In the latest of our series to help the Scottish business community, Gareth Magee gives an insight into how to do business in Norway.
Population: 5.1m
Currency: Norwegian krone
Capital city: Oslo
GDP: US $512bn
Latitude aside, Scotland and Norway have a lot in common. Roughly the same population, a strong reliance on industries like fishing, forestry and oil, home to some world-class crime writing, and at times, the weather is comparable. However, that's pretty much where the comparison ends.
Flip the coin, and the biggest difference we have is our economies.
Norway's income is almost double that of the UK, and over the last year, we've heard a lot (particularly in Scotland) about the great wealth that the independent Norwegians have tucked away since the 70s - when North Sea oil came into play. Because of this, the Norwegian way of doing things has been receiving more attention recently, and so it's now more likely than ever to be on UK Company's radar for business expansion opportunities.
Additionally, with educational achievement, life expectancy and real income topping the global leagues, and a World Bank ranking of sixth in the Ease of Doing Business Index (2014), who wouldn't want to do business in Norway?
Although not a member of the European Union, there is a large degree of economic cooperation with EU countries, and as such, Norway largely works within the EU principles of free movement of goods, people, services and capital. In turn, Norway has access to the EU's internal market for most products, and with good transport links to the UK (thanks to North Sea Oil); it's an ideal base for branching into Scandinavia.
The Norwegian Government maintains an open position towards foreign investment, and free enterprise, free trade and deregulation of business is usually encouraged. Unsurprisingly, existing regulations, standards and practices may however marginally favour Norwegian, Scandinavian and EEA (European Economic Area) investors - in that order.
Aside from some special ownership rules that apply to non-domestic investors in fisheries, air transport, finance, insurance, energy and offshore activities, a Norwegian company may be 100% owned by foreign individuals or companies, but must have a Norwegian address.
With such a strong economy, the Norwegians are not exactly throwing incentives at non-domestic businesses to invest in their country. No free trade zones and few tax incentives exist, but there are some social security benefits, lower tax rates and additional deductions around as well as some Government programmes for R&D and exports.
Additionally, labour costs are high - which is partly a consequence of the good employee relations that characterise Norway's employment market. With an average salary of between £30-40k per annum (in the UK it's around £26k), it's worth seriously considering current and future local staffing needs before deciding on Norway as a place to base a business.
Doing business in Norway is much more people focused than here in the UK. Consensus, not hierarchy, rules, and getting down to business depends on the right person for the job rather than the right job title. So a task focused approach works. Given the reliance on agreement and compromise, reaching business decisions can take a long time, much of which will be spent listening to opinions and shaping results to suit everyone. A greater commitment to outcomes is achieved through this approach, and it also lends itself to a fairly informal way of conducting day-to-day business.
Non-Norwegians should also take note of the principled way in which business is conducted. Giving gifts is not the done thing, and could even be perceived as bribery. So, in one of the least corrupt business climates in the world, a social invitation is always better than a gift.
If you are looking for some of Norway's economic success to rub off on your business by dipping a toe in to Northern Scandinavia, then the signs are good, particularly if you have a connection to the core industries. But Norway isn't a cheap option, so make sure the benefits are going to outweigh the costs.
Gareth Magee is a partner at Scott-Moncrieff, leading accountants and business advisors, which, through its membership of the Moore Stephens network, helps Scottish businesses realise their international potential.
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