HELSINKI - Anton Suchkov and Andrei Ivanchenko, two Russian businessmen from St. Petersburg, never worked together in their hometown. But now they are starting a new business together in Finland.
In the fall they launched a new company and got their visas, and their families will be joining them soon.
At first glance, it seems like a strange choice. Finland is a small market, on the fringes of Europe. But Helsinki is a cosmopolitan city, and one is just as likely to hear English as Finnish. Around 4.8% of the population in Finland is foreigners, and most of them live in Helsinki.
The overwhelming majority of those foreigners hail from the former USSR. In the first 10 months of 2012, Russians filed 4046 applications for residency in Finland. China came in a distant second, with 1342 applications. Russian investment in Finland is around 600 million euros per year – but if you count offshore accounts, it rises to more than six billion euros.
Andrei Ivanchenko says there were lots of good reasons to do business in Finland. He owns a company in St. Petersburg with a yearly income of around 50 million rubles ($1.6 million), and has long been frustrated with Russia’s business climate. Now he’s had enough.
“You know, in Russia we have total taxes that are around 50%,” he says. “But we have another financial burden in the form of bribes and kickbacks. In some industries, kickbacks can reach 80% – no accountant can hide that kind of sum. So people go under the radar. Just like before, the government thwarts business. And if you’re one day late in paying taxes, you have all kinds of unpleasantness. There are no rules.”
On the other hand, in Finland, the rules are clear and understandable. The taxes are high - the VAT is 24%, and the income tax is progressive (fixed at 35% for non-residents). But there are no hidden costs - once you’ve paid your taxes, no one will bother you.
When asked if they were scared to work in a new market, the two Russian businessmen said they were not. Andrei got an MBA in 2009, and he and Anton had been thinking for a while that it would be nice to try to use their business skills in another country. Canada and the U.S. are too far away, and Western Europe isn’t too fond of Russians. But Finland feels both close in geography and close to the Russian soul.
Registering a business was a simple process, and once that was done, the business was able to sponsor temporary resident visas for the two entrepreneurs. The visa is good for one year, and then can be extended for another five years. If the entrepreneurs spend more than half of those five years in Finland, they can then apply for citizenship or permanent residence.
Another common way that Russians end up in Finland is to study in a Finnish university. After finishing school, students have six months to find a job, and if they do, they can stay in the country.
Finland does not sell residence permits, like many countries do. The most important thing is how useful an individual is to the workforce. Of course, there are a couple of other ways for Russians to move to Finland. One is by marrying a Finn. Lastly, there have been programs for ethnic Finns living in parts of Russia that were Finnish territory in the past, to resettle in Finland.
Like Russia, but less Russian
There are plenty of opportunities for Russians to do business in Finland. First of all, there are around one million Russian tourists who visit Finland every year, and there are more than a few Finnish towns that feel like they have been overrun with Russians buying up apartments. Now Russian entrepreneurs are also preparing to help Finnish tourists go visit Russia for the Sochi Winter Olympics.
Secondly, according to one businessman who runs a successful Russian cafe in Helsinki, even though the Finns still harbor historical grudges against Russians, at the same time, they are very interested in Russian culture. His cafe was so full of Finns during my visit that there was no place to sit.
Lastly, Russia is Finland’s largest trading partner, making up for around 14% of Finland’s foreign trade (Germany comes in second, at around 11.2%). According to the Russian chamber of commerce in Finland, the trade between the two counties creates 160,000 jobs in Russia and 53,000 jobs in Finland. There is nearly $10 billion of Finnish direct investment in Russia.
Many Russians in Finland have found a niche helping both Finnish and Russian companies overcome the language barriers to doing business in each other’s country.
Igor Khitukhin married a Finnish woman and finished a law degree in Finland. He now has his own firm specializing in Russian-Finnish trade and immigration issues. His firm has seven lawyers, two legal assistants and two secretaries. His business is likely to only increase. Just as always, Russians strive to live in a calm, stable and reliable country. Something that feels similar to home, but just a little bit more European.