location and Population
Sweden is located at the heart of Scandinavia in northern Europe, with the Baltic sea surrounding a large part of it. Although Sweden is twice the size of Great Britain, its population is only 10 million, so it’s necessary to adjust expectations to the scale of the market. While the population density is rather low, Sweden has a high degree of urbanization, which has led to major business clusters being created in the urban regions. These different geographical clusters attract companies of a certain profile. Thus, there is a high concentration of manufacturing companies in Gothenburg, MedTech companies in Malmö, financial companies in Stockholm, etc.
The Swedish domestic economy is relatively small, thus making it trade-dependent and open for international business. A result of this international perspective, is that Sweden has the highest rate of foreign country investments among all the Nordic countries. Despite the market being highly developed, Sweden’s economy is growing rapidly with a larger increase in GDP than Europe in general. Sweden is also a member of the European Union which results in relatively few limitations for foreign companies entering the market.
According to WIPO’s 2017 Global Innovation index, Sweden ranks number 2 in the world. Internet is also hugely integrated into all aspects of society, so most Swedes turn to the Web when searching for products and services. Therefore, online marketing and internet retailing are crucial components to reach wide recognition among consumers. Due to the fierce competition from Swedish and third-country suppliers, advanced technologies, as well as competitive prices, must normally be offered.
When negotiating business deals with Swedish companies, keep in mind that they in general are internal consensus-oriented. Thus, be ready for an extended discussion process since there is likely an extended group of people that needs to be on-board with the decision. Occasional visits are also important – a Swedish business partner commonly expects first-hand reassurance of your company’s reliability and commitment.
Understanding laws and authorities
Finally, when you have a well thought out market strategy, you must have a fundamental understanding of Swedish customs, tariffs, and laws on foreign investment. Outside help from an expert might be of great use since it’s necessary to keep track of EU regulations and directives affecting the market as well. Sweden’s company tax is pretty standard at 22% but take into account the high VAT rate at 25% that applies to all imports or sale of the majority of products. The municipalities in Sweden have a major influence in business dealings which results in 20% of Sweden’s GDP consisting of public procurement. Therefore, you have to be prepared that launching innovative products and services on a large scale, might become a systemic challenge without having public actors on board.
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