Tough for small businesses

The Fish Site
by The Fish Site
30 January 2007, at 12:00am

NORWAY - Establishing new small businesses in Russia is difficult. For Norwegian industry, small and medium-sized businesses in Russia are important as potential partners.

Russian economy is very dependent on the big companies that extract oil, gas and minerals.

So that the country will have more legs to stand on, the authorities have concentrated on developing small and medium-sized companies within all industries.

"For Norwegian industry, which has many smaller companies, it's an advantage to have businesses of the same size established in Russia. It's easier to achieve collaborations with these than with large businesses with thousands of employees", says Scientist Gøril Voldnes.

Trade and service dominate

The study done by Fiskeriforskning shows that more small and medium-sized businesses have been developed in Russia, but primarily within trade and service.

Relatively few new companies have been developed in areas that use new technology and develop new products.

In Russia, a number of initiatives have been implemented to speed up the establishment of businesses and development of new products. Amongst other things, consulting agencies assist new establishers with different tasks such as development of business plans and market surveys.

But far more companies could be established if not for a number of difficulties that new establishers meet.

"The bureaucratic system is a big obstacle. Amongst other things, a great many licenses and permits are required, which take a long time to get and which also must be paid for", says Voldnes.

Another obstacle is corruption. It's normal to pay employees in the bureaucracy to get a case handled or to get necessary approvals.

The establishment of businesses is also slowed down by a banking system that functions poorly and the difficulties of getting financing.

Inadequate bodies of laws

Neither are the bodies of laws fully adapted to a market economy system. A number of new laws have been introduced, but often, the old ones are not removed.

Uncertainty around bodies of laws for inventions and patents results in weak protection against the copying of products by others.

"Many things are working to slow down industrial and commercial development. At the same time, one must also remember that it's only been 15 years since the dissolution of the Soviet Union. Seventy years with planned economy leave their mark on the people and the social institution. It will take time to change this", says Voldnes.

The project has been a collaboration amongst Fiskeriforskning, Troms County Council District and Kola Science Centre in Russia. This is a III A Kolarctic North Project.

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