IKEA to Beat “The Way to Communism” and to Invest US$2.1 BLN in its Russian Malls

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By Marina Romanova

1454919171_ikeaThe Supreme Court of Russia has affirmed the lower court’s ruling rejecting a claim of an agricultural enterprise, former collective farm “The Way to Communism”, which demanded to demolish two 15 store’s buildings of the “Khimky” business park, belonging to Swedish furniture retailer. Thus the court has settled the claim of IKEA, Russian news agency RIA Novosti reports.

The 16.4 hectare plot of land has been at the root of a long-term dispute between the retailer and former collective farm, now called Khimki Collective Agricultural Enterprise. They accuse IKEA of faking the documents required to obtain the land on the Leningradskoe highway, the Russian Kommersant daily reported.

Agricultural Enterprise board members claim that their signatures were faked and that they never agreed to give away the disputed land to the Khimki administration. Khimky city administration leased out the plot of land to IKEA for 49 years in 1993 and then sold the land to the retailer in 2011. Continue reading…

Russia to reduce its reliance on Boeing and Airbus with new passenger jet

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By Marina Romanova

structure_property_image_2943Siberian Irkut Corp. assembling plant, part of the Russian state-run United Aircraft Corporation, rollout a new mid-range passenger jet MC-21-300 this Wednesday in corporation’s home city of Irkutsk, corporation press release said.

The much-anticipated new aircraft was named as a successor to the Tu-154, the legendary Soviet-era trusty beast which had faithfully served then only national carrier Aeroflot since the 1960s. There is a hope that new MC-21 with nearly 25 percent lower fuel consumption than other aircraft in its class could compete with the A320neo and Boeing 737 MAX.

The a twin-engine short- and mid-range narrow-body passenger jet, MC-21 is available in two versions —the 200 and 300— which seat 132 and 163, respectively, in a standard two-class layout, or a maximum 165 and 211 seats. Unlike the old Soviet designs, the new jet is built with a significant amount of composite materials that help reduce weight and enhance fuel efficiency. New jet also has an enlarged fuselage (4.06 meters versus 3.96 and 3.75 meters in the A320 and Boeing 737, respectively), which means larger passenger and luggage compartments. Continue reading…

The Golden Arches to Conquer Siberia

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Aug. 30 – The U.S.-based fast food chain McDonald’s is on the way into one of the largest Big Mac-free territories on the globe. There was confirmation this week that the hunt is on for 10 sites in Novosibirsk, Siberia’s largest city, for McDonald’s outlets.

After serving more than 2 billion fast-food meals and opening more than 300 locations in Russia, McDonald’s is “actively looking into the possibility of opening restaurants not only in Novosibirsk, but in Barnaul, Tomsk and Novokuznetsk,” Viktor Eidemiller, vice president of development for McDonald’s Russia, told Vedomosti. Continue reading…

Russia’s Grain Crop to be Damaged by Drought

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Jul. 18 – Russian Agriculture Ministry estimates that some 28.3 million hectares of spring sowing and 16.1 million hectares of winter crops all over the country will be damaged by the current drought. That’s 3.4 percent of the total sown area, according to preliminary estimates on the ministry’s website.

Droughts have hit 16 of Russia’s 83 regional areas this year, the ministry said. It is still affecting nine regions including Rostov, Volgograd, Stavropol and Kalmyk Republic in the country’s south, Saratov, Orenburg in the Volga federal district, Kurgan, Chelyabinsk in the Ural area, and Siberia’s Altai region. Continue reading…

China Eximbank to Help Fund RusAl’s Factory Construction in Siberia

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Jun. 26 – Russian UC RusAl, the world’s largest aluminum producer, and the Export-Import Bank of China (China Eximbank), one of China’s largest financial institutions, have signed a cooperation agreement on a RusAl greenfield project in Eastern Siberia worth up to US$850 million.

The agreement foresees joint cooperation on financing for the construction of a new anode factory in the Irkutsk region. Anodes (carbon electrodes) are used in the electrolysis process to produce aluminum. About 550 kilograms of anodes are required to produce 1 ton of aluminum. Continue reading…

Chinese Investors Look to Develop Russia’s Tourism Sector

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May 24 – Dalian Wanda Group and China Oceanwide Holdings are considering investing in the tourism and infrastructural development of Russia’s Krasnodar region, Dagestan republic, city of Sochi, and Siberian Lake Baikal, but no agreements have been signed.

“We have made initial agreements with local authorities from these towns, so we have made the first step toward investment,” vice president of China Oceanwide Holding Group Tszysin Tsi told reporters after Chinese investors received a guided tour of the Russian regions. Continue reading…

Sinopec and Sibur to Produce Rubber in Krasnoyarsk

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May 15 – China Petroleum and Chemical Corporation (Sinopec) and Sibur, the Russian petrochemicals group, have entered into a cooperation agreement to form a butadiene nitrile rubber joint venture in the Siberian city of Krasnoyarsk.

The cooperation deal was signed by Sibur’s CEO Dmitry Konov and Sinopec’s president Wang Tianpu at the recent Russian-Chinese Forum on commercial investment cooperation in Moscow.

The cooperation agreement includes a mechanism for the financing of the joint venture, and arrangements relating to share capital, management, raw material supplies and marketing. Continue reading…

S&P Upgrades Novosibirsk

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May 2 – Standard & Poor’s upgraded Russia’s third largest city, Novosibirsk, from “stable” to “positive,” the credit-rating agency said in a statement issued this Monday.

The ratings are constrained by what the agency regards as the city’s limited financial flexibility and predictability, as well as low economic productivity. However, these constraints are mitigated by a relatively diverse economy, moderate debt, and prudent debt management which is resulting in a favorable debt profile.

As with other Russian local and regional governments, Novosibirsk’s financial predictability and flexibility is severely limited because the federal government regulates tax rates and shares and distributes responsibilities to different layers of the government. Standard & Poor’s still regard Russia’s institutional frameworks as “developing and unbalanced” as defined by the credit-rating agency’s criteria. Continue reading…

McDonald’s to Expand into Siberia

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Mar. 29 – U.S. fast food giant McDonald’s Corporation reportedly has begun to search for franchisees to expand into Siberia.

The fast-food giant intends to open new outlets using the franchise business model that is the basis for 80 percent of its restaurants worldwide, but has not been used in Russia yet, according to RBC Daily. All of the company’s 314 restaurants across 85 Russian cities are operated independently.

Last week, McDonald’s announced plans to open restaurants in the West Siberian cities of Novosibirsk, Tomsk, and Barnaul. According to a city official from Tomsk, the company intends to open on its own, and also by granting franchises. Continue reading…

Marriott to Expand Presence in Siberia

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Mar. 21 – The second Marriott Hotel will be open in Russian Siberia from December 2014, the Marriott International announced this week. The group’s first hotel was Courtyard by Marriott, built in Irkutsk with 208 rooms at an estimated cost of 25 million euros.

The new Marriott Hotel will be constructed in the Siberian city of Krasnoyarsk.

“We are excited to announce this great new addition to our portfolio,” Amy McPherson, president and managing director of Marriott International Europe said. “We currently operate 14 hotels in Russia and see tremendous opportunity to expand across our brands here.” Continue reading…

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