Success Stories
We can see examples of successful foreign investments in different sectors of the Russian economy. In the Russian automotive industry are such giants as Toyota and BMW/ The most noticeable companies in the food processing industry are Danone, Nestle and Cadbury. Such producers of electronics and office and home appliances as Siemens, Hewlett-Packard and Merloni have been in the Russian market for a long time. Tikkurilla and Knauf have become very popular in the construction market. Citibank, Societe Generale and Ernst& Young have been very active in the banking and advisory services market.
Although all these companies represent different industries, they have certain common traits of market behavior. Almost all businesspeople that come to the Russian market take into consideration the size of the country; their activities in Russia are not concentrated in large cities only, but are arranged as a regional network. They pay attention not only to the technical and technological aspects of their work, but also to the technological aspects of their work, but also to the social ones.
The Japanese automotive giant came to the Russian market at the beginning of the 1990s, when it opened its first official dealer firms here. In 1998 Toyota Motor Corporation opened a representative office in Moscow in order to study the situation in the Russian market and ensure growth sales in the major Russian regions. In 2002 Toyota Motor Ltd., a national marketing and sales company, began its work in Russia, and in 2005 it began construction of its own plant in Russia.
The Toyota investment project will help achieve two goals: ensure a high employment level and implement new technologies in the industry. As the Toyota Chairman Hiroshi Okuda points out, “The interest of Japanese car-makers in the Russian economy keeps growing. Along with building a Toyota assembly plant, other Japanese companies are going to implement their projects in Russia as well in the near future”.
In 1999, the German corporation BMW realized that it had to start assembling its cars in Russia, and it founded the company BMW Russland Trading, a representation of BMW in Russia. In Oktober 1999 the Autotor company, partner of BMW Russland Trading, began assembling BMW vehicles at its plants in Kaliningrad.
Today, the 3-series BMW has become the leader of sales in the Russian market among all BMW vehicles, as well as the leader in its segment. The 5-series car sales are also demonstrating growth in Russia.
“We generally believe in the importance of producing cars directly in the cointry where we are going to sell them”, says Christian Kremer, Head of BMW Russland Trading. “This helps us closely to follow the changes in the local marker and provides us with a significant marketing advantage.”
ZAO CB Citibank, a subsidiary of Citigroup, began working in Russia in 1993, among the first generation of the Russian banks with foreign capital. Today, Citibank is a leading financial institutionwith 420 employees in Moscow and St.Petersbourg providing services to over 1700 corporate clients.
Citibank clients include giants of the Russian economy, subsidiaries of the largest world corporations, and leading banks. Citibank offers a wide range of banking services: from crediting, e-banking, trade financing and currency exchange transactions to derivative financial instruments, hedging transactions, leasing and depositary services.
Mark Robinson, Citibank President, says: “Russia is like the other big markets in which we work. But there is one significant difference: the Russian market is developing much faster. This means that we also have to be moving faster here”.
The Danone Group is an international corporation, a leading producer of diary products, biscuits and bottled water. In the early 1990s, Danone became active in the Russian market. Fermented milk products have always been popular and in great demand in Russia. Therefore the first Danone store that opened in Moscow on August 14, 1992 became popular very quickly. In 1994, the Danone Group bought the controlling stake of the Bolshevik company, one of the oldest Russian confectionery plants with the production capacity of about 30 thousand tons per year. In May 1995 the first Danone dairy plant in Togliatti began producing Danone yogurt. In November 2000 Danone opened its second dairy products plant in Russia, in the Chekhov area of the Moscow region.
“We arrange our work in every country so that it comprises both economic and social programs. There is no commercial success without social progress, and the other way round” says Frank Riboud, Danone Group Chairman and CEO.
Tikkurila is Europe’s major paint producer, with production facilities based in 13 countries of the world. To establish production facilities in Russia Kraski Tikkurilla constructed a high-tech plant in the town of Ramenskoe in the Moscow region.
Tikkurila offers a full range of high-quality paint materials designated for various uses for a wide range of consumers. The effective production of its materials is ensured by selecting raw materials accurately against the criterias of operational suitability and safety.
“Owing to the great efforts of our deals and business partners as well as our own personell”, says Jannu Paju, Vice President of the company and Director of the Deco Vostok branch, “Tikkurila has necome the most famous painting brand in Russia.”
Nestle has been operating in the Russian market since 1995. This Swiss company, founded in 1866, owns such trademarks as Nesquik, Nescafe, Maggi and others. Its key production assets in Russia are Konditerskoe Obyedinenie Rossiya, Nestle Zhukovskoe Morozhennoye, Altai, Kamskaya, Khladproduct, Vologodsky Zavod and Svyatoi Istochnik plant.
The Company manufactures beverages, ice cream, confectionery,infant food and special food. The company gradually expands its production facilities in the Russian market and strives to become a recognized leader in a number of food industry sectors. This idea has been recently formulated by Hans Gueldenberg, Nestle General Director for CIS, in the newspaper Le Temps: “Currently the Russian economy is growing. It is the right moment for us to consolidate our market stance in Russia”.
Siemens has been operating in the Russian marken since more than one and a half centuries ago. Siemens AG (Berlin and Munich) is a world leader in the field of electronics and electrical engineering. Over 423 thousand people work to develop and manufacture products, design and compose systems and equipment, and provide customer services.
In Russia the company has established its presence in thirty regions of the country, and is one of the leading suppliers of products, services, annd integrated solutions for upgrading to the key industries of the Russian economy.
In the 2004 financial year, the amount of the corporation’s orders in Russia exceeded 1/25 billion euros, its turnover amounted to 1,2 billion euros, and the number of personnel was above 3,5 thousand people. After meeting Vladimir Putin in 2005, the corporation’s head Klaus Kleinfeld said, “The Russian President assured me that Siemens is an important partner of Russian industry and that he supports our further investment in the Russian economy”.
Hewlett-Packard regards Russia as one of its priority markets. Its operations in Russia are aimed at resolving four strategic objectives: the reinforcement of the company’s stance as a supplier of corporate solutions, production diversification, the increase of regional presence and implementation of specialized regional programs, and the reinforcement and expansion of the company’s partner network.
To expand its presence in the regions, Hewlett-Packard develops special regional programs for the promotion of its solutions and developing new business. Such programs are primarily aimed at informing potential customers of the company product and technologies. “We pay much attention to integration projects and the primary objective of our representatives is an increase of the share of the project business in the regions” said Owen Camp, head of the Hewlett-Packard representative office in Russia.
Cadbury Schweppes has been delivering its products to the Russian Market since 1992. In 1995 it opened a representative office in Moscow and started construction of a Cadbury confectionery plant in the town of the Novgorod region. The plant was commissioned in 1996. The amount of capital investment was 120 mln $. In 2002 Cadbury Schweppes acquired Dandy, a famous chewing gum producer (Dirol, Stimorol and others), which, in its turn had chewing gum production facilities in Veliky Novgorod. As a result of a merger of two plants – Cadbury (chocolate production) and Dirol (chewing gum production)- and their distribution structures in August 2003, OOO Dirol Cadbury was established.