The Helsinki region is a natural gateway from Russia to the EU, and Russian companies are finding a new home in the Greater Helsinki region. We spoke with Olivier Bonfils, Senior Business Advisor at Greater Helsinki Promotion, where they determined the three main drivers why Russian companies move to Greater Helsinki Area. A few of the reasons seem obvious to anyone that has done business in Finland, but one factor was surprising, to say the least. They determined that first, Helsinki is an easy gateway to European markets. Second, in Finland you have access to an innovation environment that can provide easier conditions to do research and development. And third, for many Russian companies Finland is a good place to do production and assembly of their products.
Drilling down into each of these reasons, Helsinki is a great entry point to European markets for a few reasons. Finland serves as an excellent pilot market for R&D and Sales, but by partnering with Finnish export networks and reach anywhere in Europe. Finland also provides better access to the investment market. For many high tech Russian startups, the lack of funding is a main bottleneck in their pipeline, but many of these companies know that if they are located in the EU it is easier to find funding. Investors may be suspicious of investing directly in a Russian company, but doing so in a Finnish Ltd. built on the Russian innovation background and enabling it to take advantage of Finland’s stable business and legal environment, is more attractive.
On top of that, the Helsinki region is positioned perfectly for Russian companies to set up shop in an innovation environment. Finnish universities are spitting plenty of talented people to hire, and the country offers great support services to help companies in the early stages. And once a Russian company has an entity here, it can do many things within EU regulations, such as product testing, and certifications.
But it’s surprising that Russian companies would come to Finland to do product manufacturing, considering Finland’s relatively high labor costs compared to Russia. But by doing product assembly in Finland, Russian companies can actually save a lot of money.
“We have seen many cases of Russian that are already ordering from Finnish subcontractors components of their products, because of their quality ” says Bonfils. “And actually a lot of money goes in custom costs related to the import of the components from Finland to Russia. And again there are more costs once final product assembled in Russia goes to export.”
On top of that, some Russian companies can sell their own products at a higher price in Russia if they have the European product quality stamp.
Helsinki is becoming the gateway between Russia and the west, and all parties stand to benefit. In the next article in this series, we will cover how western companies can use Helsinki as a hub to do business in Russia.
Text by Greg Anderson
Article also published in: www.arcticstartup.com