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 FCCJ Special Event 15 February 2011

Business Roundtable on Russia

Ambassador Jari Gustafsson opened the event and acted as moderator for the roundtable.

In her opening words, Nina Vaskunlahti explained about the importance of Russia as a neighbor (sharing over 1,000 km borderline) and business partner for Finland. Annually 1 million visas are issued to Russians, there are 8.7 million border crossings and about 7 bill. euro investments from Finland in Russia and about 600 companies have established their presence there. Also the new high-speed rail link between Helsinki and St. Petersburg, which has cut the travel time almost in half, has its importance in the expanding relations.

Russia is a growing market with potential especially in technology and infrastructure. The challenging business environment and sometimes unpredictable changes in the legislation are still slowing down the potential growth. The WTO negotiations are in their final tracks and if the agreement materializes, it would increase confidence and trust in Russia.

Masaaki Kuboniwa, Professor, Institute of Economic Research made in his commenting remarks a comparison between Norway and Russia, two countries much dependent on their income form oil and gas. He also noted that the Russian economy has recovered quite well from the financial market collapse in 2008-2009 and is now almost on the GDP levels before the collapse, and the GDP per capita is already exceeding 10,000 USD.

He also made a remark about Japanese investments and referring to the Nissan car plant in St. Petersburg he noted that the Japanese parts suppliers, like Denso, have been rather reluctant to invest in Russia.

Taisuke Abiru, Researcher, The Tokyo Foundation said in is remarks that the Japan-Russia political relations have deteriorated recently, but on the business side there are some positive developments, like the Japan-Russia nuclear energy agreement, Toyota's plans to establish an assembly plant in Vladivostok and a coal mine project in Mongolia. All of these would support the development of the Trans-Siberian railway. For example, the Toyota cars assembled in Vladivostok would be targeting all of the Russian market.

Juha Nurminen of Nurminen Logistics Oyj pointed out that even though the political relations between Japan and Russia are constrained, the cooperation is active in the business and cultural field.

Finland is one of the experts in doing business with Russia. Nurminen has been involved in the Trans-Siberian railway, together with their partner in Japan, Nissin Corporation, since the late 1960's. After the collapse of the Soviet Union, however, the transit traffic has almost dropped to zero, because the lack of central decision making. But there are hopes to revitalize it. The railroad is working well, but all the problems with decision making and logistics have to be sorted out. There is also a need for an increased west-bound traffic.

His colleague, Olli Pohjanvirta, noted that it is possible to do projects in Russia without corruption and that the Russians need foreign help to utilize their energy and other natural resources.

In the discussions, one of the main items was the Trans-Siberian railway which is geo-economically favorable, but has yet to fulfill its promises as a reliable and cost-efficient transport link between Europe and Japan (as well as other parts of East Asia). An indication of the problems is that currently only about 40% on its 3-400,000 container equivalent units capacity per year is used. The company representatives expressed concerns about the high, and unstable pricing, and the trust among their Japanese customers

Nissin representatives understood the concerns, but had some encouragements on the issue. For one, the transport time from Finland to Japan is about 20 days, compared to 35-40 days by sea. The Russians have now also made concessions to allow not only block train transports but also container wise, Price is still an issue but they are trying to convince their Russian counterparts to allow for a 6-12 months trial period with fixed and competitive pricing to see if that could increase the demand.

To end off the roundtable, Ambassador Gustafsson made an "infomercial" for the Vladivostok Study tour that FCCJ had planned for last September but was then postponed. The plans are again on the table and the Ambassador has discussed the project with the Finnish Embassy in Moscow and with the Russian Ambassador in Tokyo for their support in preparing a worthwhile program. FCCJ will discuss further the project with Ambassador Gustafsson early March.

Images from the event
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The event was attended by 30 members and guests.
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The moderator of the roundtable: Ambassador Jari Gustafsson
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Opening words from Nina Vaskunlahti. Left FCCJ Board Member Pekka Laitinen.
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Masaaki Kuboniwa, Professor, Institute of Economic Research. makes some commentary remarks.
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Taisuke Abiru, Researcher, The Tokyo Foundation makes some commentary remarks, with Kimio Hashida and Isao Nishimura showing some concerned faces...
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Juha Nurminen and Olli Pohjanvirta of Nurminen Logistics Oyj make some commentary remarks.
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FCCJ Board Member Veli Solehmainen (Vaisala K.K.) asks a question about the decision making process in Russian business, local or centralized.
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The panelists ponders how to respond..... conclusion, if it is purely business. local, if it involves budget issues, Moscow decides.
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From left: Ari Vehkamaki, Hidako Noto, VeliSolehmainen, Tokiko Horiuchi and Motoki Sasajima. Back to camera Isao Nieda and Shotaro Nagashima.
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Lively discussions around the table.
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Ambassador Jari Gustafsson (right) closes the roundtable.
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