Russia - an untapped market area for Finnish growth companies

“No connections, no language skills, no knowledge about the market possibilities, no idea how to start to enter into Russian market”.

This illustrative comment is taken from a short inquiry made 17th April 2018. At that day KasvuOpen event was organized in Järvenpää. KasvuOpen (GrowthOpen) is a country wide process which locates most potential Finnish start-ups and growth companies and offers a way to work and develop business with experienced coaches, so called Millers. KasvuOpen is truly a great Finnish innovation on the area of business development.

We wish to thank KasvuOpen and all those companies which were in Järvenpää for a possibility to examine how Russian market possibilities are viewed in Finland. In particular we were interested how the Finnish growth companies perceive the possibilities of Russian markets for their companies.

In the beginning of the day we shared a short inquiry to all participants. Our goal was to get direct and open comments from the participants in relation to Russian markets. We wish to thank all for your important feedback and contribution.

Next in this blog please find a summary of the answers given in that morning. In the inquiry we made three questions. The answers to questions are provided below. Please note that we have codified and collected the answers so that individual companies cannot be recognized.

Our goal here is not to focus on individual answers but to provide a general picture how those growth companies in Järvenpää event saw Russian markets. This is clearly a short snapshot and much more research is needed in the future. Hence, our aim is not to provide carefully analyzed research results, but more to tentatively explore how some Finnish growth companies perceive Russian markets.

1.      Russia from the perspective of your company - your general
   comments

• Potential market area
• Procurement from Russia most interesting topic
• Are we too quick to look only Europe without also examining possibilities in Russian markets, in particular possibilities for special Finnish products
• Russian markets feel distant and unknown, no direct connections to actual operators 

2.      From the perspective of my company which elements motivate
   to examine Russian markets? 

• A possibility to get big volumes, large markets, close vicinity
• A feasibility to develop products/services, which would be new in Russian markets
• An option to find special clientele for high quality products
• Perhaps new demand for health care products
• Might open new possibilities to tailor large product/service packages to customers 

3.      From the perspective of my company, factors hindering our
   Russian entry/growth? 

• How to find right partners
• Logistical challenges
• Volumes (if too large, can we provide)
• No connections, no language skills, no knowledge about the market possibilities, no idea how to start to enter into Russian market
• Marketing knowhow in Russia is lacking, feels that language and culture are unknown
• Political decision making (quick changes in rules, legislation
• Paperwork (a lot of documents and things to consider)

 
In sum
Our tentative hypothesis was that Finnish growth companies may not examine Russian market potential carefully enough. This hyphotesis which is here more an educated guess than a formal hypothesis is based on our observations in numerous events and discussions with entrepreneurs and growth business operators. This short inquiry and discussions during the day gave us some confirmation that there is clearly a justification for our hypothesis.

It is always to case that companies are different and some companies are successful on some market areas, and some on the other. We might even propose that in a same way as a true knowledge on personal level is self-awareness (know thyself) - the same way companies should know their unique strengths and where they are at their best.  Perhaps some companies might be strong on some market areas, which they have not explored so far. At the same time it is an undeniable fact that international business is always demanding endeavor.

In this blog we have not aimed to examine carefully all the details which relate to doing business in Russia and whether Russia might be easier or more challenging market for Finnish growth companies than some other market area. However, in general we wish to suggest that Finnish growth companies would benefit in examining also those business opportunities which exist in Russia.

Also it is important that we all who work for the business development in our own way create ways to help Finnish growth companies to take successful steps into Russian markets. Here we wish to mention three operators who might have an important role in opening new routes to Russian markets.

First, let us start with the existing operator. For instance, the Finnish-Russian Chamber of Commerce (FRCC) is already active in opening connections to Russia and helping companies to prepare themselves into Russian markets.

Second, we suggest that KasvuOpen should consider opening special Russian growth path in the future. Perhaps one event in Helsinki, one in Saint Petersburg. KasvuOpen has the expertise to find most potential growth companies and organize valuable coaching events for those companies. It would be important if KasvuOpen would use its expertise on this area and boost growth into Russian markets.

Thirdly, let us not forget our own role, also Universities could offer new services. In fact, our goal is to open new EMBA program in Saint Petersburg. That would be collaboration between University of Jyväskylä and Peter the Great St. Petersburg Polytechnic University.

The program would follow the structure of the AMBA accredited Avance Executive MBA program which is a country wide program in Finland. Avance Executive Education at the University of Jyväskylä is also most willing to develop tailored programs for companies and organizations which wish to increase their international collaboration and business capabilities, in Russia and in other market areas.


Authors of this blog:

Professor, Dr Tatiana Khvatova
Higher School of Business and Management
Peter the Great St. Petersburg Polytechnic University





Director Ari Manninen
ari.manninen(at)jyu.fi
Avance Executive Education
University of Jyvaskyla