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Business Opportunities in Russia

28.11.2012

The CBI is the UK's top business lobbying organisation

Where UK firms can benefit from link-ups with business in Russia - as identified by UKTI


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% 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% of the world’s proven oil reserves, and it is the world leader in the gas sector with an estimated 35% 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% of existing capital assets outdated. Annual market demand for new metal machining equipment is over 50,000 units. Domestic suppliers meet less than 1% 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% of which was clothing. Year-on-year growth of 15% is expected for the coming period, offering major opportunities for British companies. For giftware products in particular - from tableware and fine jewellery 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%), with the top 10 Russian retailers together accounting for only 10% 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).


Source: http://www.cbi.org.uk/media-centre/news-articles/2012/11/business-opportunities-in-russia/