After spending $120 million on a stake in an online grocer in Norway, SoftBank Group Corp is laying out the business logic of targeting a market that boasts Europe’s highest hourly labour costs.
The deal is an example of how countries that pay average workers really well often come up with some of the smartest technology, according to Paul Davison, director at SoftBank Investment Advisers.
Norway’s biggest online grocery business, Oda, operates “in a high-labour-cost market, and grocery is a low-margin category,” Davison said. Because of that combination, the company “has had to build real automation capabilities and fulfillment efficiency into everything they do from day one.”
The Tokyo-based firm’s Norway investment follows significant purchases of other Nordic businesses. Late last year, SoftBank bought a 10% stake in Swedish cloud-based platform provider Sinch AB, and recently built a roughly 15% holding in Kahoot! ASA, a game-based learning platform in Norway.
Though SoftBank is also in plenty of firms in Asia and other low-wage places, its investment model in the Nordics suggests that cheap labour isn’t the competitive parameter it once was. In fact, high-wage Nordic countries punch higher in innovation than their small populations would suggest: Sweden, Denmark and Finland rank among the top 10 in the world Global Innovation Index, alongside far richer and bigger countries including the US and the UK.
That’s reflected across industries. The countries’ banks are considered at the forefront of digitalisation and payment services, with cash practically obsolete across most of the region.
Examples of Nordic tech breaking onto the global stage have proliferated since Spotify Technology SA. Klarna Bank AB, Avito, Supercell, iZettle and Trustly Group AB were all born in high-tax, high-wage welfare societies where governments invest in free education.