Gleb Belavin Participates in 2016 InRussia Conference
The 2016 InRussia Conference took place in Moscow on October 14, 2016; MLP’s Deputy Director General, Gleb Belavin, attended this conference. The conference’s main goal was to expand business contacts between Russian and international businesses in terms of administrative contacts, institutions for development, and potential partners for joint business projects.
Among the conference’s 350 participants were representatives from 50 of Russia’s regions and 18 countries. Directors and members of major business organizations represented international businesses at the conference, including delegates from: the Association of European Businesses (AEB), the Russian-German Chamber of Commerce (AHK), the Japanese ROTOBO Association, the American Chamber of Commerce (AmCham), the Association of Italian Industrialists Confindustria Russia, the Belgium-Luxembourg Chamber of Commerce, and others. International manufacturing holdings, such as Schlumberger, Schneider Electric, Alstom, Renault, REHAU and others also took part in the conference.
Russia was represented by: Deputy Minister of Industry and Trade G.V. Kalamanov, the head of the Economic Development Department for Investment Policy of the Russian Federation I.Yu. Koval, the heads of the Industrial Development Fund, the Agency for Technological Development and the Political Party Business Russia, heads of corporations working on developing Russia’s regions, and heads of industrial parks.
Comments by dozens of international companies clearly show that interest in investing in Russia is even higher than before. This was confirmed by the head of the Russian-German Chamber of Commerce, Matthias Schepp, in his speech; he shared the results of a study of German firms which showed that among companies that have not yet localized production in Russia, 25% expressed the intention to do so. Moreover, 55% of those who have already invested in production in Russia support further expansion.
As Johan Vanderplaetse, President of Schneider Electric in Russia and the CIS, noted, the cost for his firm for production in Russia was comparable to the cost of production in China. Therefore, with sales around the world, Schneider Electric has already started to export goods produced in Russia for sales in other countries outside the CIS, and according to the head of the company, prospects of increasing exports are very high.
Despite the fact that the overall background is very positive, discussion centered around the obstacles that must be overcome to further localization. Frank Schauff, head of the AEB, emphasized the need to end parallel imports, an opinion shared by members of the Chamber of Commerce. Participants discussed removing barriers and simplifying the control system. International companies are concerned about unequal access to procurement for Russian and international companies, including the government’s newly introduced “odd man out” regulation, according to which if bids from two Russian manufacturers are competing, bids from foreign companies will not be considered. Many participants discussed the lack of or poor quality of domestic components, which makes it difficult for countries to replace imports within the specified time frame without lowering quality.
Georgy Kalamanov, the Deputy Head of Industry and Trade of Russia, noted the usefulness of publications prepared by the Business Opportunities in Russia Association, as the material clearly demonstrates that now is the time for investing in Russia. Firstly, as a result of the ruble’s devaluation, it is now cheaper for companies that operate in dollars or euros to produce in Russia. Secondly, Russia's domestic market remains one of the largest in the world (sixth in terms of domestic demand) and has the potential for increased growth. The annual amount of public and corporate procurement is the largest in the world and continues to grow (state procurement of 6.5 trillion rubles, corporate procurement of 23 trillion rubles). The publication presents data on the average cost of electricity, gas, constructing industrial buildings, and the average salary in the industrial sector. Compared to those in Europe and Asia, the cost of production in Russia is comparable or noticeably lower. A special session of the Russian Industry and Trade Ministry took place at the conference, during which Alexei Besprozvannykh, Director of the Department of Regional Industrial Policy for the Industry and Trade Ministry of Russia, revealed some non-financial means of support for industrial projects.
In his assessment of the event, MLP’s Deputy General Director Gleb Belavin stated: “We see representatives of foreign manufacturing companies as our potential customers, especially in the Severnoe Domodedovo warehouse complex, which has sufficient supplies of electricity, gas, and other necessary utilities. I see this conference as a new platform for our company to communicate with potential customers.”