Russian financial and economic forum in Switzerland
Held on Thursday 20th of October, the 16th edition of the forum welcomed its guest star, Valentina Matvienko, President of the Council of Federation (upper chamber of the Parliament). Swiss politics were represented by the President of the Council of the States, M. Raphael Comte, and the two co-presidents of the Swiss-Russian parliamentary group of friendship, Mr. Filippo Lombardi and Jean-François Steiert.
Along with her political views, Mrs. Matvienko reminded that the Russian business climate has dramatically improved in the past few years. Not only did Russia go from the 120th position in 2010 up to the 40th position in the Doing Business Report, the capital outflow is reducing and agriculture is hitting records high. Another point worth mentioning: the level of government debt remains quite low (14% of the country’s GDP) compared the European States.
Plebiscite for direct links between Canton and Regions
A new topic was introduced: interregional direct cooperation. For several years, the Kremlin has been undertaking several measures to give more autonomy to Russian regions and diversify the country’s economy. In this regard, Mrs. Matvienko called for further development of direct relationships between the Swiss сantons and the regions of Russia. On this occasion, Mr. Filippo Lombardi, parliamentary from the Canton of Ticino, announced the signature of a partnership agreement between his Canton and the Region of Krasnodar. However, no explanation was given as to whether a concrete support mechanism was to be implemented to develop this partnership.
Tough time for Swiss exports
In view of the difficult economic conditions over the last years (strengthening of the Swiss franc, fall of energy prices and of the Russian currency, global economic slowdown…), trade between the two countries has suffered a sharp decline. The volume went from USD 12 billion in 2013 to USD 4,5 billion by the end of 2015; exports from Russia to Switzerland were divided by three and only recently showed signs of growth (+15% at the last trimester*) while Swiss exports to Russia continue their relentless fall.
*Source: Trade Representation of the Russian Federation in Switzerland
What are Russian partners looking for in Switzerland?
Despite its marginal role in the trade with Russia in terms of volumes, Switzerland keeps regularly attracting Russian representatives of high rank. Some reasons are obvious: Switzerland remains an important producer of highly technological products (medicine, pharma, chemicals, machine-tools…); the country is an ideal platform to rebrand and export Russian products in Europe and the Confederation remains a world-renowned financial center as well as an important source of investments.
But most of all, Switzerland arouse the Russian curiosity through its capacity of innovation. Since 2010, Russia has been multiplying initiatives to favor the emergence of new industries or strengthen them. To this end, Russia sees Switzerland as a perspective technological partner for the development of innovation centers, essential condition for the birth of new fields of activities. This political shift is manifest in the speeches and strategies of Russian organisms responsible for economic development. After seducing the multinational companies, these investment agencies progressively turn to innovative Swiss SMEs.
High levels of investments from both sides
According to Russian statistics, about USD 16 billion of Russian capital was invested in Switzerland and 11 billion of Swiss capital were invested in Russia (5 billion on long-term projects). To this day, about 600 Swiss companies are active in the Russian market and more than a third through a subsidiary or representative office. Nestlé by itself invested more than 1,5 billion in the Russian economy; the company runs more than 14 commercial platforms or production sites, employing close to 11’000 people. ABB opened 5 production sites and counts about 1300 employees, while Holcim owns 2 cement plants and launched this year a third production project in the region of Saratov, next to Samara.
Inversely, large Russian companies such as Eurochem (chemicals), Luxoft (IT solutions), Novatek (energy) or GazPromBank (financial services) set up operations in Switzerland. Thanks to the acquisition of Sulzer and Oerlikon, the Russian investment group Renova contributes to the modernization of certain industrial sectors of the Russian economy.
Russia will develop, with or without Switzerland
Considering the new Russian development policies, the independence of Switzerland from EU and the excellent image of reliability and quality that the countries enjoys in Russia, Swiss SMEs have excellent cards to play to bring their technologies and expertise on the Russian market. Opportunities of this market - either for growth, diversification, sourcing or manufacturing - were already seized by multinational companies. Why not Swiss SMEs? At Swiss Center Samara, we believe that this is possible and we are equipped to accompany you throughout this challenging yet highly rewarding process that is the conquest of the Russian market.