There is a notable trend reversal happening in the market. While Finnish companies have been very active in setting up subsidiary companies or joint ventures in Estonia during recent years, the wind is now changing. More and more Estonian companies are checking out the possibilities of expanding their actions in Finland.

There are currently about 1500 Estonian companies active in Finland. So far, Finland leads the competition with 6000 companies in Estonia. Most Estonian companies set up a subsidiary company in Finland or look for joint ventures. They operate in different sectors, the majority in construction and services.

The most known Finnish company that an Estonian company has bought into is Silja Line, a shipper that Tallink acquired in 2006.

– Finnish market is ten times bigger than our local market. What’s more, we both have a similar culture and language. That’s why Finland is so logical and compelling for Estonian companies to look for new business growth, says Ain Hanschmidt, Chairman of The Board of investment group Infortar.

Infortar is one of Estonia’s largest private investment groups interested in shipping and transportation, hospitality, real estate, printing, trading, financial service industries, and energetics. It owns 39 percent of AS Tallink Group, the leading ferry company in the Northern Baltic Sea Region, and 100 percent Eesti Gaas, one of the Baltic Region’s largest private energy groups.

Elenger challenges the natural gas market

Eesti Gaas entered the Finnish market in 2018 when it established a subsidiary company Elenger in Finland. Elenger’s core product and competence is natural gas. They have direct access to both pipeline gas and LNG sources. They also sell electricity and are engaged in solar power production.

– Setting up a subsidiary in Finland was enabled by changes in Finnish Natural Gas Market Act, which has opened the natural gas market for competition, says Kalev Reiljan, member of the Board of AS Eesti Gaas and supervising the LNG business and foreign markets.

According to Reiljan, Elenger has ambitious growth plans in Finland and has already gained more than 10 percent of Finland’s gas market business.

– We aim to become a major international player in our industry and reach a strong position in the Baltic Region, Reiljan says.

Elenger will expand its market in the future in Finland and especially in green energy solutions.

– Our goal is to be a professional and reliable option to our customers in changing markets now and in the future, says Pasi Näkki, Marketing Director of Elenger.

– There is a lot of talk about renewable energy. Here we see an opportunity to be both at the forefront of the development and as a provider in the future. Customer feedback has been good, and we have found our position in the market. This is our primary goal to continue and develop, Näkki says.

Digital differences

Although Finland and Estonia have a very similar culture, language, and same time zone, Reiljan has noticed that doing business differs. Opening and registering a new company is more flexible and quicker in Estonia, where the whole process is 100 percent digitized, including the digital signature.

– In Estonia, we are slightly ahead in doing business digitally. In Finland, you have to be prepared to do some paperwork when conducting everyday business. So don’t give up your printer as of yet, Reiljan jokes.

Financial co-operation brings up opportunities

Ain Hanschmidt values greatly the Finnish industry that has achieved a significant role in the global market. He also appreciates the know-how of Finnish B2B companies operating globally.

– In Estonia, we have mostly small enterprises combining forces with Finnish companies or searching for partnerships. When Estonian companies gain more economic muscle, there will probably be more company buyouts in the future, he estimates.

Infortar also co-operates closely with OP Financial Group, which has resulted in positive outcomes.

– OP Financial Group has given us a lot of industry support and advice in building up the Estonian economy. They have encouraged us to negotiate loan terms to our companies and deliver us valuable information in Finland’s business opportunities, Hanschmidt concludes.

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