Assessing Subcontracting Conditions in the Republic of Karelia

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Companies consistently have to improve the efficiency of their operations and an increasing number of companies are evaluating their possibilities of transferring their labour-intensive functions to countries with lower labour costs. The Republic of Karelia is a potential option for Finnish companies due to its logistical proximity. The production industry in Finland has become increasingly interested in both the large internal market in Russia and its lowcost production environment. The trend has been affected by the stabilisation of the Russian market and political climate and the development of a market economy. In addition, the trend has been influenced by the need of Finnish companies to grow their business and enter new emerging and developing markets. The appeal of the nearby area to Finland is increased by a few success stories implemented in the region. The goal of the project was to gather information that meets the needs of Finnish SMEs interested in subcontracting in potential target areas (Pyaozersky, Kostomuksha, and Sortavala). Information of the suitability of the target areas for subcontracted production would be included for planning projects and use in business activities. The target areas in the Republic of Karelia were seen as benefiting from the increase in expertise, potential investment projects and subcontracting cooperation.

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