BUSINESS

Before Sanctions, Russians Imported European Gourmet Foods. Now They’re Making Their Own.

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Having been travelling to Russia on a regular basis for years, I am familar with the cuisine and foods on offer. Supermarkets used to be full of certain imported foodstuffs; cheese for example, as the Russian variety was rubbery and tasteless. Most wines were imported, as were various processed meats. The local equivalents were in terms of quality, rather poor, but cheap.

The imposition of sanctions by first the Americans, who have little trade with China, and the EU, who had at that time bilateral trade with Russia worth €338.5 billion, has seen a profound shift in EU supplies to Russia. When the EU hit Moscow with sanctions, the Russians did exactly the same in return. EU-Russia trade subsequently fell by over 40 percent.

Hardest hit were many of the EUs small farmers and producers, reliant upon the Russian market, in some cases, for generations. Six years later, following two-three years of Russians having to endure rubbery domestic cheese and so on, the tables have turned. Gourmet foods once exported to Russia by European producers are now produced in Russia. Here are some examples: Continue reading…

Maersk Uses Arctic Ocean Northern Sea Passage for Commercial Shipping for First Time

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The Venka Maersk loading in Vladivostok

The Venka Maersk loading in Vladivostok

The Danish shipping line Maersk has for the first time successfully navigated the Northern Sea Route of the Arctic Ocean via container ship, a route made possible by melting sea ice caused by global warming.

The Maersk Line vessel Venta Maersk, is expected to reach its final destination of St Petersburg next week. The new ice-class 42,000 ton vessel, carrying Russian fish and South Korea electronics, left Vladisovostok in Russia’s far east, on the 23rd August.

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Russia to Establish Overseas Industrial Investment Zones

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russia-briefing-russia-to-establish-overseas-industrial-investment-zonesRussia’s Industry and Trade Minister Denis Manturov has stated that the country will launch four industrial and investment zones overseas as part of its Export Development Plan. Russia recently set up such a facility near Port Said in Egypt.

Manturov stated at the Far Eastern Economic Forum last week in Vladivostok, “We are developing a program for the creation of industrial zones abroad. We should establish at least four zones in six years. We have one in Egypt, and we must form them in Latin America too – it could be Mexico, Uruguay or Paraguay, in Southeast Asia – Vietnam, Malaysia or Indonesia – and in eastern or western Africa. We will analyze where it will be advantageous”.

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China’s New WWII Era Opera Aims at Soft Power Influence in Russia

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dq5China has held a Russian Premiere at the Mariinsky Theatre in St.Petersburg of the opera “The Dawns Here Are Quiet”, featuring a full Chinese cast of singers, choreographers, conductor, and librettist. While not so surprising in itself, the subject matter, taken from a book by Boris Vasilyev and then turned into a highly popular Soviet era film in Russia during the early 1970’s with a remake in 2015, is.

The performance, staged by the Beijing National Centre For The Performing Arts, was written by Wan Fang and was state sponsored to mark the 70th anniversary of the victory over fascism – a theme held in much esteem by Russia but relatively new to the Chinese. That victory, referred to in Russian as the Great Patriotic War and elsewhere simply as World War Two, saw Russian troops defend the country against invading Germany at great cost. An estimated 20 million Russians died in the conflict.

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Russian Offshore Capital is Seeking New Homes after Sanctions. Where is it Heading?

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Wealthy Russian nationals with money parked overseas, especially in the US, UK, and other Western nations are scrambling to find new homes for their wealth and businesses after new threatened sanctions are set to impact in October.

The sanctions are related to the alleged use of the Novichok nerve agent in the UK, and include a request to Moscow to certify that it is no longer using chemical or biological weapons and will not do so in future and agree to on-site inspection to verify compliance. Moscow is deemed unlikely to agree.

Consequently, the next round of sanctions are expected to include termination of residual technical assistance programs, ban on supply of defense-related or dual-use goods or technologies to Russia, and the suspension of all credits and financial assistance.

While some of these measures are already merely reinforcing existing sanctions, others will directly impact upon Russian businesses overseas. Import-export of many products, especially between the US and UK and Russia will be severely hampered, and there is the possibility that Aeroflot may also have its flights to Western nations suspended.

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Russia Passes Laws to Redomicile Overseas Russian-Owned Businesses to Offshore Financial Centers

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Russian President Vladimir Putin has signed off a series of laws allowing Russian-controlled foreign offshore companies to be re-registered in offshore financial centers (OFCs) established in Russia’s Kaliningrad Region and Primorsky Territory in order to minimize the possible consequences of sanctions and political risks from foreign countries.

The legislation establishes the procedure of creating such areas on the Oktyabrsky Island in Kaliningrad and the Russky Island in Vladivostok, providing an opportunity for foreign-registered companies to become subject to Russia’s jurisdiction in a process known as redomiciliation and obtain the status of an international company. We wrote about the creation of the OFC in Kaliningrad here and in Vladivostok here.

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Russian-Egypt Trade Increases 37 Percent in First Half of 2018

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rmb-rubleIn more signs that the sanctions affecting Russia are proving to be a boom for new trade corridors, Nikolai Aslanov, Head of Trade Representation for Russia in Egypt has stated that Egypt’s trade exchange with Russia increased by 37 percent during first half (H1) of 2018 in comparison with same period of 2017, amounting to US$3.2 billion. The stats were confirmed by the Russian Federal Customs Service.

Aslanov added that Russian exports reached US$2,810 billion increasing by 42 percent from January to June, while exports from Egypt increased by 12 percent to reach US$402 million in the same period, noting that the main items of Russian exports to Egypt are wheat, metals, oil and gas, transportation goods, wood and wood-works, and fats and oils.

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Russia’s Double Tax Treaty Agreements

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Double tax avoidance treaties are useful instruments for foreign investors or trade businesses to understand and utilize as they mitigate against the potential for being taxed in two countries, and often provide clauses that permit the reduction in income tax, VAT, and other pertinent taxes between citizens of Russia and another treaty state. This means the application of them can help open up new markets in Russia and vice versa by reducing the overall tax burden. This can have significant impact on trade profitability.

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Kamaz Establishes Wholly Owned Subsidiary in Indonesia

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In signs of the growing trends of Russian companies moving into Asian markets, Russian truck maker Kamaz has opened a subsidiary in Indonesia to increase sales of its products, the company has reported.

The 100 percent wholly owned subsidiary, PT Kamaz Trucks Indonesia, has become a hub for Kamaz in Indonesia and obtained an import license for its products. The company is also setting up service centers in Java, Sumatra, and Kalimantan. Kamaz has chosen local distributor PT Pusaka Bumi Transportasi, which is a part of Indonesia’s Blue Bird Group, to help get its products to the market.
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Caspian Sea Agreement to Open up Volga River Interior Consumer Markets

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Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan – all of whom border the Caspian Sea – have agreed in principle on how to divide it up. Their respective leaders signed the Convention on the Legal Status of the Caspian Sea in the Kazakh Port of Aqtau on Sunday.

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