-
Innovative technologies are the most attractive industry sector in
Russia for foreign investors.
-
Russian manufacturing and industry interest investors much more than
investments in land and property.
-
Foreign investors in Russia tend to invest relatively small capital
(less than 1 million euros) in several projects and get returns
within one to two years.
-
The most popular form of investment project in Russia is a joint
venture with a Russian co-investor or the “receiver of the
investment”.
-
Despite difficulties, Moscow remains the most attractive region for
investment.
-
Within the hierarchy of investment risks in Russia, investors
continue to worry most about tax and administrative risks.
Moscow,
Russia (July 4, 2012) -- These were the main conclusions reached
by Russian consulting group Gradient
Alfa, which were based on surveys among businessmen
and investors who participated at meetings held by the company in the
first half of 2012. The meetings took place in France (February 23,
Paris), USA (12-14 March, New York), UK (12 April, London), Germany
(15 May, Munich) and Russia (22 May, Moscow).
Chairman
of the Board of Directors of Gradient Alpha, Pavel Gagarin, said that
foreign investors view the Russian market as attractive and
promising, although they place it in the "higher risk zone".
It is the potential to minimize these risks that determines the
attractiveness of investment projects.
"The
last thing foreign investors want to invest in is land and property,
even in Moscow and the Moscow region; it is incomprehensible and
scary for them. By comparison, manufacturing and industry appear a
lot more attractive. Despite Russia’s entry into the WTO, the
“import replacement” policy of the Russian authorities is
actively continuing. To bypass these restrictions, investors need to
start their production inside Russia, opening branches and
representative offices here. Moreover, it is easier to start a new
business from scratch in the Special Economic Zones, than to revive
an old company, which is burdened with debts and other obligations,"
said Pavel Gagarin.
Surveys
conducted by Gradient Alpha show that innovative technology is
currently by far the most attractive investment sphere in Russia.
This is mainly due to the insignificant level of investment required
and the quick returns. Besides, the choice is driven by the high
demand from Russian consumers for these products. The good prospects
for this market are highlighted by the rapid growth and penetration
of traditional and mobile Internet; there has also been a sharp
increase in the number of mobile applications.
The
next most promising areas for investors are retail and certain
sectors of the FMCG market. Network retail is viewed as particularly
attractive. Consumption in Russia is very high. Leading national
retailers increase revenue by more than 30% annually. According to
the Association of Retail Companies, retail networks comprise 38% of
the Russian retail sector, with the five largest companies having 10%
market share.
Another
trend for foreign investors is to invest relatively small sums of
capital (less than 1 million euros) in several projects and to get
returns within one to two years. The most popular form of investment
project is a joint venture with a co-investor or the receiver of the
investment. For investors, who would be perfectly capable of
financing the whole project, this is a way to diversify risks. It is
safer to invest 30% of the available resources in three different
projects than to fund 100% of one project.
Despite
the fact that Moscow is a difficult city in which to do business, it
is still the most attractive investment region. "Investors are
afraid to invest in projects located more than 50 kilometres from the
capital for the following reason: it can be easier to work in the
regions, but that depends entirely on the specific attitude of the
authorities’ representatives there. There is no such dependence on
the "human factor" in the federal centre, rather a
dependence on the system, which is easier to adapt to," said
Pavel Gagarin.
Another
Russian region selected by investors as an attractive area for
investment is Tatarstan. In addition to a favourable investment
climate, this choice is determined by a simplified procedure for
businesses and property registration, the vast territories of the
republic and the availability of cheap labour.
Today,
foreign investors have a certain perception of investment risks in
Russia and their relative importance. In the first place are tax
risks, meaning rather a possibility of unfair taxation than a high
level of taxes. The second and third places are bureaucratic and
administrative risks that might affect the time taken to receive the
required permits, constantly changing terms for them and regular
changes to the "rules of the game." Fourth place is taken
by legal risks. Foreign investors see the legal environment for doing
business in Russia as "legal chaos". By this they are
referring to discrepancies between federal and local laws, lack of
uniformity in law enforcement and the absence of federal laws "On
Public-Private Partnership", "On Holding Companies"
and "On project financing."
For
more information, please visit the company web site
http://www.gradient-alpha.biz
or use the following contact information:
PR department
Gradient
Alpha Investments Group
Tel:
+7 (495) 740 1264
E-Mail:
m.shetilenko@gradient-alpha.ru
PR
representative in Europe
Eva
Smit
Tel:
+44 (0) 7538 978986
E-Mail:
insidersuk@gmail.com
Gradient
Alpha Investments Group has more than 15 years of experience in
facilitating investment deals in Russia. Acting as a strategic growth
consultant for many Russian companies, the group has conducted
hundreds of investment projects, both private and public, in various
sectors of the economy. The total amount of investment capital
procured through Gradient Alpha has averaged around three billion US
dollars per year during the last five years.
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