Close proximity to Russia benefits SMEs, on both sides of the border, especially in the south-east region of the country where as many as 400 new companies with a Russian background are established each year. Foreign trade from Russia to Finland topped 68 million euros and is expected in increase in 2014. Who is driving the growth?

What do Russian SMEs find in Finland?

Russian SMEs see Finland as a huge learning opportunity where they can take advantage of increased knowledge transfer in the international trade and global networks. Finnish well-established innovation ecosystems and governmental support became increasingly popular amongst Russian start-ups, leading to a strong engagement with entities such as Technopolis and StartupSauna.  In the recent years, giants such as Yandex established their datacenters in the country which further strengthened the business relationship between the two borders. A clear example of that is the increased collaboration between the Eastern neighbor’s venture-capital firms and Finnish’s entrepreneurs.

The interest in cross-border collaboration is mutual.

An increasing number of Finnish start-ups looking to raise funding found a helping hand in the form of Russian investment vehicle such as OAO Sberbank and SBT (Walkbase Oy raised 3 million euros in November 2013). Also, Moscow-based OAO Rusnano, a state-controlled technology investor, last year invested 25 million euros in Beneq Oy, a thin-film coating company based in Vantaa.

Finland’s established companies are targeting the Russian market as well:  A potential of 143 million customers (compared to Finland’s population of 5.4 million) is too tempting to be ignored. Entering a new market has its challenges, but there are plenty of recent success stories to learn from.  Web of Trust, a website-reputation tool from Helsinki-based WOT Services Oy expanded to Russian and reached 100 million downloads in November 2013. According to WOT’s CEO Markus Suomi about a third of their users came from Russia in the past year, during which the service doubled its reach.

Not ready to enter new markets  yet? Use it for testing!

The size and diversity of the Russian market makes it an ideal test ground for Finnish enterprises to experiment and try out new ideas. Especially products or services that require a large user base are easier, and more cost effective, to test in Russia than in Finland – where the relatively small number of consumers provides less room to maneuver.

After long decline, service exports started to grow again

The export of services from Finland to Russia has from nearly 1B EUR in 2007 down to 569M EUR in 2011. In 2012, the downwards trend finally stopped and began to reverse, with exports growing +99M EUR in 2012.

The numbers for 2013 are not in yet, but with the uptake in cross-border trade and increase in SME population we expect 2014 to be another year of growth for the Finnish-Russian business relationship.

Continue reading more about cross border trade at Statistics Finland.