Russian exporters have become more actively interested in developing new markets
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Russian companies have become more actively interested in the possibility of entering the markets of “friendly” countries, including very distant and previously not so attractive, trade representatives of the Russian Federation told Kommersant, the meetings of the companies with which last week were held by the Ministry of Industry and Trade and Delovaya Rossiya. Exporters are no longer afraid of distances or problems with logistics and settlements: some companies have to work with new intermediaries, others have to look for direct buyers and local partners.
Control over the activities of trade missions passed from the Ministry of Economy to the Ministry of Industry and Trade back in 2018, at the same time a reform was launched to improve the efficiency of their work. Last week, Russian companies had several opportunities to communicate with the trade representatives of the Russian Federation at once – meetings with them were held at Innoprom in Yekaterinburg and in Moscow at the Business Russia site. Business representatives noted their need for an “ambulance” in case of problems with deliveries to new countries – the main issues remain logistics and settlements. “Some companies have accumulated funds in national currencies reaching tens of billions of dollars, and the company supplying steel becomes the largest importer of mangoes and avocados in the Russian Federation – this limits the volume of trade,” one of the entrepreneurs complained. When entering the markets of developing countries, companies also face the requirements of localization and opening of representative offices or branches.
In turn, the sales representatives themselves, in conversations with Kommersant, noted a multiple increase in business interest in geographically remote and less familiar markets, as well as a change in the structure of trade. Thus, Russian suppliers of engineering and creative industries entered the Brazilian market, where large volumes of fertilizers are traditionally supplied from the Russian Federation. Deliveries of industrial products to Azerbaijan are growing, including agricultural machinery. The interest of companies in the markets of Southeast Asia has also grown. It “has always been a “second-tier” market for Russian companies, they knew less about it, there were many times fewer Russian companies on it, and for these countries, presence in the market is critical – it is important to have personnel, service centers, and a local address,” the trade representative of the Russian Federation noted in Indonesian Alexander Svinin. There is also interest from Indonesian companies, the trade representative adds – “they have a perception that they can compete in the Russian market.” Interaction is facilitated by the fact that in both countries, national companies operate in many niches, which are less dependent on sanctions.
Trade Representative of the Russian Federation in the Philippines Artem Tsinamdzgvrishvili says that the country is just opening up after covid restrictions, metallurgical companies, manufacturers of transport, agricultural products and food, as well as IT sectors and financial services providers, are already showing interest in its market. The main barriers are related to certification (takes on average half a year, but the Philippine importer can speed up the procedures), as well as protective duties in a number of sectors, such as in the agro-industrial complex and the auto industry: they require assembly to reduce duties; for components, import tariffs are substantially lower.
In the markets that are already traditionally interesting for Russian business – China and the UAE – companies are advised to look for intermediaries and local partners. Alexey Dakhnovsky, Trade Representative of the Russian Federation in China, notes the growing interest of suppliers of agricultural products, food and timber, but warns: marketing is important in the PRC market, specialists with knowledge of the Chinese language are needed, and also “you should not try to buy small lots directly from a large manufacturer – it’s easier to work through electronic platform and foreign trade intermediaries, this removes the risks of non-delivery. “Public procurement plays an important role in the market – it is a closed market for foreign suppliers, there are also localization requirements: in fact, Russian suppliers are forced to compete not only with local manufacturers, but also with large Western companies that entered the market more than 20 years ago,”— explains the trade representative.
Maxim Zagornov, business ambassador of Delovaya Rossiya in the UAE, notes difficulties with settlements (depending on the bank), but “generally positive attitude” towards businessmen from the Russian Federation. A significant increase in turnover with the country (from $2 billion to $9 billion) occurred, among other things, due to Russian food supplies to the UAE, while there are no production facilities in the country yet – companies are only looking closely. IT companies are the fastest to enter the market – it is easy for them to localize and there is a high demand, in particular, for solutions to automate the banking sector. “Basically, small and medium-sized businesses enter the market – it’s easier for them to work through business ambassadors so as not to open branches in every country,” adds Maxim Zagornov, noting the importance of finding local partners and companies already embedded in business chains: this makes it easier long-term certification (on average, a company enters the market within a year). In general, the conditions for doing business – the cost of energy and other parameters – are comparable to the Russian market, he concludes.
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