Not in Finland Anymore? More Like Nokialand

By Alan Cowell
The New York Times, February 6, 2002


"’We take everything that Nokia says as a signal,’ said Pasi Maenpaa, a sociologist who has studied the cellphone habit that has made Finland, a sparsely populated country of five million, the world's most interconnected nation."

"Although the Internet bubble has burst and Nokia's share price is only around a third of its record highs in 2000, the company's influence on Finnish society is the clearest example of a broader collision of values within Europe's welfare states."

What responsibility does a global corporation have to its home country and the people in it?


Is it the responsibility of the global corporation to deal with the apparent "collision of values" that occur in a small country when a few get very rich while others do not? What of a country like Finland where one company is responsible for the welfare of so many citizens?

After the company town, behold the corporate nation.

A decade or so ago, this icy outpost on Russia's flank was in deep trouble, its economy battered by the collapse of traditional markets in the old Soviet Union, a recession taking hold and one in five workers looking for a job. Cafes closed. Lights dimmed.

Then, according to Finland's modern mythology, came a business- class caped crusader, as a company producing everything from paper to rubber boots was inspired to believe that the future lay in the cellphones which now bind Finns and a total of a billion people in an invisible web around the world.

That company was Nokia, after a town of that name on a river of that name in southwest Finland.

As the decade progressed, Nokia advanced its multinational interests and expanded its work force, becoming the engine of Finland's economy, representing two thirds of the stock market's value and a fifth of the country's total exports.

At its peak, in March 2000, Nokia's stock was worth $300 billion, more than any other company in Europe. By last year, 37 of every 100 cellphones sold across the globe bore the Nokia stamp. The company's $25 billion in annual sales roughly equals the entire budget of the Finnish government, which finances one of the world's most-generous welfare states.

This impressive growth, now slowing somewhat in tandem with the broader world economy, has some Finns wondering if they have not, in fact, exchanged one master — the Soviet Union — for another.

"We take everything that Nokia says as a signal," said Pasi Maenpaa, a sociologist who has studied the cellphone habit that has made Finland, a sparsely populated country of five million, the world's most interconnected nation.

"We have this new mythical story of Finland rising again and in this story, Nokia is kind of the main figure," he said. "Nokia pulled us up from the bottom of the recession. I could read that as proof that Nokia is a state within a state."

Leila Mustanoja, the former head of Finland's Fulbright Commission, who took Nokia to task last year over its policy in China and defiantly uses a Motorola cellphone, makes the comparison explicitly. "We used to have the Soviet Union that we would bow to," she says. "Now that is gone and we have Nokia."

Indeed, all Finland listened in recent days when Jorma Ollila, Nokia's chairman and chief executive, not only confirmed that growth had slowed last year, but also wondered aloud about lowering Finland's relatively steep income-tax rate (59 percent even on lower income brackets).

In those comments, Finns heard an executive whom they feared may be ready to pull out of the country, jeopardizing the tax base that supports the state's extensive welfare benefits. About 22,000 of Nokia's 54,000 employees worldwide are in Finland — but they include 11,000 of its main research and development staff, as well as the top management who could work wherever the company chooses to have its headquarters. Another 20,000 people are estimated to work for companies that depend on Nokia for contracts.

(A company the size of Nokia in proportion to the population of its host country would, in the case of the United States, employ about 1 million people.)

The concerns over a Nokia pullout point at a deeper malaise — the growing collision between a traditional, sheltered, high-tax society and the harsher, global rules by which Nokia is obliged to play. Only 1.47 percent of the Nokia's total sales occur in Finland, and more than 90 percent of its shares are held by people outside the country, particularly Americans, who clamor for higher valuations.

Nokia, said Ilkka Tuomi, a former executive with the company, "has opened Finnish society very quickly to global values." But it has also exposed the vulnerabilities of dependence on a company whose interests, ultimately, do not mainly lie at home.

As Nokia's rate of growth shrank last year for the first time since 1995, Finland's growth plummeted from 5 percent in 2000 to 0.7 percent in 2001, even though domestic economic conditions had not changed substantially, said a Jyrki Ali-Yrkko, a Finnish economist.

That has Finns worried.

"It is in the Finnish mentality to believe that, after lots of laughter, it will end in tears," said Minna Ruckenstein, a Finnish anthropologist and author of a new book based on her experiences living in California's Silicon Valley. "So they are asking: What happens after Nokia?"

Some Finns are also wondering whether the proliferation of other high-tech companies has introduced the get-rich-quick values of world technology markets at the expense of a deeper national yearning for egalitarianism.

"It's the first time in this egalitarian society that some people got rich quickly," said Olli Kivinen, a columnist at Finland's biggest newspaper. "There's a lot of envy, resentment of this money."

According to Mikko Puhakka, a venture capitalist, roughly 35 of Finland's 50 richest people made their money from Nokia jobs or stock holdings.

The challenge to the country's traditional values from the disparity between the new wave of millionaires and ordinary Finns came to light most famously last month when a top Nokia executive, Anssa Vanjoki, was fined a staggering $100,000 for a relatively minor speeding offense on his Harley-Davidson motorcycle.

Mr. Vanjoki was traveling at 46 miles an hour in a 30-mile-an-hour zone. The fine, as is customary in Finland, was calculated as a proportion of his most recent audited earnings — inflated in this case by the sale of Nokia stock that earned him in excess of $2 million.

The new inequalities have arisen rapidly: only in 1997 did Nokia's share price begin to zoom (until then, many foreigners who bought its mobile phones thought they were buying Japanese products).

Although the Internet bubble has burst and Nokia's share price is only around a third of its record highs in 2000, the company's influence on Finnish society is the clearest example of a broader collision of values within Europe's welfare states.

In the Nordic countries in particular, the state has long provided health care, education, unemployment benefits and pensions to citizens ready to pay high taxes. All Finnish schooling, for instance, is free; at colleges, the state pays students allowances starting around $300 a month to cover living expenses. People who lose their jobs receive benefits equivalent to full salary for 15 months.

While the high standard of education has been one factor in Nokia's success, high taxes has also tended to put a damper on initiative.

"There has not been a lot of incentive," said Mr. Tuomi, the former Nokia executive. "Taxation has made it very difficult to become rich."

Lauri Kivinen, a Nokia spokesman at the company's headquarters on an ice-bound Baltic inlet near Helsinki, explained the dichotomy of the new corporate state. "We have a very strong emotional attachment to this country," he said. "We love this country so we have to care." When Nokia's boss, Mr. Ollila, speaks about the country it is out of "a genuine worry for Finland," the spokesman said. And yet, indeed, high taxes mean "we have difficulty keeping skilled workers and attracting foreign skilled workers."

The new get-rich fever has not reached every Finn. Many still cherish the traditional ways and retreats, bucolic summer cottages with hand- pumped water and home saunas to take advantage of more than 18 hours of daylight, and fat stock portfolios.

"They have a nice house, two kids, a dog and a Volvo and it's a nice life," said Jarkko Joki-Tokola, a 29-year- old founder of a hi-tech start-up company, whose ambition is to have his company's shares listed on the Nasdaq. "They have chosen not to take themselves to the ultimate limit and do everything to be a millionaire."