— It is generally agreed that medium and small business is the foundation of a steady, stable economy in any country. How do matters stand in Russia today with this most important segment of the economy?
— Today, small and medium business amounts to 10% of the structure of the economy according to the most pessimistic estimates, and 20-25% according to optimistic ones. That is, its share in Russia is still small, and it cannot have the positive influence it should have on the economy to ensure its stability and growth.
— So everything is bad, not a glimmer of light?
— Quite the opposite! Ten per cent, as I said, is extremely little for any country, and more so for such a huge country as Russia. But this negligible percentage means primarily that we have simply colossal opportunities for growth and a real breakthrough in the development of small and medium entrepreneurship. This, incidentally, was the precise topic at an entrepreneurial forum ofthe all-Russian social organization “Opora Rossii” which took place in Moscow on 19th-20th January 2016. And not for nothing did we call the forum “Small business: a national idea?” The question mark, in my opinion, simply stresses the importance of the problem.
— And what were the forum’s conclusions and deductions?
— More than 150 experts took part in the forum. There were entrepreneurs from dozens of regions, leaders of the regional sections of “Opora Rossii”, representatives of the municipal authorities, the heads of RF official bodies, ministers of the Federal Government and President Vladimir Putin himself.
The discussion of urgent problems for business ended in the adoption of specific decisions. The result of the discussion between business representatives and Vladimir Vladimirovich Putin was a specific list of presidential instructions concerning amendments to standards and laws regulating the small and medium business sphere.
— You mean there is “light at the end of the tunnel”?
— If all goes as intended, there certainly is. The Russian authorities paid the most serious attention to the needs of entrepreneurs. Small and medium business in Russia will gain real opportunities for growth and development from the implementation of the numerous measures mentioned by the entrepreneurs themselves, and representatives of the authorities at various levels, and President Putin and Prime Minister Medvedyev.
— It seems, does it not, that the effect of this will also be felt by foreigners engages in small and medium business in Russia? What do you think of the participation of foreign capital in the development of small and medium entrepreneurship in Russia today?
— The idea is that changes for the better should be felt by all entrepreneurs. That’s the whole point of doing all this. It is even the case that proposals and requests from businessmen will be introduced into the draft Strategy for the Development of Small and Medium Entrepreneurship for the Period up to 2030.
It is evident that any capital investment, regardless of whether it is foreign or purely Russian, is first of all a combination of factors - of the desire to make money, and risk. Or as some would say, greed and fear. But in any case, entrepreneurs are trying to offer something to consumers: goods or services. And they try to make money by offering what is in demand. Legally. Compliantly. With a guarantee. And the consumer, generally speaking, doesn’t care who owns the business, a Russian citizen or a foreigner. The main thing is that the price should be acceptable for the quality received. Therefore foreign entrepreneurs operating in Russia can only be welcomed. How could it be otherwise?
The market of our huge country is great and really attractive. With a clear excess of consumer demand for sometimes the most ordinary and accessible things. Therefore it is desirable that there should be more of the sort of people our magazine writes about: foreign entrepreneurs boldly undertaking to organize their business in Russia and succeeding in it.
— What are the similarities and differences between small and medium business in this country and in the developed countries of America, Europe and Asia for potential and actual foreign investors?
— As thing stand today, engaging in business in Russia, and in small business in particular, still requires a vast amount of patience and bravery. Because many informal expenses and attitudes are connected with it. And as an entrepreneur, I would prefer that no officials or anyone else could arbitrarily hinder normal businessmen under any circumstances, whatever the pretext.
After all, as an example, if I should want to engage in small business – let us say in Slovenia (e.g., I want to open a small club-hotel there), it implies that having bought the licence to the right to engage in entrepreneurial activities, I am thus solving all my problems. And that by hiring a local accountant, I also solve problems with bookkeeping and tax accounting. And that I shall be able to concentrate of the business itself, as a business. And I should need think only about with whom I am competing and how, what curtains to buy, what menu to offer the guests, what the entertainment programme should be, and so on. But it’s a lot more complicated than that in Russia so far...
For that very reason, questions are being put on the agenda which should normalize the situation. In Moscow and many other regions, the so-called “single window” system is already in operation, simplifying the process of registering and legalizing small and medium business, bringing it closer to world standards.
In spite of all the problems, quite a lot of entrepreneurs in Russia continue bravely to engage in business. They open their businesses, and the “Opora Rossii” initiatives, for example on tax holidays, tax benefits for those in small business today, are the main direction, and the main requirement from business. To give entrepreneurs precise, comprehensible and simple taxation arrangements, and that these arrangements should be predictable and should not change. And that the administration of taxes and of business itself should not be a burden and should not be hostile.
— What, in your view, are the main points for application of effort, and the fields with the best prospects, for foreign investors in small and medium business in our country?
— In fact, they are innumerable. All over Russia. In the most widely varied spheres – from production to provision of services. You only need to know what exactly to offer and where exactly to offer it. But to me personally, it seems that allowing for purely Russian and local potential, it is the innovative science-based manufacturing enterprises which will be successful. They can be venture projects, or projects connected with IT and software development .
The second segment that will probably be of interest to foreigners is agriculture. Investments in agro-industrial projects in Russia today are very important. This is in connection with sanctions and with the known restrictions on the import of food products, and with serious investment in and subsidies for the agro-industrial complex. Foreigners, together with Russian farmers, helping them, competing with them, could find a good opportunity for developing a business in Russia.
— How, in your opinion, should a foreigner put his idea of opening his own business in Russia into practice? Where to begin?
— The first step is to find a local partner. Without some structure or person to accompany you in Russia, further movement becomes risky. It is as if you were to go into the jungle and needed to be guided to your target. You might manage on your own, but that would be some kind of improbable chance result. Most likely you would simply get lost.
The second step is to assess the capacity of the market and the potential for your business, taking into account the knowledge of your local partner, now giving you access to internal information. Because assessment of the market and its prospects is extremely important.
The third step is to set up, with your partner, an actual business ready to start operating. This means looking for specific fellow workers who can run your business. If you don’t have educated, trained, motivated people to implement the tasks you set them, nothing will come of it.
As for knowledge of the Russian language, I am convinced that this will not prove to be an urgent necessity. Your local partner will in fact interpret for you in every way, including linguistically, and this will enable you to discount this barrier.