Russia Briefing News

Simple Establishment Options For Asian Traders In Russia

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transcontainerRussia is very much part of the China’s OBOR Silk Road plans, and is also developing trade ties with India and other South-East Asian nations and the ASEAN trade bloc as well as its own Eurasian Economic Union. The opening up of new Russian Trade Corridors, especially with Asia is a relatively new phenomena, but one that is showing increasing potential. Russian trade with China is up 30%,
with the Eurasian Economic Union 38%  with ASEAN up 13%  and India also growing as Russia is buying more Indian products than ever before in the wake of EU sanctions, as well as growing joint technical ventures between the two nations, who have also developed a bilateral investment fund. The Singaporean Government has also expressly suggested its domestic businesses reach out to the Russian market  for new opportunities.

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Russia, China, Announce USD13 Billion Wide Body Passenger Jet JV

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comacRussia and China have announced the signing of a USD13 billion Joint Venture company, the China-Russia Commercial Aircraft International Corporation (CRAIC), set up to compete with Boeing and Airbus. The license to operate in China was granted in Shanghai on Monday. The JV is between the Commercial Aircraft Corporation of China (COMAC) and Russia’s United Aircraft Corporation (UAC), with COMAC chairman Jin Zhuanglong saying the joint venture will develop wide-body aircraft and aims to produce “competitive” long-haul planes for the world’s aviation market.

CRAIC will be responsible for research, manufacturing, marketing, sales and services of its aircraft. According to an agreement by COMAC and its Russian partner United Aircraft Corp (UAC), 280-seat jets with a range of 12,000 kilometers will be prioritized.

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Russia Connecting With India Via International North-South Transport Corridor

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instc-route

While all eyes have been on China concerning Silk Road developments and the so-called “One Belt, One Road” initiative, other countries have also quietly been engaging in massive infrastructure projects that essentially accomplish the same aims – interconnecting Eurasia. As I have pointed out before, China’s promotion of their OBOR plans are limited to projects in which they are involved with  – meaning other, equally impressive plans are not given the same amount of media attention.

One of these ‘quiet’ projects is the plan to link India and Russia via the International North-South Transportation Corridor (INSTC). This project has two components parts for India, one heading north, to Russia and to allow it to access Russia’s vast mineral and timber resources, and the other heading West, through to Iran and both accomplishing similar energy goals while also paving the way ahead for a route into Europe. Iran has just held Presidential elections with the moderate, incumbent president Hassan Rouhani, already known for progressing better relations with the West, being re-elected last week. Another, little reported fact is that India has just agreed to join the international TIR customs convention, which makes the trans-national containerized shipping of goods far more effective and efficient for goods both departing and arriving in India from another TIR nation.

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Russia’s OBOR – Moscow’s In It For The Money (and so is everybody else)

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CDE Op-Ed Commentary

russia-obor-moscow-the-moneyFollowing Russian President Putin’s appearance at Beijing’s One Belt One Road Forum, analysts in Moscow have been having a field day in examining what all this means for Russia. The country is a vital component part of China’s plans – Beijing needs Moscow onside to help it create political goodwill and develop infrastructure in the many nations that were previously under Moscow’s influence during the Soviet era.

While many have concluded the OBOR plans thus far are about Chinese politics and creating domestic symbolism to demonstrate to the Chinese people that China is a world leader and Xi Jinping one of the global statesmen, able to summon diplomats and prime ministers to Beijing to pay tribute, others suspect that from Russia’s perspective, money and infrastructure investment is the sole aim.

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Russia’s OBOR Perspectives – President Putin’s and Academic Viewpoints

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putin-xiThe Russian President Vladimir Putin gave the secondary address to delegates attending China’s OBOR conference, currently being held in Beijing. The conference, hosted by Chinese President Xi Jinping, is aimed at promoting dialogue between interested nations about plans for China’s new vision of the Silk Road, of which Russia is a major part. President Putin had this to say, underscoring the need   to establish a greater Eurasian partnership to build a bridge between Asia and Europe.

“The creation of the economic development belt and organization of mutually beneficial trade between Asia and Europe seem to be an important initiative that takes into account the current trends in the world economy and also reflects the overall need for coordination of diverse integration processes on the Eurasian continent and in other regions of the world. In order to deepen integration processes in Eurasia it is necessary to liberalize trade rules, unify regulatory norms for all kinds of products and create new transportation corridors and infrastructure capabilities. It is important that all integration structures – both existing in Eurasia and newly formed – would rely on universal internationally recognized rules, and, of course, take into account the specific features of the national models of development of the participating states, act openly and transparently.”

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Russia, China Agree On Primorye-1 Corridor; Opens Up Heilongjiang To Asia-Pacific Markets

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primore-1Li Haitao, the Vice Governor of China’s Heilongjiang Province, which shares a border along the Amur River with Russia, has said the two countries will sign an agreement on the long awaited Primorye-1 International Transport Corridor.
“During the ‘One Belt, One Road’ forum, the relevant governmental departments of China and Russia will sign an agreement on cooperation on the Primorye-1 international transport corridor,” Li said at a pre event press conference in Beijing.

Two corridors have in fact been developed, Primorye-1 and Primorye-2. These are expected to encourage trade and investment in the Russian Far East, as the improved transportation infrastructure will significantly increase cargo transit from China to the Russian port city of Vladivostok.

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Developing an Effective Purchasing Policy in Russia

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russiankeyboardIf a company does not have a properly implemented purchasing policy, it may end up paying too much money for low quality goods, or choose suppliers that are not reliable or do not offer the appropriate level of customer service.

In order to keep costs under control, companies need to buy the right quality and quantity of goods and services at the best possible price, and at the appropriate time from the ideal vendor.

By appointing one department (or a person in smaller businesses) to manage purchasing activities, the likelihood of properly performing the above increases.

However, before delegating the purchasing function to either a department or a manager, a company should consider the following aspects (to be recognized in their purchasing policy):

  • Who has the authority to purchase items for the company?
  • What items can that manager purchase without additional approval? What are approval levels for different kinds of supplies?
  • What criteria will be used to select possible suppliers? How to proceed with tenders and further negotiations?
  • What are the business processes for the purchase manager’s cooperation with other departments regarding ordering supplies, reviewing contracts, paying suppliers, and signing documents?

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Wine, Beer & Food Sale Opportunities During Russia’s 2018 FIFA World Cup Finals

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CDE Op-Ed Commentary

2018fifa-wc-logoRussia has been dealt a somewhat unfortunate hand since FIFA announced the country was to hold the 2018 World Cup Soccer FInals, sanctions placed on it by the West, and corruption and vote-rigging scandals and accusations within FIFA itself have made the appetite for investing in Russia and this event rather muted. Nonetheless, it should be pointed out that this is the first time that Russia has hosted this event. It is thus far the largest single, soccer playing nation not to have hosted the finals.

The team has participated in ten World Cup FInals, with Russia’s best performance being arguably in 1966, when under the Soviet Union flag, the team reached the semi-finals. Today, Russian soccer is dominated by  a handful of clubs, Spartak, CSKA and Locomotiv from Moscow, Zenit St.Petersburg, and Rubin Kazan.

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How to enter the Russian e-Commerce market

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Cross-border selling

Almost one third of the total volume of e-commerce in Russia is accounted for by cross-border selling. In addition, goods are ordered in foreign online-stores and supplied to the end-user directly from abroad.
For deliveries with a value of less than €1000, a distributor overseas doesn’t pay customs duties on the goods and doesn’t have to obtain certificates of conformity for the products. However, there are some exceptions, e.g. for alcoholic beverages and bicycles. A significant reduction of this relatively high allowance to € 150 or even € 22 is currently under discussion.

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Russia-China Bilateral Trade Up 30% In Q1 2017

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chinarussiaTrade between Russia and China increased by over 30% over the same period last year, according to Chinese Customs data. In the first three months of 2017, bilateral trade amounted to USD18.1 billion. Of this, Russian exports to China grew by 36.1 percent to USD9.66 billion, while Chinese exports to Russia increased by 22.4 percent to USD8.43 billion.

In 2016, the total trade volume between Russia and China was USD69.5 billion. Zhang Xiao, the deputy to the Chinese ambassador to Russia, said Beijing expects a breakthrough in trade between the countries this year. Zhang commented “After a downturn in 2015 due to external factors, Russia-China trade returned to growth in 2016. Over the course of 2016, turnover between Russia and China reached $69.5 billion, a 2.2 percent increase against the previous year. While a 2.2 percent growth is not significant, it is very important considering the unfavorable conditions in the global economy and a decrease in Chinese foreign trade volumes.”

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