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. Achievements: Current information was gathered of the target areas from public sources and visits to the areas were organised. The information obtained from public sources was verified and supplemented during the trips. The emphasis areas of the assessment were the issues that affect subcontracting: availability of production-related assets, companies that engage in subcontracted production present in the target areas, infrastructures, officials and local administration, services that support companies and business activities. In addition, the project looked into the main requirements subject to the Russian Limited Liability Law when establishing a Russian subsidiary for a foreign company in Russia. The material assembled in the project provides a good general review for companies planning operations near Finland in Russia. Based on the gathered information, it can be concluded that the areas of Pyaozersky/Louhi, Kostomuksha, and Sortavala are suitable for labour-intensive subcontracted production with some reservations. The areas are located near international border-crossing points and they offer a viable potential logistic and administrative location for subcontracted production. However, becoming established in the assessed areas is not easily achieved and there is no quick solution for easy success due to the deficiencies in the infrastructure and administrative bureaucracy. In particular, considerable investments must be made in the production facilities. The wages in the target areas of the project still remain highly competitive. In particular, there is a great supply of low-cost labour in the Louhi and Sortavala regions. The lack of information of the area can also significantly slow decision-making. The decision to engage in direct investment in a new market can be a difficult and challenging one for decision-makers. However, there is assistance available from experienced specialists for projects aiming to become established in a new market. The successful investment projects in the region (e.g. PKC Group, Stora Enso) demonstrate that becoming established in a region near Finland can be achieved in a controlled manner and the goals set for the same reached as well.