Contents

2 The Prime Minister’s introduction

3 The Swedish advantage

28 Key economic indicators

29 The micro-competitiveness of Wireless Valley

34 Facts on foreign investments

35 Investment services

General facts about Sweden

INVEST IN SWEDEN – REPORT 2000 1 The Prime Minister’s introduction

weden’s attractiveness to foreign com- Spanies has gained momentum in the last years. The economy is showing strong economic growth and the number of for- eign establishments is increasing steadily. On top of that, Sweden is rapidly becoming a truly knowledge-based information soci- ety. As a result, Sweden today offers a host of investment opportunities. The enlargement of the European mar- ket and the emerging information society affect all industries. In order to stay competitive, companies are restructuring and investing in regions that provide access to both markets and dynamic environments for creating new solutions. Sweden has many advantages. The membership in the EU and the central location in the Baltic Sea Region make Sweden an excellent base for capturing market shares in northern Europe. Meanwhile, new information technology and the Internet are penetrating our whole society, with a positive impact on productivity and thus profitabil- ity. However, despite Sweden’s present position as a leading IT nation, the government is fully committed to further strengthening Sweden’s competi- tive advantages. Major efforts are currently under way to expand education and training programs as well as to further improve the infrastructure. For example, investments in IT and telecommunications are higher in Sweden than else- where. New IT universities are being established in various parts of the country and the Öresund fixed link between Malmö and Copenhagen fur- ther enhances Sweden’s strategic position in northern Europe. Measures are also undertaken to facilitate a greater influx of competence from abroad. I recommend you to take a close look at how your company can benefit from investing in Sweden. I hope that reading this publication will be the first step to a close relationship between your company and Sweden.

Welcome to Sweden!

Göran Persson

2 INVEST IN SWEDEN – REPORT 2000 The Swedish advantage

In this section of the Report you will find facts about Sweden’s research and technology, along with facts about opportunities, production and costs. The Swedish advantage is an environment that is international, innovative and profitable – increasingly important to foreign investors.

4 Attractive location for foreign investors

6 Source of international success

8 A profitable place

10 Global leader in research and innovation

12 Focus on human capital

14 Information society showcase

16 Sophisticated market place

18 Strategic base in the Baltic Sea Region

20 Logical logistics base

22 Prepared for the future

24 Competitive cost framework

26 Favorable macro-economic environment

INVEST IN SWEDEN – REPORT 2000 3 The Swedish advantage Attractive location for foreign investors

Selected companies who chose Sweden is the keenest investor in to invest in Sweden 1999 knowledge. It spends far more of Canada Finland

its national output on R&D than • Nortel Networks • Nokia “other countries. • Tiivi • Hub of the North

Economist US October 16, 1999 • Andersen Consulting • Cisco India • Compaq • Infosys • Esperion Norway Netherlands Technologies Pharmaceuticals • Gamo • HP Dispatch • Ford • Moelven Industrier Norden Japan ” • GM • Online Club • Hewlett-Packard • KSK Belgium Akzo Nobel benefits from • IBM • Matsushita • Image Solutions Denmark • Carestel Electric Works • Intel Corporation • Yaskawa Electric Swedish know-how • Intercell • Microsoft • Schulstad Gruppen Austria Sweden is an important market for Nether- • SimCorp Taiwan • Oracle • Reiser Malzer Team • CreTe Systems lands-based chemical giant Akzo Nobel • Sun Microsystems • Scandinavian • Sykes UK Health with 9 percent of the total group net sales • TekPak • Beenz.com Germany • Telecity of NLG 27.5 billion originating in Sweden, • Bertrand • Valtech • Edag Engineering capital investments of around NLG 1.5 bil- • Knoll France • Linde lion and some 5,000 employees. • Carauto • LSG Lufthansa Service • Net Value “Sweden has a good manufacturing tra- • Norddeutsche Landesbank dition of heavy products”, says Cees J.A. van Lede, Chairman of the Akzo Nobel Board of Management. “We benefit from the great Swedish know how, for example in the pulp and paper business. Akzo Nobel is carrying out R&D in Sweden in The number of foreign companies establishing in Sweden continues to cooperation with the Swedish forest indus- increase. During 1999, several international corporations decided to locate tries and with the University of Chalmers. new research facilities, manufacturing operations, headquarter functions and In the coatings sector, our Malmö business other activities in Sweden. New research shows that the Swedish business unit has a close liaison with the University environment is very competitive. of Lund. We are also cooperating with the Swedish Academy of Engineering Sci- International companies have strong reasons to invest in Sweden. ences in the granting of prizes by Akzo Establishing in Sweden provides access to the EU’s Single Market, as well Nobel Science Award for multi-disciplinary as a strategic position in the Baltic Sea Region, state-of-the art technology, scientific achievements.” industrial clusters in fast-growing sectors and a competitive cost structure. “Good air communications with less frantic and time-consuming airports than in the crowded continental European hubs makes travelling to Sweden more agreeable”, says Mr. van Lede.

www.akzonobel.com

4 INVEST IN SWEDEN – Attractive location for foreign investors

Competitive business climate large individual transactions may Inward FDI to Sweden, 1993–99 SEK billion Several studies published during 1999 strongly affect statistics certain years. UK 336 show that Sweden represents a compet- This was the case in 1999, when the US itive alternative as a business location. inflows were influenced by e.g. the Finland In the 1999 Global Competitiveness merger between Astra and Zeneca Germany Netherlands Report, Professor Michael E. Porter (almost USD 37 billion) and by Ford’s Norway concluded that the Swedish micro-eco- acquisition of Volvo Cars (USD 6 billion). Denmark nomic competitiveness is among the top Belgium/Lux. Cyprus five in the world, and it continues to Geographical composition Austria improve. The Astra-Zeneca merger made the UK 0 50 100 150 200 Source: Central Bank of Sweden The Global Leaders of Tomorrow the largest source country of foreign (GLT), a network of young business exec- direct investment into Sweden during utives, working with the consultancy firm the 1993–99 period. The US and Fin- AT Kearney, have developed a “future land were in second and third place, Ten largest recipients index”. In its latest version, the index respectively. At the end of 1998, there of FDI, 1999 shows that Sweden is the EU country that were almost 670 American companies SEK billion US is best prepared to tackle the challenges in Sweden, employing more than 60,000 253 Sweden of the future. The index considers factors people. Due to a large number of new UK such as visionary leadership, level of entries in 1999, these figures will Netherlands education, electronic infrastructure and increase significantly. Major US China Brazil the use of Internet. investors last year include Ford, France Microsoft, Intel, General Motors, Oracle, Argentina Foreign expansion in Sweden Snap-On, Sykes, Genzyme Tissue Germany Norway Sweden’s increased competitiveness is Repairs and Esperion Pharmaceuticals. 0 20 40 60 80 100 reflected in the growing number of for- Source: Unctad eign-owned companies in the country. Reasons to choose Sweden Between 1990 and 1999, the number Executives in Sweden particularly increased by more than 50 percent, appreciate the low corporate taxation, Foreign direct investment from 2,600 to 3,950. the strong industrial tradition, the com- in Sweden, 1987–1999 In 1999, Sweden was the world’s petence of the work force as well as SEK billion 495 200 second largest recipient of inward Sweden’s advanced infrastructure, not investment after the US, according to least in the area of information and com- 150 preliminary figures from the United munications technology. As the Presi- 100 Nations. Sweden also reports among dent and CEO of Microsoft, Mr. Steve the highest outflows of foreign invest- Ballmer, said, after having entered an 50 ments relative to GDP. As in most OECD R&D joint venture with Sweden’s Erics- 0 countries, mergers and acquisitions son: “We are clearly in the heart of explain most of these capital flows. Mobile Valley. I know no better place to –50 87 89 91 93 95 97 99 Since 1990, inflows and outflows locate this company.” Outward FDI Inward FDI have basically been balanced. However, Source: Central Bank of Sweden

INVEST IN SWEDEN – REPORT 2000 5 The Swedish advantage Source of international success

Here, you will find a great many dynamic companies and highly competent people, which is vital if “you are trying to rapidly bring new products and services to market.

Pier-Carlo Falotti European Head of Oracle Corp. Pressrelease February 18, 2000

Flextronics expands European” operations Contract manufacturer Flextronics Inter- national manages its West European oper- ations from the southeast Swedish port city of Karlskrona. With total sales of USD 6 billion and with 41,000 employees, the company is one of the largest global sup- pliers of advanced engineering, design, manufacturing and distribution services to leading multinational OEMs in the tele- com, networking, computer and medical industries. In 1997, Flextronics acquired Erics- son’s Karlskrona plant. This was Flextron- ics first large European investment. Since then, the company has expanded rapidly, Few countries can match the international success that Sweden and Swedish through acquisitions and organically and now has seven production plants and companies have attained in the global economy. The trade marks shown on 4,200 employees in Sweden. this chart are examples of corporations of Swedish origin. The fact that all “Sweden continues to be of great these companies expanded from a Swedish base to become global players importance as a base for Flextronics’ signifies industrial tradition, know-how and an infrastructure that has been operations in Western Europe”, says adapted to the needs of international business operations. And the future Ronny Nilsson, President Western Europe. “It gives us access to qualified looks promising. Currently, Sweden is sizzling with entrepreneurial activity in personnel as well as qualified customers. new sectors such as biotech, IT, media and design. New businesses that From Sweden, we have built up opera- target global markets are constantly being launched. tions in Europe and we are continuously expanding.”

www.flextronics.com

6 INVEST IN SWEDEN – Source of international success

Internationalized economy System-on-chip design Large companies per million inhabitants Swedish companies have been investing Sweden intends to become a major Sweden abroad for well over a century. Alfred player in system-on-chip design (Soc- Switzerland Nobel established the first Swedish- ware). The goal is to establish a world- UK owned manufacturing foreign subsidiary leading cluster, where international Finland Belgium/Lux. in the 1860s, thus creating the world’s companies, institutions, specialists and Ireland first modern multinational corporation. experts can work together to develop Norway Today, no other country is home to a the next generation of information carri- Netherlands France greater number of large multinationals ers. “The design cluster will create Germany per capita. In 1998, 26 out of the 500 dynamic expansion in precisely those 012 34 largest companies in Europe were fields in which Sweden already has Ranked according to sales 1998 Source: EuroBusiness, December 1999. Swedish, according to EuroBusiness. many comparative advantages: techno- logical development, high value-added

Dynamic clusters industrial and service activities, systems International brand names Around these major corporations is a management competence, and techni- Companies which sell internationally have developed their own international brands web of manufacturers, subcontractors, cally advanced, internationally oriented France competent customers, research facilities companies”, says Bernt Ericson, Vice Sweden and skilled employees. They contribute President, Research and Innovations at US to the dynamism that characterizes Swe- Ericsson, the Swedish telecommunica- Germany den’s technologically advanced clusters tions equipment giant. Japan Netherlands in industrial and service sectors. Lead- UK ing clusters can be found in expansive Solid base for Belgium fields facing bright prospects of future international expansion Ireland growth, including telecommunications, The presence of many leading Original 01234567 Strongly disagree Strongly agree

IT, the automotive industry, pharmaceu- Equipment Manufacturers (OEMs) has Source: World Economic Forum, Global Competitiveness Report 1999 ticals, biotechnology, media, entertain- fostered an internationally oriented ment and design. Similarly, strong management, an excellent command of industrial clusters are found in the raw foreign languages and an open attitude material-based industries as paper and towards foreign companies. Swedish pulp, mining, and iron and steel. corporations, forced to bridge gaps in time and space, have reached interna- Future growth potential tional markets by developing efficient The Swedish economy is currently logistics and communications solutions. undergoing a rapid transformation. Tra- Swedish companies are also renowned ditional industries are being supple- for their strong international distribution mented and partly replaced by the entry systems. Thus, by expanding into Swe- of new firms. More than 300 new initial den, foreign companies can take advan- public offerings are expected in the next tage of this competitive and diverse few years. base for future international success.

INVEST IN SWEDEN – REPORT 2000 7 The Swedish advantage A profitable place

Sweden – Returns on individual equity markets, 1900–2000 Star of the century Annualized % return

“Financial Times Sweden February 14, 1999 Australia

US ” Netherlands UK

Bredbandsbolaget attracts investors Denmark Bredbandsbolaget (B2) is a pioneering Germany Swedish company specializing in provid- ing broadband access and services to Japan households. The company has attracted France several international investors in a short period of time. Most recently, NTL, an Italy

American broadband communications 0246810 company, bought a 25 percent stake in Source: Millennium Book, London Business School Bredbandsbolaget. and ABN Amro Bank “We have joined forces with B2 in order to develop an important strategic alliance in Scandinavia, Europe’s most e-centric region”, says Barclay Knapp, NTL’s Chief Sweden has proven to be a country that presents a wealth of high-return invest- Executive Officer. ment opportunities. According to a study jointly sponsored by the London Busi- Other investors in B2 are Intel, the ness School and ABN Amro Bank, Sweden hosted the world’s most successful Carlyle Group, Investor and the Rausing stock market in the 20th Century. The Stockholm Stock Exchange showed Family. B2 also has a strategic partner- ship with Cisco Systems. a real annualized return of 8.2 percent during the 100 years of the 1900s. B2’s goal is to provide up to one million The Swedish stock market was followed by the Australian and the US stock Swedish households with broadband exchanges. Internet access services via Ethernet net- In 1999, the Stockholm Stock Exchange became the fourth best performer works by the end of 2000. The Ethernet among global exchanges, rising by 68 percent. networks enable B2 to offer Internet con- nections at speeds of up to 10 megabits per second. The company plans to extend opera- tions into cities in the other Scandinavian and European countries.

www.bredbandsbolaget.se

8 INVEST IN SWEDEN – A profitable place

Valuable stocks High returns on investment Available capital USD billion, companies belonging to The Stockholm equity market was the Foreign-owned companies in Sweden are the Swedish Venture Capital Association star performer of the last century. The generally pleased with the profitability of 8 development continued in the beginning the Swedish operations. In a 1999 ISA 6 of the year 2000 and mainly reflects study, 61 percent of the foreign compa- developments in the IT sector. Stocks in nies stated that their profitability in Swe- 4 IT and telecom companies have taken den was higher or equal to the average of on an increasing importance on the operations in other countries. Among 2 stock exchange. From June 1996 to British companies, 75 percent said that

December 1999, the number of IT-relat- the return in Sweden was higher than the 0 1996 1997 1998 1999 ed listed companies increased from 12 average for operations elsewhere. Source: The Swedish Venture Capital Association to 76. By year-end 1999, the total mar- A Jetro study of Japanese manufac- ket capitalization of these 76 companies turing companies in Europe showed a was USD 150 billion, or 35 percent of similar picture. While about 30 percent Foreign ownership, Stockholm the total capitalization of the Stockholm of the Japanese subsidiaries in the UK Stock Exchange, 1991–2000 Percent Stock Exchange. The rise in IT stock val- and Ireland were reporting losses in 50 uations has made Stockholm a viable 1997, all of the interviewed affiliates in 40 alternative to listings on Nasdaq and Sweden reported net profits. Moreover, other high-tech exchanges. three-quarters of the Japanese compa- 30 nies said that profitability had improved 20 Open to foreign capital compared to the year before.

The Swedish stock market has attracted 10 increased flows of foreign investment. 0 At the end of 1999, foreign sharehold- 91 92 93 94 95 96 97 98 99 001) 1) Prognosis ers accounted for close to 40 percent of Source: DN Ägarservice AB the market value. While this develop- ment has mainly been motivated by the Development on leading stock exchanges January 1999–March 2000 expected high rate of return on invest- 290 ments in Swedish equities, it also 250 reflects the increased openness that has characterized the Swedish financial 200 markets in the 1990s. The Swedish venture capital market 150 has expanded significantly. According to a survey, published in February 2000, 100 there are now close to 120 venture capi- tal companies in Sweden, including a J FMAMJ J A SO ND J FM significant number of international 1999 2000 firms. Most of these new companies Afv IT index (Swedish IT-companies) Nasdaq FT-SE 100 (London) Afv General index (Stockholm) IBIS-DAX (Frankfurt) Dow Jones industry index focus on telecommunications, IT, Inter- Source: Six Findata net, new media and life sciences.

INVEST IN SWEDEN – REPORT 2000 9 The Swedish advantage Global leader in research and innovation

In manufacturing, expenditure on Total expenditure on R&D innovation is highest in Sweden Percent of GDP (more than 7 percent of total sales). Sweden 1) “[...] In services, expenditure on inno- vation is highest in the United King- Japan 1) dom and Sweden (about 4 percent).

OECD US Science and Technology Scoreboard 1999 Germany

France

” Netherlands 1)

UK1)

Ireland 1)

Volvo-Ford launches safety center 0 1.0 2.0 3.0 4.0 Consolidating its position as one of the Figures refer to 1998 (1) 1997) world’s leaders in automobile safety, Volvo Source: OECD, 2000 Car Corporation inaugurated in March 2000, a new, SEK 650 million ultra-mod- ern vehicle safety center at its Göteborg headquarters. Sweden’s commitment to exploiting new technology and knowledge is clearly The project represents the culmination demonstrated by the private and public sectors’ investing more than any other of decades of safety work by Volvo’s safety engineers. The center will feature com- country in research and development relative to GDP. Foreign companies puter simulation, component tests, crash investing in Sweden benefit from the country’s strong technological base in simulations and full-scale tests – all education and industry as well as from the constructive relationship between efforts to ensure that conditions are industry and academia. Foreign-owned companies now account for almost upgraded to resemble real accidents as 20 percent of the business sector’s R&D expenditure in Sweden. closely as possible. “Volvo has a world-class reputation for Studies by the OECD confirm that Sweden ranks at the top in terms of safety, quality, durability and environmen- investments in R&D, number of articles published in scientific journals, tal responsibility – all of which are attribut- patents and commitment to innovation. es that are increasingly important to our customers”, says Jacques Nasser, Ford President and Chief Executive Officer. Ford last year purchased Volvo Cars for USD 6.45 billion.

www.volvo.com

10 INVEST IN SWEDEN – Global leader in research and innovation

Strong technology record companies including Microsoft, IBM, Number of published scientific articles As stated by Unctad in the World Invest- Nokia, Nortel Networks, RSA Security, Per million inhabitants ment Report, “Firms that undertake com- Intel and Oracle all decided to expand Switzerland petitiveness-enhancing foreign direct their R&D operations in Sweden. Sweden investment seek not only cost reduction In the health care sector, American Netherlands UK and bigger market shares, but also ac- companies such as Genzyme Tissue US cess to technology and innovative capa- Repair, Esperion Pharmaceuticals and Belgium city. Possessing such assets is critical for Parexel, as well as Scandinavian Health France Germany firms’ competitiveness in a globalizing Co of Taiwan, announced plans to start Ireland economy.” research in Sweden. Japan Against this background, it is easy to Ford Motor, following its acquisition 0 500 1,000 1,500 2,000 2,500 Figures refer to 1997 understand that foreign companies of Volvo Cars in early 1999, decided to Source: National Agency for Higher Education, 1999 increasingly choose Sweden for their locate its global center of excellence in R&D investments. the area of safety in Göteborg in Swe- Nobel Prizes per capita den. Similarly, General Motors for sever- Sweden Innovative climate al years has assigned a status as a cen- Switzerland In a recent study on innovation for the ter of expertise for turbo engines to Saab UK American Competitiveness Council, Automobile in Sweden. Denmark US Professors Michael Porter and Scott Norway Stern found that only three countries in Competitive academic institutions Germany the world, the US, Switzerland and Sweden is proud of its world-class uni- Ireland Netherlands Japan, offer a more competitive innova- versities and institutions, recognized Canada tion climate than Sweden. The study world-wide for leading-edge research in 0 0.2 0.4 0.6 0.8 1.0 1.2 analyzed the common infrastructure a number of areas. Close-knit scientific Figures refer to 1998 Source: IMD, World Competitiveness Yearbook 1999 that supports innovation in the economy communities form clusters of excel- as a whole, cluster-specific conditions lence, which provide intimate coopera- that support innovation in particular tion with private business. Scientists groups of related industries, and the and researchers have high standing and strength of linkages among them. distinction in their fields internationally.

Foreign R&D investments A growing number of international com- A few examples of Swedish inventions through history panies are recognizing Sweden’s strong Invention Inventor Invention Inventor technological position. Foreign-owned • The propeller John Ericsson • Respirator Carl Gunnar Engström companies now account for almost 20 • Dynamite Alfred Nobel • Continuous cream • Hasselblad camera Victor Hasselblad percent of the business sector’s R&D separator Gustaf de Laval • Artificial kidney Nils Alwall expenditure in Sweden. During 1999, • Telephone switch Lars Magnus Ericsson • The pacemaker Rune Elmqvist • Self-adjusting roller • Acetylene applications Gustaf Dalén several multinational corporations re- bearings Sven Wingquist • Absorption refrigerator Baltzar von Platen/ vealed plans for new investments in • Safety match Gustaf Erik Pasch Carl Munther • Adjustable wrench John Petter Johansson • STDMA data link air Swedish R&D facilities. This was partic- • Tetra Pak Ruben Rausing navigation system Håkan Lans ularly the case in the IT area where

INVEST IN SWEDEN – REPORT 2000 11 The Swedish advantage Focus on human capital

Sweden has a tremendous pool of Registered students at Swedish universities technical talent. Network manage- and university colleges ment, optical technology, security ’000s “and GSM-related technologies are 350 all areas where Swedish companies and know-how excel. 325

Colin Watts 300 Business Development Manager Europe, Middle East and Africa, Cisco Systems 275

” 250

225 Valtech profits from skilled staff

Started in France in 1993, Valtech is an IT 200 training, consultancy, and project man- agement and implementation group spe- 0 cializing in e-commerce, mobile technolo- 1993 1994 1995 1996 1997 1998 gies and associated systems integration. Source: National Agency for Higher Education, 1999 “Sweden is a sophisticated, open mar- ket ideal for international e-business. It’s a good place to do business”, says Eric Mouilleron, Vice President Development Access to skilled people is the key priority for companies competing in a knowl- Europe. edge-based economy. Few countries can offer a more qualified workforce than Valtech established its Stockholm office in March 1999 as a complement to Sweden. For example, only Switzerland has more R&D personnel per capita. offices in France, Germany, UK and the The workforce is technically literate, with about 60 percent of Swedes regularly US. Since then, Valtech has acquired the working with computers. About 27 percent of the adult population has benefited Swedish IT consultancy companies Axon from post-secondary education, a figure exceeded only by Canada and the US. and Pacer Communication, now operating under the Valtech name. Meanwhile, higher education is rapidly expanding. Between 1990 and 1998 “Educational standards in Sweden are the number of students in basic higher education increased by 58 percent. high across the board and there’s a ready acceptance and real enthusiasm for new technology. Our Swedish operations have been a huge success and there’s great potential for business development in Sweden and right across Scandinavia”, says Mr. Mouilleron.

www.valtech.com

12 INVEST IN SWEDEN – Focus on human capital

Literate population ation of specific IT universities in Sweden. Investment in knowledge As a percentage of GDP The high level of education and compe- New IT-related programs are presently Sweden tence of the workforce is the factor most being developed in Göteborg, Karlskro- France often stated by foreign-owned compa- na/Ronneby, Linköping, Lund, Stock- Denmark nies when asked about the advantages holm and Uppsala. Finland Norway of the Swedish business environment. Canada In the OECD’s literacy studies, Swedish International management UK adults displayed the highest scores in The presence of many large multina- US Netherlands terms of knowledge and skills required tional corporations has fostered detailed Austria to locate and use information contained knowledge of international business and 024681012 in various formats. Sweden was award- management. Swedes have an excellent Public spending on education R&D Software ed the best results in all age groups command of English, and Swedish Figures refer to 1995. among the countries investigated. management style is recognized for its Source: OECD high performance and excellent results. Expanding higher education According to the World Economic R&D personnel More than a quarter of the adult popula- Forum, Swedish management is char- Full time work equivalent per capita tion has benefited from post-secondary acterized by a willingness to delegate Switzerland education. Nevertheless, Sweden is authority, to place strong focus on Sweden committed to expanding its higher human resources and staff training, and Japan Germany education system. Over the period to engage competent financial and mar- Netherlands 1997–2002, the number of student keting officers. UK places at Swedish universities and uni- Belgium versity colleges will increase by almost Intellectual entrepreneurship US 90,000. According to the OECD, Swe- Sweden is one of the world’s larger Ireland 02468 den spends more than 10 percent of its investors in intellectual capital. Few Figures refer to 1997 GDP on knowledge investment, which countries invest as much as Sweden in Source: IMD, World Competitiveness Yearbook 1999 was the highest figure of all countries education, IT and R&D. One way to studied. measure the yield on intellectual capital investments is to assess value added Literacy skills Percentage of the population (16 to 65 Science and technology per employee. In leading Swedish com- years) at the highest literacy levels (4/5) In Sweden, as in many other OECD panies, the average value added per Sweden countries, efforts are being made to employee is around USD 200,000 per Netherlands encourage more people to get higher year. Put another way: 25 percent of US UK education in science and technology. Swedish companies perform as well as Germany Since 1995, highly advantageous finan- the global star performers, such as Belgium cial provisions have been made for peo- those in Silicon Valley. This means Swe- Switzerland ple already holding jobs but who wish to den offers excellent opportunities to Ireland pursue studies in science and technolo- international networking, enterprising 010203040 gy. Current efforts also include the cre- and collaboration. Source: OECD, Education at a glance 1998

INVEST IN SWEDEN – REPORT 2000 13 The Swedish advantage Information society showcase

The top 10 IT-countries in the world, 2000 Sweden is a chrystal ball for the Scores rest of the world. How Swedes use “the Net, teaches us what is possible. Sweden US

Vint Cerf Finland Vice President MCI WorldCom and creator of Internet Norway ” Denmark Canada

Netherlands

Switzerland Motorola establishes R & D in Sweden Australia Motorola, the American electronics com- pany, recently announced that it will Japan establish a mobile Internet development 0 1,500 3,000 4,500 6,000 center in Sweden. The center, the first Source: IDC/WorldTimes Survey 2000 outside the United States, will be located in both Stockholm and Karlskrona. Motorola’s development center will cre- ate prerequisites enabling other compa- Sweden is the world’s leading nation in IT development and Internet maturity nies to develop applications for mobile according to International Data Corporation’s (IDC) World Times Survey 2000. Internet and for Motorola’s products. It This is the first time that any nation has moved ahead of the US. IDC com- will concentrate on R&D and cooperation with companies and institutes, and serve pared 55 countries, taking into account 23 variables. Among them are PC as a meeting-point. infrastructure, social infrastructure, Internet usage, and level of education. “The development center in Sweden will According to IDC, there are two main reasons for Sweden’s success. be Motorola’s first worldwide, but at least Sweden has long been in the forefront in areas such as social infrastructure, eight more are planned and even more education and IT investments. The large investments in new PCs in 1998 and could be considered”, says Janiece Webb, Head of Motorola’s Personal Net- 1999, due to a government employee purchase scheme, is the second major work Group. “We chose Sweden because factor that has added to Sweden’s top position. we have a good presence here, and because of the fact that Swedish universi- ties already turn out specialists who have competence in mobile Internet. That made us think of Sweden as a good place to start with.”

www.motorola.com

14 INVEST IN SWEDEN – Information society showcase

Well developed infrastructure phone penetration. It is also the base of Investments in IT and telecom, 1999 Sweden invests more in information world leaders in the development of Percent of GDP technology and communications in rela- future communication technologies, Sweden tion to its GDP than any other nation – most notably Ericsson and Telia, and the US 7.7 percent compared to US’ 7.3 per- home of many global corporations that UK Finland cent – according to the European Infor- act as demanding customers of new IT France mation Technology Observatory (EITO). solutions. Industrial buyers such as Denmark The country is today the most wired ABB, Electrolux, Volvo, Saab, Scania Norway nation on earth. Almost 70 percent of and SKF have encouraged the develop- Germany Swedish households have an advanced ment of new products and services. Japan 024 68 personal computer, with most of them Source: European Information purchased in the past two years. Inter- Software industry Technology Observatory, 2000 net penetration continues to grow at a The Swedish software industry is one of rapid pace. More than 50 percent of all the fastest-growing segments. There are Number of IT companies on Swedes aged 12–79 use the Internet. some 600 software companies in Sweden the Stockholm Stock Exchange Moreover, at least every second Swede and sales have more than doubled in and market capitalization, 1996–1999 now has a mobile phone. two years. Many of these companies are Number of companies Billion USD 160 160 recognized for their leading-edge tech- Mobile Internet nology. The three largest are Intentia, IFS 120 120 The combination of mobile communica- and IBS. When the European Union in tion and the Internet has made Sweden 1999 announced its prime award for 80 80 a hot spot in the IT industry. As Mr. Rob trailblazing products in the area of IT, all

Eckelman, Vice President and General three Grand Prize Winners were Swedish: 40 40 Manager of Intel Europe, put it when Effnet, C Technologies and Cypak. announcing that Intel had chosen 0 0 June 96 June 98 June 99 Dec 99

Stockholm for its wireless-technology New media and the Internet Number of IT companies research center: “It is the Silicon Valley Sweden has become the European lab- Market capitalization of the Nordic World. It is the fastest oratory for the fast-expanding new Source: The Stockholm Stock Exchange mover in terms of cellular and wireless media and Internet industry. Several technology and adoption.” Swedish Internet consultants rank Intel is not the only company that has among the largest firms internationally The penetration of PCs does not recognized the benefits of locating in and have attracted some of the best- “guarantee the strength of a digital Sweden. During 1999–2000, compa- known investors in the world. The economy. Instead, all infrastruc- nies as Microsoft, Oracle, IBM, Motoro- largest Swedish Internet companies tures – computer, Internet, informa- la, Nokia, Nortel Networks, RSA Securi- realized early the importance of expand- tion, and social – must be a strong, ty and Sun Microsystem all decided to ing internationally and already have own interwoven body that works together to support the Information Society. establish R&D activities in Sweden. subsidiaries abroad. Cell Network/Man- Sweden understands this need for dator, Framfab, Icon Medialab, Razor- a balanced approach. Sophisticated demand fish and Information Highway/Connecta Sweden not only has a developed mar- are today among Europe’s largest Inter- Matt Toolan ” Director, Global IT Market ket in terms of PCs, Internet and mobile net consultancy firms. and Strategies, IDC

INVEST IN SWEDEN – REPORT 2000 15 The Swedish advantage Sophisticated market place

Some of the most exciting A strategic position in Europe technology companies are here in Sweden, with a tremendous ICELAND “market potential.

Larry Lopez Senior Vice President, Silicon Valley Bank Reuters, October 19, 1999 FINLAND

NORWAY SWEDEN RUSSIA ” ESTONIA LATVIA DENMARK LITHUANIA IRELAND BELARUS UK

NETHERLANDS POLAND BELGIUM GERMANY UKRAINE LUX. CZECH REP. SLOVAK REP. Tully’s Coffee new in Europe MOLDAVIA AUSTRIA FRANCE SWITZER- HUNGARY Tully’s Coffee is America’s third-largest cof- LAND ROMANIA SLOVENIA CROATIA fee chain. With five coffee bars already in BOSNIA Stockholm, Tully’s chose Sweden as its SERBIA ITALY MONTE- BULGARIA NEGRO European base because this nation is a key SPAIN KOSOVO PORTUGAL ALBANIA market in itself. Swedes and Finns are the TURKEY GREECE world’s largest coffee consumers per capi- ta. Tully’s plans to expand first in Scandi- navia, UK and Belgium, and then else- CYPRUS MALTA where in Europe. “We are very excited to be expanding into Europe”, says Tom O’Keefe, Members of the European Union Chairman and CEO. “There are real ex- Applicant countries to an enlarged European Union pansion opportunities throughout Europe for us.” Tully’s was founded in 1992, and has Sweden offers a wealth of market opportunities for foreign companies. Sweden expanded to become the nation’s third- is part of three distinct market areas: Scandinavia, The Baltic Sea Region and largest coffee chain. It specializes in both coffee bars and retail sales of various types the EU, with some 25, 100 and 370 million consumers, respectively. Including of coffee. It has become established in the emerging economies of eastern Europe, the total European market com- Japan and Taiwan. The company views the prises almost 700 million potential consumers. Sweden may seem a small Scandinavian nations as particularly attrac- market in itself. However, as one of the world’s most advanced market places, tive because of the high consumption of it has become a much preferred test arena for new products and services. coffee as well as the ready acceptance of new lifestyle trends.

www.tullys.com

16 INVEST IN SWEDEN – Sophisticated market place

Popular test market Central location The world’s top 10 Internetbanks Swedes are very fast to adopt latest Sweden’s central location in Scandi- Citibank US products and trends from around the navia and the Baltic Sea Region, with its FöreningsSparbanken Sweden globe. International corporations in a almost 100 million inhabitants, makes it MeritaNordbanken Sweden/Finland broad range of industries have realized attractive as a base for call centers, SEB Sweden UBS Switzerland the advantage of using Sweden to try out shared service centers, distribution Wells Fargo US new products, services, strategies and centers and direct marketing activities. Net Bank US techniques before launching them on a During 1999, several international com- Egg UK global scale. This applies, for example, panies expanded their operations in Credit Suisse Group Switzerland HSBC/Midland UK to the IT and Internet sector, and to the these industries to profit from the Evaluation criteria: accessibility, navigation features, music, fashion and design industries. region’s market opportunities. Sykes, customer service, content and technology Source: IBM and Interbrand, June 1999 Convergys, Sitel and Coca-Cola all locat- IT and e-business ed their regional call center operations In the IT area, the Swedish and Scandi- in Sweden. navian markets are regarded as Sweden’s central location is also The Scandinavian e-commerce market, 1999 extremely important. In a 1999 study, illustrated by Carestel, the Belgian MUSD Scarborough Research of the US found restaurant chain, which in 1999 decid- Sweden that Swedish cities have the largest per ed to locate its new central kitchen in capita percentage of Internet users in Varberg on the west coast of Sweden. Finland the world, making the country a perfect From its Varberg site, Carestel will sup- test lab for online services. ply its expanding food service opera- Norway Trade on the Internet is one area that tions throughout not only Scandinavia is expected to grow faster in Sweden but also the UK. Denmark than elsewhere. The development of 0 50 100 150 200 250 Internet banking is an excellent illustra- Music and fashion Source: Boston Consulting Group, 1999 tion. By 2000–2001, up to 40 percent Sweden has attracted increased atten- of all Swedes are expected to handle tion in dynamic and fast-growing sec- their transactions via the Internet. tors such as music, fashion, design and Sweden is the most advanced Another field in which Sweden holds entertainment. According to a study by consumer test-bed on the planet – a leading position is Internet stock bro- the Swedish Foundation for Knowledge “ far ahead of the rest of Europe and kerage. The E-trade Group, an on-line and Competence Development, total the United States. brokerage firm headquartered in Palo Swedish exports of music in 1999 ” Alto, California, considers Sweden an amounted to about SEK 3.3 billion (USD Paul Saffo Director of the Institute for the Future attractive market because of its high 400 million), making this country the Newsweek, February 7, 2000 Internet penetration and its large num- world’s third largest net exporter of ber of online investor accounts. “Com- music, after the US and the UK. Today, bined, these factors make Sweden an all major record companies know that if ideal location for E-trade to continue its a song is a hit in Sweden, it is likely to be global expansion”, says Magnus Lin- a success in the rest of Europe as well. dahl, CEO of E-trade Sverige.

INVEST IN SWEDEN – REPORT 2000 17 The Swedish advantage Strategic base in the Baltic Sea Region

If you want to do business in The Baltic Sea Region Scandinavia, locate in Sweden. EU countries If you want to do business in “the Baltics, locate in Sweden. It’s that simple – Sweden is an

ideal gateway for your entry into Kiruna the expanding markets sur- rounding the Baltic Sea. Luleå

Norwegian Thomas Kelsey Sea Umeå Commercial Counselor, US Embassy in Stockholm FINLAND Sundsvall Gulf of Bothnia NORWAY RUSSIA SWEDEN Helsinki St. Petersburg Gävle Uppsala Oslo Västerås Tallinn Karlstad Stockholm ” Örebro Norrköping ESTONIA Göteborg Linköping Jönköping Riga North Sea Borås LATVIA Moscow Helsingborg DENMARK Baltic Sea LITHUANIA Lund Karlskrona Fujitsu Nordic chose Sweden for Malmö Copenhagen (RUSSIA) Vilnius regional base Kaliningrad Gdansk One of the world’s leading hard disk manu- Hamburg Warsaw facturers, Japanese Fujitsu, chose Sweden Berlin POLAND for its base in the Baltic Sea Region. In addi- GERMANY tion to the Nordic countries, Fujitsu Nordic has expanded sales to the fast growing mar- kets in Poland and the Baltic States. Large OEM customers in the region are served directly from Fujitsu Nordic in Sweden, The Baltic Sea Region is today one of the most dynamic and interesting while smaller customers are handled by European growth areas – and it will continue to be so for the coming decades. agents in the respective countries. Fujitsu The integration of the emerging economies in the east with some of the world’s Nordic offers a complete line of hard disk most sophisticated and rich countries in the west has created rare business products and flat bed scanners, printers and magnetic optical products. Sales have opportunities. Thanks to its central location, relatively large market and in a few years jumped from MSEK 270 to advanced infrastructure, Sweden is the natural base for regional operations MSEK 670 in 1999. in this part of Europe. “Swedish companies are large investors in the Baltic Sea Region and Sweden is a natural base for our operations also from a logistical point of view”, says Mr. T. Unai, President of Fujitsu Nordic.

www.fujitsu.com

18 INVEST IN SWEDEN – Strategic base in the Baltic Sea Region

Sizable market levels, costs, etc. This diversity makes Several Fortune 100 companies have regional The Baltic Sea Region comprises ten the region an attractive base for export HQ’s in Sweden countries and a number of metropolitan operations. The two parts of the region areas. With openings into the west, and tend to complement each other in many to the east into mainland Russia, the respects. The western economies are region encompasses Sweden, Den- strong and stable with high purchasing mark, Norway, Finland, northern Ger- power, and with full access to the Single many, Poland, Estonia, Latvia, Lithuania Market of the EU. The eastern Total number of F-100 and the northwestern areas of Russia. It economies offer qualified labor and companies present in Sweden: 54 has a population of almost 100 million. highly competitive production costs, Regional HQ in Sweden1) 29 In GDP terms, it is comparable to the with the average hourly compensation Regional HQ in another Scandinavian country 2) 4 UK or Italy. cost in manufacturing only 10–20 per- No HQ in Scandinavia 3) 21

cent of that in Scandinavia. 1) Headquarters for all operations or specific business areas. Fast growing region 2) Only companies without regional headquarters in Sweden. The Baltic Sea Region has shown Sweden the preferred choice 3) Includes four companies who did not remarkable growth in recent years. The More and more foreign corporations answer our survey. Source: Fortune, interviews, SMG, 1999 annual average (weighted) GDP growth recognize the advantages of using Swe- rate in 1997–1999 was 3.2 percent, den as a base for operations throughout higher than both the EU and US aver- the Baltic Sea Region. Several of the age. All economies bordering on the world’s largest company groups – such Baltic Sea are expected to expand in as General Motors, Microsoft, Mitsui, 2000. In Poland, Estonia, Sweden and Mitsubishi and General Electric – all Finland, real GDP growth rates of more have their regional headquarters in Selected companies with regional than 3.5 percent are anticipated. Sweden. Out of the 54 of the largest 100 headquarters in Sweden Fortune corporations that were present • AT&T • BASF Diverse region in Sweden in 1999, as many as 29 have • Bayer The countries in the region show their regional headquarters in Sweden • DaimlerChrysler marked differences in size, economic for at least one business area. • Ford Motor and industrial structures, technology • Fujitsu • General Electric • IBM • Itochu Sweden – the natural regional base • Marubeni • Sweden is the largest single market in Scandinavia. • Mitsubishi • Sweden is home to many world class and instantly recognizable OEMs which enhances the • Mitsui availability of headquarters skills. • Nestlé • It is easy to find skilled workers who speak English, German, French, Finnish, Norwegian, • Procter & Gamble Estonian or Russian. • Siemens • Sweden offers the best IT infrastructure in the world. • Toshiba • A base in Sweden benefits from efficient international air connections throughout the region. • Unilever • There are good sea links with all neighboring countries as well as with the rest of the world. • Volkswagen

• Stockholm is the leading financial center of the Baltic Sea Region. Source: Fortune, interviews, SMG, 1999

INVEST IN SWEDEN – REPORT 2000 19 The Swedish advantage Logical logistics base

The fixed Öresund link

As the natural logistics hub for

Scandinavia and the Baltic Sea DENMARK SWEDEN

Copenhagen Region, Sweden stands a lot to Malmö “gain.

Gilbert Debecker Director, European sales and marketing, Cat Logistics ”

Bayer’s regional logistics center

After careful studies, German Bayer chose to centralize distribution activities for eight countries (Sweden, Denmark, Finland, Nor- way, Estonia, Lithuania, Latvia and Iceland) to Göteborg. The city was deemed best for a variety of reasons, such as the availability of sophisticated logistics providers and a cen- tral location. In addition, one of the larger Bayer warehouses was already located there. The company’s need for multimodal transport alternatives was also important; Bayer products arrive by sea, air and truck Sweden offers ideal locations for northern European logistics operations, from Europe and the US. thanks to its geographic proximity, established distribution networks, infra- Under the new distribution system, Bayer structure quality and availability of logistics services. Logistics providers in delivers overnight in Denmark, Sweden, Sweden capitalize on state-of-the-art technology and widespread use of IT and southern Norway and the Helsinki area (Finland), and within 48 hours to remain- Electronic Data Interchange (EDI) to offer solutions for just-in-time delivery and ing areas in the Nordic countries. Baltic a seamless flow of materials and information. The fixed Öresund link between customers are guaranteed delivery within Malmö in Sweden and Copenhagen in Denmark makes Sweden an even more five days. Savings have been substantial. attractive location. “Capital costs for industrial chemicals have been reduced by 35 percent and inventory turnover rate at the Göteborg warehouse has increased by 60 percent. And we are still able to meet customer lead- time demands”, says Lars Normark, Nordic logistics and quality manager at Bayer.

www.bayer.com

20 INVEST IN SWEDEN – Logical logistics base

Centrally located Air traffic The 10 largest Swedish ports by cargo volume Sweden is located at the center of Scan- Sweden’s air cargo and passenger traf- Million tonnes dinavia and the Baltic Sea Region. Stud- fic is steadily increasing. For example, Göteborg Malmö- ies show that Sweden is the only country 1999 was a record year for Stockholm- Copenhagen1) Brofjorden in the area with locations that can guar- Arlanda International airport. Passenger Helsingborg antee 24-hour distribution to all major traffic rose by 6 percent to 17.1 million Trelleborg destinations in the region. passengers, making Arlanda the largest Stockholm Scandinavian airport. The largest air Luleå Karlshamn Sophisticated infrastructure cargo airports are Stockholm-Arlanda, Norrköping Foreign companies in Sweden enjoy a Göteborg-Landvetter and Stockholm- Oxelösund 010203040 sophisticated and extensive logistics Skavsta. For companies located in south- 1) From 2000, Malmö and Copenhagen infrastructure, covering all modes of ern Sweden, the airports in Malmö and have a jointly run port Figures refer to 1998 transport as well as information and Copenhagen provide excellent services. Source: Swedish Maritime Administration flow-of-funds. Long-term investments in roads, railways, harbors and airports Competent industry have created rapid and reliable links to The Swedish logistics industry is consid- all important parts of the region. And ered as one of the most competent in further developments are underway. Europe. A large number of freight for- In brief The SEK 15 billion (USD 1.8 billion) warding and full-service third-party • A wide range of full-service third-party logistics providers.

Öresund Link, the bridge and tunnel providers are recognized for delivering • More than 13,000 road haulage connecting Malmö in Sweden with goods on time with a high degree of companies – many of the smaller haulers co-operate Copenhagen in Denmark, radically safety. through jointly owned truck centers or shortens transit times across the Öre- Logistics companies capitalize on through forwarding companies. sund strait. Internet technology and the wide- • More than 200 shipping companies – 20 lines with rapid and reliable links spread use of IT and Electronic Data to countries in the Baltic Sea Region.

Sea links Interchange (EDI) to offer a complete • 25 independent rail transport companies There are numerous sea links between range of services, including cargo track- • Several airlines active in air cargo opera- tions, major players include Lufthansa Sweden and neighboring countries. ing and integrated supply chain solu- Cargo, SAS Cargo, KLM Cargo, Air France Every six minutes, 24 hours a day, a tions. For example, DHL’s Swedish cus- Cargo and British Airways Cargo. • Presence of global express companies, ferry from abroad calls at a Swedish tomers were the first to test a new WAP such as DHL, TNT Express and UPS. port. Regular trans-ocean liner traffic (Wireless Application Protocol) pro- serves Göteborg, the largest port in gram, which will be launched world- Scandinavia. A number of ports have wide. “Sweden is the perfect test market direct and daily connections to Finland, for developing new wireless and IT solu- the Baltic States, Poland and northern tions”, says Tomas Zetterquist, DHL Germany. Sweden is today the main Nordic’s e-commerce director. transport corridor for trade to and from the countries on the eastern shores of the Baltic Sea.

INVEST IN SWEDEN – REPORT 2000 21 The Swedish advantage Prepared for the future

In the future, a successful society Future readiness in Europe will be sustainable in economic, Index

political and environmental terms. Sweden “It will afford its citizens the possi- Finland bility to develop and grow. And it will be able to solve (if not avoid) Ireland

conflicts. UK

Fields Wicker-Miurin Denmark AT Kearney and Global Leaders of Tomorrow France

Luxemburg ” Germany beenz.com attracted by mature Netherlands market Austria British beenz.com opened its office in Stockholm in January 2000. Worldwide, Belgium beenz.com employs 220 staff in six coun- 0 25 50 75 100 tries in North America, Europe and Asia. Source: AT Kearney, 1999, Global Leaders of Tomorrow Beenz are a universal, incentive-based currency for online merchants. They are a new way of attracting, retaining and re- warding consumers. The company charges According to the so-called Future Readiness Index, Sweden is the European participating websites for issuing beenz, provides all the software needed and pays country that is best prepared for the future. The index has been developed by participating websites for accepting AT Kearney and the network “Global Leaders of Tomorrow” and measures the beenz. In its first year, there have been availability of Internet hosts and access to telecommunication lines, and it over 17 million beenz transactions. studies R&D and patents as well as at that scarce resource, well-educated, “Sweden came top for several rea- trained, people. In recent years, Sweden has become increasingly associated sons”, says Country Manager Matt Con- way. “It is the largest market in Scandi- with the new information society, entrepeneurship and an open attitude navia with plenty of potential and it’s right towards new ideas. at the geographical center of the region. Sweden in general, and Stockholm in par- ticular, is a transport and communications hub. It has the highest PC and Internet penetration in Scandinavia and is at the forefront of IT. It’s a mature market ready for the brand and service differentiation that beenz allows.”

www.beenz.com

22 INVEST IN SWEDEN – Prepared for the future

A well functioning society oped IT infrastructure. Sweden ranks The world’s 10 least corrupt countries It is easy to do business in Sweden. For- number one in the world in this respect. Denmark eign investors meet an open and honest Penetration of telecom applications and Finland society characterized by trust and coop- the use of PCs and the Internet are far Sweden eration. According to annual surveys by higher than in other nations. At least New Zealand Iceland Transparency International, Sweden is one of every two Swedes has a mobile Canada one of the world’s least corrupt nations, phone. Internet penetration continues Singapore together with its Scandinavian neigh- to grow rapidly with the fastest growing Netherlands Switzerland bors. Transparency International have age group being 50–79 years old. Norway also shown that Swedish companies dis- 024 6810 Much corruption No corruption play the lowest willingness to pay bribes Changing values Source: Transparency International, 1999 when doing international business. The 1990s also witnessed a radical change among young peoples’ work Deregulated economy attitudes. Developments in the IT area Since the early 1990s, Sweden has liber- have spurred an entrepreneurial spririt, The 10 cleanest alized important parts of the economy. resulting in a dramatic increase in business cities in Europe This applies, for example, to telecommu- the number of new companies. As 1. Stockholm 2. Geneva nications, media, financial services, trans- described by Business Week in a story 3. Oslo portation, temporary help services, and on “e.biz”: “For decades, engineers, 4. Zurich production and distribution of electricity. computer scientists, and business 5. Copenhagen This has created many new investment grads coming out of the top universities 6. Dublin opportunities and has attracted a large filed straight into 40-year careers at 7. Amsterdam number of foreign companies. Volvo, Electrolux and Nokia. Now they 8. Munich 9. Vienna detour into startups.” 10. Hamburg Environmentally friendly Source: Healey & Baker, 1999 Creating a sustainable society means High quality of life paying attention to the environment. Sweden offers many qualities that exec- Sweden has long been recognized for its utives highly appreciate. Crime rates are environmental work at governmental, low, natural disasters rare, and traffic In recent years, Sweden has corporate and private levels. Residents generally runs smoothly. Sweden’s com- “experienced an enormous surge in and visitors admire Sweden’s open prehensive system of social welfare and entrepreneurial activity. There are spaces and unpolluted cities and coun- health care contributes to the nation’s several areas where Swedish com- tryside. For example, in a 1999 survey high standard of living and long life panies stand to gain worldwide of best business cities by Healey & expectancy. Meanwhile, the number of recognition. Baker, Stockholm was rated as the least high quality restaurants is rising fast and ” Nigel Grierson polluted city in Europe. Swedish cuisine is now internationally Director, Corporate Business acclaimed. According to Newsweek, Development, Intel A wired society Stockholm “can rival almost any Euro- Of key importance for coping with the chal- pean capital for its range of places to lenges of tomorrow is to have a well devel- eat, drink or stay”.

INVEST IN SWEDEN – REPORT 2000 23 The Swedish advantage Competitive cost framework

Telephone costs are low and our Labor productivity, 1990–1998 low operating costs allow us to Percentage change offer cost effective services. “ Sweden

Eddy Ahlfeldt France Head of Nordic call center operations Ford Motor Company Netherlands ” US Germany

Belgium Carauto invested in quality When W Laminated, manufacturer of Japan automobile windscreens in Svappavaara UK in northern Sweden, started courting financial partners, one of its biggest cus- 01020304050 tomers, French Carauto, invested enough Source: US Department of Labor, 1999 to keep the 30-person company going. “We liked our Swedish supplier so much we decided to invest in them”, says Pierre Henry Vasseur, President and Sweden was once known as being a high-cost country. This is no longer a valid Chairman, Carauto. description. Thanks to strong productivity growth, increased competition and In making the SEK 2.5 million invest- ment, Carauto, a Lille-based supplier of currency adjustments, Sweden today offers some of the most competitive costs automobile windscreens, guaranteed it in the EU. According to the US Department of Labor, Swedish labor productivity would continue to receive an annual sup- increased by 44 percent between 1990 and 1998, which was the strongest ply of some 20,000 windscreens from its recorded growth among the major industrialized countries. The same study Swedish manufacturer. This amounts to a significant share of the 60,000 to 70,000 also showed that Swedish industrial production growth was higher than else- windscreens it sells each year to some where: up 32 percent during the same period. 10,000 automobile repair shops in France, Belgium and Luxemburg. “W Laminated provides us with a con- tinuous stream of quality products in a large range of models on a regular ba- sis”, explains Mr. Vasseur. The northern Swedish location is no barrier, but comparatively close for a com- pany that buys products from suppliers as far away as Thailand and the US.

24 INVEST IN SWEDEN – Competitive cost framework

Business costs undistributed profits. Moreover, from Relative business costs Index Germany =100 According to a 1997 study by the Econ- January 1, 2000, dividends paid by for- Germany omist Intelligence Unit (EIU), relative eign subsidiaries in Sweden to their par- business costs in Sweden are 30 per- ent company are no longer subject to US cent lower than those in Germany, and Swedish taxation. Belgium about 15 percent below those in the UK. UK

The EIU index takes into account the Telecom costs France costs of wages, expatriate staff, air trav- Sweden has a very strong telecommuni- Netherlands el, corporate taxes, perceived corrup- cations infrastructure with a highly Sweden tion levels, office and industrial rents, as advanced digital network to provide reli- 020406080100 Source: Economist Intelligence Unit, November 1997 well as road transport. able voice and data transfer. All sub- scribers are connected to digital switch-

Labor costs es. There are also well-established fiber- Labor costs The Swedish workforce’s high level of optic links to the US and neighboring technical engineer, 1999 USD education and competence is the factor countries (Denmark, Norway, Germany, US most often stated by foreign companies Russia and Estonia). Sweden was the France when asked about the advantages of the first Scandinavian country to comply Germany Swedish business environment. Many fully with the European Union’s directive Netherlands companies have chosen Sweden to on the liberalization of telecommunica- undertake high value-added activities tions networks and services. Today Sweden such as R&D and advanced manufac- there are about 40 telecom companies Spain turing. Against this background, it may operating in the Swedish market, with UK be surprising to find that the cost of Telia, Tele2 and Telenordia as the 0 50,000 100,000 High Low labor for Swedish skilled personnel is largest players. This makes Sweden one Exchange rate as per July 1, 1999 highly competitive. The average cost of of the most competitive markets world- Source: William M. Mercer a technical engineer or system analyst, wide and, consequently, telephony tar- for example, is about 30– 40 percent iffs are among the lowest. lower than in the US, and some 25–30 Electricity costs Medium-size industry, April 1999 percent below the cost in Germany or Electricity costs Cent per kwh France. This makes Swedish technique- The Swedish electricity market was Italy oriented production very cost-effective. deregulated in 1996. This created new Belgium Germany business opportunities for foreign play- US Low corporate tax ers and led to a more competitive envi- Ireland At 28 percent, Sweden offers one of the ronment. Today, Sweden offers the low- Netherlands lowest corporate tax rates in the EU. est electricity prices in the world, UK Companies can make pre-tax alloca- according to National Utilities Services France Sweden tions to untaxed reserves, which are (NUS). Electricity prices for Swedish 02468 subject to tax only when utilized. Thus, medium-sized industries (1–10 million Source: NUS Scandinavia AB Sweden’s effective corporate tax rate is kWhs) dropped by more than 20 per- on average only about 26 percent on cent on average from 1998 to 1999.

INVEST IN SWEDEN – REPORT 2000 25 The Swedish advantage Favorable macro-economic environment

Since last April, Sweden’s Real GDP growth in EU countries, 1999 National Institute for Economic Percent

Research has repeatedly raised Ireland “its growth forecast for 1999, Sweden boosting it from 2.2 to 4 per- Spain cent – or more than twice the overall rate from the Finland European Union. Netherlands

Newsweek France February 7, 2000 Austria Belgium ” UK Germany

Denmark

Italy Rebounding Sweden defies the 02 4 6 810 laws of economic gravity. Source: National Institute of Economic Research and the OECD […] the biggest change has “been the rise of new compa- nies, many sprouting from Ericsson’s roots in the telecom- A stable macro-economic environment is a necessary prerequisite when munications industry and many others emerging from the making long-term investments. The Swedish economy is showing strong growth. Nordic countries’ infatuation The economic upswing has become stronger, unemployment has fallen and with the Internet. inflation has been contained. Sweden is in a position where a prolonged

New York Times period of high GDP growth rates can be expected. Thus, foreign companies October 8, 1999 expanding in Sweden can benefit from an increasingly stable macro-economic ” situation, strong consumption growth and rising purchasing power.

26 INVEST IN SWEDEN – Favorable macro-economic environment

From deficit to surplus Falling unemployment Budget balance development 1995–2000, percent of GDP Sweden’s fiscal consolidation program The unemployment rate fell to about 5 4 has been among the most substantial percent by end 1999. Fairly broad- 2 undertaken by any OECD country. based employment creation has out- 0 Between 1995 and 1999, Sweden’s paced the expansion in the labor supply. general government structural balance In 1999, employment grew at an annual –2 improved by almost 9 percent of GDP. rate of 2.6 percent. The open unem- –4 As a result, the budget deficit has been ployment rate is expected to fall to 4.5 –6 turned into a significant surplus. Greater percent in 2000, while about 3 percent –8 tax revenues than expected may see the of the labor force is involved in labor 95 96 97 98 991) 001) Sweden EU2) OECD3) budget surplus rise to about 2.25 per- market programs. 1) Estimates 2) Excluding Luxemburg 3) cent of GDP. As a result of the improved Excluding Luxemburg, Mexico and Turkey Source: OECD Economic Outlook, December 1999 fiscal position, the government has sig- Tightening monetary policy naled measures to lower the overall tax The sustained low inflation and the sub- Annual change in real GDP pressure. stantial fiscal consolidation program 1995–2000, percent have led to higher credibility for Sweden’s 4 Robust economic growth monetary policy. Interest rate differen- Economic growth accelerated faster than tials have fallen and inflation expecta- 3 projected in 1999 and GDP expanded by tions are within or below the 1 to 3 per- almost 4 percent in real terms. Private cent target range set by Sweden’s Central consumption, investment in the business Bank. At the same time, the strong eco- 2 and housing sectors all showed strong nomic growth coupled with major cuts in growth. The economy is expected to unemployment has led the central bank 1 1) 1) remain strong, with domestic demand to tighten its monetary policy. 95 96 97 98 99 00 Sweden EU OECD estimated to grow at nearly 3 percent 1) Estimates Source: OECD Economic Outlook, December 1999 annually over the 2000–2001 period. Sweden and the EMU Like Denmark, Greece and the UK, Inflation Contained inflation Sweden did not introduce the Euro on 1995–2000, percent Despite a rather large depreciation of January 1, 1999. However, companies 6 the Swedish krona since 1992, Sweden in Sweden will be able to denominate 4.5 has managed to reduce and keep infla- their stock value and present their tion at a low level. In fact, during the last accounting in Euro starting January 3 five years, the rate of inflation has been 2001. The government is also investi- below or equal to that of the EU as a gating the possibility of allowing compa- 1.5 whole. In 1999, Sweden reported the nies to use other currencies than Swe- lowest inflation rate of all EU countries. dish Krona or Euro. 0 95 96 97 98 991) 001) Sweden EU OECD 1) Estimates

Source: OECD Economic Outlook, December 1999

INVEST IN SWEDEN – REPORT 2000 27 Key economic indicators

Key economic indicators SEK bn Annual change (%) 1998 1998 1999 2000* 2001*

National account Real GDP 1,872.9 3.0 3.8 3.9 3.3 Private consumption 950.8 2.4 4.1 4.1 3.3 Real gross fixed investment 296.0 9.4 8.2 5.6 5.9 Real exports of goods and services 816.0 7.3 5.2 7.6 6.6 Real imports of goods and services 705.3 10.4 5.0 7.5 6.7

Production and employment Industrial production 4.3 4.2 5.5 4.5 Unemployment rate (% of workforce) 6.5 5.6 4.7 4.0 Labor market programs (% of workforce) 3.9 3.1 2.9 2.6

Prices Consumer prices 0.4 0.3 1.4 1.7

Interest rates Bond rates (5-year) (%) 4.7 4.5 5.8 5.9 Short interest rates (3-months) (%) 4.2 3.1 4.2 4.7

Public finance Expenditure (% of GDP) 58.7 58.5 56.3 54.3 Budget deficit/surplus (% of GDP) 1.9 1.9 2.2 2.9 Central government debt (% of GDP) 76.7 69.7 58.2 48.9

Balance of payments Balance of trade (% of GDP) 7.2 6.7 7.1 7.5 Current account (% of GDP) 3.1 2.3 2.6 3.2

Exchange rates US dollar (SEK/USD) 7.95 8.26 8.41 7.90 D-mark (SEK/DEM) 4.52 4.51 4.36 4.39

* Forecast

Source: National Institute of Economic Research, March 2000

28 INVEST IN SWEDEN – REPORT 2000 The micro-competitiveness of Wireless Valley

Michael E. Porter Michael E. Porter is the C. Roland Christensen Professor of Busi- ness Administration at the Harvard Business School and a leading authority on competitive strategy and international competitiveness. Professor Porter’s 1990 book, The Competitive Advantage of Nations, developed a new theory of how nations, states, and regions compete and their sources of economic prosperity. The ideas in this book have guided economic policy throughout the world. In 1991, Michael E. Porter, Örjan Sölvell and Ivo Zander published the book Advantage Sweden, in which they shifted the focus from macro- economic solutions to the micro-economic fundamentals.

Örjan Sölvell Ivo Zander Örjan Sölvell is Professor Ivo Zander is Associate of International Business Professor at the Institute at the Stockholm School of International Business of Economics and Direc- at the Stockholm School tor of the Institute of Inter- of Economics. national Business, IIB.

At the entry of the new millennium, developments in Sweden offer a markedly different picture than only a decade ago. The country has achieved an impressive macro-economic turn-around. But even more importantly, Sweden has revitalized its micro-economic foundations and is today recognized as the Wireless Center and the hotspot in Europe for young talent. Professors Michael E. Porter, Örjan Sölvell and Ivo Zander here for the first time analyze what lies behind this significant change, how it affects the competitiveness of Sweden and the challenges ahead for Sweden.

INVEST IN SWEDEN – REPORT 2000 29 The micro-competitiveness of Wireless Valley

Sweden’s micro-economic climate

eginning in the 1998 Global Com- Sweden on the move Country ranking according to the micro-economic climate Bpetitiveness Report (World Eco- Over the past ten years, Sweden has MICI index rank 1999 1998 nomic Forum), the micro-economic achieved a remarkable turnaround in foundations of economic development both its macro- and micro-economic US 1 1 Finland 2 2 could be measured and examined statis- climate. In a number of recent articles Netherlands 3 3 tically across a wide array of countries. in international media, Sweden is de- Sweden 4 7 Using a new Micro-economic competi- scribed as a nation of increased dyna- Switzerland 5 9 tiveness (MICI) index, which measures mism, entrepreneurship and changing Germany 6 4 how well a nation scores on its underly- values. In particular, Sweden is pictured Denmark 7 8 ing microeconomic competitiveness, it as one of the emerging hotbeds in fast- Canada 8 6 France 9 11 can be shown that micro-economic dif- growing mobile telecommunications, UK 10 5 ferences explain for much of the varia- Internet and related technologies. Source: Porter, M.E. 1999, “Micro-economic Competitiveness: tion across countries in GDP per capita. What happened? First, macro-eco- Findings from the 1999 Executive Survey” in the Global Competi- tiveness Report, World Economic Forum, Geneva Sweden’s strong and improving micro- nomic stability has been achieved economic foundations are noteworthy. through joining the EU, creating tighter The overall MICI ranking places the US integration with the international econo- at the top, followed by Finland, the my, balancing the state budget, and cre- Netherlands and Sweden (see table). ating an independent central bank. Sweden has climbed a number of More impressive and difficult, in many places since 1998, driven by improve- ways, are the improvements on the ments in the intensity of local rivalry, micro-level. Sweden has always had a venture capital availability, quality of sci- strong emphasis on research and devel- entific and engineering talent, company opment, but in many areas lacked the innovativeness, and quality of physical incentives and competition for these infrastructure. Both company sophisti- investments to bear fruit. A better, more cation and the business environment dynamic competitive environment has are improving. emerged through the deregulation of Sweden ranks very high on demand- infrastructure (telecom, postal services, ing regulatory standards, business infor- railways, transportation, energy and mation supply, university-industry col- media), the opening of financial and laboration, financial disclosure require- currency markets, privatization, and ments, liberalization of hidden trade bar- more vigorous anti-trust enforcement. riers, and protection of intellectual prop- Recently, a stronger focus on basic erty rights. However, Sweden still ranks research and higher education, with low relative to its level of GDP per capita increasingly specialized colleges, univer- on administrative burden for start-ups, sity incubators, science parks and new the intensity of local competition, and universities, has boosted innovation and the quality of scientists and engineers. the migration of research ideas into com-

30 INVEST IN SWEDEN – REPORT 2000 The micro-competitiveness of Wireless Valley

mercial practice. A number of fora have future, Sweden is facing some major support the upgrading of (emerging and been created to facilitate the diffusion of challenges. In a world of international traditional) industries. While Sweden’s technology and the start-up of new sci- mobility of physical and human capital, position in terms of the quality of scien- ence-based firms. With the emergence of the attractiveness of a nation’s micro- tists and engineers is improving, it is still new growth industries, it has become economic climate is becoming increas- ranked far lower than its overall stand- comme-il-faut to start a company and to ingly important to business vitality. Swe- ing. In light of the growth in new sectors, make money. New role models have trig- den must be able to attract and retain flexibility (with respect to university cur- gered rapid imitation of the new entrepre- new people, capital and companies ricula and research programs) is essen- neurship wave, accelerated by strong from around the world. tial to sustain Sweden’s position at the media coverage. The large established Whereas a growing number of firms forefront of new technologies and busi- companies are now experiencing an invest in Sweden, much effort is needed ness concepts. unprecedented number of spin-offs. Even to support the equally important but still Sweden is definitely on the move. the most prestigious, high-paying consult- moderate inflow of talented and skilled Meeting these and other challenges will ing firms are losing people and finding it individuals. One necessity is to align the enhance the micro-economic competi- more difficult to recruit young talent. Swedish taxation system with that of tiveness of the country and promote other leading countries. growth and entrepreneurship across the Challenges ahead A second challenge facing Sweden is economy. Despite the signs of economic revival to ensure a supply of skilled and spe- and increasing optimism about the cialized people with the unique talent to

The national environment for innovation

The underpinnings of competitiveness and eco- nomic development are becoming better under- stood. A stable political context and sound macro- economic policies are necessary, but not suffi- Context for firm cient prerequisites to ensure a prosperous econo- strategy and rivalry my. Equally important, or even more so, are the micro-economic foundations of economic devel- • A local context that encourages invest- opment, rooted in firm practices and strategies ment in innovation- as well as in the business inputs, infrastructure, related activity • Vigorous competition institutions and policies that constitute the envi- Factor (input) among locally based ronment in which a nation’s firms compete. rivals Demand conditions conditions The innovative capacity of a country can be thought of as consisting of two elements: the • High quality human • Sophisticated and common innovation infrastructure that sup- resources, especially demanding local ports all parts of the economy; and the innova- scientific, technical customers and managerial per- • Home customer needs tion environment in particular clusters of relat- sonnel that anticipate those ed industries. The common innovation infra- • Strong basic research Related and elsewhere structure includes the nation’s investment in infrastructure in uni- versities supporting industries e.g. basic research, tax policies, risk capital • High quality informa- markets, the educational system, information tion infrastructure • Presence of capable and communication infrastructure, as well as • An ample supply of local suppliers and risk capital related companies openness to trade. The cluster-specific innova- • Presence of clusters tion environment is determined by the four ele- instead of isolated ments identified in the adjacent illustration. industries

INVEST IN SWEDEN – REPORT 2000 31 The micro-competitiveness of Wireless Valley

The emergence of Wireless Valley – cluster dynamics at work

he rapid emergence of new IT by a pan-European digital system, the Selected companies in the Swedish mobile telecom cluster Tfirms, particularly in mobile tech- GSM system, in 1991. Sweden allowed Ericsson (switching, mobile systems, mobile nologies, the Internet, and their combi- four competing carriers, of which three phones) nation (mobile Internet), are an impor- were commercialized: Telia, Europolitan Companies which merged into Ericsson: tant example of what the new micro-cli- and Comviq. SRA (mobile radio and mobile telephone systems), a joint venture between Erics- mate produces. The emerging IT cluster son and Marconi (turned into Ericsson also illustrates the new thinking about Entrepreneurship and competition radio Systems in 1982/83) the process of economic development. Local competition was critical to building Aga mobile (communication systems, mobile phones) What we see today emanates from a early demand and drove the continuous Sonab (radio systems, mobile phones) well-developed cluster in telecommuni- upgrading of mobile systems. While Telia Magnetic (radio systems) cations that has a long tradition in Swe- had built a de-facto monopoly through Radiosystems (radio systems) den, involving: telecom services, radio cumulative market investments, its Teli (public switching) services, public switching, and radio monopoly had never been codified in Telia (fixed and mobile systems operator) Technophone (mobile phones, later and mobile technologies. What made law (the first telecom law was enacted in acquired by Nokia) Sweden unique was a history of compe- 1993). Thus, when new technology Spectronic (mobile phones) tition in a field where monopoly has emerged, there was room for entrepre- Allgon (antennas) been the norm. The mobile telecommu- neurship and new entry. One privately Frontec (software) nications sub-cluster involves an array owned radio operator, Företagstelefon, Sendit (software) Radio Design (antennas, mobile internet) of interlinked companies delivering sys- was acquired by entrepreneur Jan Sten- Comviq (fixed and mobile systems operator) tems, operator services, software, prod- beck in 1981 and turned into Comvik Europolitan (mobile systems operator) ucts and components (see table). (later Comviq). Företagstelefon had a license to connect its radio system to the Mobile industry fixed telecom network, which opened up The first mobile radio systems had been a mobile telephony system competing introduced in Sweden already in the with the NMT system. 1930s, and an increasing number of mobile systems were established in the Deregulation attracts post-war period (for police, taxi, rescue, As one of the most deregulated telecom repair services, etc.). The first fully auto- markets in the world, in the early and matic system (MTA) was tested by Telia mid-1990s, Sweden began to attract in 1951 and went into public service in new competition also in fixed telecom; 1956. A parallel system (MTB) was Tele 2, Telenordia, France Telecom and developed by Telia in the 1960s. An ini- others. Strong rivalry between operators tiative for a pan-Nordic system, the pushed rapid innovation in terms of NMT system, began development in functionality and stimulated market 1969 and was introduced in 1981. growth through penetration of new cus- The analog NMT system was followed tomer niches.

32 INVEST IN SWEDEN – REPORT 2000 The micro-competitiveness of Wireless Valley

The growth of the telecom cluster was active rivalry among fixed telecom oper- Penetration of mobile phones Percent of population, January 2000 supported by high quality public and pri- ators, Internet usage took off. In Decem- Finland vate research, along with increasingly ber 1999, more than 50 percent of all Sweden specialized and sophisticated human Swedes used the Internet. Almost 70 Norway capital. The science park Ideon in Lund percent of Swedish households have an Denmark Austria was established in 1983 to support the advanced PC. A large number of Inter- Switzerland development of new mobile handsets at net consulting firms were established in UK Ericsson. In the late 1990s, Sweden the early 1990s. Four Swedish Internet Netherlands France hosted more than 15 science parks with companies made it to Forbes’ top 300 Germany an explicit focus on telecom and IT. A small company list in 1999, and an 0102030405060 number of universities have introduced increasing number of start-up firms are Source: Global Mobile. January 2000 or are in the process of developing new now attracting engineering, design and IT-related curricula, and research pro- business skills from telecom and other grams in the area are sponsored by vari- IT-related firms in Sweden. ous foundations and associations. Attracting foreign companies Start-ups and spin-offs Clusters attract not only local but also The dynamism of the telecom cluster foreign companies. In 1999, over 30 for- created a foundation for innovation in eign companies, mostly from the US, new technological areas and start-ups. made investments related to mobile In the growing media and Internet Internet technologies. In Stockholm- industries, the Stenbeck sphere again Kista, firms like Nortel, IBM, Nokia, played a crucial role in breaking up Motorola, Microsoft and Cisco are now monopolies and creating new business scaling up their investments. The CEO of concepts and firms, which later sup- Intel talks about Sweden as the center plied entrepreneurial talent for a host of for mobile internet, and Intel is establish- new media and Internet related start- ing a new wireless technology center in ups. The process in this respect resem- the Kista Science Park. bles Samuel Owen’s establishment of a The growing Swedish IT cluster has steam engine workshop in Sweden in made Stockholm the hot spot in Europe 1809, a completely new technology, for young talent and venture capital. The which later spawned a large number of rapid emergence of new firms also mechanical engineering firms through- reflects new values and attitudes among out the country. A significant number of the younger generation toward entrepre- companies are the result of spin-offs by neurship and risk taking. Stock options, ex-Ericsson employees. IPOs, E-commerce, WAP, and business angels are the talk of the town; quite a Sophisticated local demand contrast from only a few years ago. This In addition, demand for computers had entrepreneurial spirit and new firm for- developed early in Sweden, partly due mation is already making waves across to a tax relief on home PCs. As a result of the entire economy.

INVEST IN SWEDEN – REPORT 2000 33 Facts on foreign investments

Sweden’s 25 largest foreign owned companies Ultimate owner Company Employees Ultimate owner country ABB Norden Holding AB 25,081 ASEA Brown Boveri Ltd Switzerland Stora Kopparbergs Bergslags AB 11,373 Stora Enso OYJ Finland Foreign corporations from Ford Partena AB 10,628 Bellon SA France Scandinavian Airlines System SAS 8,017 Scandinavian Airlines Systems Denmark “to Microsoft are pumping billions Swebus AB 7,089 Stagecoach Holdings Plc UK of dollars into the country. Nordbanken AB 6,525 Merita Abp Finland ” ISS Sverige AB 6,253 ISS Intl Service System Denmark New York Times Pharmacia & Upjohn AB 5,609 Pharmacia & Upjohn Inc US October 8, 1999 Orkla AB 5,255 Orkla ASA Norway Ikea AB 5,184 Ingka Holding BV Netherlands Manpower Sverige AB 5,042 Manpower US Akzo Nobel AB 4,822 Akzo Nobel NV Netherlands Tetra Pak Nordic Holding AB 4,005 Baldurion BV Netherlands Avesta Sheffield AB 3,833 British Steel Plc UK Siemens-Elema AB 3,665 Siemens AG Germany Lear Corp. Sweden AB 3,210 Lear Corporation US Falck Sverige AB 2,995 Falck A/S Denmark Alfa Laval Holding AB 2,940 Zarus Holding BV Netherlands Cap Gemini 2,818 Cap Gemini SA France IBM Nordic AB 2,635 IBM Corporation US Corral Petroleum Holdings AB 2,382 Moroncha Holdings Cyprus AB Svenska Shell 2,153 NV Koninklijke Nederlandsche Netherlands Autoliv AB 2,112 Autoliv Inc US Unilever Sverige AB 2,022 Unilever NV Netherlands Svenska Nestlé AB 1,956 Nestlé SA Switzerland

Figures refer to 1998

Source: Statistics Sweden and ISA

Foreign-owned companies in Sweden, 1998

Home country Number of companies Employees US 667 61,089 Finland 362 44,870 Switzerland 276 34,802 Netherlands 502 34,403 UK 365 33,907 Norway 452 32,288 Denmark 351 30,950 France 140 25,169 Germany 360 18,967 Japan 95 3,568 Other countries 383 13,382 Total 3,953 333,395

Source: Statistics Sweden 1999

34 INVEST IN SWEDEN – REPORT 2000 Investment services

Invest in Sweden Agency (ISA) assists companies inter- ested in locating in Sweden by providing a wide range of services. For further information please visit ISA’s web site www.isa.se, which contains investor-related information and facts about establishing and operating a business in Sweden.

36 What ISA can do for foreign investors Dear Investor, The “hard facts” presented in this report 37 Financial incentives should speak for themselves: Sweden clearly offers many advantages. 38 Wages and payrolls The new economy emerging in Sweden offers you rich investment opportunities, especially in operations which are compe- 40 Taxes in Sweden tence-driven and represent high added value. You will find a healthy business 42 ISA Board of Directors, climate, an attractive cost structure, a ISA Council of Economic Advisors sophisticated marketplace and leading- edge industries and services. The advanced status of information and communication 43 ISA staff technology strengthens the productivity and competitiveness of investments and 44 ISA international businesses in Sweden. The mission of Invest in Sweden Agency, General facts about Sweden ISA, is to offer you the guidance, informa- tion and contacts you need when searching for an effective site selection and establish- ing a business in Sweden. We are here to serve you. When considering your next investment, may I invite you to visit Sweden and see for yourself. You will find an environment that is international, innovative and profitable. Actually, Sweden is booming.

Welcome to Invest in Sweden!

Kai Hammerich Director-General

INVEST IN SWEDEN – REPORT 2000 35 What ISA can do for foreign investors

Invest in Sweden Agency, ISA, has the task of attracting and assisting foreign direct invest- ment in Sweden. ISA carries out this mission by providing information about Sweden and by actively attracting foreign investors to several industrial clusters in which Sweden holds an internationally recognized strong position.

ompanies planning to start a new enced in each sector. Because the spe- A global organization Cbusiness or expand can free-of- cialists and managers are based in the ISA has full service offices in Stockholm, New York and Tokyo and representation charge obtain information about Swe- markets of importance for each specific offices in Denmark, Norway, Finland, Ger- den’s conditions, investment opportun- program, they are easily available to many, France, UK, South Korea and Taiwan. The agency works closely with a number of ities and facts needed for the decision- companies that need advice and sup- professional contacts nationally and on the making process, whatever the industry port. During 2000, the following projects international business scene. or sector. Support in the form of profes- are being marketed: Throughout the world, ISA also cooperates with Swedish embassies and consulates. sional advice and key information is • Automotive available through ISA and supplied in • Call Center cooperation with networks of inter- • Direct Marketing national brokers and consultants. • Food Contacts and introductions are • Health Care offered to government agencies, region- • Information Technology al, public sector and business organiza- • Micro-electronics/System-on-chip tions. Site visits can be arranged • Mineral Exploration throughout Sweden and comparative • Wood Processing. analyses can be provided for the most suitable locations. For more information please visit the ISA Sweden’s attractiveness as an invest- web site: ment country is presented through extensive investment information litera- www.isa.se ture about the economy, legal aspects and key sectors. Information is continu- ally updated and is available in both printed and electronic form on the ISA web site. ISA manages a portfolio of nine pro- jects related to some key industry clus- ters and service sectors in which Swe- den offers particular advantages to for- eign investors. The marketing projects are organized by industry specialists and managed by people highly experi-

36 INVEST IN SWEDEN – REPORT 2000 Financial incentives

A wide range of financial incentives are available to Swedish and foreign-owned companies. Some grants and subsidies are linked to investments in fixed or intangible assets, while others are linked to hiring, training and educating personnel.

here are a number of assistance nies. Companies can obtain personal- Tprograms available in a range of ized assistance by authorities that forms, such as grants, loans, credit approve grants. Bureaucratic “red tape” guarantees, capital in return for royal- is kept to a minimum. Decisions on ties, and venture capital. They can be assistance are generally made in a mat- Kiruna obtained for a large number of projects: ter of weeks. assistance for product development, More detailed information is available procurement of technology, guarantees on the ISA web site www.isa.se. and capital for technical development or Nutek is Sweden's central public Luleå high risk projects, Nordic R & D pro- authority for industrial policy issues. jects, employee education, innovation Further information concerning financial Skellefteå development, environment investments incenties is available at www.nutek.se. and construction projects. Umeå Östersund Assistance may be for hard invest- Örnsköldsvik ments (buildings, machinery, etc.) and Härnösand soft investments (product development, Sundsvall marketing, training, new employment, etc.). Several types of assistance can sometimes be obtained or combined for Falun Gävle one project. Specific regions, known as Grant Uppsala Karlstad Västerås Areas, are designated for grants and Örebro Stockholm Eskilstuna Södertälje subsidies intended to create employ- Mariestad Norrköping Nyköping ment or promote development. The type Vänersborg Linköping and amount of subsidy depend on loca- Göteborg Borås Jönköping tion, whether in Grant Area A or B. Växjö Visby Grants and subsidies are available for Halmstad Kalmar capital investment, soft investments Helsingborg Karlskrona Kristianstad and recruitment and in the form of Lund Malmö reduced transport costs.

All grants, loans and other incentives Major cities and country seats comply with European Union regula- Grant area A1) Grant area B1) tions for providing assistance to compa- 1) Definition of areas under revision

INVEST IN SWEDEN – REPORT 2000 37 Wages and payrolls

Sweden’s unemployment rate continues to decline, but there is relatively little upward pres- sure on wages. Multi-year labor contracts call for modest increases in 2000, while inflation continues to be kept in close check.

Our local bottler has done an he unemployment rate of about 5 to wage contracts worked out at the “excellent job of cooperating with T percent at the end of 1999 was the company level, the traditional central the unions from the very beginning. lowest in Sweden since early in the industry-wide union agreements estab- When the new systems was created decade. The unemployment rates, of lish guidelines for each industry or busi- we made the unions part of our course, vary from industry to industry ness sector. hiring plans and promoted an open and from region to region. But there is and honest dialogue with the one overall trend: unemployment is International management employees to create the trust re- falling as the economy continues to experience quired for a happy, productive and improve, spurred by steadily increasing Labor cost for top executives and man- efficient workforce. We feel we have exports and steady growth in domestic agers is generally less than in other good relations with the unions. ” demand. European countries, and far less than in Keith Pardy Despite the improved employment the US. Swedish executives have gained Country Manager Coca-Cola AB situation, employers find that payroll high regard abroad for their internation- costs continue to remain competitive to al management skills. Swedes have long those in the most advanced European experience managing the nation’s many countries (se table Gross salaries and multinational companies. Managers, total costs for selected positions, page engineers and marketing people are 39). Although there is heavy demand for accustomed to working in foreign cul- engineers, technicians and other spe- tures and in global markets. cialists in high-tech industries – such as information technology and pharma- Social benefit costs ceuticals – a growing interest in these Sweden’s social insurance system cov- fields insures a steady stream of compe- ers old age pensions, health care, tent workforce. unemployment and disability benefits, maternity leave payments, child care High trade union membership and youth benefits. The social insur- Sweden has very high trade union mem- ance system is financed primarily by bership: some 85 percent of blue collar employer contributions, which total workers and 75 percent of salaried about 33 percent of an employee’s pay. workers. This figure also covers costs of collective Current labor contracts generally run supplementary pension and insurance through the year 2001, and call for wage schemes according to union agreements. increases of about 3 percent annually. Employees themselves contribute about Although there is a clear trend toward 7 percent of their wages or salaries to bargaining systems that give greater role health insurance and pensions.

38 INVEST IN SWEDEN – REPORT 2000 Wages and payrolls

Trade unions and wage structure Few industrial actions Unemployment, 1995–2000 Percent Foreign managers working in Sweden Industry-wide unions and their counter- 12 are surprised at how little time and effort part employer organizations negotiate they must devote to local wage negotia- central labor contracts that are used as 10 tions and union contract discussions. guidelines for contracts between com- This is because of Sweden’s collective panies and their local unions. The con- 8 bargaining system. Industry-wide tracts primarily cover only wages and unions – such as metalworkers or grad- job rules. Holidays, sick leave, parental 6 uate engineers – are part of central leave, etc, are covered by labor laws. 4 organizations. The largest and most At first, outsiders may view this struc- 95 96 97 98 99* 00* Sweden EU OECD important central organizations are LO, ture as a bit complicated. But it works * Estimates the Confederation of Swedish Trade quite smoothly in reaching labor agree- Source: OECD Economic Outlook, December 1999 Unions, which covers blue-collar work- ments, even though negotiations can be ers and municipal employees; and TCO, tough. The frequency of industrial the Central Organization of Salaried actions – strikes and lockouts, both legal Workers, which covers white-collar and wildcat – has always been very low Work days lost to labor disputes Per 1,000 inhabitants, 1996–98 workers. in Sweden. All bargaining on local level Ireland Companies themselves are generally is carried out under a legally binding US members of employer organizations that peace obligation. Risks are very small for UK cover specific industries, such as industrial actions on the company level. Belgium mechanical engineering, chemicals, France construction, etc. These, in turn, are Sweden Netherlands members of SAF, the Swedish Employ- Germany ers’ Confederation. Japan 0 6 12 18 24 Source: ILO Yearbook of Labor Statistics 1999

Gross salaries and total costs for selected positions in Swedish industry, 1999, all figures in USD Total gross salary Total cost Position Low High Low High Managing Director 89,000 119,000 118,000 159,000 Director of Sales/Marketing 63,000 81,000 84,000 108,000 Director of Finance 58,000 74,000 77,000 98,000 Sales Manager 45,000 55,000 60,000 74,000 Finance Manager 41,000 50,000 55,000 67,000 Technical Engineer 35,000 43,000 46,000 57,000 Systems Analyst 36,000 45,000 48,000 61,000 Specialist User Support 36,000 44,000 48,000 59,000 Network Engineer 33,000 41,000 44,000 55,000 Senior Programmer 31,000 37,000 41,000 49,000

Exchange rate as per July 1, 1999

Source: William M. Mercer AB

INVEST IN SWEDEN – REPORT 2000 39 Taxes in Sweden

Sweden’s tax system offers several features that foreign investors and business highly value: efficiency, clarity and easily accessible, helpful administrators. And although Swedish taxes may be relatively high in some respects, they are low in others.

Corporate income tax, 2000 he National Tax Board (Riksskatte- corporate tax rate about 26 percent, on Percent Tverket) has overall responsibility for undistributed profits. Certain amounts Germany the tax system. Each of Sweden’s eight of untaxed reserves may be used to Japan regions has a Tax Authority, which has a cover losses. US France number of local offices. In a near future, Capital gains are taxed as regular Netherlands most tax returns and other correspon- corporate profit. Capital losses, general- UK dence with the tax authorities will be ly deductible against profit, may normal- Finland Norway maid over the Internet. ly be carried forward indefinitely. Tax- Sweden However, this does not eliminate per- able income is calculated according to Ireland sonal service. This is of particular impor- accepted international auditing stan- 01020304050

Source: KPMG, April 2000 tance to foreign investors and foreign dards. Swedish annual reports and business people who may face compli- financial statements are noted for a high cated tax questions, often of an interna- degree of informative disclosure. Such tional nature. Tax administrators and reports and statements are based on specialists are easily accessible, with universally accepted principles of his- English widely spoken. They can pro- toric costs, accrual accounting, imme- vide information, discuss special situa- diate recognition of loss risks and not tions, look up rulings, check EU regula- crediting income until actually earned. tions and double-taxation treaties, and Employers contribute about 33 per- provide many other valuable services. cent of payrolls in social security contribu- These tax officials are not anonymous: tions. These contributions are deductible correspondence and contacts are with from taxable corporate income. identified individuals – a real asset in a highly computerized world. Dividends There are no restrictions on the amount Corporate taxes of dividends a Swedish corporation may Sweden has a corporate tax rate of 28 transfer to foreign owners or sharehold- percent – along with Norway and Ire- ers. Sweden has no foreign exchange land, among the lowest in Europe. Com- controls or restrictions. panies can make pre-tax allocations to From January 1, 2000, dividends untaxed reserves, which are subject to paid by foreign subsidiaries (at least 25 tax only when utilized. Availability of this percent ownership) in Sweden to their allocation makes Sweden’s effective parent companies are no longer subject

40 INVEST IN SWEDEN – REPORT 2000 Taxes in Sweden

to Swedish taxation. Dividends distrib- VAT and excise taxes Advantages of uted to other foreign shareholders are Sweden’s Value Added Tax (VAT) Act is the Swedish tax system subject to a 30 percent withholding tax harmonized with the EC VAT directives. • No foreign exchange controls under domestic law. However, accord- Known in Swedish as “Moms” (short for • Low corporate tax rate ing to double-tax agreements, this rate mervärdesskatt), the normal VAT rate is • Extensive tax treaty network is normally reduced to 15 percent. 25 percent. However, a reduced rate of • Dividend participation exemption Profits of a Swedish branch of a for- 12 percent applies to food, hotel charges, • No Swedish tax liability on eign company may be remitted abroad passenger transport and a few other outbound interest payments without being subject to any other tax services and a rate of 6 percent applies • No debt/equity limitations than the regular corporate income tax. to daily journals, entrance fees to com- mercial sport activities and cultural Personal income taxes events. Individual earned income is taxed main- For intra-EC trade of goods and ser- The National Tax Board (Riksskatteverket, ly by municipality of residence, at rates vices, special VAT rules apply. VAT is RSV) has a useful website that provides details of tax laws and regulations. Most of ranging from 26 to 35 percent. Individu- also payable on import of taxable goods the information – especially that of value to als in a high income bracket also pay 20 from outside the EU. The Swedish Cus- foreigners – is translated into English. www.rsv.se percent of taxable earnings over SEK toms Office handles VAT on imports. 232,600, and 5 percent extra of taxable Exports of goods and services to coun- earnings over SEK 374,000 (in 2000). tries outside the EU are exempt from This means that most Swedish tax- VAT. payers pay only the municipal tax plus a general SEK 200 national tax. Special taxation of expatriates Only a few basic deductions are At the end of 1999, the Swedish govern- allowed. Beginning the year 2000, the 7 ment formally notified the EU Commis- percent pension fee, paid by individual sion of a proposal for a specific tax contributions, will be partly compensat- regime for expatriates working in Swe- ed through tax reductions. den for a limited period of time. Accord- Income from capital – interest, divi- ing to the proposal only 75 percent of dends, capital gains, etc. – is taxed at the income will be taxed during a three 30 percent. Up to 100 percent of capital year-period, if the stay in Sweden is not losses may be deducted from capital expected to exceed five years. gains, but in some cases only 70 per- The new legislation will be of particu- cent of the losses are deductible. lar interest to foreign investors who wish Personal wealth above a value of SEK to bring their own managers or special- 900,000 is taxed at a rate of 1.5 percent. ists to start-ups in Sweden. It will also be Wealth includes bank accounts, stocks, of value to established foreign sub- real estate, cars, boats, jewelry, etc. sidiaries which need expertise from In addition, real estate is taxed at a their home companies to help in expan- national rate of 1.5 percent of assessed sion, development or new projects. value.

INVEST IN SWEDEN – REPORT 2000 41 ISA Board of Directors

Jan-Åke Kark Birgitta Johansson Carl-Göran Myrin Chairman Former M.P. and Chairman of the Former Managing Director, Siemens-Elema Managing Director and CEO of Telia Parliamentary Standing Committtee on Industry and Trade Olof Sjöström Barbro Andersson Öhrn Chairman and Board Member of several M.P. and Deputy Chairman, Parliamentary Göran Johansson companies Standing Committee on Industry and Trade Chairman of the Göteborg City Council Kai Hammerich Lisbeth Gustafsson Niklas Johansson Director-General, ISA Managing Director, PostNet Political Adviser, Ministry for Foreign Affairs Sigrun Hjelmquist President, Ericsson Micro-electronics

ISA Council of Economic Advisors

Julian Birkinshaw Gunnar Eliasson Örjan Sölvell Associate Professor, London Business School Professor, Royal Institute of Technology Professor, Director, Institute of International Business, Stockholm Ove Brandes Anders Malmberg School of Economics Professor, University of Linköping Professor, Uppsala University

Pontus Braunerhjelm Torbjörn Fredriksson Ph.D., Vice President, SNS-Center for Busi- M.Sc., Economic Affairs Officer, Unctad ness and Policy Studies

42 INVEST IN SWEDEN – REPORT 2000 ISA staff

Kai Hammerich Katarina Andersson Viveca Rostén Director-General Assistant to Director-General Head of Administration [email protected] Phone: +46 8 402 78 11 Phone: +46 8 402 78 20 [email protected] [email protected]

Marketing Projects

Curt Högberg Göran Gustafsson Sören Mellberg Baltzar Söderström Head of Marketing Projects Head of Wood Processing Project Head of Automotive Project Head of Food Project Phone: +46 8 402 78 31 Phone: +46 8 402 78 45 Phone: +46 31 61 24 29 Phone: +46 42 21 10 85 [email protected] [email protected] [email protected] bas.management@helsingborg. mail.telia.com Cecilia Hanzon Mats Engelmark Lars Reinius Assistant Head of IT Marketing Projects Head of Call Center Project Lars Vedin Phone: +46 8 402 78 43 Phone: +46 8 402 78 28 Phone: +46 751 40 48 00 Head of Health Care Project [email protected] [email protected] [email protected] Phone: +46 8 402 78 33 [email protected] Cecilia Lundin Anders Linde Rolf Rising Assistant Head of Mineral Exploration Head of Socware Program Phone: +46 8 402 78 52 Project Phone: +46 70 634 08 20 [email protected] Phone: +46 751 50 22 00 [email protected] [email protected]

Investment Services & Regional Cooperation

Thomas Lindeen Yvonne Johansson Börje Svanborg Head of Investment Services & Manager Senior Manager – Regional Foreign Representatives Phone: +46 8 402 78 24 Cooperation Phone: +46 8 402 78 26 [email protected] Phone: +46 751 40 48 00 [email protected] [email protected]

Sigvard Beck-Friis Elisabeth Enderin Manager Assistant – Regional Cooperation Phone: +46 8 402 78 25 Phone: +46 8 402 78 18 [email protected] [email protected]

Communications & Public Affairs, Research

Annika Rembe Susanne Roglar Anders Linnhag Head of Communications & Editor Head of Research Public Affairs Phone: +46 8 402 78 13 Phone: +46 8 402 78 15 Phone: +46 8 402 78 16 [email protected] [email protected] [email protected] Malin Ruthström Björn Höglund Assistant Webmaster Phone: +46 8 402 78 17 Phone: +46 8 402 78 40 [email protected] [email protected]

INVEST IN SWEDEN – REPORT 2000 43 ISA international

EUROPE Norway ASIA Ingar Knudsen Denmark Den norske Bank Japan P.O. Box 1171 Sentrum Ove Hänel 0107 Oslo Invest in Sweden Agency Den Danske Bank Norway Embassy of Sweden Holmens Kanal 2-12 Phone: +47 22 48 10 50 1-10-3-300 Roppongi 1092 Copenhagen K Fax: +47 22 94 98 20 Minato-ku, Tokyo 106 – 0032 Denmark [email protected] Japan Phone: +45 33 44 31 30 Phone: +81 3 5562 5014 Fax: +45 33 44 31 27 Fax: +81 3 5562 5130 [email protected] UK Christina Knutsson Göran Edman Finland Invest in Sweden Agency Director 73 Welbeck Street [email protected] Hannu Thorén London W1M 8AN Merita Bank Abp United Kingdom Yoko Söderberg 2602 Företag och Finansiering Phone: +44 20 7486 24 55 Client Support & Communications Aleksis Kivis gata 3–5 Fax: +44 20 7935 41 30 [email protected] Helsingfors [email protected] 00020 Merita Finland South Korea Phone: +358 9 1655 29 21 Åke Karlsson Fax: +358 9 1655 29 24 NORTH AMERICA Embassy of Sweden hannu.thoren@merita.fi Hanhyo Building, 12th floor 136 Seorin-Dong France US Chongro-ku Invest in Sweden Agency Seoul Magnus Härviden One Dag Hammarskjold Plaza Republic of Korea Swedish Trade Council 885 Second Avenue, 45th floor Phone: +82 2 738 08 46 67, bd Haussmann New York, NY 10017-2201 Fax: +82 2 738 20 28 75008 Paris USA [email protected] France Phone: +1 212 702 8780 Phone: +33 1 42 66 08 88 Fax: +1 212 702 8783 Fax: +33 1 42 66 63 04 Taiwan [email protected] Magnus Moliteus Ulf Sörmark Director Swedish Trade Council Germany [email protected] Rm 0812, International Trade Building 333 Keeling Rd, Sec 1 Jörn Gallwitz Taipei Inger Hassel Savitt German-Swedish Chamber of Commerce Taiwan Narvavägen 12 Marketing & Communications [email protected] Phone: +886 2 2757 6573 115 22 Stockholm Fax: +886 2 2757 6723 Sweden [email protected] Phone: +46 8 665 18 00 Cecilia Rembert Fax: +46 8 665 18 06 Client Support & Administration [email protected] [email protected]

Göran Svensson Swedish Chamber of Commerce Berliner Allée 32 402 12 Düsseldorf Germany Phone: +49 211 862 0200 Fax: +49 211 32 44 88 [email protected]

ISA has full service offices in New York and Tokyo and representatives in European and Asian cities (see above).

44 INVEST IN SWEDEN – REPORT 2000 General facts about Sweden

Sweden General facts about Sweden Official name The Kingdom of Sweden Political system Constitutional Monarchy The mission of Invest in Sweden Agency (ISA) is to attract Kiruna Head of State King Carl XVI Gustaf Central government The Social Democratic party, and facilitate foreign direct investment in Sweden. Responsible ruling with 36.4 % of the seats Luleå in Parliament (1998–2002) to the Ministry for Foreign Affairs, ISA assists companies Prime Minister Göran Persson Population 8.9 million interested in locating in Sweden by providing a wide range of Norwegian Sea Umeå Population density 19.7 per sq. km services – including details about establishing companies, economic FINLAND Area 450,000 sq. km (174,000 sq. mi) Sundsvall Gulf of and business data, site-selection assistance, introductions to NORWAY Bothnia Time zone GMT + 1 hour (end October – end March) SWEDEN Helsinki state and local authorities and to business and trade organizations. Gävle St. Petersburg GMT + 2 hours Oslo Uppsala Västerås Tallinn (end March – end October) Stockholm Örebro ESTONIA RUSSIA GDP per capita SEK 220,116 (USD 26,616) Norrköping Linköping Exchange rates USD 1 = SEK 8.27 For more information – please visit www.isa.se Borås (1999 average) Göteborg Jönköping Riga LATVIA North Sea EUR 1 = SEK 8.81 Karlskrona DENMARK Helsingborg Baltic Sea (1999 average) Lund LITHUANIA Copenhagen Malmö JPY 100 = SEK 7.30 (RUSSIA) Vilnius (1999 average) Kaliningrad Currency 1 krona = 100 öre Gdansk Hamburg BELARUS NETHERLANDS Largest cities Stockholm (capital) The Hague 1,783,000 inhabitants Berlin Warsaw Amsterdam Göteborg GERMANY POLAND Brussels 783,000 inhabitants BELGIUM UKRAINE Malmö/Lund Frankfurt am Main Prague LUX. 353,000 inhabitants Ostrava Lvov Nürnberg CZECH REP. MOLDO

Flying time Average flying time for some daily non-stop flights from Stockholm. There are a number of other direct departures from cities such as Göteborg and Malmö, and there are many other connections via European cities.

Destination Flying time Number of flights Destination Flying time Number of flights Helsinki 55 min 30 Amsterdam 2 h 10 min 10 Tallinn 55 min 4 Düsseldorf 2 h 10 min 2 Oslo 1 h 24 Brussels 2 h 10 min 9 Riga 1 h 4 Moscow 2 h 10 min 2 Copenhagen 1 h 20 min 32 Zurich 2 h 30 min 5 St. Petersburg 1 h 25 min 1 London 2 h 35 min 16 The Report has been written by Torbjörn Fredriksson, former Vilnius 1 h 30 min 1 Paris 2 h 35 min 9 Head of Research, ISA, and Robert Skole, freelance business writer. Warsaw 1 h 30 min 2 New York 8 h 45 min 2 Publisher responsible under Swedish law: Frankfurt 2 h 05 min 6 Chicago 9 h 2 Annika Rembe, Invest in Sweden Agency Editor: Susanne Roglar Design and production: Intellecta Photos: Moona Björklund and Håkan Pettersson Printing: Halls Offset AB, Växjö Finalized in April 2000 Printed on environmentally approved, chlorine-free paper ISSN:1401-985X