Is Russia too big? or Are we too weak? 

German Angst – I can smell it I can feel it. So  I asked myselfsome months ago whether I should invest in Russia? Monitoring the market, intensively talking to business partners and travelling through Russia I have come to the following conclusions:
1. The so often mentioned sanctions just refer to some known business people and sectors and hardly reach 5% of overall business. What they undoubtedly have brought is more bureaucracy and one has to get an understanding of the sanctions.
2. In fact the sanctions (for example in the energy sector) look to me rather as a part of Mr. Trump´s „America first policyʺ then a politically inspired strategy. Its basic objective is to create insecurity for investors
3. Most affected is the agricultural industry, which on the one hand finds new suppliers in Asia and on the hand offers local suppliers the much needed protection to build up its competitive edge.
Russian Economy:
1. Due to a lack of economic reforms and protectionism the Russian economy is going slowly
2. For the same reasons technology and know-how is lacking
3. Furthermore salaries are not increasing and
4. The Russian ruble continues to be weak
Competitive advantages for production:
A. At first glance these beforehand mentioned factors do not seem to enhance direct foreign investment, but bad times are normally best times for investment.
B. But low production costs combined with access to very cheap energy and demands for quality products are offering interesting perspectives from my point of view.
C. Tax and administrative challenges are getting increasingly manageable  
From point of view:
Investors can just do all what is not explicitly prohibited. Nevertheless a good plan is always advisable and finally stay below the radar is to say: Don´t get too big or otherwise position your operations in different divisions.
I myself will go for industrial investment in Russia as there are many opportunities, which from my experience are better to identify in difficult times and at a lower cost.
Marc Ambrock

Leave a Reply

Your email address will not be published. Required fields are marked *

− 7 = 1

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>