Annual reports
Report by the Board of Directors
Download Finpro Annual Review 2012 in English (pdf)
Foundation of Finpro's operations
Finpro's mission - to build successful Finland in the global economy – remains the same throughout the years and decades but the methods change. Today Finpro's expert network consists of own offices and chosen partners and covers 46 countries. Merging the Invest-in function to Finpro adds a new dimension to operations and also supports Finpro's mission in the Finnish economy.
Finpro's value proposition to clients "Finpro – your personal trainer from business opportunities to international success" offers solutions in the operational environment where the client needs are individual and success is a sum of several factors. Reaching targets requires selecting correctly timed actions, the right market, and the right range of products - all at the same time. Expert network that knows the local market situation from the Finnish viewpoint is an important national resource.
Finpro's operations are steered by a Board of Directors elected by its members. The most important task the Board has is to approve the Finpro strategy and oversee how the strategy is being carried out. Ministry of Employment and the Economy finances main part of Finpro's operations and the Ministry's target guidelines and strategies affect Finpro's operations through performance guidance.
In 2012 Finland enhanced the development of its external economic relations in a new way. The Finnish Embassies abroad and Finpro together with other operators have added co-operation and planned focus areas for future operations. Finpro's national mission is one of the cornerstones in the "Team Finland" work. Now, with the help of experts from other Team Finland organizations, Finpro can even better keep the promises made to its clients as also their expertise is in the optimal use of the client companies.
Achievement of strategic objectives
Small and medium-sized companies make up 75% of Finpro's clientele. We have received excellent customer feedback on the projects carried out; on the scale we use, the average is between very good and excellent.
In 2012 Finpro started to steer its client activities by evaluating the joint effect of several assignments in relation to client's targets. Each client has different targets and different definition of the success in internationalization. Finpro's impact is visible in achieving these targets. Finpro's operational target during the accounting period was to create 60 client relations where Finpro and the client together define the level of client's internationalization client should have after three years. Realization of the target is followed up annually. Having a common target has proven to be inspiring both for the client and Finpro's consultants and it has made the concrete progress more visible than before.
Finpro carries out a stakeholder survey addressed to members of the Parliament, representatives of several ministries and to key partners like the Centres for Economic Development, Transport and the Environment, Tekes, Confederation of Finnish Industries, and other organizations representing innovation environment. The mean value of responses was good although lower than last year. Especially local operators considered Finpro's work to be valuable and high standard. In general, Finpro's visibility in media and the break-through of Finpro's key messages in public conversation proceeded positively.
The results of Finpro's personnel survey – one of the cornerstones in Finpro's internal development – improved in 2012. Exceptionally high remarks were received on questions related to work motivation and the meaningfulness of work. Also Finpro's superiors and management received good reviews from the personnel. Launching the new strategy has started well. Anyhow, as expected, replies to some of the strategy questions revealed that we have to continue the work leading to a joint vision on the latest strategic themes.
Situation in the global economy decreased the amount of direct foreign investments everywhere. Also in Finland the invest-in operations did not reach the quantitative goals for 2012. Organizational changes and, part of the year, shortage of staff caused us not to reach all operational targets. The new methods of working and job descriptions are ready for the new year. By the benefits from larger organization and adding volume, Team Finland operations should have positive impact on the results of 2013 and years after that. The follow-up will focus on the impact of investments instead of the number of investments.
Major events during the annual period
The most significant change in the beginning of the year was the integration of Invest in Finland foundation to Finpro. The change was well-prepared and proceeded in a controlled manner. The goal is to boost acquiring foreign capital to Finland by utilizing Finpro's network also in finding foreign direct investments.
During this financial period Finpro opened new offices and extended its operations to new countries. Operations in the Nordic countries was strengthened by opening own offices in Sweden and Norway. In the developing markets the trade center in Indonesia opened in the end of the year. In Latvia and Ukraine the operational mode was transferred to Partner model as we used detailed criteria in searching for a new partner to serve Finpro's clients. The Tunisia office – staffed with one person – was closed; the organization of Finpro operations in North Africa remained open for the time being. In India the New Delhi office remained as Finpro's own office whereas the operations in Mumbai and Chennai areas were outsourced. There were no changes in Finland Area Organization during the year; the latest new office in Rovaniemi has received excellent feedback during the year.
The project office in Rio de Janeiro was opened in the end of previous year; it started off well and supported the active operations in South America in an excellent way. Especially Finpro's maritime program was very active and successful. There is a lot of potential business for Finnish offering in Latin America and in the end of the year Finpro invested more on the area and took actions on starting a separately funded project office in Peru.
One of the big strategic projects was "Finland Care" which started in March and gathered a lot of interest. The goal for Finland Care project is to internationalize the Finnish health care and nursing service and get patients to Finland for medical care. At the same time the Finnish medical care – which utilizes top-level know-how and high-tech – will reach the position of most wanted care in the world and especially in Russia. The project starts with marketing activities connected with sales channel development and R&D. Already in the beginning the project will include over 20 companies and organizations.
Administered by Finpro, the Cleantech Finland program strives to achieve visibility and contacts for Finnish actors, in particular in connection with events related to the industry in China, India and Russia. The established and well-known program had 90 member companies and 25 partners participate in the program during 2012. According to the brand and impact survey two thirds of the members use the established brand or at least actively utilize the program. The targeted marketing communication has lead to sales e.g. in the Indian bio mass markets.
During 2012, Cleantech Finland developed the operational methods in the industry by adding digital networking. The new web-based expert service Solved now links the global needs with Finnish expertise. The experts and companies in Solved service have successfully solved challenges in the industry, like district heating solutions in Slovakia. Nordic Innovation, one of the co-operation organizations in the Nordic Council of Ministers, stated Cleantech Finland as a forerunner in utilizing digital communication tools.
In 2012 Future Learning Finland – the program for internationalization of the education sector – gained visibility for Finnish operators in Saudi Arabia, Russia, China, Tunisia and Algeria. The Finnish know-how in the education sector is highly appreciated especially in Saudi Arabia where the interest was realized also as sales deals. IEFE-2013, one of the biggest exhibition and congress events in education sector in the Persian Gulf, selected Finland as their official Theme Country.
Future Learning Finland program is financed by three ministries (MFA, MEEC and MCE) and it has 71 member organizations. In 2012 the program developed a specific format for events in education sector; the event combines a high-level seminar and networking event for decision makers.
Financial performance and key indicators in the internationalization operations of Finpro
Finpro's earnings come from client invoicing, separately funded projects, membership fees, and government subsidy on Finpro's operations.
Due to difficulties in carrying out separately funded projects, Finpro's operational result was below the budgeted level. Additionally, the annual budget for fixed costs was very tight and some areas and operations exceeded their cost budget. As a result of the cuttings in government subsidy Finpro started the co-operation negotiations with employees and the agreed personnel deductions caused extra costs to this financial period although they are considered savings in the next financial period.
The process of handling project financing applications in the Ministry of Employment and the Economy took longer than before. Although the personnel booked for the projects were partly engaged in other assignments, their costs could not be covered by any other invoicing. Some of the projects also encountered difficulties in getting the client invoicing to meet the costs outside government funding. The turnover for separately funded project was 17% below the budget. Client invoicing was 8% below the estimate which was partly due to the slow accumulation of financing projects – as the projects were started later than planned.
The sales of other assignments was almost at the estimated level and the order stock transferred for 2013 is good, just as previous year.
Regarding the industry sectors in Finpro's internationalization operations, the "Construction, Logistics and Machinery" sector reached for bigger turnover than last year and achieved its budgeted targets. Significant part of the success this year comes from the active and successful internationalization program in Maritime industry. Also the "LifeSciences" sector increased its turnover from previous year even if they fell short of the budgeted target.
Regionally, Finpro's revenue targets were best achieved in the domestic internationalization consulting and in Russia with its neighboring area. Also the revenue targets for Asia region were achieved.
Finpro increased its total number of billed assignments from the previous year. The median value of average invoicing per assignment increased which verifies the growth in assignment size and its impact. Moving over to bigger, long-term assignments has taken place in line with Finpro's strategy.
Finpro has developed its client relations management in accordance with the organizational structure introduced in 2010. Client relation, customership, means the total value of projects sold to the client during one year; one customership consists of several assignments. Finpro's strategic target is to develop more long-term client relations with more impact. The share of client relations of over 30.000 euros in all Finpro's clients has increased with 6 % within two years.
Internationalization assignments
| 2008 | 2009 | 2010 | 2011 | 2012 | |
| Number | 1 393 | 1 317 | 1 514 | 1 658 | 1 422 |
| Mediani (€) | 4000 | 4 200 | 4 344 | 3 881 | 4 200 |
| Share of SME companies in clients | 73% | 76% | 71% | 71% | 78% |
| Clients with billing over 30k€ (number) | 88 | 108 | 127 | ||
| Clients with billing over 30k€ (share of all clients) | 7% | 10% | 13 |
The cut of government subsidy for Finpro's internationalization operations was 722 000 euros in 2012. Finpro used the entire government subsidy allocated for its internationalization operations.
Since 2010 Finpro has presented the earnings from separately funded projects as a separate item in its income statement. The key indicators in the following table were entered accordingly.
Finpro Association, key indicators in internationalization operations
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| 2008 | 2009 | 2010 | 2011 | 2012 |
| Sales Margin (K€) | 10 551 | 10 927 | 13 000 | 14 169 | 14 144 |
| Fixed operational costs (K€) | 35 230 | 35 063 | 35 573 | 37 829 | 37 886 |
| Government subsidy for internationalization (K€) | 20 530 | 21 895 | 21 145 | 21 632 | 20 910 |
| Percentage of fixed expenses covered with the public funding | 58,3 % | 62,4 % | 59,4 % | 57,2 % | 55,2 % |
| Self-financed portion % | 29,9 % | 31,2 % |
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| Percentage of variable and fixed expenses covered with own sales and fund-raising |
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| 39,6 % | 39,2 % | 41,8 % |
| Percentage of variable and fixed expenses covered with separate funding |
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| 11,0 % | 13,8 % | 11,6 % |
Financial performance and key indicators in the invest-in operations of Finpro
Partly due to the situation in the world economy, the volume of direct investments to Finland did not have the expected development in 2012. Merging the operations of Invest in Finland foundation to Finpro as well as introducing a new sales model used the resources in some aspect during 2012. In the future the investment acquisition will be even more focused on finding clients for a certain, possibly interesting investment opportunity – and less focused on finding general client contacts. In the future, measuring the amount of investments will be less essential compared with evaluating the economic significance and impact the investments have on national economy, employment and innovativeness.
Key indicators in Invest-in operations
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| 2008 | 2009 | 2010 | 2011 | 2012 |
| Foreign direct investments to Finland acquired by IIF (number) | 35 | 27 | 39 | 52 | 28 |
| Annual change of jobs in Invest-in clients (number) |
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| + 347 | + 1414 | + 850 |
| Public funding for Invest-in operations during fiscal period (7 months) (K€) |
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| 2 805 |
The government subsidy allocated for (the 7 months of) Finpro's invest-in operations was 2.805.000 euros and 178.000 euro of it remained unused. This was due to the rearrangements and related slowdowns in some projects during the year. Also, the personnel changes and finding persons for vacancies took some time during the year.
Investment assets and financial results
Finpro's investment assets are not part of its operations. The external portfolio manager is bound by the Board of Directors' investment policy. Weighting Finpro's investment policy to Suomi-rahasto (Finland Fund) turned the profit of our portfolio to better than average in the stock market at the end of the year.
Finpro is a non-profit association. The result of operations for the year amounts to a loss of EUR 1,402,000. The operative result for the financial period is burdened by non-recurring costs amounting to approximately EUR 278,000.
Finpro Group
The Finpro Group comprises Finpro ry., FinChi Innovation Center Company Ltd operating in Shanghai, China, Finpro USA Inc. and Finpro Oy, a currently dormant company registered in Finland.
All expenses of Finpro USA Inc. are invoiced to the parent company, and it is part of Finpro Association's operations. The China-based FinChi Innovation Center Company Ltd rents office premises and sells various administrative services to Finnish companies looking for a place to establish operations in China. As the Ministry for Foreign Affairs withdrew its presence in Guangzhou, the administration of Finpro trade center in Guangzhou was transferred to FinChi during the financial period of 2012. FinChi's operational result of 2012 had a positive impact on the consolidated financial statements of Finpro Group.
Administration, personnel and members
Harri Kerminen was the Chairman of the Association and its Board of Directors for the financial period, while Kari Häyrinen was the CEO. The spring meeting of Finpro Association was on April 18, 2012. The annual meetings dealt with financial statements and learned about the most interesting markets and business opportunities in Finpro's LifeScience industries. The Autumn meeting on December 4, 2012 elected members to the Finpro Board of Directors and went through the Finpro Strategy for 2013-2015. After the annual meeting the participants continued on Strategic Themes by familiarizing on the plans for Team Finland. Two additional meetings were arranged during the year since the merger of Invest in Finland Foundation to Finpro Association required change in the Association Rules: the Associations' operations were expanded to cover also promotion of foreign investments and acquiring capital to Finland.
The Board of Directors convened 8 times during the year. The new strategy was dealt with in several meetings and, together with the operational management team, the Board worked on the ideas also in a 2-days' strategy meeting. In its meetings, the Board of Directors monitored the progress made in achieving Finpro's goals as well as familiarized with Finpro's strategic spearhead projects. Mr. Paul Paukku, former Chairman of The Board of Invest in Finland Foundation, was invited to join Finpro's Board as an expert member till June 2013.
The Board of Directors of Finpro 2012 - 2013
Chairmen of the Board:
- Chairman, Harri Kerminen
- Deputy Chairman, Tapani Järvinen – Lic.Sc.(Tech.), Professional Board Member
Other members of the Board:
- Kirsi Eräkangas – Professional Board Member
- Esko Hamilo – Under-Secretary of State, Ministry for Foreign Affairs of Finland
- Pekka Heikonen - Managing Director, Pemamek Oy
- Mika Lahikainen - CEO, Fasco
- Raimo Luoma - Director-General, Ministry of Employment and the Economy (till 31.12.2012)
- Janne Känkänen – Industrial Councellor, Ministry of Employment and Economy (as of 1.1.2013)
- Veli-Pekka Saarnivaara - General Director, the National Technology Agency Tekes (till 31.12.2012)
- Paul Paukku – Expert member of the Board (till 30.6.2013)
- Pekka Soini – General Director, The National Technology Agency Tekes (as of 1.1.2013)
The total number of Finpro employees at the end of the year was higher than in the previous year, 375 (341 in 2011). Of these personnel, 172 persons worked in Finland whereas in 2011 the number was 132. Most significant part of the increase is due to the transfer of Invest in Finland staff to Finpro in June 2012. Finpro had 201 persons working in the offices abroad (210 in 2011). Annually Finpro transfers some of the offices abroad to so-called partner offices where a local consultant – which Finpro has selected - carries out agreed client assignments on Finpro's behalf. The partners are not included in Finpro's personnel numbers.
| Finpro Association | 2008 | 2009 | 2010 | 2011 | 2012 |
| Employees at year-end | 353 | 363 | 351 | 342 | 375 |
| Salaries and remuneration (M€) | 17,7 | 19,9 | 23,6 | 22,9 | 23,4 |
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| Offices in Finland | 8 | 8 | 8 | 10 | 10 |
| Offices abroad | 54 | 49 | 56 | 57 | 58 |
| - of which partners | 2 | 2 | 7 | 7 | 11 |
| - of which temporary project offices | 0 | 1 | 4 | 5 | 2 |
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| Finpro ry members | 545 | 563 | 561 | 550 | 537 |
Risks and risk management
The main, long-term risk in Finpro's operations is realized if its national mission is not fulfilled: clients' goals in internationalization or acquiring foreign investments are not reached. To avoid this risk Finpro carried out a comprehensive strategy work. The next focus will be on strategy implementation. Balancing the state economy might still decrease Finpro's funding and thus its possibilities to help Finnish enterprises.
Finpro has utilized the client and stakeholder feedback and survey results in building its new strategy. Also Finpro's own experts from different industries and market areas have actively contributed in the selection of strategic focus areas. Finpro has particularly invested in the competence development of its experts. Finpro's partner mode of operations secures both the industry know-how and presence in countries where the demand for services does not call for Finpro to have its own office.
Financially Finpro's results are associated with currency rate fluctuations and credit losses. Finpro protects itself against currency fluctuations by hedging its need for dollars using forward exchange rates. Most of its cash assets are kept in Euros. Finpro strives to manage its credit losses primarily by dividing the invoicing of large projects and assignments into smaller lots. In 2012 Finpro incurred credit losses amounting to EUR 64,000. In the previous year the losses totaled exceptionally high (EUR 172,000).
Often Finpro also operates in areas of instability in political or natural conditions and has to consider also safety risks. Regarding political instability, Finpro works in close cooperation with the diplomatic missions of the Ministry for Foreign Affairs and follows any official instructions issued in this regard.
In the middle of the financial period Finpro signed a letter of intent regarding acquiring joint office facilities with other organizations (Tekes and Finnvera) within the govern of Ministry of Employment and the Economy. The letter of intent was signed by the Ministry, Tekes, Finnvera, City of Espoo, and Senate Properties. The preliminary rent agreement on a new construction project with Senate Properties was signed in the end of the financial period. In regard to Finpro's operations, this commitment is a exceptionally long-term and sizeable in money. The detailed cost level will become clear as the project proceeds but since the costs are fixed as of year 2016, this will weaken Finpro's possibilities to react fast on external changes.
Events after the reporting period
The Ministry of Employment and the Economy decided to transfer the operations of FinNode innovation network to be a part of Tekes' operations as of the beginning of financial year 2013. FinNode network has been operating in Finpro domain for a few years.
The state budget cuts the general subsidy to Finpro also for year 2013. Due to the budget cut Finpro carried out co-operation negotiations according to Co-Operation Procedure. As a result of the negotiations, 19 employment contracts were terminated in the beginning of year 2013.
Outlook for the future
During 2012 Finpro built a new strategy for the period of 2013-1015. The strategy focuses on operations that best benefit the international success of Finnish enterprises and acquiring investments to Finland. The most important element in the strategy is commitment to client success and creating even better service concepts. It is supported by foresight work focusing on business opportunities as well as co-operation with key partners. One of the key target in the coming years is developing the invest-in operations and enhancing the impact foreign investments have on our national economy. In this work Finpro is supported by the active Team Finland network – as the co-operation with Team Finland is one of the cornerstones in the new strategy.
The success of Finpro's internationalization operations and especially investment acquisition depends quite much on the development of the world economy – where the outlook for 2013 is relatively positive. The general economic development has a substantial effect on companies' and entrepreneurs' willingness to expand their international operations. Ability to take on risks requires also availability of financing as well as operational support networks for the company. Finpro strives to lower the risk-taking level by its strategic choices, like presenting market opportunities, focused marketing of investment targets, and resources in developing economies. The success of client companies is evident in the development of national economy. The changes in the state economy as well as decrease of public funding are factors which are noteworthy but difficult to predict during this strategic period.