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A period of transition opens up opportunities in Russia as well

Source: Suomalaisyritykset ovat liian varovaisia Venäjän suhteen - Accountorin Venäjän maajohtaja: "Kiinalaisten valtaamille markkinoille on vaikea palata", Kauppalehti newspaper

According to Timo Matinpalo, now is the time to secure slices of the future Russian market. Withdrawing in panic because of the weak economy or geopolitical risks in Russia is a mistake.

“The tense relations between Russia and the West have increased uncertainty and blurred the outlook of the Russian economy. Finnish companies operating in Russia are, however, confident in their own work and are increasing their activity.”

This is how the market situation was described by the latest Russian barometer of the Finnish-Russian Chamber of Commerce (FRCC). And this what Timo Matinpalo thinks about the situation as CEO of Accountor Group’s office in Russia and Ukraine which offers financial management, HR & payroll as well legal advisory services in this part of the world.

“While we should not understate the chronic problems in the economy and the geopolitical risks in Russia, they should not be overdramatised either. Corporate logic does not go hand in hand with the logic of economic cycles and world politics” Timo comments.

Many Finnish companies have withdrawn from Russia due to heavy losses, or they follow a new strategy, for instance. Such companies include Stockmann and Kesko, for example, which first closed down its K Food store and later its K-Rauta hardware store chain.

The failures of big players have naturally compelled other companies to reassess the risks in Russia. According to Timo Matinpalo, the pendulum has swung from the over-optimism of the early 2000s to over-pessimism.

“The approach of Chinese and German companies, for instance, is more rational. They observe the market calmly and analytically, and when they spot a void, they fill it” he says.

Accountor has been operating in Russia since 1992 and is among the leading Western companies providing financial management services in Russia, with offices in St. Petersburg and Moscow.

“Half of our clients are Finnish, but the global invasion of Chinese companies has also affected our work. Central European and U.S. companies are still active in the country, but reading Western newspapers, you might come to a different conclusion” Matinpalo continues.

In the current economic quandary, many companies need to think about minimizing costs, and outsourcing is one option to achieve this end. Contracting out financial management services, for instance, confers greater flexibility which is necessary to navigate economic upswings and downturns.

“In Russia, employees enjoy protection against dismissal which is strictly enforced” reminds Matinpalo.

When Western companies set up operations in Russia, they usually intend to abide by the law and avoid getting involved in corruption and off-the-books operations. That is why it is vital to check the background of subcontractors and any counterparties.

“Even certain Finnish public companies have made mistakes by engaging subcontractors that offer low-cost services. These Russian companies are often those that pay part of the salaries to their employees off the books. This kind of cooperation may eventually turn out to be extremely expensive for a Finnish company” notes Matinpalo.

Establishing a company in Russia is pretty straightforward these days, but practical business operations are still subject to bureaucracy.

“This naturally offers business opportunities for service providers. For instance, Accountor can act as a temporary general director, open bank accounts and handle routine tasks on behalf of a company about to be established in Russia” says Matinpalo also stating that Russia is changing too and surprisingly fast when it comes to financial management. Piles of paperwork on an accountant’s desk will soon be a thing of the past as electronic documentation is gaining ground.

Russia is coming up with a lot of innovations, particularly in the new economic sectors unburdened by ancient traditions, such as IT. For instance, ecommerce and taxi services already work better in St. Petersburg than in Finland.

Timo Matinpalo has been working in Russia for close to 15 years, and this how he would advise companies already operating in Russia or currently considering establishing a business there:

“Create a functional business model and conduct a thorough market analysis. Make sure to choose reliable partners and be prepared for frequent changes to the law. The current transition period will split companies into winning and losing ones. Companies need to work even harder than before, because it is very difficult to return to a market invaded by Chinese companies” summarizes Matinpalo.

Timo Matinpalo

Date of birth: 1963

Position: Accountor Group, CEO Russia&Ukraine

Education: MSc (Techn), Helsinki University of Technology

Family status: married; one child (son)

Interests: Sports, music, literature

Favourite business book: Johtajuus (Leadership) by Matti Alahuhta


2013 to present Accountor Group, CEO Russia&Ukraine

2010–2012 Tammet Oy, Deputy Managing Director

2006–2009 Kone Oyj, Regional CFO in Russia

1998–2005 Neste Oyj/Fortum Oyj, financial management duties in Espoo, Hamburg and Moscow

1995–1998 JSC SFAT, Financial Controller, Moscow

Theses by Timo Matinpalo

Motivate! Your colleagues and customers are people who think and feel. See to their motivation and satisfaction

Win! Put together an organization that shares a vision to win and the desire to run faster than your competitors

Dare! Live abroad once in a while, change your job and your industry

Live! Don’t forget your friends, contacts, hobbies, culture, health and keeping fit

Power politics do not affect practical business

Are executives expected to have different capabilities in Russia than in Finland?

There may be minor differences but, broadly speaking, things are the same everywhere. We need to focus on the essential. Executives are not getting paid for signing documents or monitoring their subordinates. Executives are there to show the way, remove obstacles and enable others to be successful. You cannot lead by email which is no substitute to personal interaction. Everybody deserves a new opportunity, but not over and over again endlessly.

The business climate in Russia has suffered from isolationism and geopolitical crisis. Attitudes toward foreign companies and foreigners in general have become negative

Power politics run their own course, they do not have an effect on practical business. Attitudes toward foreign investors are positive, and Finns have a particularly good reputation in Russia.

Russia is still an extremely bureaucratic environment

This is partly true and also why it is wise for foreign companies to use professional service providers as subcontractors. Business practices can also change surprisingly fast. Electronic signatures and document transfers are common practice in Russia, too.

Russia has blocked access to LinkedIn, a popular social platform in the business world. Russian authorities have also tried to block the Russian-based instant messaging service Telegram. Is Russia effectively building a “Chinese wall” around its borders, blocking the entire Internet?

I don’t believe so. The threat of banning Telegram gave rise to an outcry in Russia, even from government circles. An information society cannot function without the Internet, and I cannot see any reason why Russia would shoot itself in the foot.