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South East Europe Regional Market Opportunity Forum Connecting Businesses with Outside Markets

South East Europe Regional Market Opportunity Forum Connecting Businesses with Outside Markets Russia Presented By: Eric Hansen Deputy Director The U.S. Russia Center for Entrepreneurship Bucharest, Romania November 2, 2006. The U.S. Russia Center for Entrepreneurship Who We Are.

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South East Europe Regional Market Opportunity Forum Connecting Businesses with Outside Markets

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  1. South East Europe Regional Market Opportunity Forum Connecting Businesses with Outside Markets Russia Presented By: Eric Hansen Deputy Director The U.S. Russia Center for Entrepreneurship Bucharest, Romania November 2, 2006

  2. The U.S. Russia Center for Entrepreneurship Who We Are $330 Million USAID Enterprise Fund Mission: Accelerate Entrepreneurship in Russia via: • Trainings/Workshops • Network Learning Events • Conferences • Research • Grants 2

  3. The U.S. Russia Center for EntrepreneurshipProgram Priorities Entrepreneurship Training and Education Policy Analysis and Development Catalyst Organization Commercializing Innovation and Technology Transfer 3

  4. The U.S. Russia Center for EntrepreneurshipProgram Priorities Entrepreneurship Training and Education Policy Analysis and Development • Seminars • Entrepreneurship Group Panel Events • Business Plan Competitions • Promote Entrepreneurship Education in Universities • Educate Policymakers on Entrepreneurial and Growth Industries • Promote High Standards of Business Practices and Corporate Governance 4

  5. The U.S. Russia Center for EntrepreneurshipProgram Priorities Catalyst Organization Commercializing Innovation and Technology Transfer • Identify and Recognize Role Models • Publish Case Studies, Success Stories and Books for Entrepreneurs • Promote Innovation and Initiative in all Sectors of the Economy • Business Planning Training to Technology Start-Up Companies 5

  6. Russia: Competitive Advantages • Many Potential Partners • 2 million SMEs (<250 employees) • Skilled Labor in Sciences, Software, Aerospace and Optics • Access to Natural Resources • Increasing Foreign Direct Investment • 2005 = $9 billion • 2004 = $6.6 billion • Expanding Consumer Market • 2005 = $220 billion • 2004 = $193 billion • Increasing Monthly Income • 2005 = $440 • 2004 = $320 • Access to Capital • Increased Presence of Foreign Banks and Investment Funds 6

  7. Russia: Expanding Sectors Consumer market • Food processing and packaging • Printing • Medical equipment and pharmaceuticals • Retail trade and distribution • Healthcare services • Financial services (asset man., insurance, banking, mortgage) • Hotel and tourism Natural resource-oriented • Wood processing, pulp & paper • Metals • Oil & gas • Chemicals • Fishing Industry • Building Materials • Environmental technologies • Automotive Industry Subcontractors • High Tech (software development) • Machine-building (nuclear power stations, optics, trucks and automobiles, other) Infrastructure • Ports and airports • Road construction • Telecommunications • Logistics (cargo terminals, warehouses, etc.) 7

  8. Russia: Risks • High Administrative Barriers • Fire & Sanitation Inspections, Certification/Licensing, Utilities Hook-Up • Corrupt Legal System • Weak Intellectual Property Protection • Cumbersome Tax Regime • Restricted Market Access in Certain Industries • High Cost for Warehouse and Production Premises • Deficit of Information • Marketing Research, Demographics, Statistics • Poor Management Practices • Scarcity of Manufacturing Labor 8

  9. #2 – Stavropol Region (Agriculture) #15 – Novosibirsk Region (IT) #22 – Nizhny Novgorod Region (IT) #23 – Rostov Region (Agriculture) #34 – Volgograd Region (Agriculture) #57 – Leningrad Region (IT) #64 – Krasnodar Region (Agriculture, Tourism) #65 – Irkutsk Region (Tourism) #68 – Moscow Region (IT) #69 – City of St. Petersburg (IT, Tourism) #78 – City of Moscow (IT, Tourism, Food Distribution) #79 – Voronezh Region (Agriculture) Where to Enter the Russian Market?Sample Ranking of Administrative Barriers by Region*#1 (Low Barriers) - #80 (High Barriers) * Source: Conditions and Factors Affecting the Development of Small Enterprises in the Regions of the Russian Federation OPORA Russia 9

  10. Russia: Key Success Factors • Good Local Partner • Carefully research potential partners • Long-Term Approach • Need to be committed to Russia • Carefully Research the Market • Be wary of official statistics • Be Prepared for Unexpected Legal/Regulatory Obstacles 10

  11. Russia: Additional Resources Trade Promotion Resources: • Agricultural Business Trade Associations: www.rusagribiz.com • IT CompaniesTrade Association: www.acsit.ru • Russian Travel Industry Union: www.rata.ru • World Food Exhibition: www.world-food.ru • PRODEXPO International Food Exhibition: www.prodexpo-moscow.ru Business Support Organizations: • OPORA (Organization of Small and Medium Business): www.opora.ru • Delovaya Rossia (Business Russia): www.deloros.ru • Russian Venture Capital Association: www.rvca.ru • European Bank for Reconstruction and Development: www.ebrd.com • Association of European Business in Russia: www.aebrus.ru • American Chamber of Commerce in Russia: www.amcham.ru 11

  12. Thank You Eric Hansen Deputy Director The U.S. Russia Center for Entrepreneurship ehansen@cfe.ru www.cfe.ru Our Offices: Moscow Nizhny Novgorod St. Petersburg 12

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