Investments in Russia: Frost & Sullivan Focuses on Growth Opportunities
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Over the past nine years, the
Russian economy has demonstrated strong growth, spurring investors to
seriously consider the economic benefits of Russian investments. Currently,
Russia is the world's second biggest producer of oil, it is not dependent on
foreign capital flows, is relatively stable politically, boasts reasonable
market valuations as well as having access to the biggest growth story of
our time, Asia. Although this potential is alluring especially for foreign
investors, there are a number of risks involved with investing in Russia.
Primarily, obtaining access to reliable facts about Russian markets is
extremely difficult and, at the same time, strategically important.
Therefore, getting guidance is absolutely necessary for companies and
foreign investors looking for success in the developing Russian markets.
Frost & Sullivan's Director Beatrice Shepherd states, "The unfavorable press
on doing business in Russia overshadows this country’s true potential. There
is limited objectivity and willingness, coming from Western enterprises, to
accept the differences of working with a different culture and business
environment. At Frost & Sullivan, we have been working on projects in Russia
not only for global companies from the US, Europe and Asia but also for
Russian companies. This gives us a unique perspective on this country, a
truly objective view".
Within these developing markets not yet saturated, Frost & Sullivan projects
continued growth. Beatrice Shepherd is enthusiastic about the work her team
is doing in the region: "We recently won an important project for a Russian
government agency to assess and develop a new technology. Moreover, we have
just completed a due diligence for one of the largest private equities in
Russia for the acquisition of a Russian construction company. It is great to
see businesses flourishing and prospering, thanks to our strategies".
"We work on different projects/partnerships with our clients in Russia from
the simple assessment of the market potential for a certain company to due
diligence, risk assessment, partnership projects, business model and
business cases design" – continues Beatrice Shepherd -. "We also work for
Russian companies and, at the same time, for foreign companies. Thanks to
our business intelligence strategies, we are able to place our clients in a
stronger and more powerful position which leads to growth and success".
This is particularly interesting and important in times of global economic
crisis where a new strategic thinking can make a huge difference. "The
current economic crisis that is hitting Russia as well will not diminish its
attractiveness" – continues Frost & Sullivan director Beatrice Shepherd -.
"Russia is and will be one of the most exciting emerging markets in the
world. We believe in the high potential of this region. There are huge
opportunities and resources that are waiting to be tapped".
In 2008, Russia's Real GDP growth significantly outperformed average EU and
global growth rates. Since 1999, Russia's Real GDP growth is 83%. "Having
demonstrated incredible economic growth, Russia is now comparable to other
European countries, with greater access to consumer goods and services" –
continues Beatrice Shepherd – "Perhaps the biggest draw to Russia is the
fact that its markets are far from saturated, predicting future growth, yet
underdeveloped, making it a prime investment region. Another compelling
reason to invest in Russia is the double-digit increase in disposable
income. Currently, Russian households have experienced a 163 percent
increase in disposable income, which is funding the expansion in financial,
retail, healthcare, and media segments. Russia has a large population, with
increasingly higher purchasing power. The combination of unsaturated markets
and a growing percentage of disposable income provide a significant
incentive for potential companies to enter this growing market".
Investment risks in entering the Russian market revolve around the lack of
diversification in the overall economy. For the most part, the entire
economy is being carried by the energy and oil industries. If the Russian
economy is to become more multifaceted, other industries such as
construction, FCMG and manufacturing need to continue to gain economic
importance and build strength. The rise in investment demand is up by 20
percent, but Russia is still experiencing lower levels of investment,
especially when compared to its neighbors China and India.
Beatrice Shepherd has no doubts, "However intimidating these risks may seem,
investment risk takers cannot ignore the immense advantages of investing in
Russia. I believe that when all the pros and cons have been weighed, we will
continue to be attracted and scared by the Russian market. It is not for the
feint of heart. Breaking into Russia is not a race, it is a marathon".
Details:
Beatrice
Shepherd
Director
CEE & CIS Group
Frost & Sullivan International
E-mail:
beatrice.shepherd@frost.com
URL:
www.frost.com
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