OPPORTUNITIES AND THREATS OF CHINESE FOREIGN DIRECT INVESTMENT IN FINLAND Case study of investments in the forest industry, technology industry, and transportation infrastructure

Abstract

The main objective of this study was to explore opportunities and threats that raise from the Chinese outward foreign direct investment to Finland. There are three categories that are examined in the study: the forest in-dustry, technology industry, and transportation infrastructure. China will be studied as an investor and Finland as an investment destination. As a result of internationalization, FDI flows are increasing globally. China has risen to one of the biggest players in international business and its presence is not avoidable, the country currently being the second-largest economy in the world. Today, it is among the largest investors abroad. For a long time, China was not interested in investing in Europe, especially in northern Europe. That trend took a complete turn-around during the past decade. In 2019, Finland was China’s favorite FDI destination in Europe. Because China is rather new and unknown to the general public in Finland, it is important to understand the possibilities and threats that come from partnership with China.

The research methodology is mixed research. Secondary data sources include articles from Finnish, Chinese, and international media outlets, official statistics from the government, and previous researches, among others.

The outcome of the research was that Finland should embrace Chinese investments. Chinese FDI has the ability to stimulate Finland’s economic development by bringing money to Finland that helps with the development of companies. That escalates the internationalization process of the Finnish companies, and opens doors to the Chinese and Asian markets, which are commonly hard to enter for Western companies. Chinese funding also decreases unemployment and can possibly increase the wealth of the Finnish people. In the forest industry, opportunities come from boosting the Finnish forest industry because of growing demand in China for wooden products, especially pulp. A threat of that is deforestation, but because the investment would increase environ-mentally friendly products, possibilities are greater than threats. In the technology industry, threats arise from intellectual property rights. Coopera<ting with the Chinese might jeopardize a Finnish company’s patents and trademarks since the Chinese business environment is not particularly protective of those. However, with a good strategy, intellectual property can be protected and operating with the Chinese could be made profitable. The Chinese FDI in transportation infrastructure has the ability to make better connections from Finland to Europe and to the Arctic Ocean, therefore, it should be welcomed.