When asked “Will there be a difference this year in the numbers of your compatriots attending the St. Petersburg International Economic Forum?”, the overwhelming response (more than 90%) was that numbers would in fact be higher.
Several of those polled also offered their opinions. Chairman of the Board of Directors of the Canada-Eurasia-Russia Business Association (CERBA) Lou Naumovski remarked: “In 2017, our Association will be the official regional partner of the SPIEF-2017’s organizing committee, with a cooperation agreement being signed alongside the forum. We are certain that thanks to the Canada Business Association’s official status, and a more structured approach to promoting the forum in Canada, the number of Canadian companies here will rise. Representatives of 13 Canadian companies plan to be here his year in St. Petersburg”.
Manish Kumar the Indian President of Soltex Group, believes that his country too will increase its representation at SPIEF-2017. He calculates that no fewer than 80 participants from India will be in attendance.
Amongst those who remarked that representation from their countries would be slightly less than last year (with only around 50!), was Rosario Alessandrello, President of the Italo-Russian Chamber of Commerce (CCIR). And only because last year the number of Italian participants was very high for an understandable reason. “It can be explained by the fact that last year Italy had the official status of Guest Country, and its own national pavilion. This year no more than 50 participants from Italy are planning to be at the SPIEF. It is expected that five of them will appear as speakers at various subject-specific tables”.
In response to the next query “Sum up the first five months of 2017: has interest in doing business in Russia amongst the entrepreneurs in your country changed at all?”, he pointed to a significant rise in it on the part of political and business circles in Italy. “During the first five months of 2017, representatives of the highest echelons of power in Italy visited Russia: The Foreign Minister Angelino Alfano, and the President of the Italian Republic Sergio Matarella. Our already warm relations are proving stronger than the sanctions regime, despite Italy being a member of the European Union and NATO. Economic ties won’t be shrinking, and the results achieved in 2016 will be bettered”.
Also talking about the changes was Canadian Lou Naumovski, although he gives a more guarded prognosis: “Russian imports exceeded Canadian exports by one and a half times according to the figures for 2016. We expect that gap to grow further. Canadian exports won’t, it would appear, increase from their current extremely low level (about 600m dollars) until sanctions are lifted on both sides”.
Englishman Philip Gudgeon, head of the Moscow office of the leading international management consultancy Oliver Wyman, is also inclined to think that interest in Russia on the part of British business is set to grow. However, he ties in these positive trends with a host of political factors, such as Britain’s leaving of the European Union (Brexit), which will have an influence on the situation.
What attracts Italian entrepreneurs to Russia?
1. Russia is in close geographical proximity to Italy and has a huge market with many untapped areas.
2. Energy prices are significantly lower than in Italy and the EU.
3. The cost of a trained workforce is lower in Russia than in European countries.
4. The concentration of industrial enterprises on the huge territory of Russia is significantly lower than in European countries, which makes for a better environmental situation.
What are the problems that Italian businessmen encounter in Russia?
1. Most Italian entrepreneurs represent small and medium businesses, and despite having at their disposal the very latest technology and products ranking first in the world, they lack the requisite financial resources to enter a market such as Russia.
2. Italian businessmen don’t really know Russia with its 80 plus regions, the large part of which are unattractive to business considering the lack of infrastructure and existing bureaucracy. The number of regions which might represent an interest is no more than 15-20.
3. The eastern part of Russia is located too far from Italy, consequently this market is not an area of interest to Europe, even if it is attractive and carries a strategic importance.
Natalia Kurkchi, who is Director of Regional Development at Antal Russia, one of the largest recruitment companies in Russia and the CIS, and who is also responsible for bringing foreign specialists over to work in the RF, briefly explained the “capital interest” from foreign companies: “Traditionally, foreign business acquaints itself with Russia through Moscow and St. Petersburg. This is clear not only from the presence of foreign companies in the two capitals, but also from the well-developed and extensive community of expats in evidence in those cities”.
And she related in some detail those other Russian regions which might become attractive to overseas business: “For example, in the self-same Kazan, there aren’t the same numbers of expats, and yet interesting propositions and opportunities for business are on the rise all the time. The tax burden on business in Russia varies from region to region, which is now making certain constituent territories of the Federation more attractive in terms of investment and business expansion. Just as special economic zones are also making their presence felt. One of the best-known at present is the SEZ Alabuga in Tatarstan where export duties don’t apply, and there is a range of other conditions which make doing business attractive. Therefore, overall, Kazan and Tatarstan occupy leading positions amongst the regions beyond the capitals. They are of interest to international companies”.
Those who took part in the poll named the Top 15 Russian regions from the business viewpoint.
The Top 15 regions for foreign investment
1. Moscow and the Moscow region
2. The Republic of Tatarstan
3. St. Petersburg and the Leningrad region
4. Sverdlovsk region (primarily Ekaterinburg)
5. Kaluga region
6. Samara region (primarily Tolyatti)
7. Krasnodar region
8. Krasnoyarsk region
9. Chukotka Autonomous Region
10. Lipetsk region
11. The Sakha Republic (Yakutia)
12. Primorye (primarily Vladivostok)
13. Kaliningrad region
14. Smolensk region
15. Ulyanovsk region
Alongside this, those polled named the industries in Russia in which they would advise their compatriots to invest.
The Top 10 Russian industries for foreign investment
1. Agriculture and Food Processing
3. Machine tools
6. Construction (including architecture and design, and building materials manufacturing)
7. Transport and Logistics
9. Educational services
10. Personal finance services and consultancy
Finally, those who took part in the poll gave their answers to the following question: "Which five major factors influence foreign entrepreneurs when deciding whether to start a business in Russia?" The most frequent responses formed the basis of a small table:
1. The scale and potential of the market
2. The beneficial terms of financing, affordable energy and workforce
3. The customs regime, and legislation on supplies and commerce
4. State support, and a good dialogue with local governments
5. Political stability (bearing in mind the presence or absence of sanctions in any given sector)