Lessons from Finland’s struggle

Supercell, a Finnish game maker known for Clash of Clans,” was sold to Chinese internet company Tencent on June 21. It is reported that Tencent purchased the company for 8.6 billion dollars. Founded in 2010, Supercell is the biggest mobile game maker in the world, with $2.4 billion in sales last year. It is a legend in the startup world. Rovio, maker of another popular mobile game Angry Bird, is a Finnish company.

The promising startups like Supercell and Rovio were considered to vitalize Finland’s economy shaken after the fall of Nokia. Some analyzed that the seeds planted by Nokia led to venture and startup boom, bringing a new Renaissance to the economy of Finland.

But if you look inside, things are a bit different. Finnish economy is still in crisis. Once considered a small but strong country, there are views that Finland may become a new patient of the Euro zone. According to the World Bank and OECD data, the Finnish economy showed negative growth for four consecutive years from 2012 to 2015. The future prospect is not bright either According to BMI Research, GDP growth rate of Finland is expected to remain at 0.9 percent for the next 10 years. So much have changed from the time when the economy was growing by an average of 4 percent annually from 1997 to 2007.

The biggest cause of Finland’s struggle is the fall of Nokia. Nokia once dominated 40 percent of global mobile phone market and made up over 24 percent of Finland’s GDP. Nokia was synonymous for Finland. However, Nokia failed to keep up with the trend of switching to smartphone and lost market share, putting Finnish economy in a slump. In the end, Nokia sold the mobile phone division to Microsoft in 2013.

Finland’s situation is a cautionary tale for Korea. Korean economy is also highly dependent on large enterprises. According to IMF report in September, 2015, Samsung Electronics’ revenue, $195.9 billion, was 13.83 percent of Korea’s nominal GDP of $1.417 trillion. Shipbuilding industry, one of Korea’s main industries, is faltering. Finland’s successful startups are charming examples as Korea pursues restructuring and seek new growth engines. But the key is how effectively the new companies replace existing industries and provide sufficient jobs quickly. We need to thoroughly study Finland’s struggle.