Page 45 - Intangible value

In both Finland and the USA, investments in intangible assets are already greater than in- vestments in tangible assets.29 Companies attempted to stand out among competitors with product development, building brands and other intangible investments and in that way enable creation of greater added value.
In recent years, moving manufacturing activ- ities elsewhere has given cause for concern in western countries. Some consolation for the disappearance of jobs is offered by the fact that in many products, only a small part of the value added is presently created in manufacturing. The most value added is cre- ated by brand owners, product developers and owners of distribution channels.
However, expanding to international markets does not only concern production activities. Many Finnish companies also carry out prod- uct development and other activities related to intangibility in other countries in addition to Finland. As a consequence, intangible as- sets – such as patents and copyrights – are also not necessarily owned by the units locat- ed in Finland. Ownership may also have been transferred to other countries, even if product development and the other work creating the intangible assets have remained in Finland.
What difference does the location of the units owning the assets make? Because the prof- its based on these assets belong to the units owning them and they are taxed in the coun- try of the unit's location. For example, the revenues from royalties paid for patents are included in the gross national product. Hence the location of the units that own the assets is signi cant in terms of the national economy.
INTANGIBLE PROPERTY STILL MOSTLY IN FINLAND
Where are the intangible assets of Finnish companies located? A few years ago, Sta- tistics Finland carried out a survey in which companies that had expanded internationally were asked where the owners of their intangi- ble and tangible property were located.
Almost all companies in the material had both tangible and intangible assets in Fin- land. Almost one half (45%) of respondents also had tangible assets in other old EU15 countries. By contrast, around one third (32%) had intangible assets in these coun- tries (Figure 1).
The signi cance of EU countries as a location of tangible and intangible assets was empha- sised when the new EU12 countries were also reviewed. Finnish companies had tangible assets in the new EU12 member states as often as in the old EU15 countries, but intan- gible assets slightly less often.
Russia stood out among individual countries as a target location of both intangible and tangible assets. This was the situation before the crisis between Russia and Ukraine. Finn- ish companies still have extensive business activities in Russia, but many companies have cut back the plans they had on investing in the country.
The difference between intangible and tangi- ble assets is repeated across the board. Com- panies' tangible property is more spread out outside Finland than their intangible property. For example, 18 per cent of respondents had
tangible assets in China but only 8 per cent had intangible assets in the country. Sim- ilarly, 16 per cent had tangible assets and 11 per cent had intangible assets in the United States and Canada.
MANY KINDS OF INTANGIBLE ASSETS
What do companies' intangible assets com- prise? Intangible assets were divided into three groups in the survey: patents, trade- marks, copyrights and other legally protected assets as well as other intangible assets that are not judicially protected.
According to the responses, Finland was by far the most common location for all these different types of intangible assets. In the majority of companies, at least some of their patents, copyrights and other intangible as- sets were owned by the units in Finland. This was the case in both industry and services.
It was common for many industrial and ser- vices companies to have intangible assets in both the old EU member states (EU15) and the new EU12 member states. In industrial companies, intangible assets concentrated more commonly in the old member states. Services, on the other hand, had invested their intangible assets in new EU member states as often as in old member states.
The greatest differences between industry and services were in China and North Amer- ica. As locations of intangible assets, these areas were clearly more important for indus- try than services. The gures revealed an in- teresting detail about industrial companies:
COMPANIES' INTANGIBLE ASSETS ARE STILL PRIMARILY IN FINLAND
RESEARCH DIRECTOR JYRKI ALI-YRKKÖ / ETLATIETO OY
AND
ECONOMIST SAMULI RIKAMA / MINISTRY OF EMPLOYMENT AND THE ECONOMY
4
4
5
5