# Presentation: 428288

## U.S. Commercial Service

**Your Key to Russia**

**The “R” in BRIC – Russia as a **
**Strategic Emerging Market**

## U.S. Commercial ServiceRussia

- “Russia is a riddle, wrapped in a mystery inside an enigma.”  Winston Churchill, 1939.

_**PERCEPTION:**_

- Russia’s “national interest” now encompasses joining Europe and the West.

**BUT...**

## U.S. Commercial ServiceRussia

**Russia in the Western Press:**

-  Avian Influenza
-  Beslan/Chechnya
-  Yukos/Khordikovsky
-  Political Retrenchment

## U.S. Commercial ServiceRussia

**Reality:**

-  Russia is a Developing Country.
-  Significant progress over past 15 years.
-  Impressive economic growth since 1998.
-  Substantial structural, administrative,
-    and economic reforms implemented.
-  Strategic market with significant assets.

## U.S. Commercial ServiceRussia

_**Macroeconomic Snapshot:**_

- Average GDP growth: 	6.7% per yr. since ‘98
- GDP 2005 estimated: 	$720B
- PC GDP 2005: 		$5,010 ($1,339 only 6 years ago)
- Inflation:			10% (9-12% considered sustainable)
- Unemployment: 		7.1% (same as Sweden)
- U.S. exports: 		$4.2B to Russia
- U.S. imports: 		$10.5B from Russia (mostly oil)

## U.S. Commercial ServiceRussia

_**Oil and Gas Economy:**_

-  Moscow awash with money; record oil/gas     prices driving economy.  Trickling down to regions.
-  Russia will continue to be major player in the global energy market:
-  World’s largest natural gas reserves.
-  Neck-in-neck with Saudi Arabia for oil production; 2nd biggest oil exporter.
-  World’s 3rd largest energy consumer.

## U.S. Commercial ServiceRussia

_**Oil and Gas Economy (cont’d):**_

-  Putin wants to bring greater share of energy sector under state control.
-  Simultaneously trying to diversify economy away from reliance on petrodollars.
-  Energy remains strategic focus of bilateral dialogue and Presidential initiatives (CED).

##          Market Opportunities &

| Telecom | 600 |
| --- | --- |
| Automotive Parts | 700 |
| Oil/Gas Equip/Svcs | 570 |
| Franchising | 180 |
| Medical Equipment | 200 |
| Pharmaceuticals | 190 |
| IT Hard/Software | 68 |
| Aircraft and Parts | 201 |
| Agric. Machinery | 40 |
| Mortgage Finance | 67 |

**          ****Sector****	****    ‘04 U.S. Exports ($m)****	****	****	**

_**Best Prospects**_

## Telecommunications Equipment & Services

## Automotive Parts and Aftermarket

## Oil & Gasfield Equipment and Services

## Franchising

## Medical Equipment

## Agricultural Machinery

## U.S. Commercial ServiceRussia

_**Challenges:**_

-  Corruption:
-  85th out of 104 in gov’t favoritism in procurement (Global Competitiveness Report).
-  95th out of 146 (Transparency International).
-  Nature of corruption changing.

## U.S. Commercial ServiceRussia

_**Challenges (cont’d):**_

-  Rule of Law, Bureaucracy:  Difficult to navigate.
-  State control of Economy: Less transparent.
-  Competition: Especially from W. Europe and Asia.
-  Intellectual Property Rights Violations.

## Intellectual Property Rights (IPR)

- Copyright, Trademark and Patents
- Enforcement continues to be a problem
- Major issue facing WTO accession
- IPR Toolkit can be found @ www.buyusa.gov/russia

## U.S. Commercial ServiceRussia

_**Successes:**_

-  U.S. investors report high profits despite hurdles.
-  Bilateral talks, esp. in WTO context, producing movement   in eliminating/reducing trade barriers.
-  Numerous inroads from U.S. companies securing business across sectors:  GE, Ford, Alcoa, Motorola, Merck, John Deere, IP, Subway, Marriott, Citibank, Boeing, Chevron......

## U.S. Commercial ServiceRussia

_**Successes (cont’d):**_

-  Increased focus in Russia on promoting SME development.
-  CS Russia actively engaged with GOR on advocacy issues.
-  OPIC/EXIM represented in-country, facilitating deals.

## U.S. Commercial ServiceRussia

_**Advice for Doing Business in Russia:**_

-  Perform detailed market research; identify specific sector opportunities.
-  Find a qualified local partner; conduct due diligence.
-  Be patient: maintain a long-term timeframe for plan implementation.

## U.S. Commercial ServiceRussia

_**Advice for Doing Business in Russia (cont’d):**_

-  Know your trade financing options: make use of TDA, EXIM, OPIC.
-  Consider regions – ground floor opportunities (13 cities w/populations > 1m).

## Business Travel

- Russian Visas (_[www.russianembassy.org](http://www.russianembassy.org/)__)_
- Transportation
- Language
- Additional information for travelers is located at the American Embassy website @ _[www.usembassy.ru](http://www.usembassy.ru/)__ and via our Country Commercial Guide at __[www.export.gov](http://www.export.gov/)_

## 
  News & Events in Russia 
  Our Products & Services 
  Trade Leads 
  Upcoming Conferences 

-   News & Events in Russia
-   Our Products & Services
-   Trade Leads
-   Upcoming Conferences

- Our Website: www.buyusa.gov/Russia/en/

-   Recent Market Reports
-   Industry Highlights
-   Special Programs

**U.S. Commercial Service****Russia**

- _Our Offices: _
-  CS Moscow, CS St. Peterburg, CS Vladivostok
-  Includes: CS, BIS, BISNIS, OPIC/EXIM, SABIT

## What Our Clients Say

*“**We would like to thank you very much for making our Gold Key visit to Moscow a success. Due to your excellent preparations, the meetings were meaningful and we are now hopeful to acquire some solid customers in Russia”*
**Horner Discus International, Inc., **
**Fort Lauderdale, FL**** **

*I am very grateful for your prompt and skillful efforts on my behalf.  I did not realize that there was such good service -- and such fine people -- available from our government to help my business.*
**J. Lyman Industries Inc., Chicago, IL**

*“**The Gold Key Service was everything that was promised and more... I assure you we will use this fine service in the future and recommend it to all our business contacts...”*
**J.D. Watkins Enterprises, Inc., **
**St. Louis Park, MN**** **

*“**You and your service are to be applauded for the efforts and dedication... I want to express my deepest appreciation for efforts with the various elements of the Russian bureaucracy.”*
**Potomac International, Inc., Alexandria, VA**