Finnish Marketing Conquered Urals

24.12.2009 — Analysis

Without large financial resources on hand, the Finnish business has developed a special model of being present in the Russian market. Steps which have been mulled over for years have enabled the Finns to maintain their investments in the conditions of the economic crisis. The RusBusinessNews observer tried to find the financial capital from Finland in the Urals but revealed something more valuable.

Compared to other countries of the West Finland has one undoubted advantage in trading with Russia. Finland has been a good partner for over 60 years since the time the Second World War ended. This friendship in politics and economy has remained unaffected by the cold war, the following disintegration of the Soviet Union, or by the current blame in the restoration of imperial ambitions being laid upon Russia by some Western leaders.

"It is very easy for our entrepreneurs to communicate with Finns, since they and Russians used to be one country," Boris Shipitsyn, the Co-chairman of the Working Group on Cooperation between Finland and the Sverdlovsk Oblast, told RusBusinessNews. "The attitude of Finns to Russia is rather well-intentioned. When you come to the Western Europe, the media pours mud on Russia daily. It is not so in Finland. Finns understand that our country is one of their key partners."

It is worth pointing out that a large number of Russians work in Finland. In business they take high positions - up to a plant director. There is no doubt that this helps the further adaptation of the Finnish mentality to the Russian conditions. Finns do not act all surprised when they see our reality, they have been familiar with it for a long time.

At the same time in terms of financial relations with the Urals Region Finland is well behind many other developed countries. In the recent decade the Sverdlovsk Oblast has increased the trade turnover with Suomi 16 times, although in monetary terms this figure is not that significant, only 143 million US dollars according to the 2008 results (ranking 19 in the list of foreign trade partners of the Mid Urals). Just over 30 representative offices of Finnish companies are operating in the Sverdlovsk Oblast which also confirms the insignificance of financial and organizational investments coming from this Scandinavian country.

The first reason for this is the extreme caution Finns exercise in foreign markets. Their extremely slow moves in this direction have on numerous occasion been the subject of jokes about peculiarities of the national mindset. On the other hand in the crisis conditions of today Finnish investment projects in Russia are still running. For instance it took YIT 3 years to make the decision on the establishment of the Russian-Finnish investment and construction company СJSC YIT Uralstroi. This company successfully constructs housing now in Ekaterinburg and the Sverdlovsk Oblast.

We should not, however, expect a significant capital flow from Finland to the Urals. Finnish companies just do not have the resources for this. "Finns do not like to invest into the development of their business abroad, this includes Russia. They develop international cooperation without making investments. They manage to make Russian partners interested not by the money but by the actual idea of what they are offering," a Urals businessman explained the Finnish expansion model for RusBusinessNews.

Instead of opening own representative offices, trade and production facilities abroad the majority of Finnish businesses try to establish dealer networks. "I have the opportunity to compare Finnish business to German," Aleksandr Stikhin, the Urals Regional Director of the Finnish-German company Nokia Siemens Networks, told RusBusinessNews. "Germans aim at the regional expansion more, try to spread their influence in the area the broader the better, opening their own representations. The majority of Finnish businesses focus their efforts on the development of dealer networks. They do not invest own resources into this. Finland does not have that much in terms of resources and manifest this thrifty approach in everything."

At the same time Finnish companies do not like the exclusive dealership system, they are used to more flexible relationships with partners. Otherwise sales representations in Moscow and St Petersburg monopolize the sales in the Russian regions thus limiting the sales capacities.

There is a very high level of interest amongst Russian partners to working with Finns. Urals businessmen unanimously claim that Finns put us on a higher level of development. First of all this applies to the development of marketing and management systems.

"Finns do not offer any credit or leasing schemes. They seriously help us in terms of information. They provide printed catalogues and disks with their products in Russian. They participate in exhibitions in the Urals. They organise seminars for our clients, come to Ekaterinburg especially for this," Maria Zhogoleva, the Head of the Department for Development of Uralenergoserviskomplekt Ltd., informed RusBusinessNews. This Ekaterinburg-based company became a dealer for the Finnish VEXVE in sales of pipe fittings less than a year ago.

Free training seminars are organised regularly in the Urals and in Finland for Russian dealers as well. Local businessmen see as positive a dynamic in this as to be ready to provide their offices, shops, warehouses, and even offer (naturally - at own expense) ‘buy now pay later' schemes for their clients for sales of Finnish equipment.

The Urals region developed the liking to Finnish innovations not only in terms of goods and production technologies but in the system of the establishment and running high-tech business. For instance in 2010 it is planned to establish a Finnish innovation technology centre in Ekaterinburg. "Today the Sverdlovsk Oblast has many scientific developments but there is no mechanism for their commercialisation. The core contribution from the Finns in this project will be the provision of the methodology for the organisation of the work itself. They will analyse the economic situation in the region, establish the key spheres in which the future centre will operate, select innovation companies of the matching profile for the centre. With Finns everything is driven by the real needs. It is not by accident that Finland, having the bare minimum in terms of resources, pays a lot of attention to the development of innovation activities," said Boris Shipitsyn.

It is true that Finns have managed to make their Russian partners work for an idea. Sometimes an idea brings in more profit than direct monetary injections.

Pavel Kober