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Russia — A Market Overview

Russia — A Market Overview. Country Overview. COUNTRY OVERVIEW. Geography. Largest Country by Area 17,098,242 sq km 1.8 times larger than U.S. Spans 9 time zones Natural Resources and Land Use

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Russia — A Market Overview

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  1. Russia — A Market Overview

  2. Country Overview

  3. COUNTRY OVERVIEW Geography • Largest Country by Area • 17,098,242 sq km • 1.8 times larger than U.S. • Spans 9 time zones • Natural Resources and Land Use • Vast natural resources including oil, natural gas, coal, strategic minerals, rare earth elements and timber • 7.17% of land is arable (43,460 sq km of land is irrigated [as of 2008[)

  4. COUNTRY OVERVIEW Population • 9th Largest Country by Population • Nigeria (8th) – Japan (10th) • 138 million inhabitants • Median Age • total: 38.7 years (36.9 years in U.S.) • male: 35.5 years(35.6 years in U.S.) • female: 41.9 years(38.2 years in U.S.) • Population Centers • 12 cities over 1 million population • European West: Moscow (11.5 million); St. Petersburg (4.8); Yekaterinburg (1.4); Nizhniy Novgorod (1.3); Samara (1.2) • Asian Central: Novosibirsk (1.4); Omsk (1.1); Krasnoyarsk (.9) • Asian East: Vladivostok (.6); Irkutsk (.6); Khabarovsk (.6); Yakutsk (.2); Yuzno-Sakhalinsk (.2) • Population Growth Rate • -0.47% (Ranks 222nd out of 230)

  5. COUNTRY OVERVIEW Economy • 7th Largest Economy • $2.223 trillion GDP • Germany (6th), UK (8th) • Projected Growth(Source: IMF) • 4.3% - 2011 • 4.1% - 2012 • Unemployment Projections (Source: IMF) • 7.3% - 2011 • 7.1% - 2012 • GDP Per Capita (Source: CIA World Fact Book) • $15,900 (2010 est.) • Highest of BRIC Countries (Brazil, $10,800 – China, $7,600 – India, $3,500)

  6. COUNTRY OVERVIEW Economy • Positive Trends • Per Capita Growth of 84% by 2015 • (Source: Business Monitor Int.) • Affluent, urban population strong base for consumer goods • World Trade Organization Membership • Fully Membership by 2012 • Lower Tariffs • Average legally binding tariff ceiling • 7.8% after WTO • 10% currently (Source: WTO) • Trade Policies Subject to Multinational Overview

  7. COUNTRY OVERVIEW Governance/Concerns • World Bank 2010 Ease of Doing Business Index • Rank 123 of 183 (116 in 2009) • China (79), Brazil (127), India (134) • Transparency International 2010 Corruption Perceptions Index • Russia 154 of 178 • Brazil (69), China (78), India (87) • Intellectual Property Protections • Trade Mark and Domain Name Squatters

  8. Music Instrument Market Overview

  9. MUSIC INSTRUMENT MARKET OVERVIEW General Trends HS Code “Chapter 92”

  10. MUSIC INSTRUMENT MARKET OVERVIEW Market Share and Growth HS Code “Chapter 92”

  11. MUSIC INSTRUMENT MARKET OVERVIEW Year to Date August 2011 HS Code “Chapter 92”

  12. MUSIC INSTRUMENT MARKET OVERVIEW Parts • Most robust growth • Substantial growth in 2010 • Significant growth in Parts in 2010 HS Code “Chapter 92”

  13. MUSIC INSTRUMENT MARKET OVERVIEW Summary • Significant Growth • Parts and Instruments • Approaching and Possibly Surpassing Pre-Crisis Levels • Quality Products Appreciated (Germany #2 importer) • U.S. Growth Diversifying • Higher Percentage of Exports for Instruments • Fast Growth in Non-Parts in 2010 & y-t-d 2011

  14. Tariffs and Certifications

  15. TARIFFS AND CERTIFICATIONS Summary • Value Added Tax - VAT • 18% uniform rate • 10% rate on certain foodstuffs, pharmaceuticals and children's clothes • Some products, e.g., certain financial services and medical equipment, are exempt from VAT • Import Duties • 5 – 30% • Applied to CIF (Cost, Insurance + Freight) • Customs Union • Kazakhstan and Belarus • Duty Free Trade

  16. TARIFFS AND CERTIFICATIONS Select Import Duties • Pianos – 15% • Stringed Instruments (guitars, violins) – 5% • Wind Instruments (trumpets, clarinets) – 5% • Percussion Instruments – 5% • Electric Instruments (guitars, synthesizers) – 15% • Parts for Musical Instruments - 5%

  17. TARIFFS AND CERTIFICATIONS Certifications • Certificate of Conformity • Applies to Electronic Instruments and Equipment • GOST R (former name) • Local Certification Companies

  18. Selling in the Russian Market

  19. SELLING IN THE RUSSIAN MARKET Distribution Channels • Four Basic Channels • Agents • Distributors • Representative/Branch Office • Foreign Subsidiaries

  20. SELLING IN THE RUSSIAN MARKET Distribution Challenges • Territory • Ensure Coverage of Russia’s Vast Territory • Customs • Choose a Partner with Customs Experience • Logistics • Many Underdeveloped Logistics Systems • Payment • Uneven Access to Credit • Intellectual Property • Take Responsibility

  21. SELLING IN THE RUSSIAN MARKET Major Distributors • Key distributors • Mir Muziki (http://www.mirm.ru/) • Muztorg (http://www.muztorg.ru/) • Muzikalniy Arsenal (http://www.arsenalmusic.ru/) • Asia Music Trade (http://www.asiamusic.ru/)

  22. Commercial Service Solutions

  23. COMMERCIAL SERVICE SOLUTIONS Counseling and Research • Counseling • Goal to Increase U.S. Exports • Provide Answers to Questions • Find Local Resources • Research • Market Research Reports • Country Commercial Guide • www.Export.gov • http://export.gov/mrktresearch/index.asp • Customized Research

  24. COMMERCIAL SERVICE SOLUTIONS Buyer Matchmaking • Gold Key Service • Appointments (typically four per day) with prescreened Russian firms • Background and contact information on potential partners • Customized market briefing with U.S. Commercial Service staff • Available market research on the relevant industry sector • Debriefing with U.S. Commercial staff to discuss results and plan follow-up action • Preliminary Market Assessment • Conducted Prior to Gold Key • Determines Potential for your Product • Pricing • Small/Medium Companies - $700 ($400 – preliminary) • Large Company - $2,300 ($1,100)

  25. COMMERCIAL SERVICE SOLUTIONS Risk Assessment • International Company Profile (ICP) • Determines Suitability of Overseas Partners • Factual Report Containing: • Management details • Business activities • Product/service lines • Financial condition • Credit-worthiness • Trading experience • Market coverage • Business connections in the target country • Pricing • Small/Medium Companies - $600 • Large Company - $900

  26. COMMERCIAL SERVICE SOLUTIONS Sales/Client Presentations • Single Company Promotion (SCP) • Product Demonstration or Reception • Private Location • Assistance With Invitation List • Delivery of Invitations • Follow-up • Catering and Location Assistance • Pricing • Based on Time and Actual Costs

  27. Contact us today. Ken Walsh, Commercial Officer Ken.walsh@trade.gov +7-495-728-5369 Oksana Prokofieva, Commercial Specialist Oksana.Prokofieva@trade.gov +7-495-728-5405

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