BUSINESS

Border Town Business Continues to Grow

By Elmira Alieva

The St. Petersburg Times

Alexander Belenky / The St. Petersburg Times Despite the recession, Russian entrepreneurs continue to invest in Finnish border towns such as Lappeenranta (above.)

Despite the global economic crisis, Russian entrepreneurial activity in Finnish border territories, close to St. Petersburg, continues to develop steadily.

The Kotka-Hamina region, Lappeenranta, Lapland and other Finnish territories close to the Russian border continue to accumulate Russian capital, according to the Kotka-Hamina regional development company Cursor.

Attracted by numerous advantages such as good traffic connections, stable and functional infrastructure, security, low interest rates on bank loans and the opportunity to enter the EU market, Russian businesspeople are pouring significant investment into Finland — almost 10 percent of the companies founded in the Kotka-Hamina region include Russian capital.

During the past 10 years, Finland has become a priority destination for investors from Russia’s northwest. In 2001, only 10 Russian companies had been set up in the Kotka-Hamina region. In 2008, this figure grew to 66 out of 420 new firms opened in the region. A relatively new trend is the influx of Moscow capital to the Finnish market.

“The crisis has had a positive effect on Russian-Finnish business contacts, because it prompted the disappearance of so-called daisy enterprises — companies that didn’t have their own business idea and that existed at the cost of other businesses,” said Alexei Kantonen, a representative of Cursor.

Alexei Varshavsky, general director of the St. Petersburg business contacts center Bizkon, said that the recession had harmed numerous Russian companies in Finland, but had also stimulated additional interest from Finnish partners. “For instance, one Finnish company is seeking a Russian cardboard supplier, because it is too expensive to produce it in Finland now,” he said.

Russian-Finnish business activity has intensified, according to Alexei Ulanov, general director of the St. Petersburg foundation for the support of industry. He said that Finland’s use of technology is advanced, and Russian and Finnish entrepreneurs have the opportunity to share their knowledge. “The crisis means a change of direction,” he said. “Those who change direction will survive in the cruel world of the market.”

“To establish a successful enterprise in Finland, first of all it is necessary to choose the correct sphere of business,” said Kantonen.

Leisure and business tourism, logistics and the construction industry, along with consulting, auditing, real estate, legal services and retail attract the most Russian investment in Finland. Russians have set up new restaurants, spa centers and retail stores in Finland.

Finland is also a destination for more substantial Russian projects. “Two St. Petersburg companies intend to launch plants for machinery construction, electrical engineering and mechanical engineering in Finland,” said Ulanov.

For those planning to open a business in Finland, especially in the Kotka-Hamina region, Bizkon and Cursor together offer information about the regional economy and provide consultations on business opportunities in Finland.

“Several years ago there was no information available in Russian about doing business in Finland,” said Kantonen. “Now the situation has changed. Extensive consultations are available in Russian.”

To stimulate Russian-Finnish business dialogue, the Russian hotel management group Turris is set to create a Russian-Finnish center of business contacts that will operate in the Hotel Baltiets in the village of Repino outside St. Petersburg, and in the Hotel Leikari, which is the leading conference hotel in southeast Finland.

“On March 12, 2010 there will be an exchange of subcontracts in St. Petersburg,” said Ulanov. “About 19 Finnish companies participated in the October exchange; the preliminary volume of orders totaled 525 million rubles ($17.6 million.)”

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