RCPM is a Hong Kong based company managing and developing consulting, trade and investment projects between Russia, Mainland China and Hong Kong.
Consulting services are services provided by an independent contractor through consultation. The consulting services model aims to eliminate organisational difficulties. Then the functions are reintegrated in a simplified environment. Consulting is most often used when a company needs an external expert opinion regarding a business decision. For example, a company seeking to sell its products abroad may need a consultant who is familiar with the business practices in a target country. A consultant will tell the company what are the best practices that should be followed, what to expect from customers and how to handle foreign regulations.
Today, Russian market is becoming increasingly popular for foreign companies, thanks to high production speed, advanced logistics and relatively low prices. For this reason, consulting companies are starting to enjoy an increasing demand, as they help to overcome such obstacles to running a successful business in Russia as structural unfamiliarity with Russian business and local laws and traditions.
Networking is an increasingly important part of Russian business culture. The process of building relationships, communicating with different people, as well as providing support for their part is not new to Russians. The mentality of Russian people is a fertile ground for the development and improvement of networking in Russia. The organisation of business schools, training programs, internships, conferences displays the ability of Russian businessmen to build partnerships on a professional level. There are also numerous networking groups, clubs and professional associations dedicated to business and individual professions.
Marketing research is a type of sociological research focused on studying the market situation, desires, preferences and behaviour of consumers and other market players. The Russian market research industry is growing rapidly, driven both by domestic growth and the huge interest in the country by foreign investors.
The execution of an in-depth market research is a fundamental first step for any business that wants to enter a new market or industry in order to sell well-targeted products or services. It also serves as an essential platform for the development of well-planned business decisions, as it provides a clear acumen awareness of the environment. Market research thus minimises risks and increases potential for profit making. The goal of any marketing research is ultimately the formation of the company's strategy and tactics, taking into account the actually existing and potentially possible market factors and conditions, on the one hand, and its position and prospects, on the other.
Russia is the largest country in the world with varied market segments spread across eleven time zones. With a population of 142 million, the Russian market has enormous potential. The major markets of Moscow and St. Petersburg are well served and new market entrants will face stiff competition from established businesses.
However, other large cities such as Yekaterinburg, Novosibirsk and Vladivostok may not be as developed but can move quickly on a new product/service offering. In order for international companies to enter the biggest Eastern European market it is important not only to consider various market regulations but also to adapt to different mentalities and understand consumer behaviour of local population.
Russia’s wealth in natural resources underpins its potential as a leading economy of the future. As the world’s largest oil producer, second-largest producer of natural gas, and possessor of great mineral wealth, Russia ranks eighth in the world by GDP and leader of the BRICS countries by per capita GDP.
The Russian government’s ambitions for economic development cover many core sectors. Developing the country’s oil, gas and mineral industries will require investment in excess of $24bn per annum in the coming decades, providing opportunities for suppliers of related machinery and technologies.
Its heavy industries and transport infrastructure are in great need of modernisation, requiring not only machinery and engineering but also IT, services and consulting support. The telecommunications market has grown strongly, with much future potential as next-generation mobile telephony and data services expand. Modernising the healthcare system and building a strong pharmaceutical industry are also of core importance.
Metal work and tools manufacturing is one key contributors to the economy of Russia. The fact that Russia has the largest deposits of metals makes the country a cheaper place to run a company that is into the production of metal tools and instruments.
Retailing of commodities is yet another very flourishing business in Russia. The fact that Russia is considered as the 6th country with the highest purchasing power parity makes retailing business a very profitable venture in Russia.
The climate for doing business remains problematic, particularly for those looking to invest rather than simply trade. Bureaucracy and corruption can hamper business development; for this reason alone sound professional advice is strongly recommended.
Nowadays, the importance of marketing in general and marketing research in particular plays a big role for the establishment of Business in Russia. This is primarily due to the development of the market and market relations, increased competition, high consumer requirements for the quality of products. With the advent of specialised marketing companies providing a wide range of services in the Russian market, there has been an increase in the efficiency of production processes in enterprises. The implementation of various marketing approaches in the enterprise management process and in the production processes plays crucial role in the Russian market.
Cultural sensitivity and understanding of protocol is paramount to effective marketing. Traditional advertising media are well established in Russia and they work well, in particular for consumer goods. Television, print media, outdoor billboards, magazines, point-of-sale promotions and displays, and free samples are widely used. Person-to-person direct marketing also works well. Besides, e-commerce and online marketing are developing at a very high speed.
Well-organised distribution channels have developed significantly over the last 20 years, particularly in the major population centres of Moscow and St. Petersburg, and have started to expand to the regions.
In order to enter Russian market successfully, it is important to invest some time and resources into a precise marketing strategy in order to identify customer segment and the ways to reach it. In addition, before entering Russian national market, one has to consider legal regulation and state rules regarding various products’ advertising. Besides, one of the key elements to expand in Russian market is to be able to provoke customer interest and to adapt to cultural differences.
Business travel is the travel of employees of different companies and organisations for business purposes, such as attending corporate events. Business tourism is not only business trips as such, but also the exchange of information, the organisation of seminars as an effective way to accumulate professional experience, the search for new partners, the organisation of events of various types, the strengthening of corporate culture. Business tourism (external and internal) is one of the main indicators of the level of economic development of a country.
Russia hosts not only a big number of large international exhibitions devoted to various sectors of the economy and production areas, but also scientific conferences and fairs for a wide range of visitors. They collect a lot of specialists from Russia and abroad. At the same time, Russia hosts branches and representative offices of hundreds of foreign trading firms, airlines, banks, communications companies, to which new employees or partners come to work from other cities and countries.
Russia hosts a big number of different exhibitions oriented to various business spheres and industries including oil and gas industry, food market, tourism.
Company due diligence refers to performing a thorough investigation of the company in order to minimise the risks that could lead to an unsuccessful cooperation. Russia can be a challenging market which means that international companies need to take time to learn about the business environment and select local partners wisely. Taking shortcuts when evaluating business opportunities and selecting local partners is not advisable.
Occasionally, basic information about regulations, company ownership and credit worthiness is not readily accessible, and the market’s regulatory framework continues to evolve, requiring companies to closely monitor changes. The purpose of due diligence in Russia mainly depends on what the client wants to find out about a company. Due diligence is usually performed when investors require to obtain all relevant documentation regarding the company they are about to enter in a relation with in order to evaluate the risks they are exposed to and to make an informed decision on the future steps to be taken.
Russia’s machine-building industry provides most of the country’s needs, including steam boilers and turbines, electric generators, grain combines, automobiles, and electric locomotives, and it fills much of its demand for shipbuilding, electric-power-generating and transmitting equipment, consumer durables, machine tools, instruments, and automation components. Russia’s factories also produce armaments, including tanks, jet fighters, and rockets, which are sold to many countries and contribute significantly to Russia’s export income.
As oil and gas input increased in the second half of the 20th century, new chemical plants were built, particularly in the Volga, Ural, and North Caucasus zones and in other regions served by pipelines, which helped to reduce the dependence on traditional resources. Chemical industries requiring large quantities of electric power, such as those based on cellulose, are particularly important in Siberia, where both timber and electricity are plentiful.
Textile industries are heavily concentrated in European Russia, especially in the Central region, which produces a large share of the country’s clothing and footwear. Cotton textiles are dominant, with the raw cotton supplied mainly by Central Asian countries. In the zone between the Volga and Oka rivers, east of Moscow, there are numerous cotton-textile towns, the largest of which are Ivanovo, Kostroma, and Yaroslavl.
The machine-building industry forms a key part of Russia’s non-commodity, non-energy exports. It is one of three leading industries, second only to agriculture. High-technology manufacturing is the backbone of Russia’s industry.
Russia is one of the world’s leading exporters of nuclear power plant equipment, lasers, navigation devices, jet engines and particle accelerators.
Russian railway equipment, parts and components, and motor vehicles are also in high demand. Consumer electronics exports are also growing, especially of washing machines. Russia offers a wide range of machines, appliances and devices to international consumers. For example, Europe imports mill machinery made by Altay-based company CSort. Its color sorting machines are popular in Poland, France, Germany, Spain. St. Petersburg-based company Unicum Vending manufactures vending machines that are in demand abroad. Cryogenmash plant, which is based outside Moscow, produces cryogenic units, pipelines and systems exported to China and India. Systems created by Cryogenmash are used at spaceports all over the world. Metallurgical equipment from Russia has also found its overseas consumers. Russia’s largest manufacturer is StankoMashStroy, a manufacturer of a wide range of machines and systems ranging from basic models to state-of-the-art high-precision machinery.
In August 2012, Russia became a member of the World Trade Organization (WTO), lowering the average bound tariff rate on industrial and consumer goods, from almost 10% in 2011 to 7.8% by 2017. Russia’s WTO Accession Protocol establishes tariff rate quotas (TRQ’s) for agricultural goods such as beef, pork, poultry, and some other products. Imports entering the market within the quota would enjoy lower tariffs, while imports outside of the quota would face higher tariffs.
On January 1, 2015, the Eurasian Economic Union (EAEU) was launched, incorporating the tariff regulations previously set forth in the Russia-Belarus-Kazakhstan Customs Union (CU) established in 2010. Armenia's accession into the EAEU came into force on January 2, 2015, while Kyrgyzstan's accession came into effect on August 6, 2015. The Unified Customs Tariff of the EAEU/CU has undergone periodic revision since 2011, with the rates of import customs duties now set in accordance with the obligations outlined in Russia’s WTO Accession Protocol. All issues such as tariffs, tariff rate quotas, technical regulations, licensing, and certification are being harmonised by the Eurasian Economic Commission (EEC), the multilateral entity originally established by the member countries to manage the Customs Union which now oversees the Eurasian Economic Union.
In addition to Customs duties, import excise taxes may be applied for limited categories of products, such as luxury goods, alcohol and tobacco products, cars, diesel and motor oil, and other petroleum products. Import excise taxes range from 20% to 570%.
Value Added Tax (VAT) is applied to the sum total of the Customs value, the Customs duty, and any excise tax. Russian Customs VAT is levied at the same rates as Russian sales VAT – generally 18% for most goods, works, and services. A 10 % rate applies to certain food products, children’s goods, medical and pharmaceutical products, pedigree livestock, and certain books and periodicals. Some categories (e.g. medical goods and equipment, goods designated for diplomatic corps) may be VAT exempt.
Сlose trade relationship between Russia and China is based on very large consumption markets in both countries. Due to the economic restrictions imposed by Europe and the USA in relation to Russia, one could expect an unprecedented growth in imports of goods from China. However, the volume of imports from China to Russia constantly fluctuates and changes almost every month. In recent years, controversial issues have arisen regarding import of food, fruits and agricultural products in general. As for industrial products, there is a steady increase in consumer confidence. The main goods imported from China to Russia are automobiles and auto parts and components, clothing and footwear, toys and products for children, textile and electronics.
Russia is the 14th largest export economy in the world and the 27th most complex economy according to the Economic Complexity Index (ECI).
Occupying Northern Asia and a large part of Eastern Europe making the Russian Federation the world’s biggest area by geographic area, Russia shipped US$449.3 billion worth of goods around the globe in 2018. Based on estimates from the Central Intelligence Agency’s World Factbook, Russia’s exported goods plus services represent 26.2% of total Russian economic output or Gross Domestic Product. That percentage includes re-exports.
Russia generates most of its income from oil, natural gas, timber and metal. The agriculture sector is another income generator for Russia and the government has put in place policies that support farmers. This is so because since Russia has the fourth largest total area suitable for cultivation in the world hence the encouragement of investors to go into farming.
From a continental perspective, 54.5% of Russian exports by value were delivered to fellow European countries while 36.8% were sold to Asian importers. Smaller percentages went to Africa (3.8%), North America (3.4%) and Latin America (1.2%) excluding Mexico but including the Caribbean.
Given Russia’s population of 142.1 million people, its total $449.3 billion in 2018 exports translates to roughly $3,200 for every resident.
Oil and Gas
Years of sanctions and drop in global commodity prices hit Russia hard – but as of 2018 the Russian oil & gas industry is feeling resilient. Historically high production figures, plus huge planned investment, are painting a bright picture for Russian energy.
The last four years have seen agriculture emerge as a real success story of the Russian economy. The main achievement has been tremendous growth in the production of grains, especially wheat.
Russian wheat exports exceeded U.S. wheat exports in 2016, and in 2017 it topped those of the European Union. It currently holds 22 percent of the global wheat market, with the EU and the U.S. trailing at, respectively, 14 and 13 percent.
Russia as a large geographical area with great distances and rich resources, promotes a need of efficient logistics. Compared to other CIS countries, Russia has the highest logistics performance together with Kazakhstan. For the past decade, the Russian logistics market has become attractive to foreign companies. Players who had come from abroad not only became full participants in all market processes but also now firmly hold leading positions in Russia.
St. Petersburg remains the main port of entry for a variety of consumer and industrial products for European Russia. Vladivostok is the main port of entry for the Russian Far East. The majority of cargo moves by rail, and the road network is in need of expansion. Major western express couriers are active in Russia.
The number of Chinese tourists visiting Russia saw a significant boost last year. In 2018, Russia was in the top three (after the UK and France) most popular destinations among European countries for Chinese travellers. In general, tourist industry in Russia is developing as the country becomes more and more attractive for foreigners. There are agencies responsible for tourism development on a regional level.
Russian regions and cities have their own centres for tourism development and visitors’ centres provide information on local tourist sites and programs. In addition to Moscow and Saint Petersburg, such cities as Kazan, Sochi, and Nizhny Novgorod gain popularity among tourist. Besides, Murmansk, a city in northwestern Russia, at the end of a deep bay off the Barents Sea, attracts those who want to admire Northern Lights. The destination is very popular among Chinese tourists and is significantly cheaper than, for example, a trip to the Nordic countries.
China-Russia joint CR929 wide-body passenger aircraft project is in its initial design phase.
Metals and Mining
Russia is the largest country in terms of geographical area. As a result, it has some of the largest mineral reserves in the world. In fact, it ranks in the top three in mineral commodities such as platinum, gold and iron ore. Russia is also the world's largest producer of diamonds and palladium.
Russia's mining industry accounts for a significant share of its gross domestic product and exports. It is the country's second largest industry after oil and gas. But unlike oil and gas, which is primarily state-owned, Russia's mining industry is mostly privately owned.
Russia’s IT market is one of the world’s largest and continues to grow. By 2025, there are expected to be 124 million internet users in Russia. The information and telecommunications industry grew by 3.7% in 2017 and was among the most successful sectors of the Russian economy.
The Russian IT industry has the potential of global competitiveness and should become one of the most important growth points for the Russian economy until 2036.
Forest and Paper
In 2017, the volume of Russian-Chinese timber turnover increased by 23% compared to 2016 and amounted to 4.8 billion US dollars, of which export volume was 4.2 billion US dollars, and imports – 635 million US dollars. The volume of export shipments in 2017 increased by 23%. Currently, the share of forestry products is 10.7% of total Russian exports to China.
Russia experienced a massive housing boom from 2000 to 2007, with secondary market prices skyrocketing by 436%, while primary market prices rose 362%.
Moscow Exchange provides local and international investors, professional participants of the financial market and their clients with a broad choice of opportunities for trading stocks, bonds, fund units, derivatives, currencies, government securities and commodities.
Saint-Petersburg Exchange (SPB Exchange) is one of the oldest Russian exchanges. Nonprofit Partnership Stock Exchange "Saint-Petersburg" was created in April 1997 for the purpose of organizing securities trading. The partnership became the first licensed stock exchange in Russia.
Eurasian Economic Union
The Eurasian Economic Union is an international organization for regional economic integration. It has international legal personality and is established by the Treaty on the Eurasian Economic Union.
The EAEU provides for free movement of goods, services, capital and labor, pursues coordinated, harmonized and single policy in the sectors determined by the Treaty and international agreements within the Union.
Saint Petersburg International Economic Forum
The Saint Petersburg meetings have become a good tradition. We value the forum’s atmosphere of trust and openness. Such a discussion and an informal dialogue are particularly important today when the environment for doing business and making investments, as well as everyday life, going through dynamic changes.
Eastern Economic Forum
Over the last three years, the EEF has become the biggest international platform for discussing the strategy for developing political, economic and cultural ties between Russia and Asia Pacific.
Russian Energy Week
The Forum is being held to demonstrate the prospects of the Russian fuel and energy industry and unlock the potential of international cooperation in energy.
Russian Investment Forum
This is a platform not only for discussing current issues in Russia’s socioeconomic development, but also for reaching important agreements and signing mutually beneficial contracts. State officials, the business community, and leading experts work together to seek solutions to the main problems that are facing Russia today. Anyone can share their views on the current situation, and offer their solutions and specific proposals.
International Financial Congress
The programme for IFC-2019 will be divided into several thematic tracks, which will cover monetary policy and macroeconomics, banks, insurance, collective investments, finance market professionals, and microfinancing.
A range of sessions will be dedicated to topics applicable to various sectors of the financial market. These include Digital Transformation and Cyber Risks in the Financial Sector; Creating institutes of Financial Ombudsman and Conduct supervision; Human resources development in the Financial Sector; and others.
International Arctic Forum
The Forum brings together government bodies, international organizations, and the scientific and business communities of Russia and other countries for a focused discussion and comprehensive exchange of views on current issues impacting sustainable growth in the Arctic region.
One Belt One Road
The Belt and Road run through the continents of Asia, Europe and Africa, connecting the vibrant East Asia economic circle at one end and developed European economic circle at the other, and encompassing countries with huge potential for economic development. The Silk Road Economic Belt focuses on bringing together China, Central Asia, Russia and Europe (the Baltic).
On land, the Initiative will focus on jointly building a new Eurasian Land Bridge and developing China-Mongolia-Russia.
Give full play to Inner Mongolia’s proximity to Mongolia and Russia, improve the railway links connecting Heilongjiang Province with Russia and the regional railway network, strengthen cooperation between China’s Heilongjiang, Jilin and Liaoning provinces and Russia’s Far East region on sea-land multi-modal transport, and advance the construction of an Eurasian high-speed transport corridor linking Beijing and Moscow with the goal of building key windows opening to the north.
Accelerate cooperation between regions on the upper and middle reaches of the Yangtze River and their counterparts along Russia’s Volga River. We should set up coordination mechanisms in terms of railway transport and port customs clearance for the China-Europe corridor, cultivate the brand of “China-Europe freight trains,” and construct a cross-border transport corridor connecting the eastern, central and western regions.
Ice Silk Road
In addition to the Maritime Silk Road, Chinese Premier Xi Jinping also urged the close cooperation between Russia and China to carry out the Northern Sea Route cooperation to realize an "Ice Silk Road" to foster development in the Arctic region.
China COSCO Shipping Corp. has completed several trial trips on Arctic shipping routes, the Transport departments from both countries are constantly improving policies and laws related to development in the Arctic, and Chinese and Russian companies are seeking cooperation on oil and gas exploration in the area and to advance comprehensive collaboration on infrastructure construction, tourism and scientific expeditions.
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