Norway is the fifth largest country in Europe, meaning "a way to the North". For Latvians, this Nordic land is mainly associated with Vikings, fjords and trolls, but economic ties between Latvia and Norway are not insignificant and growing stronger.
Until recently, Norwegians have known best about Latvian companies in our traditionally most vital sectors, such as construction and timber. However, our products with high added value have gained greater recognition lately.
"We can see that a strong, growing economic relationship between the countries also brings about more joint research and scientific projects. Several Latvian companies are already working with Norway's independent research organisation SINTEF, the largest in Europe", said Evita Nedzvecka, Head of the Investment and Development Agency of Latvia (LIAA) Representative Office in Norway.
One of the fastest-growing export markets
"Interest from Latvian companies in exporting opportunities in Norway and Nordic countries is growing rapidly. In addition to geographic proximity, it is driven by a similar communication and business culture", believes Austris Keišs, Deputy Head of the LIAA Representative Office in Norway. Jānis Sams, CEO of the electronic systems and component manufacturer AS HansaMatrix, also thinks that a similar mindset makes business with partners in Norway more successful than, for example, in Italy or Spain. "We tried exporting to those countries too, but their way of thinking meant that work did not move as fast as we were used to. Their temperament is completely different, and we realised that we were doing better with Scandinavian entrepreneurs", he revealed.
Physical distance is essential in hi-tech industries because it allows dealing with matters in person, e.g. a customer may visit a production facility in the morning and return home by dinner. "The online environment is very convenient, but there are things you cannot do over a video call", Sams said. Keišs added: "Geographic location means good logistics options, quicker deliveries, lower risks and more competitive costs. Of course, let's not forget that in Latvia, we have the largest airport in the Baltic states, and a flight from Rīga to Oslo takes just ninety minutes".
Timber, metal, books
Timber and timber products account for 23%, and metal products for 17% of total Latvian exports to Norway. Nedzvecka explained that Norway had imported many construction materials because construction is one of the sectors the government uses to heat the economy. The large number of government construction contracts in Norway is a significant driver of Latvian exports to that country.
Zaiga Fogelmane quotes one of her customers: "Every Norwegian has a boat in the sea, a summer house in the mountains and a tractor which needs a shed". She points out that the Norwegian market is currently active with steady demand in the industrial construction sector.
At the same time, if you go inside any bookshop in Norway and pick up any book, the odds are good that it has been printed in Latvia. "Printing services account for 7% of Latvian exports to Norway", Keišs added.
Latvian products are used in the construction of significant buildings
The heat insulation material manufacturer SIA Tenax Panel's first projects in Norway were in 2008. "After we did some projects in private homes, we knew what products were suitable for that market, i.e. sandwich panels and strip foundation systems, as well as building foundation systems made by Tenapors, a company within Tenax Group," said Fogelmane, Head of Export Sales at SIA Tenax Panel.
Today, the company's main products for Norway are sandwich panels for walls, ceilings and roofs and parts made by the company. The company also provides engineering services, including technical drawings, design and consulting. Another Tenax Group company, Tenax Install, includes installation, project management and engineering services.
Norway's share of Tenax Panel sales in the Scandinavian market is about 30%. The company's biggest success story in Norway is a supply contract for sandwich panels with mineral wool for Lagunen shopping centre in Bergen, which in 2018 was the largest in Norway. The company's products were also used for the then-largest logistics centre Europris in Moss. "This year, we are supplying products for two buildings in the logistics park Drøbak with a total area of 21 thousand square metres. We are proud that we can supply such large-scale projects", Fogelmane said.
Exporting food is a challenge
"We must remember that Norway is not a favourable market for all sectors. For example, I can name food, a strategic industry in Norway, where the local government uses various tools to support local producers, including making things difficult for external players trying to enter the market", Nedzvecka explained.
For example, the list of importers in the cheese category in Norway is relatively short: it features companies that bought import quotas at an auction and can import products without import duties. For others, import duties may reach 277% of the price for one kilo of cheese, which makes the imported product too expensive and far less competitive than local products.
That is why food exports to Norway only amount to 3%. Moreover, they are dominated by a few companies – Atlas Premium, which buys fish from Norway, processes it and sends it back, and Orkla, which has production facilities in Latvia.
"If a food company is looking into export opportunities in the Nordic countries, Norway is definitely not the best market to start, as the number of steps and the degree of difficulty is higher than, for example, in neighbouring Sweden or Finland where food exporters are doing much better", Nedzvecka added.
Norway is not the EU
"As Norway is not in the European Union, many industries will involve an additional bureaucratic load. Moreover, many sectors in Norway are protected to support local businesses", Nedzvecka said.
Sams added that Norway is not in the eurozone either, and exchange rate fluctuations sometimes bring unexpected losses. "However, it's not something we can influence or control. It's like that in all countries with other currencies", he said. Sams also urges companies to remember currency conversion rates and recommends using one currency, e.g. the euro, when signing the contract. "Then you won't have any unnecessary surprises. Sometimes they may be good, sometimes not. And when they are not, business will always pay", he said.
Speaking the language is a valuable bonus
"Norway is a coveted export market for Latvian companies and businesses from many other countries. Because Norwegians use language as one of the initial selection filters for potential partners, often those who can speak with them in their language will have an advantage. In Latvia, interest in Norwegian, Swedish and other Scandinavian languages is growing, opening up broader economic cooperation opportunities", Keišs concluded.
Sams says that locals make the best representatives: "If a local person represents a foreign business, it strengthens trust". HansaMatrix has a sales agent in Norway. He has been working for over a year, and it is hard to say what has been accomplished regarding business results. However, Sams believes it is crucial that the sales agent is local and can also represent the company on a technological level. "An agent cannot be just a salesperson because the more technological the business is, the better their understanding of the product being sold there should be. The first impression made by our agent is our business card. If they are competent in technical matters, our chance of success is higher", Sams said.
Respect for privacy
Nedzvecka notes that matters related to time off, employees' mental health and work-life balance are very important to Norwegians.
Achievements in work and business are also important, but for Norwegians, physical activity, hobbies, travelling, and time spent with their families are just as meaningful.
"In my experience, I have observed many times that, during business negotiations or dinners, Norwegian entrepreneurs talk about their hobbies and things they are excited about outside work as this can provide a fresh perspective on a solution to a problem. The Norwegians appreciate it very much when, in addition to complying with the contract conditions, their potential foreign partners see time off and healthy work-life balance as values. That is why pestering and calling after business hours or at weekends is not the best way to communicate in Norway", Nedzvecka explained.
A democratic approach to all matters
Nedzvecka says that entering the Norwegian market requires a lot of resources from exporters – in terms of both money and time. It would help if you also remembered that your initial plan of action is likely to be delayed because decision-making takes a long time in Norway. This is due to their democratic approach to all matters, i.e. all decisions are made jointly rather than individually, which takes time. "That is why businesses should arm themselves with patience", Nedzvecka recommended.
At the same time, Sams believes that Norwegians are more decisive than their Nordic neighbours. If Norwegians consider a solution reasonable, the decision may be taken much faster than in neighbouring countries.
Building a relationship will not be easy
"In Norway, one of the keys to achievement is creating a relationship based on trust. In general, Norwegians are very reserved regarding new contacts or friendships, so you should remember that finding new partners and building relationships takes longer in Norway", Nedzvecka added. Fogelmane also thinks that the business environment in Norway is not open. "You have to be able to build relationships and get into their circle of trust", she said. SIA Tenax Panel Head of Export Sales also notes that in business, Norwegians do not like remote communication or business trips twice a year – presence is essential. It helps to reduce the distance between business partners.
Sams explains that trust is gained through work, i.e. when you keep a promise, you get credits which add up. You need to do what you promised to build a business relationship. "First impressions are powerful. If you gain trust at the beginning, after that, your relationship will develop much better", she added. Jānis Lisenko, CEO of the wooden house manufacturer SIA Dores Fabrika, also notes that keeping promises is one key to a long-term partnership. It is imperative when working with a new partner.
Sams recommends being realistic about your abilities. Otherwise, you can waste a lot of energy. "However silly it may sound, big ambitions should be reasonable. You cannot just decide to double your sales tomorrow; you have to sit down and calculate the cost. If you have no investors to back this up with capital, you will have to work with your funding, and your growth must be sustainable. That is why a company with a turnover of 20 or 30 million cannot offer a partnership to a company whose turnover is worth half a billion. It would be a struggle for both parties. Often entrepreneurs get so carried away with their growth, favourite product and friendliness that they forget these basics", Sams added.
Like a hand in glove
HansaMatrix supplies three different product groups to Norway. They include 3D cameras made and installed by the company, which are used in robotic vision solutions. In the aquaculture sector, the Latvian company supplies underwater cameras, winches, control units, cables and power supply units, which comprise a system for monitoring and controlling processes at fish farms in fjords. The third group is power management. In this sector, HansaMatrix's customer is a company whose business is identifying power management errors.
Currently, exports to Norway account for about 25% of HansaMatrix turnover. However, this can change quickly because some customers may be inactive for a year and then place a huge order. For example, a Norwegian company recently acquired the right to enter the Saudi Arabia electricity market and suddenly required three times as many products. "So, today, exports to Norway maybe 25%, but next year they might be 50% or 0%", Sams explained.
However, HansaMatrix is building long-term relationships with its partners to avoid suspending business in a bad year. When, for example, a drop in sales is expected, often both partners discuss their options together.
"We work with our customer's hand in glove – no company with a steady long-term relationship wants to lose a partner. Normally, they are as interested in our relationship as we are. That's why we work together through thick and thin. We sit down together and figure out what we can do for the business", Sams said.
There is great potential
"The Norwegian market is not an easy one. The country is very different, with its standards, requirements and nationalism", Lisenko said. In his experience, Norwegians are not too open to imported products. "That is why you have to go there and talk. They want guarantees that everything will meet their expectations. We are actively seeking partners in Norway, specifically in constructing industrially manufactured wooden frame houses. It isn't easy, and Latvia is not always a word they want to hear in Scandinavia. We had many predecessors there whose work brought disrepute to our country, and trust was lost. So, we go to our potential partners and show, tell and try to convince them that things aren't as bad as they think", Lisenko explained.
Dores Fabrika's experience shows that to enter the Norwegian market, a company should comply with various construction regulations and standards and be registered in multiple registers. Lisenko says that Norwegians ask about previous experience in Norway. Things go easier if there are references from existing customers or partners. Partners also value your experience at home and in other countries. In the case of Dores Fabrika, more than ten years of experience and 1,000 completed projects are an advantage. "Looking at the map, our working locations are all over the world. We have delivered our houses to New Zealand and Europe", Lisenko said.
Today, Norway does not contribute a significant share to Dores Fabrika turnover. "Nonetheless, it is a target market we are looking at and where we see a lot of potential. We still have plenty of work ahead of us", he admitted. To find new partners, the company is working independently and with LIAA and Gateway&Partners.
Support in gaining new export contracts
Nedzvecka says that LIAA representative offices in Norway and other countries offer a range of support activities to facilitate and help Latvian companies find new partners leading to new export contracts. "The representative office can offer efficient help to businesses, such as lists of contacts and market reviews, support in arranging supplier meetings, informative events and market reviews. Other important factors are the representative office's network of contacts, knowledge and market insights in a specific country which may help companies to understand their export prospects better", the representative in Norway added.
2.2% of total Latvian exports go to Norway
In 2022, total sales of Latvian goods and services in Norway amounted to EUR 815.6 million. This puts Norway in 19th place among Latvian foreign trade partners. Total exports of goods and services to Norway were EUR 631.9 million, or 2.2% of total Latvian exports. Imports of goods and services reached EUR 183.7 million, representing 0.6% of Latvian imports. Compared with 2021, exports grew by 33% and imports by 41%. In 2022, Norway was Latvia's 13th-largest export and 27th-largest import partner.
At the end of 2022, Norway was the 9th largest foreign investor in companies registered in Latvia. The total amount invested in 242 companies employing over 6,000 people was EUR 304 million. The largest companies with Norwegian capital in Latvia are Linstow, Orkla, DNB, Moller Baltic Import, Visma, Narvesen, Circle K, Atea, Zalaris and Norwegian.
In future, in addition to sectors which are the backbone of Latvian exports, such as timber processing, metal processing and manufacturing of industrial goods, Nedzvecka sees excellent export potential for those companies that invest in research and innovations to create sustainable products and services with high added value which can successfully compete on international markets. "The future belongs to enterprising, innovative and green companies", she believes.