Krasnodar Rated Best Russian City for Business by Forbes

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Jun. 2 – The Russian edition of Forbes magazine has rated Krasnodar the best city in Russia to do business for the third time. Located southwest of Moscow, Krasnodar is well known for its investment friendly and supportive business environment.

Khabarovsk city in the Russia’s Far Eastern region was ranked second followed by Ekaterinburg in third, Chelyabinsk in fourth, and the western Siberian city of Novosibirsk taking fifth place.

A total of 103 Russian cities were analyzed in the study. Selection criteria were business climate, purchasing capacity of the population, stability during crisis, social characteristics, infrastructure development, and comfort of business dealing for owners and top management of the companies.

For creditability of research, Forbes did not include the country’s recognized business centers like St. Petersburg and Moscow.

“These are the two main economically independent cities, which concentrate the basic streams of the finance, labor and information resources, therefore it is almost impossible to compete with them for provincial cities. They represent another category, and if they were included in the ratings the palm by all means would pass to them,” said Head of Macro-economic Research of BDO in Russia Elena Matrosova, agreeing with the research approach.

Offering another view point, the City Economy Institute’s Representative German Vetrov doubts that the two Russian capitals could lead the rate if included in the list due to high level of corruption in both cities.

Cities in the Northern Caucasus were also excluded from the Forbes ratings because of “the impossibility to define the level of safety in a region where military operations recently took place.”

Vetrov agreed with Forbes’ placement of Krasnodar at the top of the list. “The city’s leading position can be explained by the high level of economic diversification,” he said.

According to the World Bank’s “Doing Business” research report conducted in the 10 capitals of the Russian regions last year, Rostov-on-Don was the rated the top business location in the country. It placed seventh on the Forbes list.

World Bank experts estimated cities from the view of complexity and cost of company creation, getting the constructing license, property registration procedure, and international trade arrangements.
“That fact that Rostov-on-Don and Krasnodar take first place in different ratings is a consequence of the competition between them. They struggled with each other for means of attracting businesses and, as a result, they improved the quality of the investment climate and local legislation, reduced the quantity of administrative barriers, and struggled against corruption,” World Bank economist Sergey Ulatov said.

According to the expert estimations, the competition between the two cities will increase in the future. “It is obvious their own means are not enough for further development and they will continue to compete for outsource investments. This means Rostov-on-Don and Krasnodar will maintain business condition improvements,” Ulatov said.