Portugal: multinationals move to Russia or other eastern destinations – a sign of things to come for Russia in future??

The multinational companies have started to discover that Portugal, once the poorest country in Europe and a haven of cheap labour and therefore low production costs, have started to close up shop and move eastwards. Such a development was to be expected, as standards of living in Portugal begin to approach EU averages in the main cities but could this be a warning of future problems for Russia, whose economy grows stronger by the day? Portugal’s textile sector is a prime example. The European Union intends to liberalise the market for Asian textiles to enter after 2005 and since this was announced, a significant number of multinational companies have left Portugal – and a significant number of unemployed – behind. In the last two years, for example, almost 3,000 workers have been laid off in the textile sector alone as companies like Clark’s, Moda Real, Vesticom, SIC/Kansas and Norport move out. In a population of ten million, this means 0.03% of the population. Not dramatic on a national scale, but a clear signal. As manual labour costs no longer attract the multinationals, old loyalties and friendships are forgotten. The world of business these days looks at the bottom line, not the handshake. There is an old Portuguese proverb which goes: “In the backs of others, you see your own.” The point is, as Russia and Eastern Europe become more popular today for foreign investment, it is necessary to remember the lessons and mistakes highlighted in the examples of others, to learn, so as to prepare the future.


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