19.09.2005
Dozens of measures to boost Russian know-how of Finnish companies

from Helsingin Sanomat

SITRA wants Finland to become leading expert on Russia

The Finnish National Fund for Research and Development (SITRA) published on Thursday dozens of measures that would help boost the Russian know-how of Finnish companies and their success in the Eastern neighbour’s markets.

The new economic Russia strategy proposes, among others, that a new private equity fund be established in Finland to finance the Russia-related projects of small and medium-sized enterprises.

In addition, the SITRA report proposes that the responsibility for economic policy issues related to Russia be given to the Prime Minister, so that relations with Russia would receive more attention in politics than at present. Russians affairs are currently handled primarily by the Minister for Foreign Affairs and the Minister for Foreign Trade.

Finland should also be active in developing relations between Russia and the EU.

SITRA President, former Prime Minister Esko Aho feels that investing in Russia creates an opportunity for boosting the Finnish economy and welfare. Aho believes that Russia offer a chance to counter the global China-phenomenon, where countries with low labour costs drain jobs from old industrialised nations.

"Finland can strengthen its competitiveness by combining Finnish know-how and Russia’s lower cost level. The largest economic growth prospects will open up in Russia in the future", Aho says.

According to Maaret Heiskari, the Director of SITRA’s Russia Programme, Finnish companies often face the problem of weak knowledge about Russia, and as a consequence, lack the courage to look East. Finnish firms are also plagued by small size and an inability to assume larger risks.

"That is why it would be important for firms to build networks at home and abroad, and then turn to the Russian market with the help of these networks", Heiskari explains.

SITRA is campaigning for Finland to become the world’s leading expert on Russia outside of Russian borders. According to Heiskari, the best chances to succeed in this are in fields where Finland already possesses strong know-how: in the forest industry, logistics, construction, and technology.

Heiskari observes that there is plenty of expertise on Russia and advisory services for companies in Finland, but the services suffer from fragmentation. Many of SITRA’s proposals start out with the requirement to combine, compress, and centralise information and experiences.

The business also requires more fresh blood. "Many of the people who trade with Russia are nearing retirement, and a shortage of professionals is in sight within the next ten years", Heiskari points out.

In fact, the SITRA report hopes that Finnish universities would offer more courses on doing business in Russia.

There are nearly 40,000 people living in Finland who speak Russian as their native language and have an immigrant background. SITRA hopes that they will also be of help in future Russian projects.

"The skills of immigrants have unfortunately been utilised to a relatively small degree. The first immigrants are quite elderly, and many lack suitable Finnish language skills", Heiskari says.

Then again, those immigrants who possess the necessary language skills and education do not always wish to return to their former homeland, but prefer to work in Finland.

The Russia strategy has been drafted by an invited group of 34 experts on the country. Many of the group members have worked for years in Russia or have done plenty of business with Russian firms. They maintain that the neighbour to the East is often feared for no reason.

"Russia is a much better business environment than is assumed. For example, the wastage in our Moscow department store is smaller than in Finland", reports Hannu Penttilä, the CEO of Stockmann.

According to SITRA’s Maaret Heiskari, the future of Russian projects also depends on Russia’s own reform process. Corruption and bureaucracy continue to pose large problems.

"As long as the government reform does not properly take off and the wages of civil servants are not raised to a viable level, there is still a market for corruption."

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