Twenty years ago, the Swedish government had a positive attitude towards the firms, enterprises and companies, but the attitude of the capitalists was sharply negative. It was quite a challenging combination but the success of Swedish economic model proved its efficiency. Withdrawing money from their firm, the owners had to pay huge taxes. In case that money continued circling in a company, it was subject to scanty taxes. Such approach stimulates the growth of companies. The current problem in Sweden is the slow development of medium-sized businesses. Those businessmen, who want to start their own business in Sweden, have the opportunity to take a medium-sized business sector. The legal framework of the country was changed in such a way that not only corporations can earn money, but also the owner and managers can finally profit. This fact makes businessmen from America extremely interested in the opportunities offered by the Swedish business environment.
Country Background Information
Geography: Sweden is the country located in the eastern part of the Scandinavian Peninsula It extends from the Arctic to the icy desert border with Denmark. Sweden is one of the major European countries, and at the same time, it is one of the least populated. Spruce and pine forests cover most of its territory. Forests provide the raw material for highly profitable furniture, wood and paper industry in Sweden. Farmers grow the major amounts of agricultural production on the fertile lands in the south of the country. Rich deposits of iron ore lay in Lapland. Some small part of the ore is used in steel industry, and the rest bulk goes for exports. Hydroelectric power produces the energy for this and other industries.
History: Nowadays, Sweden is a prosperous country. The standard of life is very high. The Swedes pay high taxes but enjoy free medical care and pensions. In the past Sweden was a major power and included Finland, the Baltic States, Poland and the northern part of Germany. From 1814 to 1905 the country was in the union with Norway. After the Napoleonic wars, from 1814, Sweden gave up wars and began to adhere to the policy of neutrality. In the 19th and early 20th century, it was a poor country. About 1 million people migrated to other countries in search for a better life. Currently, Sweden is one of the highly industrialized states, and the level and of life quality is one of the highest in the world.
Economy: Economists define the Swedish model as a combination of fulltime employment (official unemployment is less than 2% of the active population) and price stability at the expense of a restrictive economic policy, supplemented by selective measures to maintain a high level of employment and investment. This model was presented to the trade union economists in the early '50s and the social-democratic governments supported and promoted its development.
Swedish economic system is generally characterized as a mixed economy. It is based on market relations in competitive basis with the active use of state regulation. There is a combination of private, public and cooperative relationship and interaction of the main forms of ownership in a capitalist market economy. Each of these forms has taken its niche and performs a certain function in the overall system of economic and social relationships.
The vast majority (about 85%) of all Swedish companies employing more than 50 people belong to private capital. Private enterprises employ about ¾ of working people in the manufacturing sector. Foreign-owned firms employ 8% of the population. The rest is accounted for state and cooperatives. The state sector is expanding while the share of the cooperative has remained almost unchanged since 1965.In addition to the above mentioned forms of property, there are many companies with mixed ownership, the company owned by trade unions, savings banks, etc. However, their share is very small.
Government and Legal Issues
Sweden is a Constitutional Monarchy. However, the king carries out only the executive authority. The state is controlled by the government headed by the Prime Minister, who is elected by parliament the Reichstag. The parliament is elected by universal suffrage every four years. From 1932 and up to the present (with the exception of 1976-1982's and 1991-1994) Swedish Social Democratic Party was in power. For decades, it worked closely with Central Swedish Trade Union Confederation that strengthened the reformist labor movement in the country. In addition, the Swedish model underlined the importance of the spirit of compromise and mutual restraint between the workers' movement on the one side and large industrial companies on the other side. This spirit of harmony appeared out of the knowledge that small in population Sweden could survive in the big world of fierce competition only by combining the efforts of all parties.
Currency: Swedish krona appeared in 1873, and since that time it was stable. No unions either political or financial, affected the financial welfare of the Swedes and the Swedish krona. Joining the euro zone did not shake the authority of the Currency. While all western countries embraced the euro as the highest good, the Swedes decided through a referendum to continue krona financial exchange within the country. As a result, the euro found a wide circulation only in tourist centers and souvenir shops.
The stability of the currency indicates the mere fact that in the 140 years of its existence, devaluation of 16% happened only once. It was a preventive measure to improve the health of the economy. The idea was successful at 100%, and the Swedish krona once again got the leading positions.
Language: Sweden is one of the most homogeneous countries in ethnic, religious and linguistic aspects. The fact stipulates Swedes’ preservation of their language. The population used their native language in the administration and the service from the beginning of the XVI century, and granting it the status of an official language had never seemed necessary.
Swedish was the dominating language throughout the entire modern history of the state. Linguistic minorities, such as the Sami were very small and often marginalized during the XIX and early XX centuries. English has never had a status of official; however, with the process of globalization and the increased importance on the international arena, it acquired the new demand for the business contacts and many people choose it as a first foreign language to study.
Advantages and Disadvantages of having Location in Sweden
The last twenty years have been favorable to the development of capitalism and private enterprises in Sweden. Opening a business in Sweden, the businessman becomes attractive for foreign investors. The attractiveness of Sweden to open their business in the country is also in the system of taxation. Taxes on capital and corporate tax rates in Sweden are low, and there is no value-added tax. In Sweden, there is no shadow economy, which allows companies to be competitive. The taxation system in Sweden is constructed in such a way that the shadow business is just not profitable. By helping companies to avoid paying taxes, the consumer exposes himself to the payment of large sums of money for a certain product or service.
How to Get to Business Meeting
All travelers must obtain a visa or travel authority before travelling to Sweden. One can apply for a range of visas, including tourist visas and working holiday visas there.
A flight from Los Angles to Stockholm will take about 16 hours, crossing many time zones. And, due to this fact you will gain some hours as if coming back in time.
Sweden has the simplest system of company registration that takes about two hours. The country shows the progressiveness in the fact that there is no need to go anywhere for the registration of the company. The preparation of all necessary documents is possible with the help of the World Wide Web. For those who want to open a small business with an annual turnover of no more than three hundred thousand Euros, there is no need for an audit. This procedure was mandatory for a long time. The advantage of setting up a business in Sweden is also the transparency of all systems and structures. Businessmen can easily obtain all the necessary information about the status of a particular sector of the market. The simplicity of access to this information allows the businessman to improve the efficiency of their own business in the shortest possible time. The public information transparency has facilitated the process of creating a clear business plan, which will contain detailed information.
Tips for the Sweden Business Traveler
Business meeting and Negotiation Style: Informal atmosphere in the office determines the manner of communication between people and partners. At no stage of career pursuit, from the classroom to the boardroom, there is no need in use of titles such as "Mr." or "Doctor". These ceremonies are redundant in Sweden. Students and teachers, patients and doctors, workers and employers refer to each other by their first names. Swedes dress up to the service, usually conservative, but not strictly formal. The employee can come into the office and change the shoes for sandals or sneakers, and then again put on shoes for the street, going home. Informality is the basis of relations in many workplaces in Sweden.
In Sweden business practice, there is a specific word ‘lagom’. The set of ideas that it reflects encompasses in the meaning ‘as much as necessary; no more and no less. The principle of Golden Middle is an important aspect of successful cooperation. This concept implies that employees, and many employers, focus on how to do the task exactly and without the decline and bias. A foreigner can experience difficulties in applying to such approach in business ethics.
The internal organization of Swedish companies tends to be less hierarchical than in many other countries. This means that the boss is more accessible to their employees, the distance between them is short, and it eliminates the need for some of the mechanisms of the hierarchy existing in other countries. In general, the employee has the opportunity to address with comments, questions or complaints directly to the head.
The majority of employees of Swedish companies are members of a trade union. Due to the strong position of trade unions in Sweden, workers here have excellent working conditions compared to those which prevail in many other countries. Equality in the workplace and safety are put at the forefront because the unions direct all their efforts to ensure that employees feel secure, and no one threatened or abused.
The decision-making in Swedish organization is characterized by setting a compromise and agreement. It is usually assumed that the principles and ideas are best discussed openly and at all levels, before making any decision. Sometimes the Swedes can show unusual endeavor to stand out from the crowd or take individual decisions affecting the company as a whole. It can sometimes lead to delays in the decision-making and hindering the development of business.
Entertaining Break at work is a sacred time for the Swedes. They have a special word ‘Fick’ that means a break from work to drink some coffee and chat. Coffee break in Sweden is equal to a ritual. It happens during working hours, and there are usually two or three Ficks per day, so one should not be surprised if a Swedish colleagues or business partner has suddenly disappeared. He/she is having Fick.
The Swedes appreciate punctuality, especially in business. Swedish worker always comes and goes from the service on time, and has Fick in the set time. Swedes jealously guard their privacy and therefore tend not to work overtime, unless it is absolutely unavoidable.
- Learn the language. Although English is widely spoken in the Swedish business community, it is recommended to acquire some knowledge of Swedish, before starting business there. The ability to say some words in the native language will certainly make a good impression on Swedish colleagues.
- Be punctual. It is crucial to come on time and stick to the agenda provided in order to finish in time.
- Make haste slowly. Starting a business in Sweden, one should know that the creation of a customer base there can be very, very difficult. It is important to be patient and have a backup plan or alternative source of income.
- Do not drink alcohol in public. Sweden has quite strict habits in the use of alcohol. Liquor can be bought only in the shops of the state monopoly "Systembolaget". Alcohol is not sold on Friday, Saturday and Sunday. The level of prices for all drinks is high. So many tourists prefer buying alcohol at "duty free shop" at the airport. In no case, visitors can drink the bought alcoholic beverages at a restaurant or cafe. It is not recommended to do it in the street or other public places.
The consumption of alcohol takes place generally on holidays and weekends. The Swedes prefer beer or wine to stronger drinks.
When having some free time in Stockholm, one should visit Royal Palace. It is the official residence of the Swedish kings in the Old Town on the waterfront of the island Stadholmen. The Royal Palace was rebuilt several times, the latest version of the construction was completed in 1760. Not long ago, the royal family has ceased to use the palace as a permanent place of residence, preferring suburban residence. On the tour of the Royal Palace, one can get acquainted with the history of the Swedish royal family and the history of the country as a whole. On the square in front of the palace of the real show is the changing of the guard. In my opinion, Sweden has a great potential as a tourist destination, because of the long living traditions and an instructive example of non-violent social and business transformation.
Such traits of the Swedes as rationalism, self-discipline, a thorough study of approaches to problem solving, commitment to consensus and the ability to avoid conflicts became distinguished treats leading the nation to economic and business success. Consequently, the potential partners in Sweden will expect a profound and at the same time precise approach to decisions in common business and compliance with the above mentioned characteristics.
The chance to analyze the Swedish economic model from inside is a guiding experience for a young manager. Starting Business in Sweden is a challenging but very luring opportunity due to the low rates of competition in the medium-size business. At the same time, highly organized and homogeneous ethnic society and a political system dominated by one large party contribute to the stability of business leading in the country. Such favorable conditions create a lot of advantages for the talented and promising specialists, and in this perspective, Sweden is a promising and attractive country for the investments and the cooperation of the new generation of business professionals.