The growing battle for economic and technological leadership between the US and China has adverse effects also on Finnish companies. In a recent report, the Ministry for Foreign Affairs and the Confederation of Finnish Industries EK recommend that both Finland and the EU prepare more carefully for possible harmful effects.
This was the first time that the influence of the rivalry between the great powers on Finnish companies was studied. The Ministry for Foreign Affairs and EK conducted their joint project together with 60 specialists and 30 companies.
The competition between these countries that are important partners for the Finnish economy inevitably affects Finnish companies. Due to the battle for power, Finnish companies may encounter difficulties in the cooperation with both countries. At its worst, this could mean economic and technological decoupling between the US and Chinese markets. An extreme example could be Finnish companies facing a choice between the two markets. Due to the restrictions and risks caused by the intensifying great power rivalry, some Finnish companies have already had to make changes in their supply chains.
The report presents key examples of the various forms of battle for power between China and the United States, which may have repercussions on Finnish companies’ operations. These include sanctions, export control of dual-use items, which involves products that can be used for both civilian and military purposes, funding, standardisation, and restrictions on market access.
It is important that Finnish companies recognise how these matters and the risks related to them show in such global value chains as subcontracting, relations with clients, product development, and funding.
Competition for a leading position in technology shows especially in sectors that are central from the point of view of the great powers’ national security. In Finland, the most serious impacts would be felt in the technology sector, where we have much expertise, many companies and much export. In an extreme example of such impacts, the other great power could deny market access for a Finnish company’s product that includes technology or other elements originating in the other great power.
“Companies and the public sector must take the impacts of the rivalry between the great powers into consideration. It is important to raise awareness of the rivalry between the great powers especially among small and medium-sized enterprises,” says the project’s leader, Pia Sarivaara from the Ministry for Foreign Affairs. In autumn, events will be organised for companies and public sector representatives on the impacts of the great power rivalry on Finnish companies.
“Both powers will offer significant opportunities for cooperation and potential commercial contacts also in future. However, possible growing rivalry between the great powers should be taken into account in the cooperation,” says Petri Vuorio, Director at EK.
The report will be published in English in July. So far it is available in Finnish: ”China and the United States – a challenge to companies; Impact of China–US rivalry on Finnish companies” The report is part of the work done by Team Finland to support companies’ international business operations.