Lord Green urges companies to explore Russia
East of England companies were urged to explore new trade opportunities with Russia following a three-day trade mission with Lord Green to the UK’s fastest growing major export market.
One local business is already reaping the rewards of this growing market and urging others not to be put off by the Russia market. Luton-based Morris Gordon Engineering recently clinched three deals for stainless steel banding and tensioning tools for the highways sector, worth in excess of £75,000 in Russia as a result of taking part in a UK Trade & Investment (UKTI) October mission.
Managing director Chris Cleevely said: “I went on UKTI’s Passport to Export scheme a year ago which is absolutely first class and as a result we took part in the Russian trade mission in October. My advice to other companies is do not be frightened by the Russian market. It is enormous and offers good potential for anyone with a quality product.”
As part of the mission, Lord Green and John Cridland visited Moscow and St. Petersburg, where they met key figures from the Russian Government and business community. The UK companies, which included Cambridge-based TAP Biosystems had the opportunity to gain useful knowledge of the market and engage with potential commercial partners.
David Newble, CEO of TAP Biosystems said: “It was an honour to have represented the Cambridge cluster of hi-tech life sciences firms, as only one of 25 UK companies selected by the UKTI and CBI to be part of this fascinating trade mission to Russia. Russia has an excellent reputation for life science research as well as, an increasingly active pharmaceutical market.”
Russia is a significant trading partner for British businesses, with more than 600 UK companies already operating there. UK exports for 2012 are on course to total £5 billion. In the last two years, the value of British goods exported to Russia has increased by over 80 per cent. This is expected to grow further as Russia opens its economy up to more international trade and investment.
UKTI defines Russia as a high growth emerging market. Russia is now the UK’s 11th biggest export market. UK exports to Russia totalled £4.8 billion in 2011 and are increasing faster than exports to any other country in the UK’s top 40 export markets.
Trade and Investment Minister Lord Green said: “Russia is our fastest growing major export market and, with 140 million consumers looking for quality British products and services, it offers great opportunities for British businesses. Important steps such as Russia’s accession to the World Trade Organisation are making it easier for British firms to do business there.
“The London Olympics showed the UK delivering an outstanding summer of sport on time and on budget. Now is the time for British businesses to build on this legacy and assist Russia in achieving its ambitious economic modernisation and infrastructure development goals.
“With this trade mission we are targeting new export opportunities for Britain’s mid-sized businesses in an important market. Building on National Export Week earlier this month, we’re keen to make strides in reaching our target to get another 100,000 UK firms exporting by 2020, helping to secure long-term and sustainable economic growth.”
Business Opportunities in Russia
Russian railways investment programme: The railway station modernisation programme envisages the redevelopment of 332 stations by 2015. Opportunities worth an estimated value of £450 million are available for companies in transport, construction and services, and UK companies are already bidding for some of this work. Skolkovo Innovation Hub: This innovation park on the outskirts of Moscow is being developed to house up to 30,000 residents and act as a hot-bed for businesses in high-tech sectors. On the same site, infrastructure for a city of over 30,000 residents is being constructed, alongside a new Institute of Science and Technology, offering a range of post-graduate programmes and exchanges. UK firms in sectors including construction, aerospace, energy, ICT, pharmaceuticals and healthcare are well-placed to win contracts up to an estimated value of £300 million. 2014 Sochi Winter Olympic Games and FIFA World Cup 2018: Construction, services and transport contracts worth over £2 billion companies are available, and firms in supporting sectors such as hospitality and retail will also have opportunities to capitalise on increased tourism to Russia. Life sciences: A draft national strategy on drug procurement, including new pricing rules, is expected to be announced by the end of the year and may enable greater access for UK pharmaceutical companies to the Russian market. Financial and professional services: Moscow is already home to over 600 banks and is one of the world’s top ten centres for derivatives trading. The Russian government aims to cement Moscow’s position as a leading city in the global financial system through the ‘Moscow as an International Financial Centre (MIFC)’ initiative. Almost 80 per cent of Russia’s financial resources are transacted through the City of London, which is working through TheCityUK with the MIFC initiative, and there are major opportunities for UK-based companies in the financial and professional services sectors to raise their profile in Russia. Oil and gas: Russia is the second largest oil producing country in the world, with up to 14 per cent of the world’s proven oil reserves, and it is the world leader in the gas sector with an estimated 35 per cent of known world reserves. An estimated £14-16 billion will need to be invested annually to develop Russia’s oil and gas industry, including for the new offshore oil projects, so there are lots of opportunities for UK expertise and investment. Mining: Russia is one of the most mineral rich countries on earth, ranking first globally for nickel production, second for aluminium production, in the top three for platinum, gold, diamond, iron ore and coal production, and fourth for steel production. There are opportunities for UK companies to supply both machinery and consultancy services to support the development of this industry. Advanced engineering and manufacturing technologies: Russian heavy industry is in urgent need of modernisation, with an estimated 70 per cent of existing capital assets outdated. Annual market demand for new metal machining equipment is over 50,000 units. Domestic suppliers meet less than one per cent of the internal need, so the market relies heavily on imports of technologies, tools and machinery for sectors including aerospace, automotive, shipbuilding, transport, power engineering. UK exporters are well-placed to increase their sales of this equipment to the Russia marketplace. Retail and giftware: The Russian clothing, footwear and accessories market was estimated at £37 billion in 2010, 65 per cent of which was clothing. Year-on-year growth of 15 per cent is expected for the coming period, offering major opportunities for British companies. For giftware products in particular - from tableware and fine jewellry to home decoration items - the market is heavily dominated by imports and British firms are already doing well in the upper and luxury end of the market. Food and drink: Russia is the fastest growing market for food and drink in Europe and is expected to become the continent’s largest by 2015. The sector relies heavily upon imports (up to 70 per cent), with the top 10 Russian retailers together accounting for only 10 per cent of total food and drink retail. In particular, there are opportunities for producers and retailers of specialist food and drinks, including organic foods, special dietary foods, convenience products, gourmet foods, and light alcoholic drinks (for example, Cider).
• PHOTOGRAPH SHOWS: Lord Green (right) in Russia