Craig Barrett says he believes Finnish know-how and Russian market size could help increase investments in both countries. The former chief executive of Intel, now co-chair of the Skolkovo innovation center in Moscow, will share his insights with the Executive Forum on November 8.

Studies suggest that investors tend to have a poor perception of Russia. The huge country is not only full of potential, but it is also undergoing rapid and profound change.
But the Russian government understands that the country needs foreign long-term investors, and it is now actively trying to attract them to what they say is a less risky investment climate. This is a far cry from the decade before the 2008 financial crisis, when the state’s priorities involved restructuring control over strategic industries.
On a pragmatic level, Russia now has a law that prohibits insider trading. The government is working on the creation of a central custody in Russia that, once in place, will open up the local stock market to a much larger number of big-money investors.
For the past three years, AmCham Finland has held a strategic partnership with AmCham Russia, which boasts a membership of over 800 American companies and is a key advisor in the modernization of the Russian legislature. The cooperation is based on the strikingly different strengths of both markets. The 600 Finnish companies operating on both sides of the eastern border and employing some 50,000 people in Russia provide a model for many American and other global investors. That said, it makes sense to organize entry into the emerging Russian market through a democratic western market economy—Finland.
The AmCham Newsletter interviewed Craig Barrett, former CEO and Chairman of Intel, ahead of his visit to AmCham about the change he perceives from his vantage point at Skolkovo and how doing business in Russia can be tied to opportunities in Finland.
Q: Finnish companies were the first to invest in the Russian market after the collapse of the Soviet Union. Today, they are heavily involved in Russia. Do you see that global companies could leverage that expertise when they look to operate in the region? Are there win-wins that can be built across the Finnish–Russian border?
A: I suspect that other multinationals, as they look to invest in Russia, can take advantage of the Finnish experience.  With the continued opening of the Russian market, there are many companies that have invested or are looking to invest in Russia.
The Skolkovo model is to recruit multinationals to invest in research and development in Russia and to take advantage of the excellent Russian workers and their strong educational background. Many of these multinationals are just starting their first investments in Russia.
An R&D Center is a relatively simple form of investment, as it only typically requires the hiring of professional staff and not the creation of a full business operation.  Some companies will want to move in a more comprehensive fashion to take advantage of the Russian market.  Others, of course, are already familiar with investing and hiring in Russia.
From a strictly business perspective, it is always easier to make your first investment in a foreign country with the help of others who have been operating there for some time.  In this instance there is clearly an opportunity for ‘Finnish First Movers’ to work with foreign investors.
Q: Russian companies are significant investors around Europe, but not in Finland. What could and should Finland do to attract more direct investments from Russia?
A: I believe investors, Russian or others, are always looking for maximum opportunity, which is usually associated with market size.  As such the Finnish market, or the Nordic market as a whole, is not large and by itself not a great inducement to investment.  What will attract Russian investment is the ability to invest in companies that have a business plan to move rapidly beyond the local or Nordic market.
In a sense this is the basic question that Finland has been wrestling with for some time.  How does a country like Finland, small in size but rich in human talent attract the attention of others, or even how do startups in Finland structure their business plans for success.  It seems the fundamental issue is that Finland and Finnish companies have to focus beyond Finland if they want to succeed and attract foreign investment.
This question, by the way, is also the fundamental question that Russia is facing.  Beyond the obvious investments in natural resources, how does Russia leverage its highly skilled citizenry to attract more foreign direct investment?  The relative issues of openness, intellectual property protection, and corruption make the Russian challenge a bit more complicated, but the general issues are the same.  Russians want to promote business plans that focus beyond the Russian market. They want to market their educational expertise in the form of a well-qualified work force, and they want to improve the investment climate—IP protection, minority shareholder rights, and rule of law—to attract investment.
Q: The startup and entrepreneurship programs of the Aalto Innovation University have attracted a lot of interest among talented Russian programmers and scientists who seek to start their own companies and find funding.  The Finnish side has been eager to welcome the talent and increased cooperation. What opportunities do you see for university-level exchange between Finland and Russia?
A: Many interesting programs and science parks today attract young innovators from around the world—the Start-Up Chile program, Skolkovo and Silicon Valley.  All of these programs have a couple of things in common.  Firstly, they draw smart people, usually university graduates, and secondly, they require excellent ideas, usually the outgrowth of research activities from universities or research laboratories.
The Skolkovo Project in Russia is all about increasing the supply of smart people and great ideas.  Also there is the issue of the right environment to let brilliant people and smart ideas actually do something, and that is a key ingredient of Skolkovo as well.
Finland could get involved in this program through university affiliation with Skolkovo.  The present plan is to create a Skolkovo Institute of Science and Technology—basically modeled after Stanford or MIT—and to use affiliations with other globally leading universities to make this institute a success.  As this whole process is just starting, I would encourage Finnish universities to get involved, for example, through the transfer of students, faculties and research projects.  This would bring Finland in at the ground level in this attempt to modernize the Russian educational sector and gain access to young Russian entrepreneurs.
More information:

Russia Investment Risks—Article in the AmCham Russia Magazine p.8:
http://www.amcham.ru/_images/upload/AmChamNews91.pdf
For more information on the Executive Forum luncheon with Craig Barrett on November 8, sponsored by Valio, please visit the AmCham website at www.amcham.fi or call the AmCham offices.

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