Russia

Russia is a vast country with enormous natural resources and ever-needed economy modernization. With its almost 146 M of inhabitants, Russia may considered to have plenty of unsaturated niches. Economic development of the country is uneven geographically with a Moscow region contributing an enormously big share of Russian GDP. The country faces a pressing need for new and better roads and other logistic infrastructure like high-speed railway connections, airports and sea and river ports. Gaining from its location Russia develops and facilitates routes from Asia to Europe, especially Northern Sea Route, which runs along the Russian Arctic Coast may become an alternative to the Suez Canal. The traffic is projected to increase up to 65 million tons per year by 2020.

Russian Government offers benign conditions and many incentives for international businesses to benefit out of Russia’s opportunities (e.g., special economic / free trade zones, territories of priority development, tax incentives and holidays, government funding and procurement programmes)

The share of the state is rather high in Russian economy and a role of bureaucracy in doing- business -aspects is strong however has been shrinking steadily. Many small improvements have made it easier to do business in Russia. It is no coincidence that Russia has steadily risen in the Doing Business index issued by the World Bank, ranking 62 out of 189 countries in 2017, up from 120 in 2010.

Russian State Corporation may be also considered as potential partners for the Finnish companies, but those have to be prepared to meet a certain rigorous requirements and deal with a strong hierarchic structure. Due to long historical and trade links between Russia and Finland, altogether, Finnish products are known here as high-quality, innovative and Finnish companies have obtained excellent reputation and are considered as reliable partners.

Russian economy is trying to decrease the oil prices dependence, to develop domestic production and to support SMEs, which are still playing undeservedly diminutive role in the country’s economy.

In 2017 a slight growth is shown by industrial output, especially automotive industry, chemical processing, pharmaceuticals and agriculture.

Unsaturated sectors and niches at the moment are:

-Garbage processing, recycling

-Construction materials

-Machine-building

-Pharmaceuticals

-Food processing and agricultural machinery and equipment

The influence of sanctions is constantly going down, say the stock market experts. In 1Q of 2017 a growing interest to equities of Russian companies was noticed. RTS index grew by 11% by the end of 2017. After a long period of stagnation and even negative development, Russian economy shows positive trends.

Another positive news is that in spite of the sanctions, during the first 2Qs of 2017 the Russian-Finnish trade turnover grew significantly and reached EUR 5 bn that is 1.5 times more than the same period of 2016. Import from Russia grows, a big part of it being imports of pipelines apparently reflecting supplies for the Nord Stream 2 gas pipeline project. As BOFIT reports, Finnish exports to Russia were up in nearly all product groups, in particular the export of machines and equipment rose by 50%, and food exports by 12%. Finland belongs to the Top-3 of the main Russian export trade partners.

We can help you to find market opportunities, attractive niches and active partners, introduce obstacles and give recommendations

Zhanna Malinovskaya

Business Consultant
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