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Doing Business in Russia

Tuesday, 10 December 2013
The Caledonian Hotel, Edinburgh
Doing Business in Russia

AGENDA
09:30 – 11:10
11:10 – 11:30
11:35 – 13:10

13:10 – 13:30
13:30

Presentations
Networking break
Breakout sessions
Group A:
Dornoch Suite
Group B:
Glamis Suite
Group C:
Boardroom
Networking lunch
Start of one to one sessions
Doing Business in Russia

Welcome and Introduction
Yuri Andreev
Country Manager
SDI Russia
Doing Business in Russia

Introduction and Visa
considerations
Sergey Krutikov
Consul General of the Russian
Federation, Edinburgh
Consulate General
of the Russian Federation
in Edinburgh
Doing Business in Russia
10th December 2013
Russian Consular Services in Edinburgh
• Notarial Services
– Consulate General

• Visas
– Visa Application Centre
Notarial Services
• Mr Timofey Kunitskiy
Consulate General of the Russian Federation
58 Melville Street, Edinburgh EH3 7HF
0131 225 34 84 visa@edconsul.co.uk
• Consular Certification Equal to Russian Notary
Public Certification
• ‘Legalisation’ Question
Notarial Services
• Attestation of Signatures
• Verification of Translations
– NB: No Translation Service

• Attestation of Copies
• Witnessing Powers of Attorney
Visas – Stereotypes and Opinions
•
•
•
•
•
•

“Closed Country”
Complicated Procedure
“Travel Agencies Only”
High Costs
“Shopping” Approach
Facts:
–
–
–
–

13 000+ visas issued annually
Effectively 100% approval rate for submitted applications
No processing-related delays
“Walk-In” approach enables applicant to discuss the procedure with the
Centre’s Staff
Visas – Visa Application Centre
Russian Visa Application Centre
In Edinburgh
Monday - Friday
16 Forth Street, Edinburgh EH1 3LH
http://ru.vfsglobal.co.uk
0905 889 01 49
Visas – Application Process
• Fixed list of documents required
• Fixed application assessment time
• Relatively quick assessment
– 7 days
– Next day

• No appointment required
• Submitting applications by post or by proxy allowed
Visas - Business Visitors
• Business Visa
–
–
–
–
–

Single/Double/Multiple Entry, Up to 1 year
Invitation from Federal Migration Service (FMS)
Telex (digital) Invitation
Single Entry, 7 Day Processing - £77.60
Multiple Entry, 7 Day Processing - £227.60

• Special (Special Purpose) Tourism Visa
–
–
–
–

Single/Double Entry, Up to 1 month
Hotel or Travel Agency Voucher/Confirmation
Single Entry, 7 Day Processing - £77.60
Double Entry, 7 Day Processing - £92.60
Visas - Business Visitors
FMS
Invitation
Visas - Business Visitors
• Business Visa for the Schengen Zone nationals
– Single/Double/Multiple Entry, Up to 5 years
– Invitation From a Company Registered in Russia
– Next Day Service Not Available
– Single/Multiple Entry, 7 Day Processing - £57.60
Useful sources and links
Russian Visa Application Centre (Edinburgh, London)
http://ru.vfsglobal.co.uk
Embassy of the Russian Federation in the United Kingdom /
Consulate General of the Russian Federation in Edinburgh
http://rusemb.org.uk
Russian Trade Delegation in the United Kingdom
http://rustrade.org.uk
Doing Business in Russia

Russian market overview and
business context
Yuri Andreev
Country Manager
SDI Russia
Yuri Andreev
Scottish Development International
December 2013
INDEX

Russian Market Highlights

SDI Moscow – Role, Place, Difference

Q&A, discussion
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY

•World’s largest country = Scotland x 217
•143 million population – within top 10 in the world
•Nearest BRIC – GMT + 3 (+4 winter)
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY

Region

(000s km)

Density/ sq
km

Share of Urban
Population

26.2%

650

57.1

80.9%

22.97

16.2%

591

38.8

56.8%

13.44

9.5%

1,687

8.0

82.5%

6.44

4.5%

6,169

1.0

74.3%

Siberian

19.56

13.8%

5,145

3.8

70.9%

Urals

12.28

7. Volga
8.6%
Nizhniy Novgorod
Samara
Perm
21.2%
Ufa
Saratov
Kazan

1,818

6.8

79.3%

Central

Population
(million)
3. Northwestern
St. Petersburg

Southern
1. Central

North-Western
Moscow
Ryazan
Tula
Twer
Far-Eastern
Vladimir
Voronezh
Yaroslavl

Volga

2. Southern
Krasnodar Rostovon-Don
Volgograd
Stavropol

% Total
Population

37.12

6. Urals
Yekaterinburg
Chelyabinsk
Tyumen
Area

30.12

1,037

5. Siberia
Novosibirsk 29.0
Krasnoyarsk
Omsk
Irkutsk

4. Far East
Vladivostok
70.3%
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
Rank

1

Cities

Population

Rank

Cities

3. Northwestern
Moscow
St. Petersburg

10,563,038

11

Ufa

6. Urals
Yekaterinburg
Chelyabinsk
Tyumen

Population

1,030,812

2

St. Petersburg

4,600,276

12

Perm

986,497

3

Novosibirsk

1,409,137

13

Volgograd

979,617

Yekaterinburg

1,372,800

14

Krasnoyarsk

962,466

Nizhni Novgorod

1,271,045

15

Voronezh

847,620

Kazan

1,136,566

16

Saratov

827,193

Samara

1,133,754

17

Tolyatti

721,752

18

Krasnodar

1. Central
Moscow
4
Ryazan
Tula
Twer
5
Vladimir
Voronezh
Yaroslavl
6

7
8
9
10

Omsk

2. Southern
Krasnodar RostovChelyabinsk
on-Don
Volgograd
Stavropol

Rostov-on-Don

7. Volga
Nizhniy Novgorod
1,127,675
Samara
Perm
Ufa 1,095,909
Saratov
Kazan

1,048,124

19
20

5. Siberia
Novosibirsk
Izhevsk
Krasnoyarsk
Omsk
Irkutsk
Yaroslavl

713,426

4. Far East
Vladivostok

610,633
606,880
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
2007

2008

2009

2010

2011

GDP (Nominal €bn)

949

1,137

878

1,148

1,272

GDP (Real) Growth (%)

8.1

5.2

-7.9

3.4

4.3

6,675

8,027

6,213

8,141

9,055

Unemployment

6.1

6.3

8.4

7.6

7.1

CPI Inflation, yr/yr av. %

9.0

14.1

11.7

6.8

6.1

GDP per Capita (€)
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
2007

2008

2009

2010

2011

Consumer Spend (€bn)

455.83

547.33

479.99

593.98

712.78

Total Retail Market (€bn)

310.23

382.10

330.33

399.19

479.03

Grocery Retail Market (€bn)

139.46

174.17

160.70

193.61

231.85

981

1,227

1,137

1,379

1,657

44.9%

45.6%

48.6%

48.5%

48.4%

Grocery Retail Spend / Capita (€)
Grocery Retail as a % of Retail
Grocery Retail Market
Europe TOP 10

T/o (€bn)

Grocery Retail Market
Global TOP 10

T/o (US$bn)

1. France

208.17

1.

2. Russia

193.61

2. China

789.91

3. Germany

162.46

3. Japan

359.96

4. United Kingdom

161.96

4. India

350.38

5. Italy

129.56

5. Brazil

289.92

6. Spain

97.05

6. France

276.04

7. Turkey

67.73

7. Russia

256.38

8. Switzerland

39.77

8. Germany

215.43

9. Poland

38.43

9. United Kingdom

214.60

10. Belgium

34.92

10. Italy

171.80

USA

881.84
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY

Consumer and Grocery Retail Spend Dynamics
Per Capita (Euro)

5,500

5,095

4,500

4,232

4,000
3,500

3,359

3,000
2,500
2,000
2009

2010

2011e

1,657

1700

Grocery Retail Market/Capita EUR

Consumer Spend/Capita EUR

5,000

1600
1500
1,379

1400
1300
1200

1,137

1100
1000
900
800
700
2009

2010

2011e
Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
Global oil consumption

Crude & condensate production by Ru majors
Russian Market Highlights – UK-RU trading relations

UK-Russia trading context
UK EXPORTS TO RUSSIA

UK TOP 20 MARKETS 2011 (GOODS)
Country of export £ millions
£ millions
Rank 2011 Rank 2010 2011
Change in
2011 Jan-Dec 2010 Jan-Dec % change Jan-Dec
Jan-Dec
ranks

Trade in Goods

01
02
03
04
05
06
07
08
09
10
11
12

UNITED STATES
38,949
37,413
GERMANY
33,038
28,539
Total
FRANCE
23,056
20,262
NETHERLANDS
22,671
20,537
Road vehicles
IRISH REPUBLIC
17,219
16,375
Medicinal
BELGIUMand pharmaceutical products
15,354
12,946
Specialised industrial machinery
ITALY
9,888
8,798
SPAINgenerating machinery 9,449
Power
and equipment 9,700
CHINA
7,225
Miscellaneous manufactured 8,773 nes
article
SWEDEN
6,141
5,408
Other transport equipment
INDIA
5,411
3,952
General industrial
and equipment, and parts nes
SWITZERLAND machinery 5,375
5,218
Chemical materials and products nes
HONG KONG
5,062
4,202
CANADAoils, resinoids, perfumess and cleansing prep.
4,848
4,318
Essential
RUSSIA
4,781instruments
3,451
Professional, scientific and control
UAE
4,715
Articles of apparel and clothing accessories 3,892
JAPAN
4,395
4,101
Electrical
thereof
POLAND machinery, nes and electrical parts 3,676
4,187
Telecoms and
AUSTRALIA sound recording and reproducing apparatus
4,179
3,175
TURKEY
3,698
3,074
Source: BIS analysis of data from HM Revenue & Customs

Total Exports

4 GBP
16
14
10
5
19
12
-3
21
14
37
3
20
12
39
21
7
14
32
20

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

CountryShare CountryShare of
2010 % Change
% Share
2011 Jan-Dec 2010 Jan-Dec

Total Exports

in Exports 2011 Exports

GBP 0
1
13.2%
2
0
11.2% 38.6%
4,781,127,609
3,450,708,224
4
1
7.8%
3
-1
7.7%
1,745,031,882
1,090,323,767
60.0%
5
0
5.8%
304,291,029
294,222,979 5.2% 3.4%
6
0
271,927,800
167,236,095 3.4% 62.6%
8
1
7
-1
242,371,585
180,363,348 3.2% 34.4%
9
0
228,649,387
147,428,114 3.0% 55.1%
10
0
2.1%
184,066,100
106,353,407
73.1%
15
4
1.8%
180,058,838
128,213,591 1.8% 40.4%
11
-1
147,057,214
63,511,277 1.7%
131.5%
13
0
12
-2
130,849,460
121,370,109 1.6% 7.8%
18
3
128,760,003
93,955,400 1.6% 37.0%
16
0
126,286,792
103,467,077 1.6% 22.1%
14
-3
1.5%
120,663,955
102,740,939 1.4% 17.4%
17
-1
85,811,792
58,012,036 1.4% 47.9%
20
1
22
2
1.3%

14.3%
10.9%
7.7%
7.8%
36.5%
6.2%
6.4%
4.9%
5.7%
3.4%
3.7%
5.1%
2.8%
4.8%
2.1%
3.8%
1.5%
3.8%
2.0%
3.1%
1.6%
1.6%
2.7%
1.3%
2.7%
1.5%
2.6%
1.6%
2.5%
1.4%
1.8%
1.2%
1.2%
Russian Market Highlights – Scottish industry ranking

Export markets ranking by Scottish industries
Russian Market Highlights – Customs Union

Russian Federation
•

Capital City:

Moscow

•

Population:

143 million

•

GDP (PPT):

Customs Union
Russia, Belarus, Kazakhstan

$1.9 trillion

Per capita

$16,6

Capital Centres: Moscow, Minsk, Astana

•

Total

•

Population:

•

GDP:

167,5 million

Total

$2.42 trillion

Per capita

$14.5
Russian Market Highlights – SUMMARY

•
•
•
•
•
•
•

Healthy macro-economic situation
Strong performance – heavy industry and consumer
Parliament and presidential elections are over
Accession to WTO – Aug 2012
Customs Unions with Kazakhstan and Belarus – Jan 2012
Impressive UK-RU trade dynamics
Good match of SCO-RU key sector strategic goals
Russian Market Highlights - CHALLENGES

•
•
•
•
•
•
•
•
•
•

Product/services not concept/idea
Local certification/standards compliance/registration
Packaging/labelling
Language
Customs/import duties
Payment terms, credit insurance
Marketing communications
Length of time to secure business
Finding the right partner
Visits to market essential – group & individual
Russian Market Highlights – WHY RUSSIA?...
Russian Market Highlights - WHY RUSSIA?...
Russian Market Highlights – WHY RUSSIA?...
Why Russia?... Views from Volvo Cars,
inclusive of years 2009-11
25000

20000

15000

10000

5000

0
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
Russian Market Highlights – WHY RUSSIA?...

why Russia?... Views from Ayrshire
2004 - 3 clients with 4-5 orders through the year and low volumes
2005 - Showcase event in Moscow
2006 - detailed market research through OMS
2007-08 - two in-market sales visits and two Heimtextil exhibitions
2008-09 - sales picked 5 times to the level of 2004
Higher additional margins over standard goods prices. Russia is currently MYB’s second biggest export
market worldwide.
“…this success is fundamentally due to the research and ongoing market support from…the SDI office
in Moscow” John Glen, MYB Director Sales
Russian Market Highlights

why Russia?... Views from Ayrshire, inclusive 2009-2011
•
•
•
•
•

MYB – Additional £190k sales per annum from exhibiting at Heimtextil and working with SDI
Moscow
Follow up meetings arranged at European shows with Russian buyers
The company have recently taken on an agent in the Russian market and are looking to channel
new customers through the agent.
Sales in Russia were only slightly hit by the financial crisis of 2008, not effected really as
compared with how their sales in the USA were affected.
At the moment MYB are having a very healthy growth in sales in Russia and are fully satisfied
with their Russian business.

“Without SDI input and support we would not have been able to make Russia our second largest
market “ – Margo Graham, Design Director, Morton Young and Borland
SDI Moscow
the Network
SDI Moscow
how we fit SE network
SDI Moscow field office key functions:
•Customer specific market research
•Marketing communications
•Verified advise on setting up & doing business in Russia
•In-market visits’ and programmes’ arrangements
•Exhibitions, seminars, networking events, learning journeys
•Inward/buyer missions activities
•Market awareness activities (sector & cross-sector)
•Globalscot network engagement
SDI EMEA
Number of co’s serviced by EMEA field
Total 2010/11 – 483 CO’S

229
250
200
150

115

149

131
97 97

100

42 36

50
0
Duseldorf Central Europe

London Northern
Europe

Moscow Russia & CIS

Paris Southern
Europe Middle
East & Africa

Total 2009/10 – 414 CO’S
SDI Moscow - product delivery
2009 - 2012
Opportunities

Unique co's / Opportunities

Unique co's

2011-12

2010-11

2009-10
0

20

40

60

80
SDI Moscow Products & Services, Sectors
SDI Moscow - product delivery
2011-12 Product and Engagement Type

2012 Unique co's by sector (54 total)

Product Name Number of opps

OMS
EMLJ
Int Specialist Engmnt
Int Strat W/shop
OMIS
Globlascot
2011-12 Opps by product type

37
17
7
3
4
1

Food & Drink
Textiles
Energy
ICT
Whisky
Financial services
Education
Forestry
Tourism

14
16
11
5
4
1
1
1
1

2012 Opp's by country
Russia
Ukraine
Kazakhstan
Azerbaijan

49
4
4
1
SDI Moscow
Products & Services
Mission:
To deliver high quality value add products and services aimed at winning new
market business opportunities in Russia and CIS
Products & services:
Standard and bespoke, focused on customer needs
• OMS - Overseas Market Support
• EMLJ - Exhibitions & Missions, Learning Journeys
• Ministerial visits (with Scottish Government)
SDI Moscow
Products & Services - OMS
CONCEPT
• Support to companies to target
overseas markets
• Flexible, Tailored and Joined-Up
• Brings together assistance from
regional SE/SDI representatives &
Scottish Development International
field offices
• Maximising the use of UK PLC
exposure and SE networks/partners
• GlobalScot network

IMPLEMENTATION
• All enquiries are channelled via SDI
Scotland office to field office
• Brief/terms agreement
• Report/presentation of market research
and target identification
• Visit programme arrangement and
formal introduction to the market
participants, regulators, networks
• Assistance on market communications
• Feedback analysis, follow up and
further advice
SDI Moscow
OMS
OUTPUT
• Market research report,
presentation or/and detailed faceto-face discussion
• In-market visit programme
arrangement
• Hand-holding in-market visit
assistance
• After-sales support
SDI Moscow
Products & Services - LJ
CONCEPT
• 3-4 days in-market visit for first-time
exporters, newcomers usually timed
along with major in-market event
(exhibition, conference)
• Doing business in … market brief
and Q&A’s with market participants
and regulators
• Access to UK Plc and SE networks
• Visits to key targets / individual
meetings
• Cultural icebreaking
SDI Moscow
Products & Services - Exhibitions
CONCEPT
• Scotland stand with individual
spaces for companies
• Pre-visit market brief
• Individual companies enquiries
(under OMS or OMIS terms)
• Marketing communications
• Shipment logistics
• Visitors traffic coordination and
management
• Post-event follow up and
business development
SDI Moscow
Products & Services - Missions
CONCEPT
• Scotland’s key sector strength
focus, e.g. Subsea Technology
• 2-3 strategic in-market targets
• High-level communication &
engagement with key decisionmakers
• Partnership with UK-Scotland
industry/trade associations
• Platform for individual sales
pitches strengthened by mission
critical mass
• Often – cultural link
SDI Moscow
Staff responsibility

Yuri Andreev

Svetlana Simonova

Regional manager

Senior executive

Anna Kravtsova

Sector - Oil & Gas

Sectors:

ICT

Food & drink

International
Admin

Textiles
SDI Moscow Planning & Way Forward
•
•
•

•

Keep the quality of service & speed of reaction to meet customer expectations
Manage resources, ADE integration Q2
Set and achieve ambitious targets in key sectors:
– Energy - focus on off-shore sectors in Russia and Kazakhstan
– Premium Textiles - interior sector & fashion beyond Moscow market
– Food & Drink – Ru 10 implementation, individual co work
– Life Sciences, medical - individual company work, refresh strategic outlook
– DMET – formulate market strategy
– Inward investment from watching brief to active projects
Key other CIS geographies – Ukraine, Kazakhstan, Azerbaijan
Doing Business in Russia

Bilateral Trade
Alan Thompson
Russia Director, Russo-British
Chamber of Commerce
An introduction and overview to

The Russo-British Chamber of
Commerce

Alan Thompson
Edinburgh
10/12/2013
The Russo-British Chamber of
Commerce
•
•
•
•

Economic Environment Update
History of the RBCC
Where we are today?
Strategic direction
Economic Environment
• Russians: Vladimir Putin. 3.08.2012
–

We should confess we have a very modest volume of trade [between our two
countries] : it is all of 21 billion [dollars], whereas with Germany we have 72. It is
obvious that the United Kingdom and Germany have different sizes of their
national economies but still this size difference is not 21 billion. I am certain that
we can relatively easily achieve at least in the region of 50 billion in the near
future.

• British: John Cridland 27.11.2012
–

“We’ve identified a potential £30 billion export prize by 2020 if the UK creates the right
business environment for our industries to thrive, and mid-sized businesses will be at the
heart of this. Russia is a significant trading partner for British businesses, with more than
600 UK companies already operating there and UK exports totalling £5 billion. In the last
two years, the value of British goods exported to Russia has increased by over 80%.
This is expected to grow further as Russia opens its economy up to more international
trade and investment.
Economic Environment ‘08-’13
2008 г.

2009 г.

2010 г.

2011 г.

Янв. – март
2013 г.

2012 г.

млрд.
долл.

прирос
тв%

млрд. прирост
долл. в %

млрд. прирос
долл. т в %

млрд.
долл.

прирост в млрд.
%
долл.

прирост млрд.
в%
долл.

приро
ст в %

Оборот

22,5

34,8

12,6

-44,0

15,9

25,9

21,2

33,3

23,2

9,6

5,6

15,6

Экспорт

14,9

34,8

9,1

-39,0

11,3

24,7

14,0

23,8

15,0

7,3

3,7

22,2

Импорт

7,6

35,0

3,5

-53,6

4,6

29,0

7,2

56,9

8,2

14,1

1,9

4,4
The Russo-British Chamber of Commerce
RBCC is a not-for-profit company that has worked to promote trade and
cooperation between the UK and Russia since 1916.
The RBCC:
–

–
–

works to promote trade and cooperation between the UK and Russia, helping
companies in both countries to find trading partners and representing the interests
of its member companies of all sizes.
aims to be the first point of contact for Russian companies wanting to do business
in the UK and for British companies wanting to do business in Russia.
is governed by a high-level Board of Directors, who between them have many
decades’ experience of doing business between our two countries.

RBCC Members include multinational corporations, but also Small and
Medium Sized Enterprises working in all sectors of the economy.
The RBCC derives its income from membership fees and sponsorship of
various activities and events held in both countries.
The RBCC Today

• 550 companies
• 15 bi-lingual employees
• 3 offices: Moscow, London, St.P
•A unique trade newtork
RBCC Fundamentals
The provision of up to date, information and
advice
• Quarterly Magazine «The Bulletin», The Observer, And a
monthly news letter

Trade delegations – Kaluga
Promotion:
• Companies, Regions Oblasts, Republics, Products

Events – for business people to meet:
Seminars, Industry specific Conferences,
Investment Forums, Film viewings,
Examples of successful
investments
Succesful SME projects:
Over the last 6 months the RBCC has:
1. A min of 25 requests with a positive outcome –
introductions to distributors with a view to market
entry (products/services) to Russia
2. 3 companies “entering the market”
3. M&A- two major acquisition contracts faciliated
4. Bringing British businesses to the Regions of Russia
with RBCC trade missions – Nizhny Novgorod, Kaluga
Approximate ROI:
For every 1 GBP invested into membership or the RBCC,
companies on average obtain 5 GBP of value from
business development, services;
Strategic Aim/ RBCC Ambition
By 2016, the 100th Anniversary of the establishment of the RussoBritish Chamber of Commerce, the organisation will be regarded as
the foremost authority on establishing trade links between Russia and
the United Kingdom in both commercial and non-profit spheres; the
RBCC will achieve this by concentrating on the following three
strategic areas:
- Through the stimulation of dialogue and interaction of both
communities through the organisation of events;
- Through the support and further growth of its commercial
network of members – themselves both Russian and British
businesses representing a wide cross section of industries and
service providers through improved satisfaction for services
received to individual members;
- By contributing net 10bn+ GBP to the external trade between
UK and Russia
Main aim:
Thank you for your attention:
Alan Thompson Director, RBCC
Alan.Thompson@rbcc.com
+7 495 961 2160
Doing Business in Russia

Setting up sales / distribution
channels in Russian market
David Cant
Managing Director
Albion (Overseas) Ltd.
Doing Business in Russia
10th December, 2013, Edinburgh

David Cant
Albion (Overseas) Ltd
www.albionoverseas.com
About Albion (Overseas)
• We only work in Russia
• Exporter (Distributor)
• UK/Russian office, warehouse, staff etc
• “Consultancy” help for other exporters
• Certification
• “Outreach” activity (Events, Training, Publications, Online Services)
• We are not theoreticians. We’re dirty!
Why Russia?
• Increasing number of companies.
• Less expensive than you think.
• Geographical proximity.
• Increasing political stability.
• Here, we are all competing for the same business.
• “Russia is one of the most industrialised of the former soviet Republics.
However, years of very low investment have left much of Russian industry
antiquated and highly inefficient.” (economywatch.com)
Killer Facts (1.5): Economy
600
500
400
300
200
100
0
1999 2000 2002 2004 2005 2006 2007 2008 2009 2010 2012
Foreign Exchange Reserves (US$bn.)
Source: CIA World Factbook
Why Russia? –
Largest Country in the world.
That’s a lot of opportunity...

9 Time Zones.

70 UKs would fit into Russia.
Perceived Problems:
• Mafia
• Finding people who understand
your product
• Corruption
• Non-Payment
• IPR
• Corp. Governance
• FDI Slow
• Accountancy Standards
• Entrepreneurship
• Legislative and Political Issues
• High Cost of Market entry (T+M)

•
•
•
•
•
•
•
•
•
•
•
•

Demographic crisis
Weak military
Inflation
Brain Drain
Capital Flight
Weak Banks
Climate/Size
Lack of infrastructure
Language difficulties
Cultural barriers
Economic Instability
Security Issues
Real Problems:
• Difficulty in finding reliable and tested
distributors
• Expense
• Lack of knowledge of what the
distributor is doing
• Difficulty in making forecasts or
sticking to targets
• Export documentation
• Corp. Governance
• Lengthy sales cycles

•
•
•
•

Poor communication
Language barriers
Complicated customs procedures
Difficult to
recruit/retain/administer/replace
staff.
• Missing opportunities in the regions.
• Stifling bureaucracy.
• Time constraints to develop full
potential.
Where companies go wrong:
•
•
•
•

Too many seek an easy way in.
It is bad to try to develop a market with zero expenditure.
You are not pioneers; the Board should be proactive.
Take advice and help wisely.

•
•
•
•
•

Don’t just replicate what your company does in other markets.
Don’t appoint a distributor, then go home and wait.
Don’t expect to do business by email.
Don’t leave export documents to Brian downstairs.
Don’t assume your product is too technical to be understood.
Routes to market:
It is important to spend money WISELY:
DO’s
•
•
•
•
•
•

OMIS report
Product Certification
Literature and website in Russian
Planned trips
Building a sales pipeline
Planned exhibition participation.

DONT’s
• “Fact-finding” trips (a.k.a
unplanned trips).
• “Market Research” (a.k.a
procrastination).
• Sending of samples, emails etc
to unknown distributors.
Routes to Market:
• Agent
• Distributor
• However:
• They are no longer queuing up to represent you. You must find them
and put forward your case.
• Russia is moving fast. Choose them wisely, or you may lose control, time
and money.
Consider why a distributor would wish to represent YOU.
Routemap - (Reactive: Zero Cost):
• Desk Research:
• Internet, databases, libraries e.g. IOD.
• Register with www.UKTI.gov.uk
• Meet your ITA (quiz them on their experience!).
• Use specialist help (Bank, Freight Forwarder, etc)
• Plan and budget. “Free stuff” is not always helpful. Google translate is a
good example of this.
• Identify all your options: DIY, Distributor, Footprint, Presence, etc
• Consider reports, such as OMIS.
Routemap - (OMIS)
...OMIS
• A report to establish the market for your product and to list potential
buyers.
• Do you really need a report?
• Plans for what you will do with it.
• OMIS v Commercial report.
• The advantages and disadvantages of each?
• There should be nothing in the report that you can ‘Google’!
Routemap - (Reactive: Zero Cost):
• Question the board on their commitment.
• How much time can be devoted to this? The falsehood of “EMEA”....
• Now consider: Product Certification, Travel, Reports, Samples, Translation,
Interpreting, Couriers, Trade Fair Participation.
•
•
•
•

Establish competition. Deconstruct their prices.
Find possible margin, then compile the pricelist
What foreign currency should you be selling in? Probably not Sterling.
Make it easy for your Buyer, not just EXW Sterling! Put EXW into CIF.
Consider DDP. Can you offer the product for Roubles?
• PREPARE A BUDGET!
Routemap - The Spending Zone:
Language: Translate your homepage (at least), produce a Russian brochure / leaflet, and
have cards in Russian (not a UK address)...
Consider how to follow up (ie not just by email, and in Russian).
Consider certification
Plan trips round a trade fair. Don’t just walk round it; set up meetings in advance.
Visit and visit again! Minimum 4 times a year if via distributor/agent.
Support your partner with trade fairs, literature, samples.
Get above the Power Line. It’s all about relationships!
Routemap - The Spending Zone:
4-Day Moscow Trip:
Return Flight UK-Russia
Subsistence
Taxis, UK + Russia
Hotel, 3 nights, incl tax
Interpreter
2-day Follow up
---------------x 4 trips / year
One Multi visa
One colleague trip
Colleague’s single visa
2 Regional flights

16 Days UK time
4 Days Colleague’s time

£
£
£
£
£
£

200.00
300.00
240.00
900.00
400.00
400.00

£ 2,440.00
£ 9,760.00
£ 600.00
£ 1,680.00
£ 300.00
£ 500.00
=========
£12,840.00
=========
£ 2,560.00
£ 640.00
=========
£16,040.00

Other Costs:
Report
Couriers, samples etc
Translation
Professional Fees

Certification (UK)
Total
Add other costs:
TOTAL COST YR1

£3,000.00
£ 800.00
£1,500.00
£2,500.00
-------------£ 7,800.00
£9,500.00 *
========
£17,300.00
£16,040.00
=========
£ 33,340.00

*It is extremely difficult to give an average
price.

This is the cost, whether you use a distributor or do it
yourself. Either way, you must visit the market several
times per year. You sell to people, so build relationships.
Footprint – In Brief:
• Infrastructure (office, warehouse, salesperson)
• Instant. Fast entry and exit strategy
• Russians, talking to Russians, in Russian, in the right time zone
• Control over your Russian Business. Pricing, end-users, everything.
• Increased margins for the manufacturer
• Access to Russian Rouble sales
• Zero bureaucracy (almost)!
• Troubleshooting (currency transfers, freight routines)
• Consignee Address
Footprint (cont’d):
• No lock in period – only pay as long as it works.
• Savings (interpreters, docs, fees, time)
• We won’t work with your competitors.
• Faster deliveries, item replacements (local suppliers etc).
• Clear communication with UK Albion
• Hands-Free administration of local expenses.
• Management is freed up to develop other markets
• Objective presence – intelligent feed, and control over products and price.
Russians speaking to Russians
Footprint – Costs saved:
Report, Couriers, Fees, Translation
GOST Certification (RF)
2 Trips to Russia
8 working days not spent in Russia

Your 1-year costs (£33,340.00) minus above savings
Add cost of Footprint One Year:
Projected over one year, total cost of:

£7,200.00
£3,500.00
£4,800.00
£1,440.00
==========
£16,940.00
= £16,400.00
£20,400.00
£36,800.00

Having a Moscow office and salesman costs the exporter £3,460.00
Now consider the additional wins:
10 days gained: 10/252 working days =
Russian presence = relentless prospecting:
Access to internal Rouble market
Margin gained by making sales direct to customers:

Co. T/O + 1/25
Return + x%
Return + y%
40%
Footprint Clients:
Allen Gears, Alphatech, Arefco, Asahi Seiko, Avalon Sciences, Barwell Global, Bennet
Opie, BOCM Pauls, Brand Search, Canyon Europe, CG Europe, Chelsom Lighting,
Chesapeake, Coltrad, Delmatic, Esschem, Global Protein Solutions, Good Food and
Wine Company, Grace Foods, Greenwood, Hart Doors, HH Print, Hubcast, IDS, Jacob
White, Juratek, Katsu OY, Ken Read & Son, Kestrel Thermoplastics, Kovil OY, Linatex
(Weir Group), Lucy Zodion, Lucy Switchgear, M&I Materials, MacAlpine, Marley,
Miller, Montracon, Munster Simms, NJO LEDs, Owen Mumford, Powell Craft, SeaBand, Sly Filters, Smart Beauty, Spline Gauges, Tideland Signal, Titan Europe, Unison
Colour, Velcro, Verder Pumps, VisiTech, White House Products
Some Final Thoughts:
•
•
•
•
•

Size doesn’t matter. Russia is for everybody, especially SME’s
Russia is not usually difficult. Scary stories are the exception!
Meetings may be difficult to arrange. Be patient.
Use specialist help.
This is not Poland, China, Europe. Not Asia, Eurasia, FSU or CIS
This is Russia/
• Consider your product or service. Adaption needed?
• Understand and enjoy Russia; Learn something in Russian!
Thank you!
David Cant
Albion (Overseas) Ltd
+44(0)1732 783555
david@albionoverseas.com
Twitter: @Albion_Overseas
www.albionoverseas.com
Doing Business in Russia

Smart Exporter – outline of
the programme
Isabelle Henderson
International Trade Adviser
Smart Exporter
WHAT IS SMART EXPORTER?

• Smart Exporter is an international trade skills
programme designed to increase exporting skills and knowledge
amongst Scottish businesses
• This initiative is delivered by SDI and funded by ESF
• Smart Exporter services are available on a free or subsided basis to
businesses and individuals across Scotland
EXPORT ADVISOR SUPPORT

Access to support from an Experienced Export Advisor which
includes:
• A one to one meeting to discuss your international plans and how the Smart
Exporter programme can help your business
• Help with market research about the market potential for your product or service
or information about your competitors
• Access to free export training through workshops or online
• Practical advise on how to be paid from an overseas sale to help with
distributor agreements via Smart Exporter’s technical support
SMART EXPORTER – WHATS COMING UP
Market Awareness events
• Doing Business in India (31st October 2013, Edinburgh)
• Access Europe 2013 (6th November 2013, Edinburgh)
• Doing Business in Japan (28th November 2013, Glasgow)
• Doing Business in Russia (10th December 2013, Edinburgh)
• Emerging Europe 2014 (5th February 2014, Glasgow TBC)

Exporting workshops
-

Introductory Programme (New Exporters) – Edinburgh (November 2013)
Introductory Programme (New Exporters) – Glasgow (January 2014)
Intermediate Programme (Inexperienced in international trade), Glasgow (Jan to March 2014)
Intermediate Programme (Inexperienced in international trade), Stirling (Jan to March 2014)

Future International E-commerce events and workshops to be scheduled

All Smart Exporter Events: http://www.sdi.co.uk/Events.aspx
Doing business in russia all presentations (final)
Doing Business in Russia

Networking Break
20 min.
Sign up for one to one meetings at
the registration desk
Doing Business in Russia

Breakout sessions
• Opportunities and challenges in the market by sector
• Product Accreditation and Certification requirements
• The practicalities of doing business in Russia:
Contracting & payments: reducing risk & liability
Doing Business in Russia

Networking Lunch
Followed by one to one meetings in
the boardroom
(see registration desk for availability and schedule)

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Doing business in russia all presentations (final)

  • 1. Doing Business in Russia Tuesday, 10 December 2013 The Caledonian Hotel, Edinburgh
  • 2. Doing Business in Russia AGENDA 09:30 – 11:10 11:10 – 11:30 11:35 – 13:10 13:10 – 13:30 13:30 Presentations Networking break Breakout sessions Group A: Dornoch Suite Group B: Glamis Suite Group C: Boardroom Networking lunch Start of one to one sessions
  • 3. Doing Business in Russia Welcome and Introduction Yuri Andreev Country Manager SDI Russia
  • 4. Doing Business in Russia Introduction and Visa considerations Sergey Krutikov Consul General of the Russian Federation, Edinburgh
  • 5. Consulate General of the Russian Federation in Edinburgh Doing Business in Russia 10th December 2013
  • 6. Russian Consular Services in Edinburgh • Notarial Services – Consulate General • Visas – Visa Application Centre
  • 7. Notarial Services • Mr Timofey Kunitskiy Consulate General of the Russian Federation 58 Melville Street, Edinburgh EH3 7HF 0131 225 34 84 visa@edconsul.co.uk • Consular Certification Equal to Russian Notary Public Certification • ‘Legalisation’ Question
  • 8. Notarial Services • Attestation of Signatures • Verification of Translations – NB: No Translation Service • Attestation of Copies • Witnessing Powers of Attorney
  • 9. Visas – Stereotypes and Opinions • • • • • • “Closed Country” Complicated Procedure “Travel Agencies Only” High Costs “Shopping” Approach Facts: – – – – 13 000+ visas issued annually Effectively 100% approval rate for submitted applications No processing-related delays “Walk-In” approach enables applicant to discuss the procedure with the Centre’s Staff
  • 10. Visas – Visa Application Centre Russian Visa Application Centre In Edinburgh Monday - Friday 16 Forth Street, Edinburgh EH1 3LH http://ru.vfsglobal.co.uk 0905 889 01 49
  • 11. Visas – Application Process • Fixed list of documents required • Fixed application assessment time • Relatively quick assessment – 7 days – Next day • No appointment required • Submitting applications by post or by proxy allowed
  • 12. Visas - Business Visitors • Business Visa – – – – – Single/Double/Multiple Entry, Up to 1 year Invitation from Federal Migration Service (FMS) Telex (digital) Invitation Single Entry, 7 Day Processing - £77.60 Multiple Entry, 7 Day Processing - £227.60 • Special (Special Purpose) Tourism Visa – – – – Single/Double Entry, Up to 1 month Hotel or Travel Agency Voucher/Confirmation Single Entry, 7 Day Processing - £77.60 Double Entry, 7 Day Processing - £92.60
  • 13. Visas - Business Visitors FMS Invitation
  • 14. Visas - Business Visitors • Business Visa for the Schengen Zone nationals – Single/Double/Multiple Entry, Up to 5 years – Invitation From a Company Registered in Russia – Next Day Service Not Available – Single/Multiple Entry, 7 Day Processing - £57.60
  • 15. Useful sources and links Russian Visa Application Centre (Edinburgh, London) http://ru.vfsglobal.co.uk Embassy of the Russian Federation in the United Kingdom / Consulate General of the Russian Federation in Edinburgh http://rusemb.org.uk Russian Trade Delegation in the United Kingdom http://rustrade.org.uk
  • 16. Doing Business in Russia Russian market overview and business context Yuri Andreev Country Manager SDI Russia
  • 17. Yuri Andreev Scottish Development International December 2013
  • 18. INDEX Russian Market Highlights SDI Moscow – Role, Place, Difference Q&A, discussion
  • 19. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY •World’s largest country = Scotland x 217 •143 million population – within top 10 in the world •Nearest BRIC – GMT + 3 (+4 winter)
  • 20. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY Region (000s km) Density/ sq km Share of Urban Population 26.2% 650 57.1 80.9% 22.97 16.2% 591 38.8 56.8% 13.44 9.5% 1,687 8.0 82.5% 6.44 4.5% 6,169 1.0 74.3% Siberian 19.56 13.8% 5,145 3.8 70.9% Urals 12.28 7. Volga 8.6% Nizhniy Novgorod Samara Perm 21.2% Ufa Saratov Kazan 1,818 6.8 79.3% Central Population (million) 3. Northwestern St. Petersburg Southern 1. Central North-Western Moscow Ryazan Tula Twer Far-Eastern Vladimir Voronezh Yaroslavl Volga 2. Southern Krasnodar Rostovon-Don Volgograd Stavropol % Total Population 37.12 6. Urals Yekaterinburg Chelyabinsk Tyumen Area 30.12 1,037 5. Siberia Novosibirsk 29.0 Krasnoyarsk Omsk Irkutsk 4. Far East Vladivostok 70.3%
  • 21. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY Rank 1 Cities Population Rank Cities 3. Northwestern Moscow St. Petersburg 10,563,038 11 Ufa 6. Urals Yekaterinburg Chelyabinsk Tyumen Population 1,030,812 2 St. Petersburg 4,600,276 12 Perm 986,497 3 Novosibirsk 1,409,137 13 Volgograd 979,617 Yekaterinburg 1,372,800 14 Krasnoyarsk 962,466 Nizhni Novgorod 1,271,045 15 Voronezh 847,620 Kazan 1,136,566 16 Saratov 827,193 Samara 1,133,754 17 Tolyatti 721,752 18 Krasnodar 1. Central Moscow 4 Ryazan Tula Twer 5 Vladimir Voronezh Yaroslavl 6 7 8 9 10 Omsk 2. Southern Krasnodar RostovChelyabinsk on-Don Volgograd Stavropol Rostov-on-Don 7. Volga Nizhniy Novgorod 1,127,675 Samara Perm Ufa 1,095,909 Saratov Kazan 1,048,124 19 20 5. Siberia Novosibirsk Izhevsk Krasnoyarsk Omsk Irkutsk Yaroslavl 713,426 4. Far East Vladivostok 610,633 606,880
  • 22. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY 2007 2008 2009 2010 2011 GDP (Nominal €bn) 949 1,137 878 1,148 1,272 GDP (Real) Growth (%) 8.1 5.2 -7.9 3.4 4.3 6,675 8,027 6,213 8,141 9,055 Unemployment 6.1 6.3 8.4 7.6 7.1 CPI Inflation, yr/yr av. % 9.0 14.1 11.7 6.8 6.1 GDP per Capita (€)
  • 23. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY
  • 24. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY 2007 2008 2009 2010 2011 Consumer Spend (€bn) 455.83 547.33 479.99 593.98 712.78 Total Retail Market (€bn) 310.23 382.10 330.33 399.19 479.03 Grocery Retail Market (€bn) 139.46 174.17 160.70 193.61 231.85 981 1,227 1,137 1,379 1,657 44.9% 45.6% 48.6% 48.5% 48.4% Grocery Retail Spend / Capita (€) Grocery Retail as a % of Retail Grocery Retail Market Europe TOP 10 T/o (€bn) Grocery Retail Market Global TOP 10 T/o (US$bn) 1. France 208.17 1. 2. Russia 193.61 2. China 789.91 3. Germany 162.46 3. Japan 359.96 4. United Kingdom 161.96 4. India 350.38 5. Italy 129.56 5. Brazil 289.92 6. Spain 97.05 6. France 276.04 7. Turkey 67.73 7. Russia 256.38 8. Switzerland 39.77 8. Germany 215.43 9. Poland 38.43 9. United Kingdom 214.60 10. Belgium 34.92 10. Italy 171.80 USA 881.84
  • 25. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY Consumer and Grocery Retail Spend Dynamics Per Capita (Euro) 5,500 5,095 4,500 4,232 4,000 3,500 3,359 3,000 2,500 2,000 2009 2010 2011e 1,657 1700 Grocery Retail Market/Capita EUR Consumer Spend/Capita EUR 5,000 1600 1500 1,379 1400 1300 1200 1,137 1100 1000 900 800 700 2009 2010 2011e
  • 26. Russian Market Highlights - GEO, DEMOGRAPHICS, ECONOMY Global oil consumption Crude & condensate production by Ru majors
  • 27. Russian Market Highlights – UK-RU trading relations UK-Russia trading context UK EXPORTS TO RUSSIA UK TOP 20 MARKETS 2011 (GOODS) Country of export £ millions £ millions Rank 2011 Rank 2010 2011 Change in 2011 Jan-Dec 2010 Jan-Dec % change Jan-Dec Jan-Dec ranks Trade in Goods 01 02 03 04 05 06 07 08 09 10 11 12 UNITED STATES 38,949 37,413 GERMANY 33,038 28,539 Total FRANCE 23,056 20,262 NETHERLANDS 22,671 20,537 Road vehicles IRISH REPUBLIC 17,219 16,375 Medicinal BELGIUMand pharmaceutical products 15,354 12,946 Specialised industrial machinery ITALY 9,888 8,798 SPAINgenerating machinery 9,449 Power and equipment 9,700 CHINA 7,225 Miscellaneous manufactured 8,773 nes article SWEDEN 6,141 5,408 Other transport equipment INDIA 5,411 3,952 General industrial and equipment, and parts nes SWITZERLAND machinery 5,375 5,218 Chemical materials and products nes HONG KONG 5,062 4,202 CANADAoils, resinoids, perfumess and cleansing prep. 4,848 4,318 Essential RUSSIA 4,781instruments 3,451 Professional, scientific and control UAE 4,715 Articles of apparel and clothing accessories 3,892 JAPAN 4,395 4,101 Electrical thereof POLAND machinery, nes and electrical parts 3,676 4,187 Telecoms and AUSTRALIA sound recording and reproducing apparatus 4,179 3,175 TURKEY 3,698 3,074 Source: BIS analysis of data from HM Revenue & Customs Total Exports 4 GBP 16 14 10 5 19 12 -3 21 14 37 3 20 12 39 21 7 14 32 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CountryShare CountryShare of 2010 % Change % Share 2011 Jan-Dec 2010 Jan-Dec Total Exports in Exports 2011 Exports GBP 0 1 13.2% 2 0 11.2% 38.6% 4,781,127,609 3,450,708,224 4 1 7.8% 3 -1 7.7% 1,745,031,882 1,090,323,767 60.0% 5 0 5.8% 304,291,029 294,222,979 5.2% 3.4% 6 0 271,927,800 167,236,095 3.4% 62.6% 8 1 7 -1 242,371,585 180,363,348 3.2% 34.4% 9 0 228,649,387 147,428,114 3.0% 55.1% 10 0 2.1% 184,066,100 106,353,407 73.1% 15 4 1.8% 180,058,838 128,213,591 1.8% 40.4% 11 -1 147,057,214 63,511,277 1.7% 131.5% 13 0 12 -2 130,849,460 121,370,109 1.6% 7.8% 18 3 128,760,003 93,955,400 1.6% 37.0% 16 0 126,286,792 103,467,077 1.6% 22.1% 14 -3 1.5% 120,663,955 102,740,939 1.4% 17.4% 17 -1 85,811,792 58,012,036 1.4% 47.9% 20 1 22 2 1.3% 14.3% 10.9% 7.7% 7.8% 36.5% 6.2% 6.4% 4.9% 5.7% 3.4% 3.7% 5.1% 2.8% 4.8% 2.1% 3.8% 1.5% 3.8% 2.0% 3.1% 1.6% 1.6% 2.7% 1.3% 2.7% 1.5% 2.6% 1.6% 2.5% 1.4% 1.8% 1.2% 1.2%
  • 28. Russian Market Highlights – Scottish industry ranking Export markets ranking by Scottish industries
  • 29. Russian Market Highlights – Customs Union Russian Federation • Capital City: Moscow • Population: 143 million • GDP (PPT): Customs Union Russia, Belarus, Kazakhstan $1.9 trillion Per capita $16,6 Capital Centres: Moscow, Minsk, Astana • Total • Population: • GDP: 167,5 million Total $2.42 trillion Per capita $14.5
  • 30. Russian Market Highlights – SUMMARY • • • • • • • Healthy macro-economic situation Strong performance – heavy industry and consumer Parliament and presidential elections are over Accession to WTO – Aug 2012 Customs Unions with Kazakhstan and Belarus – Jan 2012 Impressive UK-RU trade dynamics Good match of SCO-RU key sector strategic goals
  • 31. Russian Market Highlights - CHALLENGES • • • • • • • • • • Product/services not concept/idea Local certification/standards compliance/registration Packaging/labelling Language Customs/import duties Payment terms, credit insurance Marketing communications Length of time to secure business Finding the right partner Visits to market essential – group & individual
  • 32. Russian Market Highlights – WHY RUSSIA?...
  • 33. Russian Market Highlights - WHY RUSSIA?...
  • 34. Russian Market Highlights – WHY RUSSIA?... Why Russia?... Views from Volvo Cars, inclusive of years 2009-11 25000 20000 15000 10000 5000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 35. Russian Market Highlights – WHY RUSSIA?... why Russia?... Views from Ayrshire 2004 - 3 clients with 4-5 orders through the year and low volumes 2005 - Showcase event in Moscow 2006 - detailed market research through OMS 2007-08 - two in-market sales visits and two Heimtextil exhibitions 2008-09 - sales picked 5 times to the level of 2004 Higher additional margins over standard goods prices. Russia is currently MYB’s second biggest export market worldwide. “…this success is fundamentally due to the research and ongoing market support from…the SDI office in Moscow” John Glen, MYB Director Sales
  • 36. Russian Market Highlights why Russia?... Views from Ayrshire, inclusive 2009-2011 • • • • • MYB – Additional £190k sales per annum from exhibiting at Heimtextil and working with SDI Moscow Follow up meetings arranged at European shows with Russian buyers The company have recently taken on an agent in the Russian market and are looking to channel new customers through the agent. Sales in Russia were only slightly hit by the financial crisis of 2008, not effected really as compared with how their sales in the USA were affected. At the moment MYB are having a very healthy growth in sales in Russia and are fully satisfied with their Russian business. “Without SDI input and support we would not have been able to make Russia our second largest market “ – Margo Graham, Design Director, Morton Young and Borland
  • 38. SDI Moscow how we fit SE network SDI Moscow field office key functions: •Customer specific market research •Marketing communications •Verified advise on setting up & doing business in Russia •In-market visits’ and programmes’ arrangements •Exhibitions, seminars, networking events, learning journeys •Inward/buyer missions activities •Market awareness activities (sector & cross-sector) •Globalscot network engagement
  • 39. SDI EMEA Number of co’s serviced by EMEA field Total 2010/11 – 483 CO’S 229 250 200 150 115 149 131 97 97 100 42 36 50 0 Duseldorf Central Europe London Northern Europe Moscow Russia & CIS Paris Southern Europe Middle East & Africa Total 2009/10 – 414 CO’S
  • 40. SDI Moscow - product delivery 2009 - 2012 Opportunities Unique co's / Opportunities Unique co's 2011-12 2010-11 2009-10 0 20 40 60 80
  • 41. SDI Moscow Products & Services, Sectors
  • 42. SDI Moscow - product delivery 2011-12 Product and Engagement Type 2012 Unique co's by sector (54 total) Product Name Number of opps OMS EMLJ Int Specialist Engmnt Int Strat W/shop OMIS Globlascot 2011-12 Opps by product type 37 17 7 3 4 1 Food & Drink Textiles Energy ICT Whisky Financial services Education Forestry Tourism 14 16 11 5 4 1 1 1 1 2012 Opp's by country Russia Ukraine Kazakhstan Azerbaijan 49 4 4 1
  • 43. SDI Moscow Products & Services Mission: To deliver high quality value add products and services aimed at winning new market business opportunities in Russia and CIS Products & services: Standard and bespoke, focused on customer needs • OMS - Overseas Market Support • EMLJ - Exhibitions & Missions, Learning Journeys • Ministerial visits (with Scottish Government)
  • 44. SDI Moscow Products & Services - OMS CONCEPT • Support to companies to target overseas markets • Flexible, Tailored and Joined-Up • Brings together assistance from regional SE/SDI representatives & Scottish Development International field offices • Maximising the use of UK PLC exposure and SE networks/partners • GlobalScot network IMPLEMENTATION • All enquiries are channelled via SDI Scotland office to field office • Brief/terms agreement • Report/presentation of market research and target identification • Visit programme arrangement and formal introduction to the market participants, regulators, networks • Assistance on market communications • Feedback analysis, follow up and further advice
  • 45. SDI Moscow OMS OUTPUT • Market research report, presentation or/and detailed faceto-face discussion • In-market visit programme arrangement • Hand-holding in-market visit assistance • After-sales support
  • 46. SDI Moscow Products & Services - LJ CONCEPT • 3-4 days in-market visit for first-time exporters, newcomers usually timed along with major in-market event (exhibition, conference) • Doing business in … market brief and Q&A’s with market participants and regulators • Access to UK Plc and SE networks • Visits to key targets / individual meetings • Cultural icebreaking
  • 47. SDI Moscow Products & Services - Exhibitions CONCEPT • Scotland stand with individual spaces for companies • Pre-visit market brief • Individual companies enquiries (under OMS or OMIS terms) • Marketing communications • Shipment logistics • Visitors traffic coordination and management • Post-event follow up and business development
  • 48. SDI Moscow Products & Services - Missions CONCEPT • Scotland’s key sector strength focus, e.g. Subsea Technology • 2-3 strategic in-market targets • High-level communication & engagement with key decisionmakers • Partnership with UK-Scotland industry/trade associations • Platform for individual sales pitches strengthened by mission critical mass • Often – cultural link
  • 49. SDI Moscow Staff responsibility Yuri Andreev Svetlana Simonova Regional manager Senior executive Anna Kravtsova Sector - Oil & Gas Sectors: ICT Food & drink International Admin Textiles
  • 50. SDI Moscow Planning & Way Forward • • • • Keep the quality of service & speed of reaction to meet customer expectations Manage resources, ADE integration Q2 Set and achieve ambitious targets in key sectors: – Energy - focus on off-shore sectors in Russia and Kazakhstan – Premium Textiles - interior sector & fashion beyond Moscow market – Food & Drink – Ru 10 implementation, individual co work – Life Sciences, medical - individual company work, refresh strategic outlook – DMET – formulate market strategy – Inward investment from watching brief to active projects Key other CIS geographies – Ukraine, Kazakhstan, Azerbaijan
  • 51. Doing Business in Russia Bilateral Trade Alan Thompson Russia Director, Russo-British Chamber of Commerce
  • 52. An introduction and overview to The Russo-British Chamber of Commerce Alan Thompson Edinburgh 10/12/2013
  • 53. The Russo-British Chamber of Commerce • • • • Economic Environment Update History of the RBCC Where we are today? Strategic direction
  • 54. Economic Environment • Russians: Vladimir Putin. 3.08.2012 – We should confess we have a very modest volume of trade [between our two countries] : it is all of 21 billion [dollars], whereas with Germany we have 72. It is obvious that the United Kingdom and Germany have different sizes of their national economies but still this size difference is not 21 billion. I am certain that we can relatively easily achieve at least in the region of 50 billion in the near future. • British: John Cridland 27.11.2012 – “We’ve identified a potential £30 billion export prize by 2020 if the UK creates the right business environment for our industries to thrive, and mid-sized businesses will be at the heart of this. Russia is a significant trading partner for British businesses, with more than 600 UK companies already operating there and UK exports totalling £5 billion. In the last two years, the value of British goods exported to Russia has increased by over 80%. This is expected to grow further as Russia opens its economy up to more international trade and investment.
  • 55. Economic Environment ‘08-’13 2008 г. 2009 г. 2010 г. 2011 г. Янв. – март 2013 г. 2012 г. млрд. долл. прирос тв% млрд. прирост долл. в % млрд. прирос долл. т в % млрд. долл. прирост в млрд. % долл. прирост млрд. в% долл. приро ст в % Оборот 22,5 34,8 12,6 -44,0 15,9 25,9 21,2 33,3 23,2 9,6 5,6 15,6 Экспорт 14,9 34,8 9,1 -39,0 11,3 24,7 14,0 23,8 15,0 7,3 3,7 22,2 Импорт 7,6 35,0 3,5 -53,6 4,6 29,0 7,2 56,9 8,2 14,1 1,9 4,4
  • 56. The Russo-British Chamber of Commerce RBCC is a not-for-profit company that has worked to promote trade and cooperation between the UK and Russia since 1916. The RBCC: – – – works to promote trade and cooperation between the UK and Russia, helping companies in both countries to find trading partners and representing the interests of its member companies of all sizes. aims to be the first point of contact for Russian companies wanting to do business in the UK and for British companies wanting to do business in Russia. is governed by a high-level Board of Directors, who between them have many decades’ experience of doing business between our two countries. RBCC Members include multinational corporations, but also Small and Medium Sized Enterprises working in all sectors of the economy. The RBCC derives its income from membership fees and sponsorship of various activities and events held in both countries.
  • 57. The RBCC Today • 550 companies • 15 bi-lingual employees • 3 offices: Moscow, London, St.P •A unique trade newtork
  • 58. RBCC Fundamentals The provision of up to date, information and advice • Quarterly Magazine «The Bulletin», The Observer, And a monthly news letter Trade delegations – Kaluga Promotion: • Companies, Regions Oblasts, Republics, Products Events – for business people to meet: Seminars, Industry specific Conferences, Investment Forums, Film viewings,
  • 61. Over the last 6 months the RBCC has: 1. A min of 25 requests with a positive outcome – introductions to distributors with a view to market entry (products/services) to Russia 2. 3 companies “entering the market” 3. M&A- two major acquisition contracts faciliated 4. Bringing British businesses to the Regions of Russia with RBCC trade missions – Nizhny Novgorod, Kaluga Approximate ROI: For every 1 GBP invested into membership or the RBCC, companies on average obtain 5 GBP of value from business development, services;
  • 62. Strategic Aim/ RBCC Ambition By 2016, the 100th Anniversary of the establishment of the RussoBritish Chamber of Commerce, the organisation will be regarded as the foremost authority on establishing trade links between Russia and the United Kingdom in both commercial and non-profit spheres; the RBCC will achieve this by concentrating on the following three strategic areas: - Through the stimulation of dialogue and interaction of both communities through the organisation of events; - Through the support and further growth of its commercial network of members – themselves both Russian and British businesses representing a wide cross section of industries and service providers through improved satisfaction for services received to individual members; - By contributing net 10bn+ GBP to the external trade between UK and Russia
  • 64. Thank you for your attention: Alan Thompson Director, RBCC Alan.Thompson@rbcc.com +7 495 961 2160
  • 65. Doing Business in Russia Setting up sales / distribution channels in Russian market David Cant Managing Director Albion (Overseas) Ltd.
  • 66. Doing Business in Russia 10th December, 2013, Edinburgh David Cant Albion (Overseas) Ltd www.albionoverseas.com
  • 67. About Albion (Overseas) • We only work in Russia • Exporter (Distributor) • UK/Russian office, warehouse, staff etc • “Consultancy” help for other exporters • Certification • “Outreach” activity (Events, Training, Publications, Online Services) • We are not theoreticians. We’re dirty!
  • 68. Why Russia? • Increasing number of companies. • Less expensive than you think. • Geographical proximity. • Increasing political stability. • Here, we are all competing for the same business. • “Russia is one of the most industrialised of the former soviet Republics. However, years of very low investment have left much of Russian industry antiquated and highly inefficient.” (economywatch.com)
  • 69. Killer Facts (1.5): Economy 600 500 400 300 200 100 0 1999 2000 2002 2004 2005 2006 2007 2008 2009 2010 2012 Foreign Exchange Reserves (US$bn.) Source: CIA World Factbook
  • 70. Why Russia? – Largest Country in the world. That’s a lot of opportunity... 9 Time Zones. 70 UKs would fit into Russia.
  • 71. Perceived Problems: • Mafia • Finding people who understand your product • Corruption • Non-Payment • IPR • Corp. Governance • FDI Slow • Accountancy Standards • Entrepreneurship • Legislative and Political Issues • High Cost of Market entry (T+M) • • • • • • • • • • • • Demographic crisis Weak military Inflation Brain Drain Capital Flight Weak Banks Climate/Size Lack of infrastructure Language difficulties Cultural barriers Economic Instability Security Issues
  • 72. Real Problems: • Difficulty in finding reliable and tested distributors • Expense • Lack of knowledge of what the distributor is doing • Difficulty in making forecasts or sticking to targets • Export documentation • Corp. Governance • Lengthy sales cycles • • • • Poor communication Language barriers Complicated customs procedures Difficult to recruit/retain/administer/replace staff. • Missing opportunities in the regions. • Stifling bureaucracy. • Time constraints to develop full potential.
  • 73. Where companies go wrong: • • • • Too many seek an easy way in. It is bad to try to develop a market with zero expenditure. You are not pioneers; the Board should be proactive. Take advice and help wisely. • • • • • Don’t just replicate what your company does in other markets. Don’t appoint a distributor, then go home and wait. Don’t expect to do business by email. Don’t leave export documents to Brian downstairs. Don’t assume your product is too technical to be understood.
  • 74. Routes to market: It is important to spend money WISELY: DO’s • • • • • • OMIS report Product Certification Literature and website in Russian Planned trips Building a sales pipeline Planned exhibition participation. DONT’s • “Fact-finding” trips (a.k.a unplanned trips). • “Market Research” (a.k.a procrastination). • Sending of samples, emails etc to unknown distributors.
  • 75. Routes to Market: • Agent • Distributor • However: • They are no longer queuing up to represent you. You must find them and put forward your case. • Russia is moving fast. Choose them wisely, or you may lose control, time and money. Consider why a distributor would wish to represent YOU.
  • 76. Routemap - (Reactive: Zero Cost): • Desk Research: • Internet, databases, libraries e.g. IOD. • Register with www.UKTI.gov.uk • Meet your ITA (quiz them on their experience!). • Use specialist help (Bank, Freight Forwarder, etc) • Plan and budget. “Free stuff” is not always helpful. Google translate is a good example of this. • Identify all your options: DIY, Distributor, Footprint, Presence, etc • Consider reports, such as OMIS.
  • 77. Routemap - (OMIS) ...OMIS • A report to establish the market for your product and to list potential buyers. • Do you really need a report? • Plans for what you will do with it. • OMIS v Commercial report. • The advantages and disadvantages of each? • There should be nothing in the report that you can ‘Google’!
  • 78. Routemap - (Reactive: Zero Cost): • Question the board on their commitment. • How much time can be devoted to this? The falsehood of “EMEA”.... • Now consider: Product Certification, Travel, Reports, Samples, Translation, Interpreting, Couriers, Trade Fair Participation. • • • • Establish competition. Deconstruct their prices. Find possible margin, then compile the pricelist What foreign currency should you be selling in? Probably not Sterling. Make it easy for your Buyer, not just EXW Sterling! Put EXW into CIF. Consider DDP. Can you offer the product for Roubles? • PREPARE A BUDGET!
  • 79. Routemap - The Spending Zone: Language: Translate your homepage (at least), produce a Russian brochure / leaflet, and have cards in Russian (not a UK address)... Consider how to follow up (ie not just by email, and in Russian). Consider certification Plan trips round a trade fair. Don’t just walk round it; set up meetings in advance. Visit and visit again! Minimum 4 times a year if via distributor/agent. Support your partner with trade fairs, literature, samples. Get above the Power Line. It’s all about relationships!
  • 80. Routemap - The Spending Zone: 4-Day Moscow Trip: Return Flight UK-Russia Subsistence Taxis, UK + Russia Hotel, 3 nights, incl tax Interpreter 2-day Follow up ---------------x 4 trips / year One Multi visa One colleague trip Colleague’s single visa 2 Regional flights 16 Days UK time 4 Days Colleague’s time £ £ £ £ £ £ 200.00 300.00 240.00 900.00 400.00 400.00 £ 2,440.00 £ 9,760.00 £ 600.00 £ 1,680.00 £ 300.00 £ 500.00 ========= £12,840.00 ========= £ 2,560.00 £ 640.00 ========= £16,040.00 Other Costs: Report Couriers, samples etc Translation Professional Fees Certification (UK) Total Add other costs: TOTAL COST YR1 £3,000.00 £ 800.00 £1,500.00 £2,500.00 -------------£ 7,800.00 £9,500.00 * ======== £17,300.00 £16,040.00 ========= £ 33,340.00 *It is extremely difficult to give an average price. This is the cost, whether you use a distributor or do it yourself. Either way, you must visit the market several times per year. You sell to people, so build relationships.
  • 81. Footprint – In Brief: • Infrastructure (office, warehouse, salesperson) • Instant. Fast entry and exit strategy • Russians, talking to Russians, in Russian, in the right time zone • Control over your Russian Business. Pricing, end-users, everything. • Increased margins for the manufacturer • Access to Russian Rouble sales • Zero bureaucracy (almost)! • Troubleshooting (currency transfers, freight routines) • Consignee Address
  • 82. Footprint (cont’d): • No lock in period – only pay as long as it works. • Savings (interpreters, docs, fees, time) • We won’t work with your competitors. • Faster deliveries, item replacements (local suppliers etc). • Clear communication with UK Albion • Hands-Free administration of local expenses. • Management is freed up to develop other markets • Objective presence – intelligent feed, and control over products and price. Russians speaking to Russians
  • 83. Footprint – Costs saved: Report, Couriers, Fees, Translation GOST Certification (RF) 2 Trips to Russia 8 working days not spent in Russia Your 1-year costs (£33,340.00) minus above savings Add cost of Footprint One Year: Projected over one year, total cost of: £7,200.00 £3,500.00 £4,800.00 £1,440.00 ========== £16,940.00 = £16,400.00 £20,400.00 £36,800.00 Having a Moscow office and salesman costs the exporter £3,460.00 Now consider the additional wins: 10 days gained: 10/252 working days = Russian presence = relentless prospecting: Access to internal Rouble market Margin gained by making sales direct to customers: Co. T/O + 1/25 Return + x% Return + y% 40%
  • 84. Footprint Clients: Allen Gears, Alphatech, Arefco, Asahi Seiko, Avalon Sciences, Barwell Global, Bennet Opie, BOCM Pauls, Brand Search, Canyon Europe, CG Europe, Chelsom Lighting, Chesapeake, Coltrad, Delmatic, Esschem, Global Protein Solutions, Good Food and Wine Company, Grace Foods, Greenwood, Hart Doors, HH Print, Hubcast, IDS, Jacob White, Juratek, Katsu OY, Ken Read & Son, Kestrel Thermoplastics, Kovil OY, Linatex (Weir Group), Lucy Zodion, Lucy Switchgear, M&I Materials, MacAlpine, Marley, Miller, Montracon, Munster Simms, NJO LEDs, Owen Mumford, Powell Craft, SeaBand, Sly Filters, Smart Beauty, Spline Gauges, Tideland Signal, Titan Europe, Unison Colour, Velcro, Verder Pumps, VisiTech, White House Products
  • 85. Some Final Thoughts: • • • • • Size doesn’t matter. Russia is for everybody, especially SME’s Russia is not usually difficult. Scary stories are the exception! Meetings may be difficult to arrange. Be patient. Use specialist help. This is not Poland, China, Europe. Not Asia, Eurasia, FSU or CIS This is Russia/ • Consider your product or service. Adaption needed? • Understand and enjoy Russia; Learn something in Russian!
  • 86. Thank you! David Cant Albion (Overseas) Ltd +44(0)1732 783555 david@albionoverseas.com Twitter: @Albion_Overseas www.albionoverseas.com
  • 87. Doing Business in Russia Smart Exporter – outline of the programme Isabelle Henderson International Trade Adviser Smart Exporter
  • 88. WHAT IS SMART EXPORTER? • Smart Exporter is an international trade skills programme designed to increase exporting skills and knowledge amongst Scottish businesses • This initiative is delivered by SDI and funded by ESF • Smart Exporter services are available on a free or subsided basis to businesses and individuals across Scotland
  • 89. EXPORT ADVISOR SUPPORT Access to support from an Experienced Export Advisor which includes: • A one to one meeting to discuss your international plans and how the Smart Exporter programme can help your business • Help with market research about the market potential for your product or service or information about your competitors • Access to free export training through workshops or online • Practical advise on how to be paid from an overseas sale to help with distributor agreements via Smart Exporter’s technical support
  • 90. SMART EXPORTER – WHATS COMING UP Market Awareness events • Doing Business in India (31st October 2013, Edinburgh) • Access Europe 2013 (6th November 2013, Edinburgh) • Doing Business in Japan (28th November 2013, Glasgow) • Doing Business in Russia (10th December 2013, Edinburgh) • Emerging Europe 2014 (5th February 2014, Glasgow TBC) Exporting workshops - Introductory Programme (New Exporters) – Edinburgh (November 2013) Introductory Programme (New Exporters) – Glasgow (January 2014) Intermediate Programme (Inexperienced in international trade), Glasgow (Jan to March 2014) Intermediate Programme (Inexperienced in international trade), Stirling (Jan to March 2014) Future International E-commerce events and workshops to be scheduled All Smart Exporter Events: http://www.sdi.co.uk/Events.aspx
  • 92. Doing Business in Russia Networking Break 20 min. Sign up for one to one meetings at the registration desk
  • 93. Doing Business in Russia Breakout sessions • Opportunities and challenges in the market by sector • Product Accreditation and Certification requirements • The practicalities of doing business in Russia: Contracting & payments: reducing risk & liability
  • 94. Doing Business in Russia Networking Lunch Followed by one to one meetings in the boardroom (see registration desk for availability and schedule)