EEF–2018

In this issue

05

12 Business programme
25 The ‘Far East Street’

94 Andrey Sharonov, President,

Welcome addressesby the leadersof Russia,
Japan, and Mongolia

exhibition

26 EEF 18 cultural programme
27 eef 18 sporting programme

Moscow School ofManagement SKOLKOVO

144

44 The FEFD’s storehouse
50 Alexey Chekunkov, CEO, Far
East Development Fundeconomic zones in the
Russian Far East: a secretresource for Asian market
growth62 Federal cluster nna Tsivileva, KolmarA
Daria Ustyuzhanina, TimePad
Natalya Kaspersky, InfoWatch
Marina Domracheva, 3D Smile72

about a hectare

40

Alexander
KOZLOV,

ARCHIVE:

The historyof Orthodoxy
in Japan76 Hiroshige Sekō, Japanese134 Roscongress

General Director, SpeechTechnology Centre

national brandDirector of the Institute of
Far Eastern Studies of theRussian Academy of Sciences

140 The Russian Convention
Bureau84 Zhou Liqun, General

148 Vitaly Verkeenko:

Manager, China Chengtong
International Investment

A European city withan Asian mentality
and a profoundly
Russian soul150 Vladimir Mamontov:

Crossing the bridges of mymemory110

46 Accelerated path to successin the FEFD

28
2

138 The ‘Made in Russia’

80 Sergey Luzyanin, Professor,

AND WHERE TO FIND ITGEOPOLITICS
Asia-Pacific as a new zone for global market growthSocial Platform

Director, Korea TradeInvestment Promotion
Agency (KOTRA)

SPORT
Sensei Vasily
Oshchepkov:
FROM JUDOTO SAMBO

The World Ocean
on Russky Island

126 Dmitry Dyrmovsky,

86 Kim Jongkwon, General

Minister for the Development of
the Russian Far East:
I know what to look for

128

SCIENCEAND
SHOW

There’s no other city
like it in the country
Minister of Economy, Trade,and Industry

66 Reasons to care34

98 GIRL POWER:Ilya Lagutenko:

60 Advanced special

The Trans-Siberian: thelongest railway line in theworld

President, Japan Association
for Trade with Russia andthe Newly Independent
States (ROTOBO)FIRSTPERSONS:

18 Forum: Navigator

54 MEGAPROJECTS

88 Shigeru Murayama,

152 The top 12 sights in the

EEF
SAILINGREGATTA

Primorye Region capitaland surrounding area

156 BIG DIFFERENCE:

This is Vladik, baby!

106 How the Far East’s

Gazinsky made hismark on international
football102

120 STARTUP:

ROOT
SYSTEM

Viktor Tsoi’s two ‘blood types’

The university as a regional
economic powerhouse

124 Alexander Galitsky,

founder of venture fund
Almaz Capital
3

160

VIP
DININGAll the President’s Goubuli

FORUM | FIRST PERSOns

FORUM DOCUMENT

To participants and guestsof the 4th Eastern Economic Forum
Friends,
I cordially welcome all participants and guests of theEastern Economic Forum, which is being held in Vladivostok
for the fourth time.
Over the years, the Forum has become an important andpopular venue for face-to-face dialogue between politicians
and public figures, business executives and experts. This
year, delegations from more than 60 countries across theworld will be taking part.
The theme of this year’s event, The Far East: Expanding
the Range of Possibilities, reflects our aspiration to see
Russia more closely integrated into the economic networkof the huge Asia-Pacific region. In order to support businessinitiatives in the Russian Far East, we have establishedadvanced special economic zones that offer significant
incentives to companies wishing to launch new production
facilities. We have also created a port area with a special

customs and tax regime, Vladivostok Free Port. We are
implementing large-scale social, infrastructure, education,and research programmes and projects aimed at supporting
exports and technological modernization. All this opens up
a wide range of opportunities for partnerships, trade, andlong-term capital investment, as well as for adopting modern
and effective forms and models of cooperation, including
within the framework of such multilateral organizations as
the Eurasian Economic Union, the Shanghai Cooperation
Organisation, and the Asia-Pacific Economic Cooperation
forum.
I am confident that the ideas discussed during the Forum
will contribute to business growth in the Far East and todeeper mutually beneficial cooperation between Russia
and the Asia-Pacific region.
I sincerely wish you a productive and successful Forumand all the best!
Vladimir Putin

The history of the Eastern Economic Forum began with this decree

Eastern Economic Forum • 2018 • The Roscongress Foundation magazine and catalogue
Project Manager Andrey Reut • Editor-in-Chief Ramil Farzutdinov • Senior Editor Dmitry Kryukov • Director Camilla Spence • Design Mila Bazhenkova • DTP and pre-press LyudiPeople •The magazine includes photos by: TASS • RIA Novosti • AP • Roscongress Foundation Photo Bank • Lori • Shutterstock • Alexey Voron • Sergey Gorshkov • Igor Olkhovsky • Alexander Khitrov• Drawings by Ksenia Lokteva • Caricatures and cartoons by: CARTOONBANK.RU • Victor Bogorad • Arkady Gursky • Valentin Druzhinin • Roman Peshkov • AndrewZavgo •Authorized for publication on 17 August 2018 •Printed at the printing house: TYPOGRAPHSKIY COMPLEX DEVIZ, Office 44, Building 2A, 10, Ul. Yakornaya, St. Petersburg, 195027. Copies printed: 3,000© The Roscongress Foundation is a socially oriented non-financial development institution and a major organizer of international conventions, exhibitions, and public events.
• Reprinting with reference to the Roscongress magazine and catalogue is permitted and encouraged •All questions regarding commercial cooperation should be addressed to: camilla.spence@roscongress.org

4

5

FORUM | FIRST PERSOns

FORUM | FIRST PERSOns

To all those participatingin the Eastern Economic Forum
I would like to offer my sincere congratulations on the occasionof the 4th Eastern Economic Forum.
Vladivostok has long been an international city and home to an
important Russian port. It is developing as an economic centre that isopen to the fast-growing Asia-Pacific region. The Eastern Economic
Forum brings together business people from several dozen countries
around the world to discuss the future of the Russian Far East, andthe vital role that this Forum is playing in that development needs
no explanation for those who have attended the event.
I myself have attended the Eastern Economic Forum for threeconsecutive years, and on each occasion I get a strong sense not
only of the shape of new business in this area, but also of the vitalityof people-to-people exchanges. At last year’s Forum I met young
Japanese and Russian students with high aspirations, and I was
deeply impressed by one Russian student who informed me of hergoal to “strive to become a bridge between Japan and Russia.” Asa result of the efforts of these young people to open up the future,
I am confident that the city will become a bridge that connects
the people of the Asia-Pacific region, including Japan and Russia.
Cooperation in the Russian Far East is one of the pillars of
the eight-point cooperation plan that I proposed, and Japan
has been collaborating with Russia in order to contributeto the development of the region. At the end of last year adevelopment concept for Vladivostok proposed by a Japanese

Dear Forum participants and guests

design company was incorporated into the city’s master plan,and specific work will move ahead in the future. In addition,
Hokuto Rehabilitation Centre, which opened in May, treated462 people in June, the limit of its current capacity. The
centre gives a genuine sense of the advanced nature of Japan’s
rehabilitation technologies. Furthermore, we are constantly
seeing new outcomes that are leading directly to lifestyle
improvements for Russian citizens, including the establishmentof greenhouse facilities that make it possible to harvest fresh
vegetables even in winter and the construction of clean andlight-filled wooden homes.
This year is “Japan Year in Russia” and “Russia Year in Japan”,
during which a large number of events are being held. In June,
the Japanese training barque Kaiwo Maru docked in the port of
Vladivostok and exchanges took place between Japanese andRussian maritime students. Following on from last year, the Kano
Jigoro judo tournament will also be held in Vladivostok. I am pleased
to see that exchanges between Japan and Russia are expanding ina broad range of fields.
I hope that the Eastern Economic Forum this year will once
again serve as a venue for active discussion about the futureof the Asia-Pacific region, including the Russian Far East, andthat it will give rise to projects and ideas that will realize diverse
cooperation.

Today, as the countries of the world have begun towork towards developing more productive economic
cooperation by utilizing their competitive advantages, I
am pleased that the Russian Federation holds the Eastern
Economic Forum on an annual basis and that the scope of
this event is expanding every year, along with the calibreof its participants.
I am delighted to be taking part in this event for the second
time, since the stable development of friendly relations andcooperation with the Russian Federation, as well as active
participation in regional cooperation and integration processes,
are priorities for Mongolia’s foreign policy.
The Russian Far East is a developing region that isgeographically close to Mongolia. Ample opportunities
are available for developing mutually beneficial regional
cooperation in all areas.
Implementing projects that will connect Mongolia’s
infrastructure to that of Russia and China is of particularimportance for increasing the competitiveness of Mongolian
goods in the markets of neighbouring and other countries
and improving the investment environment. It also opens
up opportunities to create short and profitable transit

transport corridors linking both our neighbours and Asiawith Europe through our country. We actively cooperatewith our neighbouring countries in this area.
Although Mongolia faces certain challenges and difficulties
due to its lack of access to the sea, its location between twolarge and rapidly developing markets provides us with great
opportunities. Along with the implementation of many projects
on a bilateral basis, we are also working on the Mongolia–Russia–
China Economic Corridor Development Programme to take fulladvantage of the opportunity to connect two major nations andtwo parts of the world.
Our country signed the Economic Partnership Agreementwith Japan in 2016, and we are considering a free trade
agreement with the Republic of Korea. Mongolia has alsoreached agreements with the People’s Republic of China andthe Eurasian Economic Union to begin assessing the expediency
of concluding a free trade agreement.
I am confident that the Fourth Eastern Economic Forum
will contribute to the development of bilateral and multilateralrelations and will give a boost to regional integration.
I hope that we will all enjoy a successful and productive
Forum!
Khaltmaa Battulga
President of Mongolia

Shinzō Abe
Prime Minister of Japan6

7

ВЭФ–2018

FORUM | FIRST PERSOns

Dear participants and guestsof the 4th Eastern Economic ForumThe Russian Far East has huge economic potential. Morethan half of the timber resources of the entire Asia-Pacificregion, more than a third of its freshwater supplies, 27% of its
gas, and 17% of its oil are concentrated in the more than six
million square kilometres of the Russian Far East. Our region
has abundant gold deposits, and its seas are well stocked withfish. The longest railway lines in the world run across the Far
East, and the shortest route by sea from Northeast Asia to
Europe also passes through the region.
Developing this fantastically valuable territory is a priorityof the national policy which our President, Vladimir Putin,
is currently pursuing. My task is to offer you a detailed
presentation of the competitive advantages of the Russian
Far East. The first significant steps have already been taken.
First, a new economic model for the development of the Far
East has been enshrined in current legislation. More than 30
laws have been passed to create a competitive environment
for pursuing investment projects in the region.
Second, special economic zones have been created in the Far
East where taxes are the lowest in Russia and administrative
procedures are quick and painless. These include our advanced
special economic zones and Vladivostok Free Port.
Third, the state can now offer investors a developed
infrastructure. A business based in a Far Eastern advanced
special economic zone will know exactly when they will beconnected to mains water, gas, and electricity, and can be
confident that access roads to their factory will be in place.

Fourth, we have created a support system for investors basedon best practice from around the world. We work with every
investor individually and provide assistance at every stageof a project. The state has a vested interest in ensuring thatinvesting in the development of the Far East is profitable. Thisis our aim in organizing Investor Days, which are held regularlyin the region, and setting up meetings between businesses andsenior government officials.
Fifth, we have taken a vital step towards making the Far Eastas accessible as possible for our foreign partners: since August
2017, citizens of 18 nations have been permitted to enter our
region on an electronic visa. As things stand, more than 30,000
visas have been granted, and this figure is increasing every day.
As a result of all this, over the past four years the Russian
Far East has attracted more than RUB 3.8 trillion in investment,
and 1,375 projects are at various stages of implementation.
By 2025, more than 127,000 jobs will have been created. In
2017, 30% of foreign investment in Russia went to the regionsof the Far East.
At the same time, there is clearly still much to be done. We
will continue to work on creating a welcoming environment
for business in the Far East, supporting investors’ projects, andfinding new ways to meet the challenges ahead of us. I intend
to discuss all of these questions with the business community
at the 4th Eastern Economic Forum.
I look forward to seeing you at the biggest event in Russia’s
East.

Yury Trutnev
Deputy Prime Minister of the Russian Federation
and Presidential Plenipotentiary Envoy to the Far Eastern Federal District

89Forum
In this issue, we would like to show EEF participants and guests several wildlife
photos from the Far East taken by our own Russian photographers, who, in the
search for outstanding and stunning photos, often spend several months on
expeditions in the most remote corners of the Kamchatka Peninsula, Magadan
Region, Khabarovsk, Primorsky Territory and other regions in the Far East of Russia
In the photo: A bear fishing during the fishing season
Photo location: Kamchatka Peninsula
Photographer: SERGEY GORSHKOV
A recipient of numerous awards, including Wildlife Photographer of the Year. Many of his photos are
unrivalled across the globe. He is famous for his wildlife shots taken on the Kamchatka Peninsula,in Africa, and in the Far North. His work has been published by National Geographic, GEO, and BBC
Wildlife, among others

FORUM | BUSINESS PROGRAMME
INDUSTRY PRIORITIES IN
THE FAR EAST
• Integration of the Far Eastern Agriculture
Sector into the Food Industry System of the
Asia-Pacific Region• Mining and Processing Solid Minerals: The
Traditional Industries Today and Tomorrow• The Fishing Industry: New Challenges• Oil and Gas Processing: Creating a New
Industry Cluster• Port Infrastructure: New Opportunities for
Investors• Developing Tourism: The Cluster Approach• Mariculture: The First Steps of a New
Industry• Improving Legislation on Geological
Prospecting: Subsoil Users Speak• Agricultural Logistics in the Russian Far
East: A Driver of Agroindustrial Growth• Russian Jewellery Industry: Potential andProspects for Development
EEF 2017 plenary session: ‘The Russian Far East: Creating a New Reality’

Guests of the Forum

BUSINESS PROGRAMME*TOOLS TO SUPPORTINVESTORS: NEXT STEPSAdvanced Special Economic Zones
and Vladivostok Free Port: The
Present and the Future

The number of advanced special
economic zone (ASEZ) and Free
Port residents has almost tripled
in the course of the last year (from454 to 1,200), indicating increased
interest and readiness on the part ofthe business community to develop
entrepreneurship in the Russian Far
East. Although the results achieved by
the ASEZ and Vladivostok Free Portregimes have been impressive, however,there remains a clear need to increase
competitiveness in the international
arena and improve existing tools.
Practice has shown that a numberof incentives are either inapplicableor not in demand, and that existingsupport measures are insufficient for
implementing projects. What needs
to be done in order to increase thecompetitiveness of incentive regimes,
both within the country and at aninternational level?

Supporting High-Tech Projects
in the Far East

High-tech products account forless than 15% of the Russian Far
East ’s GRP. Meanwhile, t he Far
Eastern Federal District remains fifth
for innovative development among
Russia’s federal districts, and is failingto attract investment in high-techprojects from direct investment andventure capital funds. How can acompetitive ecosystem be established
for developing innovation and hightech projects in the Russian Far East
which is equivalent in scale to thosefound in other Asia-Pacific countries?

An Investment Breakthrough for
the Regions of the Far Eastern
Federal District: What Next?
Аnd also:

T h e 2 018 Ru s s i a n R e g i o n a l
Investment Climate Index shows that
Russia’s Far Eastern regions haveproduced some impressive results,
including an increase in the total
number of points across the whole
Index, which was 1.5 times better thenational average, Khabarovsk Territory
featuring among the top 20 regions
for the first time, and Sakhalin Region
appearing among the top three growth
regions and demonstrating the mostdynamic trajectory of all regions in thefederal district. How can collaboration
be developed between regional
governments, regional departments offederal executive bodies, and businessassociations in order to keep improving
the investment climate in the Far
Eastern Federal District?

• Protecting Investors’ Rights in the Far East
• The Far East as a Financial and Offshore Centre• Targeted Infrastructure Support for Business: What’s Next?
• The National Project to Develop SMEs: What Will Be Done in the Far East?
• Features of the Vladivostok Free Port Customs Administration* Information is valid as at 20 August 201812

BUSINESS DIALOGUE

Russia–China

Russian–Chinese relations havesteadily improved over the past year:
the volume of foreign trade between
Russia’s Far Eastern regions and thePeople’s Republic of China in 2017
amounted to USD 7.7 billion, 28.3%
more than in the same period lastyear. Chinese companies are carryingout more than 40 investment projects
in the Russian Far East, eight of whichwere launched in 2018. However, thefull potential of Russian–Chinese trade,
as well as economic and investment
cooperation, has still not been achieved.
What conditions need to be in place tofoster trade and economic cooperation
and attract Chinese investment?

Russia–Republic of Korea

The strategy of the President of
the Republic of Korea Moon Jae-in oncooperating with regions to the northis intended to create the necessary
conditions to encourage Russian–
Korean trade, economic, and investment
cooperation in the Russian Far East.
At present, eight investment projects
that are partly funded by the Republicof Korea (to the tune of over USD 50
million in total) are being pursued under
the new mechanisms for developing
the Russian Far East. South Korean
companies are discussing the possibilityof funding and carrying out promising
new projects worth a total USD 1.1
billion. The implementation of the ‘Nine
Bridges’ partnership concept should givea new impetus to the growth of tradeand investment cooperation between
the regions of the Russian Far East andthe Republic of Korea. Which areas are
the most promising for jumpstarting
Russian–Korean business dialogue?

Russia–Japan

Thanks to the joint measures thathave been taken over the past year, theRussian Far East has developed muchcloser relationships with the Japanesebusiness community, and there is every
reason to expect that projects will moveto the practical implementation stage
in the coming year. In the Far East, 14
investment projects involving Japanare being implemented. On 27 April,
during the St. Petersburg International
Economic Forum, an agreement was
signed to create a joint Russian–
Japanese platform to support Japanese
investments in the Russian Far East.
The platform is accompanied by eightprojects with total investment of morethan USD 120 million. What support has
the Russian Government provided for the
projects that are being implemented?
Will the platform act as a successful tool
for attracting Japanese capital to the Far
East?

13

Аnd also:• Russia–India• Russia–Middle East
• Russia–Europe• Russia–ASEAN

IMPROVING LIVING
CONDITIONSThe Smart City: From Theory toPractice

The modern city is changing how its
residents live, creating an environment
for development, and providing aplace where people can achieve theircreative and intellectual potential. The
appearance and comfort of our cities
and towns have become importantcompetitive factors in attracting
and retaining the active part of the
population, namely young professionals.
In order to compete for human capital,
the cities of the Russian Far East must,in one way or another, change theirapproach to development strategies.
The integrated and phased introductionof ‘smart’ solutions in all areas of urbanlife will help to reduce utility costs,
optimize resource consumption, makecities affordable and convenient forpeople, and attract investors. What isa ‘smart city’? What mechanisms need
to be developed in order to make cities
smarter and attract investors?

EEF 2018

FORUM | BUSINESS PROGRAMME(From left to right) Alexander Karelin, a member of the State Duma Committee for International Affairs, Anton Kobyakov,
Advisor to the President of the Russian Federation, and Yury Trutnev, Deputy Prime Minister of the Russian Federation
and Presidential Plenipotentiary Representative to the Far Eastern Federal District

And also:• National Projects: What Will Be Done in the Far East?
• The Far Eastern Hectare: From Granting to Developing• The Future of the Labour Market in the Far East: New Strategies for Employers• From the Funding of Social Services to the Achievement of Social Impacts• The Role of Cultural Institutions in Developing Strategic Russian Regions• Talent 2035
• Healthy Life Expectancy in the Russian Far East
• Parents, Children, and Changing Technology: The Limits of Control and Potential for Development• The Contribution of Female Innovators and Business Leaders to Shaping the Economy of the
Future• The Forces Driving Change in Society: How to Create Effective Social Communication• Genetic Engineering: A Boon to the Economy or a Threat to Life?

THE GLOBAL FAR EAST:
INTERNATIONAL PROJECTSFOR COOPERATION

bridge to Sakhalin Island and a highspeed mainline linking Harbin and
Vladivostok. How can investment be
attracted from the Asia-Pacific region
into global logistics projects in the
Russian Far East?

A range of projects are being
implemented in t he Russian Far
East today which will impact upon
the future of logistics in Northeast
Asia. The Russian Far East offers theshortest routes from east to west,
with the Trans-Siberian Railway
providing a transportation solutionthat is a third faster than the available
alternatives. The projects include themodernization of the Baikal–Amur
Mainline and Trans-Siberian railway,
international transport corridors in
Primorsky Territory, the Northern
Sea Route, and border crossing
points in Amur Region and the Jewish
Autonomous Region. Discussions arein progress on the construction of a

The New Asian Geopolitics andPolitical Economy: Opportunities
for Russia

Transport Corridors
in the Russian East: New
Competitive Advantages
for the Asia-Pacific Region

Valdai Club Session
The rise of China and India ischanging the entire world geopolitics.
Previously, these countries were objectsof competition and receivers of ideas
and technologies, but now they are
becoming the sources of expansion
and entering competition with thetraditional leaders. How does thischange the future of today’s world?
Can Russia capitalize on this tectonic
shift? How will sanctions and tradewars influence the long-term strategies
of China and India? What can Russia
offer the new world geopolitics?

14

Prime Minister of Japan Shinzō Abe

Towards the Pacific Ocean:
People, History, Ideology,
Education. Rediscovering
an Identity

TV Debates of Russia 24 and the Valdai
Discussion Club
Russia’s pivot east has long been perceived as a technological move, if not atechnical process. The discussion centres
around developing economic ties and integrating Russia into regional manufacturing, sales, and technology chains. But
the ideological dimension of this pivot is
no less important. The Russian elite andRussian society should come to believethat the relationship with Asia is a serious
and long-term shift. The essence of thisnew phase lies in consolidating technological achievements and reflecting on the
new policy in the context of the domestic
perception of Pacific Russia’s role in the
country’s development and international
standing.

The World Ocean: A BoundlessResource

The World Ocean represents aseemingly boundless resource that no one
has yet fully quantified. The oceans containbiological resources, extractable mineral
resources and energy. Water itself is alsoa resource provided by the World Ocean.
Seawater contains about 75 chemicalelements, and once it has been desalinated,
it can become the vital resource we needto sustain us. At the same time, the stateof the ocean’s aquatic biological resource
reserves and the question of how they
can be effectively managed are becoming
increasingly important. This question isrelevant not only to the challenge of

President of the Republic of South Korea Moon Jae-in

Discussions at the Eastern Economic Forumproviding the population with high-quality
food products, but also to ensuring thatmany industries and agribusinesses aresupplied with the raw materials theyneed. The problems of the World Ocean
will be the problems of future humancivilization. They require concerted
international measures to coordinate theuse of its resources. How can we learn how
to properly evaluate these resources andto use them correctly?

trade policy to counter protectionism or,on the contrary, close sensitive markets
to prevent them from being flooded with
overproduced global goods?

and strengthening trade and investment
flows in the Asia-Pacific region.

The Far East as a Centre of Economic
Cooperation with the Asia-PacificRegion (APR): A Dialogue Between
Business and Government

The unbalanced distribution of energy
resources in Northeast Asia in the context of rapid growth in demand implies
the need to ensure an adequate level ofsupply, which will stimulate the economic growth of energy importing countries.
The geographical proximity of Russia, China, Mongolia, and North and South Korea to one another may lead to mutually
beneficial cooperation in Northeast Asia,and the development of trade in energy
resources. Keeping in mind the realitiesof the modern world, the heads of scientific institutes and academies and theheads of international organizations andassociations will discuss the possibilitiesof establishing multilateral scientific andtechnological cooperation in the field ofenergy, with the aim of ensuring energy
security in Northeast Asia, and will identify potential mechanisms for intensifying
cooperation in the region. What will theenergy trends of the future be in Northeast
Asia? What is the role of the Russian energy sector in Northeast Asia?

A Modern Integration Framework
for the Asia-Pacific Region and
Beyond: Eurasian Economic Union
Approaches
As protectionist sentiments are on therise and trade conflicts escalating, countries in the Asia-Pacific region and beyond
are still trying to adhere to the principles
of joint economic development througheconomic integration. The slowing rate of
growth in the number of concluded agreements in recent years can be explained bya number of factors: there is a shift to better quality integration processes; existing
agreements are being expanded to cover
new areas; and agreements are being concluded with a greater number of participants in a bid to align and improve the rulesof the game. A number of events have confirmed this trend: the signing of the Comprehensive and Progressive Agreement forTrans-Pacific Partnership (CPTPP), which
was based on the Trans-Pacific Partnershipproject; the completion of negotiations on
the agreement to create a free trade area (FTA) between the EU and Japan; andthe launch of negotiations between the
EU and Australia as well as New Zealand.
What line of conduct should the Eurasian
Economic Union pursue: enhance an open

The Russian Federation is interested
both in increasing the share of Russian
investment in the rapidly developing economies of the Asia-Pacific region and in
attracting Asian investment to Russia. At
the present time, significant progress has
been made in such areas of investment
partnership as energy, transport, agriculture, information technology, and industry. However, at the same time there
are a number of barriers that impede
Russia from maximizing the potential ofthis cooperation. These include technicalbarriers, differences between the regulatory environments, the lack of extensive
experience in cooperation and relevant
information, and a shortage of financial
resources and effective mechanisms forsupporting exports. Session participants
will discuss the difficulties and opportunities that exist on the path to diversifying

And also:

Energy Cooperation in Northeast
Asia• Russia and the Koreas: A New Space for Economic Cooperation?
• An International Medical Cluster in Vladivostok: Taking the First Steps• World Sport Today: A View from the Asia-Pacific Region in the Run-Up to Tokyo 2020
• Solving Challenges in Russian–Chinese Communications: Myths and Reality• Cross-Border Electronic Trade between Russia and China: Belt and Road in the Digital
Dimension• Outposts of Science. Creating the Future Today

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ВЭФ–2018
EEF 2018

FORUM | NAVIGATOR

Forum:
NAVIGATOR*LOCATION AND DATEFar Eastern Federal University(FEFU)

10 September 2018 (EEF starting day)
11–13 September 2018 (EEF main
events)from 08:00 to 20:00
Ajax, Russky Island, Vladivostok

Information centre

Participants are kindly requested toarrive at the Forum venue 30–40 minutes
before the start of an event.
The journey time from the city centre
to the Forum venue is approximately
half an hour (depending on the
traffic).

Tel.: +7 (499) 7000 111
Email: info@forumvostok.ru
forumvostok.ru

ACCREDITATION POINT OPERATING HOURSINFORMATION AND SERVICES POINTS
At information and services points
you can obtain information on
the Forum programme, available
services, and directions around theEEF venue and other sites.
EEF information and services points
are located:•A t the World Trade Center Moscow• At Vladivostok International Airport• In Accreditation Centre 1 (building М1)• At the Forum venue (А2, А3, А4, А5,
А6, В5, В6, С6)
The information and services points at
the Forum venue also offer the following
services:• Copying, scanning, and printing of
documents• Copying and writing information
to electronic media• Distribution
of
EEF
2018
information materials• Subscription to or cancellationof the Viber or text message
notification service for EEF 2018
participants

Accreditation point

Address

Date

Time

29 August

12:00–19:00

30–31 August,
3–7 September

10:00–19:00

8–9 September

10:00–18:00

10 September

10:00–20:00

1–8 September

10:00–19:00

9 September

10:00–23:59

10–12 September

24 hours

13 September

00:00–22:00

Moscow
Roscongress Foundation
Accreditation Centre atthe World Trade Center
Moscow

Entrance No. 7, groundfloor,
12, Krasnopresnenskaya
Nab.

Vladivostok

PARTICIPANT
ACCREDITATION
The main events on the Eastern
Economic
Forumbusiness
programme and a number ofcultural and sporting programme
events may only be accessed with anaccreditation badge.
Accreditation badges are personalized
and may not be transferred to third
parties.
Participants should carry theirbadge and their passport (oranother identity document) withthem at all times during the Forum.
If your accreditation badge is lostor damaged, go to any accreditation
stand or Help Desk, or call+7 (499) 7000 111.

Badges may be collected from anaccreditation point in Moscow or
Vladivostok, either in person (uponpresentation of a passport) or by powerof attorney.
If a participant’s badge is collected bya third party using a power of attorney,
the authorized person must present:• A document confirming their identity(a passport)• An original standard power ofattorney form*• A list of all participants whose badges
the proxy is collecting• Copies of the passports of participants
whose badges the proxy is collecting*** A power of attorney form can be found inthe ‘Participant accreditation’ section atforumvostok.ru.
** Copies of passports will be returned once badges
have been issued.

Accreditation Centre 1

M1, FEFU

Vladivostok International
Airport41, Ulitsa Vladimira
Saybelya, Artem

7–12 September

07:00–23:00

Vladivostok Marine
Terminal

1, Nizhneportovaya
Ulitsa

9–12 September

10:00–20:00

Lotte Hotel Vladivostok

29, Semenovskaya Ulitsa

7–12 September

10:00–20:00

Accreditation officers will check registration details to ensure that they
are accurate and up to-date before issuing badges. In the event of any
discrepancies, it will not be possible to issue badges on that day.

* This information is valid as at 20 August 2018. Detailed information about the Forum can be found on the official website forumvostok.ru.

18

19

ACCREDITATION
OF PERSONAL VEHICLES
During the Forum and the Forumpreparation
period,vehicular
access to the Forum venue will be
granted only to vehicles with an
EEF 2018 transport pass. There may
also be limited vehicular access to
Vladivostok International Airport,
EEF official hotels, and various
cultural and sporting programmevenues.
Once applied for, driver and vehicle
accreditation badges can be collectedfrom Accreditation Centre 1, eitherin person (upon presentation of apassport) or by power of attorney. The
power of attorney form is available
to download in the ‘Accreditationof personal vehicle’ section atforumvostok.ru.

Accreditation
Date
point

Time

28 August –10:00–19:00
8 September
9 September
Accreditation
Centre 1
10–12(M1, FEFU)
September

10:00–23:59
24 hours

13 September 00:00–22:00

EEF 2018

FORUM | NAVIGATORROSCONGRESS & GOVERNORS’ CLUBEEF online community
en.forumvostok
jp.forumvostok
ko.forumvostok
vi.forumvostok

FINANCIAL SERVICES
Participants can pay the participation fee and the cost of any additional services
provided by the Roscongress Foundation at the financial services stand at the FEFU
venue. The financial services stand also issues closing documents.
Cash and bank cards are accepted for payment.
A 5.5% commission fee is charged when paying for participation and services atForum financial services stands.

Eastern Economic Forum

Locationen_forumvostok

Time

10 September

09:00–20:00

11–12 September

08:00–20:00

13 September

08:00–15:00

PARTICIPANT BAG
Participant bags can be collected either in person (upon presentation of aparticipant badge) or by power of attorney.
The authorized person must present:• A document confirming their identity (a passport)• An original standard power of attorney form*• Badges or electronic tickets for all participants whose bags the third party iscollecting* A power of attorney form can be found in the ‘Participant bag’ section at www.forumvostok.ru.
Please note that a third party acting on a power of attorney may collect participant bags only if they have

Official hashtag of the Forum:#EEF2018

MOBILE APP
The Eastern Economic Forum mobile
app is the best way to get the latest
information about EEF and learn about
the services offered at the Forum.
The mobile app can be downloadedin the App Store and Google Play
(keyword: ‘eef 2018’).

Valentin Druzhinin

Accreditation Centre 1(M1, FEFU)

Dateforumvostok

You must try the local fish while in Vladivostok

BROADCASTS OF FORUM EVENTS
The plenary session and other
Forum events will be broadcast live
on TV screens located throughout
the Forum venue. In addition tosession feeds, the TV screens will
also display information that will
help participants navigate throughtheForum:
announcements
about sessions, changes to theprogramme, the schedule forupcoming events, notices regarding
the cultural programme, the latest
news and photographs, and muchmore.
For online broadcasts of businessprogramme events and the broadcast
archive, see:forumvostok.ru, ‘Programme’ section

a badge with access to the zone of business programme events.

Location

Date

Time

11–12 September

08:00–20:00

13 September

08:00–18:00

A2

INTERNETInternet access is available free of charge at the Forum venue.
Network name: EEF2018
Password: eef-2018

Authorization via Badge ID (six digits) and Passcode(four next digits) listed on your badge.

20

All of the app’s functions and features
are fully available after you enter
your personal web office login andpassword.
Key app functions:• Get information about the Forum
programme• View video broadcasts of businessevents• Exchange messages with otherparticipants• Schedule meetings• Create a personal schedule to attend
Forum events• Get information on transport services• Navigate the Forum venue

VIBER ORTEXT NOTIFICATIONS
A free Viber or text notification service
allows participants to receive shortmessages providing information on
Forum events, participant services,and changes to the programme.
The service may be activated ordeactivated in the personal web office
at forumvostok.ru, by contacting
the Forum information centre on+7 (499) 7000 111, or at the Forum
information and services points.

21

Level 4, building А
 0 September, 09:00–20:00;
1
11–13 September, 08:00–20:00
The Roscongress Foundation is pleased
to present the Roscongress & Governors’
Club – a new space for communication
at the Eastern Economic Forum (EEF).
The Roscongress & Governors’ Clubis specially equipped to provide a
comfortable and relaxed atmospherein which Roscongress Club members
and the heads of Russian regions can
network.
Access: Roscongress Club card holders
and heads of Russia’s regions and thoseaccompanying them, in accordancewith the regulations.
Roscongress & Governors’ Club areas at
EEF 2018:
The Main Lounge offers an informal
environment for discussions withpartners. It is also an area forrelaxation, where you can enjoy agourmet catering service and follow
online broadcasts of events from theEEF 2018 business programme.
The Presentation Area is a multifunctional
space designed to host presentations
at the highest level, as well as awards
ceremonies and entertainment andcharity events.
Roscongress & Governors’ Club partner
meeting rooms provide speciallyequipped spaces for meetings between
groups of 6–10 individuals.
The VIP Lounge is an exclusive,
restricted-access business area ideal
for holding meetings at any level, or
simply for taking some time out froma busy day at EEF 2018. Visitors to the
VIP Lounge can take advantage of theCongress Attaché concierge service,whose specialists will help you to solve
work-related issues and make the mostof your leisure time.

EEF 2018

FORUM | NAVIGATORACCOMMODATIONCAFÉS AND RESTAURANTS (PAYMENT REQUIRED)For any queries regarding
accommodation, participants may
contact the Roscongress Foundation
Hotel Booking Team:

Name

Location

Panorama restaurant+7 (499) 7000 111
booking@forumvostok.ru

А12Deck 12 restaurant

Media representatives
should contact:
mediabooking@forumvostok.ru

Polina café

FEFU campus

Requests will be accepted until
25 August 2018.

08:00–21:00(10–13 September)

08:00–20:00

09:00–00:00(11–13 September)

Astoria 4*
No. 1 Coffee Place café

AZIMUT Hotel Vladivostok 4*
Tigre De Cristal 4*

A6
B5
С6

Acfes-Seiyo 3*
A-HOTEL Amur
Bay Vladivostok 3*

08:00–18:00(10–13 September)

Pryanik café

D5

08:30–18:00(10–13 September)

Don Gofree café

D7

08:00–18:00(10–13 September)

Villa Arte 4*

Tea, coffee,
snacks,and desserts

For a list of recommended Vladivostok restaurants (meals and services will becharged at menu prices), see: forumvostok.ru, ‘Vladivostok restaurants’ section

Arbat-Vladivostok 3*
Aurora Park Hotel 3*

Sunrise Apartments 3*

Zhemchuzhina 3*

Avanta 3*

Teplo Hotel 3*

Cruise Liner Costa neoRomantica

Equator 3*

Venice 3*

Russky Island hotels:

Gavan 3*

Versailles 3*

FEFU 3* – hotel buildings 1–5

Marine Wave 3*

Vlad Motor Inn 3*

FEFU 3* – hotel buildings 7–8

Mayak 3*

COFFEE AND LIGHT REFRESHMENTS
Name

Location

Rial Hotel 3*

Time

B6

Coffee break area

B7

Slavyanskaya 3*
Story Hotel 3*

Set menu

Parking area nearbuilding В

Lotte Hotel Vladivostok 5*

Sibirskoye Podvorye 3*

11:30–17:00(10–13 September)

12:00–21:00(10 September)

Vladivostok Hotels:

Primorye 3*

Catering format

À la carte

East Sea restaurant

Meridian 3*

Time

Café for participants

08:00–19:00(11–13 September)

B5 (opposite conference hall 3)

22

23

EEF 2018

FORUM | NAVIGATORTRANSPORT SERVICESFORUM SHUTTLES
During the Forum, regular free shuttle buses will run from the official
hotels, city centre and Vladivostok International Airport to the Forumvenue and back, as well as around the FEFU campus.

SHUTTLE ROUTES 11–13 SEPTEMBEROFFICIAL HOTELSROUTE 1.1. ZOLOTOY ROG
Lotte Hotel Vladivostok (former HotelHyundai), Astoria, AZIMUT Hotel Vladivostok,
Avanta, A-HOTEL Amur Bay Vladivostok,
Zhemchuzhina, Primorye, Meridian, Equator,
Sunrise Apartments, Slavyanskaya, Gavan,
Sibirskoye Podvorye, Arbat-Vladivostok,
Marine Wave, Versailles, Teplo Hotel, Cruise
Liner Costa neoRomantica

to FEFU:
08:00–13:00
to hotels:
15:00–20:00
Interval: 30 minutes

ROUTE 1.2. VTORAYA RECHKA
Acfes-Seiyo, Rial Hotelto FEFU:
07:00, 08:00, 09:00

ROUTE 1.3. SEDANKA
Story Hotel, Aurora Park Hotel, Vlad Motor Inn

to hotels:
18:00, 19:00, 20:00

ROUTE 1.4. ARTEM
Villa Arte, Venice
ROUTE 1.5. MURAVYINAYA BUKHTA
Tigre De Cristal, MayakCITY CENTRE

08:00–20:00
Interval: 30 minutes

22, Svetlanskaya Ulitsaаэропорт
24 hours
Interval: 60 minutes
FEFU CAMPUS
Route 4.1.
Building A (level 6), building G,
hotel buildings 1–8

07:00–22:00
Interval: 15 minutes

Route 4.2.
Hotel buildings 1–8, building G,
building A, hotel buildings 9–11, ‘Far East
Street’ exhibition

22:00–07:00
Interval: 30 minutes

The free shuttle bus timetable and intervals are subject to change. You
should enquire about exact shuttle departure times and places from Forum
personnel at the airport, hotels and Forum event sites.

24

All of the Far East on one
street!
The ‘Far East Street’ exhibition, a traditional part of the Eastern Economic Forum,
will take place on 11–16 September in Vladivostok.

Russia’s Far East covers an areaof more than 6 million square
kilometres. The climate, natural
sur roundings, and culture var yenormously from region to region. It
might seem that it’s impossible to get toknow the Far East all at once, but there
is a way! Forum participants and guests
visiting Vladivostok will be able to see allnine regions of the Far East in one street,the ‘Far East Street’.
The exhibition will stretch for morethan a kilometre along the seafront of
Ajax Bay, just a few steps from the main
campus building of the Far Eastern
Federal University. Each region of the Far
Eastern Federal District will present its
own large-scale exhibition, showcasing
the features which make it unique, as
well as its economic opportunities andachievements, tourism potential, andcultural traditions.
Modern interactive technology willallow visitors to immerse themselvescompletely in the world of each region. In
previous years, visitors to the exhibition
have been able to try their hand at beinga Magadan gold miner or a Kamchatka
dog sled driver, experience the latest
sports simulators for skiers, peek into
the traditional homes of the indigenous
peoples of the North, hear whales sing,stroke an Amur tiger, help to assemble a
modern airliner, sit in the cockpit of thelatest helicopter, attend an international
traditional mas-wrestling tournament,
and see a historical stadium.

The ‘Far East Street’ provides an opportunity to learn about the diverse culture of local people

This year, visitors can look forward toan even more diverse exhibition. A walkalong the embankment will create some
unforgettable memories and, happily,
work up an appetite. It’s certainly
worth trying Far Eastern delicacies:
Pacific salmon from Kamchatka, huge
Sakhalin oysters and prawns, sea
urchins, scallops, and scrumptious
Yakutian cold cuts served straight fromthe freezer! As in previous years, the ‘Far
East Street’ exhibition will host the Fish
Market. Representatives of major Far
Eastern fish companies will hold masterclasses on cooking crab and scallop,
and prepare exquisite dishes from Far
Eastern seafood.
There will be a particular focus on thepreservation of the Far Eastern Federal

25

District’s unique ecology. An eco-trail
following the outline of the Far Eastern
Federal District will introduce guests tothe natural environment of each region.
Inaccessible areas of natural beauty will
be featured in a panoramic 3D cinema.
For those who prefer real tours overvirtual experiences, representatives fromnature reserves and national parks in
the Russian Far East will be on hand toselect and book tourist trips.
The ‘Far East Street’ exhibition will
be open to participants and guests of the
Fourth Eastern Economic Forum from 11
to 13 September. On the three following
days, including 16 September, anyone
who is interested in visiting the entire
Far East without leaving Vladivostok
may visit.

FORUM | cultural programMEFORUM | SPORTING PROGRAMME

Points of Intersection

11–13 September
10:00 –19:00
Artetage exhibition halls
25, Ulitsa Fokina, Vladivostok
Admission is free.
An exhibition of Moscow artists
Anatoly Vlasov, Olga Dushechkina,
Larisa Kucherenko, Alexey Mironov,
Vladimir Potemkin, and Vladimir
Fomichev. The project is curated by
the experienced artist and inspiration
behind the Artist’s Workshop art
school in Moscow, Larisa Kucherenko.

The Great Karl: The Works of
Karl Bryullov and His Students
from the Collection of theRussian Museum

11–12 September
11:00–19:00
13 September
12:00–21:00
Primorye State Art Gallery
12, Ulitsa Aleutskaya, Vladivostok
Admission on presentation of EEF
2018 badge (note that participants
must pay for guided tours and otheradditional services separately).
This exhibition from the State
Russian Museum will stun in its
scope and generosity: 50 works byperhaps the most splendid Russian
artist of the nineteenth century, Karl
Bryullov (1799–1852), alongside 20
vibrant works by his students andcontemporaries. Vladivostok is in fora treat!

An Hour of Silent Cinema

13 September
18:30–19:30‘Far East Street’ exhibition mainstage, FEFU Campus, Russky Island
Admission is free for all EEF 2018
participants.
A screening of Dziga Vertov’s 1929
silent film Man with a Movie Camera

accompanied by the Jazz Quartet
Classic ensemble. Be transported
back a hundred years to a time whencinema was carried primarily bymeans of music.

be counted in seconds or kilometres.
‘Open Ocean Halls: Pacific Time’ is atale of the rhythm of Vladivostok, arhythm that has been lived, is lived,
and will be lived for generations.

Open Air Cinema

Graphic Art: Cherkasov, Ivankin,
Mashanov

11–13 September
19:30–23:30
FEFU Campus, Russky Island
Admission is free for all EEF 2018
participants.
The open air cinema will screen
Russian live-action and animated films
released between 2016 and 2018.

Historic Milestones on the Mapof Russia, from the Collection of
the Moscow Kremlin Museums

13 September
10:00–19:00
Arseniev State Museum of
Primorsky Region
20, Ulitsa Svetlanskaya, Vladivostok
Admission on presentation of EEF
2018 badge (note that participants
must pay for guided tours and otheradditional services separately).
This collaboration between the
Moscow Kremlin Museums and theArseniev State Museum of Primorsky
Region examines the phenomenon of
Russia as the world’s largest nation
state, a status which it has maintainedfor over three hundred years.

Open Ocean Halls: Pacific Time

10–13 September
10:00–19:00
City Museum
6, Ulitsa Petra Velikogo, Vladivostok
Admission on presentation of EEF
2018 badge (note that participants
must pay for guided tours and otheradditional services separately).
Cities by the ocean follow their own
rhythm. Time and space are perceived
differently here, in a way that cannot

26

11–13 September
9:00–19:00
Artists Union of Russia Primorye
exhibition halls
14a, Ulitsa Aleutskaya, Vladivostok
Admission is free.
A joint celebration of the Days of Peacein the Pacific from Russia’s leadinggraphic artists forming part of the ‘I
Sing, Fatherland’ event series. The
project was created as a means to unite
the artistic space in Russia.
Forum participants will also havea chance to enjoy various concert
programmes, exhibitions, and evening
events.

EEF 2018
SPORTING
PROGRAMMEEEF 2017. President of the International Judo Federation Marius Wieser, Japanese Prime Minister ShinzōAbe, Russian President Vladimir Putin, and Mongolian President Khaltmaagiin Battulga (from left to rightin the background) at the International Jigoro Kano Judo ChampionshipRoscongress Sport Games:
Far Eastern Corporate GamesFIRST-PERSON

8 September
09:00 – 17:00
Olympiets Sports Complex, 2, Ulitsa
Batareynaya, Vladivostok
Dynamo Stadium, 1, Ulitsa Admirala
FokinaMikhail Metcel, TASS

Valentin Druzhinin

CULTURALPROGRAMME

Arkady Gursky

eef 2018

Georgy Bryusov,
Deputy CEO of
the Roscongress
Foundation,
Head of theOrganizing
Committee’s
TournamentWorking Group

Roscongress Cup: Gala Hockey
Match between Team EEF
and Team Primorsky Territory
Administration
11 September
17:00 – 19:00
Polyus Ice Arena, 26V, Ulitsa
Ovchinnikova, Vladivostok

Friendly International
Football Match
between Luch-Energiya
FC (Vladivostok)
and Yanbian Funde
FC (Yanji)

11 September
19:00 – 21:00
Dynamo Stadium, 13, Zapadnaya
Ulitsa, Vladivostok

Roscongress Cup: Tennis
Tournament

12 September
07:00 – 08:30
FEFU tennis courts, Russky Island

Roscongress Cup: Platu 25 Class
Regatta
12 September
10:00 –18:00
Ajax Bay, Russky Island– The debut tournament held a year ago
was highly rated in terms of the sports
component and the level of organization byboth participants and the President of theInternational Judo Federation (IJF) Marius
Wieser, and has secured its place in the IJF
calendar. This year, participants were drawn
from an even wider geographical area, withteams from Russia, Japan, and Mongolia
joined by teams from China and South Korea.
This time the tournament will be held in
the entertaining new ‘wall-on-wall’ format
that will be used at the Olympics startingwith Tokyo 2020. Participants will live andtrain at the FEFU campus and will be able tolearn about the culture and traditions of theRussian Far East. All this demonstrates that
the International Jigoro Kano Tournament
has established itself as a communications
platform for expanding dialogue between
countries and joint activities in the field ofsports. A now traditional master class givenby the legends of judo for local boys andgirls will serve as the tournament’s legacy
for Primorsky Territory.

27

Annual International
Jigoro Kano Junior(U18) Judo Tournament
in Vladivostok
under the auspicesof President of theRussian Federation
Vladimir Putin andPrime Minister of Japan
Shinzō Abe
12 September
09:00 – 23:00
Fetisov Arena, 284, Ulitsa
Makovskogo, Vladivostok

International Mas-Wrestling
Tournament
12 September
10:00 – 17:00
13 September
10:00 – 13:00
Sakha Republic (Yakutia)
Pavilion, Far East Street,
Russky Island

Roscongress Cup: Platu 25 Class
Regatta
13 September
10:00 – 18:00
Ajax Bay, Russky IslandAnd:• A maritime robotics competition• Olympic Patrol• An international tall ships regattaForum | SPORT
Vasily took his mother’s surname. Maria
died in 1904, when her son Vasily was eight
years old.
His father, Sergey Zakharovich
Plisak, was a joiner at the camp; hedied two years before Maria, in 1902.
They had no family to speak of. The
prison administration did not actually
try to prevent marriages (including civil
marriages) between exiled convicts.
Newly-created ‘families’, especially once
children had been born, were classed as
resident exiles, and so allowed to leave
the camp barracks. The civil marriage
between Vasily Oshchepkov’s parents,
which granted them their ‘freedom’,would last only a little while.
There was little to distinguish customs
in the convict settlement on Sakhalin fromthe criminal norms of the barracks. Thisis how Anton Chekhov described themin his book Sakhalin Island: “Exploiting
foreigners and new arrivals, selling hardliquor on the black market, lending moneyat very high interest rates, staking large
bets on the outcomes of card games – thisis how the men spend their time.” As foryoung unmarried women, they “sold theirbodies”.
There were few children, and they
abided by the same semi-criminal rules
as the rest. Their vicious fights were both asource of entertainment and a struggle forsurvival. In the nineteenth and twentiethcenturies, this was precisely the sort ofenvironment that produced many of theworld’s greatest fighters.

A Japanese national and student
at a Tokyo seminary
Memorial to commemorate the founder of the Soviet school of judo, Vasily Oshchepkov, and his teachers In Vladivostok

Sensei Vasily
Oshchepkov:

FROM JUDO TO SAMBO
A Russian intelligence officer ‘posted’ to Japan as an eleven-year-old boy, a Japanese serviceman, an officer in the White
Army under Kolchak, then a member of the Red Army, and later a Soviet secret agent in Japan… This is not a descriptionof a character from a Hollywood script, but excerpts from the biography of a real person: Vasily Oshchepkov. And the mostimportant secret he brought back with him from the Land of the Rising Sun was the martial art of judo: a practice which
the intelligence officer was responsible for turning into the Russian sambo, the art of self-defence without weapons.
28

Text: Viktor ALEKSEEVThe son of convicts on the island
prison of Sakhalin
Vasily Oshchepkov had a very difficult
start in life. He was born in one of the outercircles of hell, the convict prison that was
the island of Sakhalin, in December 1892
(or January 1893, using the Gregoriancalendar). We know little about his
parents. His mother, Maria Semenovna
Oshchepkova, spent 18 years in penal
servitude after being sent to Sakhalin forcommitting a serious crime. The labour
camp archives contain only one mentionof her, noting that she was given 60 lashes
for evading corrective labour. Vasily wasconsidered to be an illegitimate child, as
his parents were in a civil marriage andLosing both your mother and yourfather in this environment was an
unenviable fate. But Vasily Oshchepkov
had a stroke of good fortune where theRussian Empire’s luck had failed. After
Russia’s defeat in the Russo–Japanese warof 1905, South Sakhalin passed to Japan,
and the teenage Vasily rather unexpectedly
became a subject of the Land of the RisingSun. After two years, he was sent to Japan,
to the island of Honshu, where, from
September 1907, he studied at a seminary
run by the Orthodox mission in Japan,
headed by Bishop Nicholas of Japan (whowould later be canonized).
Bishop Nicholas was a man like noother. Over the half-century of his apostolic
service in the Land of the Rising Sun,
33,000 people were baptized. This Russian
priest enjoyed so much respect from theJapanese that he was permitted to build
a chapel in Tokyo and open a seminary to
prepare the local inhabitants to become

29

Vasily Oshchepkov wearing a judo kimono

Word was that the‘Russian bear’ (as Vasily
was called in Japan)
was put to use as achallenging opponent
for young Japanesewarriors-in-training tospar withclergymen. It was on the threshold of
this seminary, with a crowd of Japaneseboys, that the Russian teenager Vasily
Oshchepkov found himself after leaving
Sakhalin in 1907.

First martial arts lessons – and afirst taste of success on the tatami
To Vasily’s surprise, future clergymen
were not only given a religious and secular
education, they were also taught themartial art of judo (meaning ‘the gentle
way’ or ‘the agile way’). Even the locals
knew very little of judo at the time, as it
had come into being only at the end of
the nineteenth century. Moreover, theart of judo was intended for promoting
spiritual development and good healthrather than for combat. At that time, judo
was becoming an obligatory component ofa boy’s education in Japan, just as karate
later would.
But judo is fundamentally a martial
art, and inevitably has a competitiveelement: combat. We don’t know how
Vasily understood the spiritual side ofjudo, but his experience of fighting on
Sakhalin certainly stood him in good steadwhen it came to becoming a successful

EEF 2018

Forum | SPORT
judoka. The boy’s abilities were soonrecognized by none other than the creatorof judo, the legendary Japanese master
Jigoro Kano, who accepted Oshchepkov
into his school of Kodokan judo in 1911.
Vasily left the seminary in Kyoto andmoved to Tokyo, having undergone agruelling examination. Word was thatthe ‘Russian bear’ (as Vasily was calledin Japan) was put to use as a challenging
opponent for young Japanese warriorsin-training to spar with. At the same time,the ‘bear’ himself was still in training, andwith the best teachers in Japan.
After two years, in June 1913,
Oshchepkov was recognized as a judo
master, receiving his black belt (first dan);after four years, he was a second-dan black
belt. This was an incredible outcome: up
until this point, Japanese masters had
not taken fighters of other nationalities
seriously. Oshchepkov had turned out tobe stronger than many Japanese fighters,
and had shown what was considered tobe real mastery of judo in Japan at thetime. He was the first Russian and only
the fourth foreigner to win a black belt in
Kodokan judo.

Oshchepkov in Japan. Photo taken in the early 1920s

time as a secret agent. For cover, he spent
most of his time continuing to work as afilm distributor and practising judo. As
Russian reports noted, he “uncovered
valuable and, on occasion, extremely
valuable information.”

Teaching hand-to-hand combat
in the capital of Soviet Russia

Returning to his native land andworking for the secret services
When Oshchepkov returned to his
homeland in 1914, then, he was no longer
a downtrodden teenager, but a specialist
with rare skills and a decent grasp ofJapanese and English. However, it was
his knowledge of this new Japanese formof combat that was of most use to him
in his homeland, and summer 1914 saw
the birth of the Russian tradition of judo.
Oshchepkov organized classes inJapanese combat at Vladivostok’s sports
club, where he taught around 50 pupils.
The popularity of martial arts grewquickly, particularly after Russian teams
had begun to compete with Japanesesportsmen and sailors.

The front page of the Physical Culture and Sports newspaper dedicated to judo, 1930

Vasily Oshchepkov’s sporting career
was progressing nicely until the Japanese
occupation of the Far East (1918–1925).
At that point, the military took note of his
many talents. Oshchepkov was enrolled

Oshchepkov demonstrates sambo techniques

30

in Kolchak’s anti-Bolshevik army andposted to the Japanese Office of MilitaryCommunications.
Later, when the Red Army took theplace of Kolchak’s forces, they also
turned their attention to Oshchepkov:
after all, they had their own secretservices. So, during the Japanese
occupation of the Russian Far East, Vasily
became a film distributor on Sakhalin.
Showing silent films with live music,
he would listen to what his audience
were saying and ask them questions. In
this way, he gathered information about
the Japanese military contingent on theisland. His knowledge of Japanese camein useful here.
Oshchepkov’s feats in gathering
intelligence on Sakhalin were noticed
by the Red Army’s intelligence services,and he was once again sent to Japan, thisIn the meantime, Oshchepkov’s
fame had gone before him all theway to Moscow, where he was known
as a martial arts master with skills
unequalled anywhere in Russia. In any
case, Oshchepkov was transferred to
Moscow expressly to instruct Red Armysoldiers in hand-to-hand combat. This
was an extraordinary decision. Until
this point, in both the Imperial and thenew proletarian army, soldiers (special
forces aside) had been trained only inthe use of bayonets.

Oshchepkov began his career as a Red
Army sensei with a show, staging a martial
arts demonstration at the Central Houseof the Red Army – an unusual move at thetime. During the demonstration, a numberof strong and well-armed fighters attacked
the black belt at once from all sides. With
little effort, Oshchepkov scattered themacross the stage. Clearly, though, thefighters were not going to give in easily:
they were getting angry and trying in
earnest to attack their ‘enemy’. But next
to Oshchepkov, they looked like little boys
about to get a beating. The result of thiswas the organization of hand-to-handcombat courses for the commanders of
the Moscow garrison in 1929 – and thecreation of what was really the first schoolof judo in the USSR.
The school was immediately
oversubscribed, and the Red Army soldiers
were the envy of the town. Oshchepkov
would go on to organize judo lessons forthe police, various sports clubs, and theInstitute of Physical Education.

Integrating national combat
techniques: from Japanese judo toSoviet sambo
True, the form of judo Oshchepkov
was teaching was not quite the judo he
had studied as a Russian boy in Japan.
A pragmatic man, Oshchepkov was notinterested in developing the ethicalelements of judo; rather, he wanted tomake it as effective a form of combat
as possible. And so he did what manya sensei before him had done: hebrought together the best of all that hehad learned. He integrated techniquesfrom boxing, freestyle wrestling, andthe national combat systems used by thevarious peoples of the USSR. Here, hiswork as a teacher at the Central State
Institute of Physical Education came inhandy: he picked up national combat
techniques from his own students there.
In this way, judo was augmented withelements of the various martial artsthat were most effective in combat
situations.

He did what many
senseis before him
had done: he brought
together the best of allthat he had learned. He
integrated techniquesfrom boxing, freestyle
wrestling, and thenational combat
systems used by thevarious peoples of the
USSR
In 1933, Oshchepkov edited a bookon the principles of self-defence, which
included techniques taken from Americancollegiate wrestling and Greco-Roman
wrestling. However, it was not theory that
decided the fate of this new type of martial
art, but its practical effectiveness. Donn F.
Draeger, a seventh-dan black belt, would
later say: “Fighters with four to six months’
training in sambo could take on fourth-dan
black belts who would have taken years to
get to that level.”This was the beginning of the new,applied form of combat which is known
today by the abbreviation sambo(samooborona bez oruzhiya, or ‘self-defence
without weapons’).

The tragic demise of a great
fighter
The creator of this new type ofmartial art was not, however, to survive
the dark years of Stalin’s repressions.
In October 1937, Vasily Oshchepkov
was arrested on suspicion of spying forJapan and died exactly ten days later ofa heart attack.
He was rehabilitated only in 1957,
thanks to his wife’s efforts. Today, a street
in an estate in the Novomoskovsky districtof Russia’s capital city bears his name;martial arts tournaments are held in hishonour and clubs are named after him. And
in September 2012, during the Asia-Pacific
Economic Cooperation summit, a memorial
to the great fighter was unveiled.

Vasily Oshchepkov with his students. Vladivostok, 1914

31

The Far EastХод нерки на нерест в период путины

In the photo: Sockeye salmon spawning
Photo location: Kamchatka Peninsula
Photographer: SERGEY GORSHKOVEEF 2018

But Donald Trump’s
victory in thepresidential elections
on an anti-globalist
platform of restoring
America’s industrial
greatness broke thesystem. Our clear andcomprehensible world
crumbled, and black
became white
The share of global GDP held by theworld’s 16 leading economies (the G7
countries, Australia, Denmark, Austria,
Belgium, the Netherlands, Norway,
Finland, Sweden, and Switzerland)
had gradually been falling before themillennium, but then virtually collapsed.
In the 30 years leading up to 2000, theircollective share dropped from 76% to71%, whereas in the 13 years since it
has plummeted to 53%. Global economic
growth in the 21st century has been
driven exclusively by trends in developing
markets.

Andrew Zavgo

The transfer of wealthfrom West to East

Asia-Pacific as a new zone
for global market growth
The global economy is disintegrating into two separate projects: theWest and the East. Sanctions have prevented Western investment
from accessing the Eastern zone, capital has been frozen on the stock
market, and global growth has been blocked. The economic imbalance
has turned into a political crisis, and has led to a deterioration ininternational relations. The search is on for a new identity beyond theborders of nation states. Financial globalization (the Western project)requires a uniform standard for decision-making, whereas industrial
globalization (the Eastern project) requires the joining together ofdiverse interests on the basis of agreements.
34

Text: Leonid KRUTAKOV“T

he idea of a future that would
be distinct from the present
is so inaccessible to our
traditional way of thinking and actingthat we, or at least the majority of us,
categorically resist any opportunity to
implement it.”John Maynard Keynes, English economist andone of the founders of macroeconomics

Transforming the world
at a global level

Until 8 November 2016, protectionism
was considered an indisputable world
evil. Within the Western values system,
it ranked worse than political dictatorshipand totalitarianism (Chile, Saudi Arabia).
‘Economic nationalism’ was recognized as
the major obstacle on the path to global
market growth. But Donald Trump’s
victory in the presidential elections on
an anti-globalist platform of restoring

America’s industrial greatness broke thesystem. Our clear and comprehensible
world crumbled, and black became white.
We unexpectedly discovered that
economic protectionism would become
the content and driving force of American
foreign policy. It became clear that it is
not only developing and developed
countries (East and West) that view the
future differently. The West itself is now
beset with disagreements. As British
Prime Minister Theresa May announced
in the immediate aftermath of the Brexit
referendum, London will in the future
be making all decisions based on its own
national interests, without taking into
consideration what is amenable to Europe
as a whole.
These protectionist manoeuvres on
the part of the USA and the UK will only
have come as a surprise to the casual
observer, however. The first signs of a
global shift in the trajectory of world
economic development were visible as
far back as 2000.

35

This phenomenon has been termed‘the transfer of wealth from West to East’.
Experts identify two factors facilitating
this ‘transfer’.
The first comprises demographics
and a cheap workforce, which created
the Asian industrial boom, growth in
the prosperity of the population, andincreased levels of consumption. In
1980, the share of the global population
represented by the countries of Europe,
the USA, Japan, Australia, and New
Zealand stood at 24%, compared with
18% in 2009. By 2025, it is predictedthat this share will fall to 16% (basedon calculations which do not take into
account China’s decision to allow families
to have a second child). With respect todomestic consumption levels, in 2010
developing markets outstripped the USA
for the first time in modern history, andthis gap is set to keep growing.
The second factor is a sharp increasein the cost of raw materials (primarilyhydrocarbons), which is facilitating therise of resource-rich countries (including
Russia and Iran). Over the 100-year
period preceding this increase, which
also began in 2000, raw materials prices
had been falling by an average of 0.7%
annually. In 1999, oil prices stood at

EEF 2018

THE FAR EAST | GEOPOLITICSAs British Prime
Minister Theresa May
announced in theimmediate aftermath of
the Brexit referendum,
London will in the
future be making all
decisions based on its
own national interests,
without taking into
consideration what is
amenable to Europe as awhole
It isn’t the depth of this economictransformation that is astonishing,
however, so much as the speed at which it
has taken place. It took Great Britain 155
years to double its per capita GDP withan initial population of 9 million people.
The USA and Germany, each of whichbegan with populations numbering inthe several tens of millions, took between
30 to 60 years to do the same. India andChina, each with populations of around
1.3 billion doubled their per capita GDP
in just 15 years.
Political consolidation has been the
key competitive advantage for developing
countries in the battle for economic
leadership. This isn’t just a matter of
rapid growth in the influence of state
corporations, through whose mutual
penetration China, Russia, and India
have linked their programmes for security,
economic development, and access toenergy resources. This is about the ability

to change the structure of global savings
and investments in a centralized way.

Drang nach Westen

Between 2000 and 2008, t heinvestment landscape of the global
economy underwent cardinal changes.
The level of investment by national
state funds in developing economies
outstripped the resources allocated by
the IMF and the World Bank combined.
The total amount of wealth accumulated
in sovereign funds reached USD 3 trillion.
If it hadn’t been for the crisis, the volumeof state funds would today exceed global
currency reserves, at USD 12–15 trillion(around 20% of global capital).
Prior to the crisis, China, which inthe space of 20 years had become the‘factory of the world’, had establishedcolossal gold and foreign exchange
reserves totalling USD 3.8 trillion (ata time when the US Federal Reserve
System held USD 12 billion in reserves).
In autumn 2007, China created the
China Investment Corporation (CIC) to
manage the country’s currency reserves
and diversify investments while gradually
reducing its dollar assets, with an initialshare capital of USD 200 billion.
The CIC was issued with three key
objectives. The first of these was toexpand the share capital of transnational
corporations with the goal of acquiring
new technologies and taking over global
brands. The second was to launch Chinese
brands on the global market. The third
was to get involved in strategic oil andgas projects.
In political terms, these constituted
just one objective – to liberate the Chinese
economy from its dependence on exports.
At that point, the deflationary effect of
low wages was already exhausted. China
had begun to lag behind its neighbours(Vietnam, Indonesia, Taiwan, andMalaysia) in terms of foreign investment
growth rates.
Immediately prior to 2008, thesituation in the global supply chain wassuch that, if nothing changed, the AsiaPacific economy would very quickly
exceed the potential of the ‘united West’.
According to PricewaterhouseCoopers,
the top ten global economies in 2050
would have been as follows: 1) China,2) India, 3) the USA, 4) Indonesia, 5)Brazil, 6) Mexico, 7) Japan, 8) Russia,
9) Nigeria, 10) Germany.
At the time of the crisis, US internalmarkets were directly dependent on
Chinese investment. Pre-millennium, themajority of Chinese investment (59%)
went to developed countries (primarily

36

the USA and Canada), whereas postmillennium, priorities shifted towards
Africa and Latin America.
The present level of Chinese
investment in the USA is now at thesame level as China’s investment in
the Virgin Islands. Through offshore
companies, China invests in economies
throughout the world, which may havebeen one of the reasons for cleaning up
offshore markets on the pretext of fighting
corruption.

An intentional imbalance

Modelling carried out by the WorldBank has shown that, if it retains open
access to the financial market, China
will contribute more than 30% of
global economic growth by 2025. The
contributions of China and India to global
growth are two times greater than thoseof the USA and EU. The threat of losing
not only the initiative, but also operative
control over the global economy forced
the USA to remind market participants
who holds the key to ‘shared’ financial
institutions.
A programme of quantitative easing
was launched, and, with a single move,
the US Federal Reserve System devalued
the reserves accumulated by developing
countries. According to balance data
provided by the Federal Reserve, around
USD 4 trillion was printed over thecourse of five years. And according to
the Government Accountability Office,off-balance sheet issues guaranteed bycommercial banks, including foreign ones,
now exceed USD 15 trillion.
In essence, the reserves of developing
countries have been confiscated, and nontariff practices for limiting investment
have been expanded (through sanctions
and campaigns to restrict offshore
activities). Global savings have been‘transitioned’ into the US jurisdiction.

Post-election
bacchanalia in the
USA and disarray inEurope have revealed
the full horror ofthe ‘united West’s’
political class when
faced with the threatof the world being
rearranged according
to new (unknown andincomprehensible)
conditions

Mikhail Metcel, TASSUSD 14–15 per barrel, compared with
USD 135 in 2008. This growth was
facilitated by the transfer of labourintensive and harmful production fromdeveloped countries to Southeast Asia
(primarily to China), which assumed themain costs involved in the rising prices.
Today, developed countries spend 8–10%of their GDP on energy, versus 20–25%
in developing countries.
Both factors (‘def lationar ydevelopment’ and ‘the resource boost’)
have been analysed in detail. Far lessattention has been devoted to the third,
no less significant factor in the growth ofdeveloping economies: the consolidated
political management which has
permitted countries in the Asia-Pacificregion to concentrate their efforts on
narrow breakthrough areas regardless of
short-term market conditions and achieve
rapid results in a highly mobilized way.

Official visit of the Russian President to China. This handshake between Vladimir Putin and Xi Jinping heralded a dynamic improvement in Russian–Chinese relations

In 2014, following the completionof quantitative easing programmes,
Chinese reserves stood at the pre-crisis
level of USD 3.8 trillion, whilst US federal
reserves had increased from USD 12
billion to USD 2 trillion, with an overallbalance of USD 3.7 trillion.
As time passes, it is becoming possible
to say that the 2008 financial crisis was
the consequence of structural changes
to the economy, rather than their cause.
The global market was consciously
and deliberately unbalanced, the Westrefusing to finance the alternative
political strategies of the East. The
failure immediately prior to the crisis of
the Doha Round of WTO negotiations,
during which the USA attempted to force
the denationalization of Chinese, Indian,and Brazilian capital markets, heralded
the end of a unipolar world.
Today, the West is stuffed with ‘new’money, which it is unable to transform
into development programmes. This
money is inflating domestic capitalization
and blocking an independent Westernindustrial project, while investment
in manufacturing and resource-richcountries (Asia-Pacific, the Middle East,and Russia) which could serve as a driverof global growth is obstructed.
In the five years following the crisis,
America’s Dow Jones more than doubled
in size, Japan’s Nikkei grew by a factorof 2.5, and Germany’s DAX tripled. Only
China’s stock market failed to grow,maintaining zero returns alongside a
GDP growth rate of over 7%. During thesame period, Russia’s stock market has
shrunk threefold, even though oil prices
have soared and GDP growth rates haveexceeded the global average.
At one time, the unified project for
financial globalization was in alignment.
The old global economic model is now
in need of change, and the new America
has been kept from the public amid talkof national priorities. Trump’s victoryhas shown that the project for big
democratization is at an end, and postelection bacchanalia in the USA anddisarray in Europe have revealed thefull horror of the ‘united West’s’ politicalclass when faced with the threat of theworld being rearranged according to
new (unknown and incomprehensible)
conditions.

A perfect match

On 17 June 2016 (nearly six months
before Trump’s victory), Vladimir Putin,
in his address to the St. Petersburg
International Economic Forum (SPIEF),
announced the creation of a ‘broad
integrative approach’ involving theEurasian Economic Union (EAEU), theShanghai Cooperation Organisation(SCO), and the countries of the CIS.

37

A week later in Tashkent, the leadersof the countries taking part in the SCO
summit announced the accession tothe organization of India and Pakistanby the end of the year, as well as theirunanimous support for China’s Belt andRoad initiative. Two days later, Vladimir
Putin commenced a large-scale visit toChina.

China is not simply
transitioning to aninternal investment
growth mechanism,however; it also wants
to make its domestic
market a source ofgrowth for the entire
region. This will require
diversification of the
Asia-Pacific economy
During this visit, Moscow and Beijing
set out their priorities: to establish ajust and rational world order (a global
agenda), to strengthen security andstrategic cooperation (in the military
and technology spheres), and tocreate a unified transport system andhydrocarbons market (spatial unification

EEF 2018

THE FAR EAST | GEOPOLITICS
via infrastructure). More than 30 major
contracts were signed, covering scientificand technological developments andtransport and energy projects.
In China, the Russian President’s
visit was described as a ‘turning point’,
which indicated a mutual departurefrom a policy of ‘non-alignment’. In aninterview with news agency Xinhua on
the outcomes of his visit, Putin said that
describing Russian–Chinese relations
as strategic cooperation no longer went
far enough, and that ‘a comprehensive
partnership’ was now the appropriate
term.
A union between the ‘factory of theworld’ and ‘the resource base of the world’based on intergovernmental cooperationlays the foundation for a new global
project on the one hand and, on theother, returns the world to its former(Westphalian) format of mutual relations.
Unlike the financial market (or Western
project), which is based only on thecirculation of paper, production assembly(the Eastern project) requires the physicalavailability of people, technology,
warehouses, workshops, logistics, andraw materials. What is called the national
dimension of the economy, in contrast to
the global dimension (digital or virtual),
is burdened with social programmes andobligations that do not always coincidewith market motivations.
At the heart of today’s political crisisand trade wars is a clash of interests
between those who control capital assets
and those who possess claims to them.
The ideologies and principles behindthe financial and industrial approaches
to creating a new value chain are
diametrically opposed.
The incompatibility of the Westernand Eastern approaches to the future
must be carefully noted. Some see thefuture in terms of intergovernmental
relations (the Peace of Westphalia and

Igor Olkhovsky

The most important
thing for Russia is
to understand thismechanism thoroughly
and to make it a system
in which it can realize
its own interests
without becominga ‘raw materials
appendage’ once more.
This time, to Asia

The potential energy of Asia-Pacific countries is every bit as powerful as Pacific Ocean waves

Yalta Agreement), whereby the fulfilmentof obligations is guaranteed by a broad
web of supranational agreements. Others
seek to remove the constitutive role of thestate (the new ‘Washington Consensus’).
What is important to understandis that competition between countries
has never ceased. Initial attempts toconceal national strategies behind thecommercial interests of private companies
were mistaken. The attempt to deceive
competitors also laid the foundations
for the crisis of trust which has led tothe division of globalization into two
independent projects.
The political divorce will be followedby the separation of industrial projects
from the financial risk management
system. This isn’t just about two versionsof the market. It is about the creation of
new socioeconomic formats, which is why
politics is moving to occupy a leading

38

position in relation to economics. We
need to know now who will be answering
tomorrow (in 20–30 years’ time) for the
obligations that we accept today.

A window into Asia

What is special about t he erat hat t he world is now enter ing
smoothly? Primarily, this is a newera of regionalization, and of therearrangement of financial institutions,
not by themselves, but in conjunction withsocial and industrial policy.
The Asia-Pacific region is one of theworld’s most backward regions when it
comes to levels of internal integration.
As the McKinsey Global Institute (MGI)
notes, no one country in the world enjoys
the ‘simultaneous presence of all factors
required to resume growth’. There areseveral reasons for the lack of unity in
the Asia-Pacific region, but two are key.

The first is due to the external
dimension of problems arising fromthe ‘historical’ attitude of the West to
domination, which refers to its refusal
to admit the emergence of alternative
centres of power. This was manifested
in the conquest of India and the opium
wars in China. It has been pursued in thepresentation of artificial contradictions
and the creation of additional
confrontation zones (for example Northand South Korea, as well as Taiwan and
China).
The second originates from ongoinginternal problems. These include themultitude of mutual territorial claimsin the South China Sea (the region’s
key communication channel). Anotheris the historical rivalry between India andChina, and the latter’s lack of a direct
outlet to the Indian Ocean. Finally, thereis the banal fear of Chinese power among

the other Asia-Pacific countries, which
is dictating the search for an external
arbitrator – especially in issues of
security.
The creation of the SCO is removing
the majority of the integration problems
in the Asia-Pacific region.
Firstly, Russia is becoming asecondary centre of regional power,
which is alleviating fears of possible
Chinese expansion. Secondly, Russia
and its energy resources are providing
a solution to one of the region’s most
systemic problems by making it lessdependent on hydrocarbon supplies fromthe Persian Gulf (according to the AsianDevelopment Bank, by 2050 the region
will be 90% dependent on oil imports).
Thirdly, Russia is a country in which theinterests of such diverse nations as China,
Japan, South Korea, India, and Vietnam
are at play.

39

The SCO represents a historic
opportunity for the Asia-Pacific region.
The era of Asian development under
the aegis of the ‘industrial offshoring’of the Western economy is coming toan end. Following the 2008 crisis andquantitative easing programmes, it has
become clear that sovereign developmenton the basis of a ‘foreign’ institutional
environment is impossible.
Between 2008 and 2017, the bondmarket for Chinese non-financial
companies grew from USD 69 billion
to USD 2 trillion. Beijing is now
transitioning its economy to a domestic
investment mechanism. The share offoreign capital in all investment in China
was 2% last year (compared with 28.6%
in 1996), versus 60% of China’s own
funds. Almost 80% of credit is provided
by state banks and in the state sector. The
share of foreign participation in China’s
industrial production is steadily falling(from its 2003 peak of 35.9%). At thesame time, the share of joint ventureswith 100% foreign participation is rising(at more than 80% of all joint ventures).
These last figures may appear
paradoxical: foreign participation in
production is falling, whilst the numberof entirely foreign joint ventures is rising.
In fact, it is completely logical. China
takes ‘Chinese’ money from joint venturesand creates 100% ‘Chinese’ companies,
which compete with the joint ventures on
quality and price of goods on the foreign
market, thus lowering the profits of theforeign companies from Chinese exports.
China is not simply transitioning
to an internal investment growthmechanism, however; it also wants
to make its domestic market a sourceof growth for the entire region. This
will require diversification of the AsiaPacific economy and its development
to full cycle (resources, production, andconsumption). The production pyramid
will be topped off not by a trade orinvestment regime, but by agreement
between all participants in the processof creating a development model (orlifestyle).
Without Russia, this new modelfor Asia-Pacific development will not
be possible. A mechanism has now
been launched that carries enormous
momentum. To stop it will be very
difficult. The most important thing for
Russia is to understand this mechanism
thoroughly and to make it a system inwhich it can realize its own interests
without becoming a ‘raw materials
appendage’ once more. This time, toAsia.

THE FAR EAST | MINISTER

Minister for the Developmentof the Russian Far East Alexander KOZLOV:

I know
what to look for
and where to find it

Text: Andrey VANDENKO, TASS –especially for the EEF magazine
It’s easier to manage from thecentre – that’s a fact
– You’re a relatively recent arrival
to Moscow, Mr Kozlov, but perhaps
you already know which building is
the capital’s tallest? After all, this is afact known to more people than justnative Muscovites.
– Do you mean the tallest buildingin the literal architectural sense or thehighest in terms of decision-making
authority? If you are talking about the
Kremlin, then I can confirm that I’ve
visited it and attended meetings there.
– I’m actually referring to an old
Soviet joke. Nothing is higher thanthe KGB headquarters building on
the Lubyanka: from there you can see
Kolyma in any weather... Of course,
since the advent of your Ministry, thejoke has become dated. It would seemthat you can see even further fromyour building at 14 Burdenko.
– Let’s just clarify that our department
was not created for the purpose of
winning a competition about who has
the best view of the remote corners of
the country.
– Do you think it’s right that theorganization that concerns itself withthe affairs of these corners of thecountry is not a local agency on the
ground in Yakutia, say, or Kamchatka,
but rather based in Moscow?
– Decisions must be made expediently
and effectively. It is probably wrong toinvest so much significance in a nameand to adhere to geographical principles.
Decisions should be made with an eye tosolving the problems facing the Ministry.
We play an active role in the lawmaking
process and seek to attract investment to
the region. We look for different sourcesof funding, both from the state budget
and outside it (I have in mind investment
by state corporations as well as major
Russian and foreign investors). The
Russian Far East is attractive because it
borders the Asia-Pacific region. However,
the embassies of, let’s say, Japan, South
Korea, and China (and all the others) are
not located there, but in Moscow. The
Ministry of Foreign Affairs, the State
Duma, and the Federation Council arealso located in the capital, and we workwith them on a regular basis. Yes, you can

see a lot from a distance, but it’s better toconsider important details from a local
vantage point.
It is right that the Ministry is locatedin the capital. In my opinion, everythingis arranged logically. This location is also
beneficial for advancing the regional
agenda. The laws that are enacted here
are implemented there. The funds thatare allocated for projects in the Far Eastgo there.
And we maintain a constant presencein these places. We do this to ensurethat we have a correct basis for ourdecision-making and to obtain first-handinformation. This allows us to reduce therisk of possible errors before making a
final decision.
– You didn’t mention logistics. To
get from one Far Eastern region toanother, you often have to fly throughMoscow.
– This is a separate topic that we candiscuss. It’s easier to manage from thecentre – that’s a fact.
I recently met with the Japanese
Ambassador and discussed a specificproject in Amur Region. In order for us
to have this discussion, he didn’t haveto go to Blagoveshchensk and I didn’t
have to go to Tokyo. The same is true of
everything else.
The Ministry does not control theregions. After all, they have their own
governors or heads of the republics.
They are responsible for everything that
happens in their respective regions. We’renot trying to stick our noses in someone
else’s business. We’re trying to help. We
are drafting laws that will create newjobs, solve social issues, and make life
simpler for investors. Therefore, to draw
an analogy with the organization of themilitary, it would be better to think ofourselves as different service branches
that are able to act together.

You have to live in the time zone
where you are located– Which time do you set yourwatch by? We are meeting at the
beginning of the business day, but it’salready evening in Magadan. Whichtime zone do you use for scheduling
purposes?
– You have to live in the time zone
where you are located. We are notconstantly focused on the time. We
work on legislation on Mondays, andwe do project work on Tuesdays. On
Wednesdays we check whether enoughfunds have been raised, and we listen to41

reports from development institutions,which allow us to gain an insight into
how particular areas are developing. On
Thursdays we have our weekly briefing,in which the heads of regions take part
via teleconference.
Of course, we stay in constant touchwith each other. Just before this interview
I talked with the Governor of Primorsky
Territory, and we discussed current issues.
The Governor of Sakhalin called the day
before yesterday to warn me that he
was flying to Iturup for four days, since
the mobile phone coverage on the Kuril
Islands is spotty.
When I worked in Blagoveshchensk,
people from Moscow would call at
inopportune times if circumstances sodemanded. That’s the normal state ofaffairs! I can’t imagine another way of
doing it.
You need to realize that the earlier thehead of the region receives information,
the more time he has to respond toit correctly and to prevent or correct
negative consequences. This is what weare concerned about, not ensuring that
subordinate officials do their superiors’
bidding.
– Then let me ask: how do you
divide your time between Moscow
and the provinces? How much time
do you spend in each place?
– Look: during the first two monthsof my tenure, I spent four weeks in the
Russian Far East, trying to visit as many
areas as possible: Kolyma, Yakutia, Amur
Region, the Jewish Autonomous Region,
Khabarovsk Territory, Kamchatka...
My year is divided into cycles. Statefunding proposals are drafted in Julyand August. Before this can be done,
it is necessary to check the situation in
the regions. This fieldwork allows us toplan and know which proposals we needto advocate on 6 September before the
Ministry of Finance’s budget commission.

During my time as Mayorof Blagoveshchensk,
I oversaw the openingof four kindergartens.
Each time I got
tremendous pleasure
when I, together with thebuilders, handed overthe keys to the principal.
Then we would havetea and cake with theteachers...

EEF 2018

THE FAR EAST | MINISTER

It’s terribly expensive to fly
vegetables to Magadan orAnadyr!
– Since we are on the topic oftransport... Is the Sakhalin Bridge
project going to be built?
– We have been instructed on thismatter by the President. That means that
we are going to build the bridge. However,
we can’t put the cart before the horse.
First, we need to figure out the sourcesof funding, wait for a concrete engineering
proposal to be drafted, and decide on thedeadlines and contractors.
The fact that global infrastructure
projects in the Russian Far East areneeded is not even a discussion. But
I am not saying that we should forget
about building a smaller bridge oversome anonymous stream in a village lostin the taiga. For the residents of such asettlement, a modest wooden bridge is
no less significant than the Sakhalin span.
Megaprojects give a powerful impetus
to the development of the region. They
require support, ranging from cement andYes, my daughter Alisa
is six months old, andI’m proud to say that her
birthplace is recorded
as Blagoveshchensk.
I myself come fromYuzhno-Sakhalinsk...

fittings factories, where the concrete will
be mixed and the metal will be cast, to thefood services that are needed to feed theconstruction workers.
When I was Governor, we began tobuild a bridge across the Amur River toChina. I said to my colleagues: “Why are
you focusing on the cost? Figure in therevenue from the severance tax. Estimate
how many people will receive work foryears to come.”
The construction site for the bridge
drew in several cities. Work on the project
not only began, it kicked into high gear.
– So in the end you were able tobuild the bridge?
– There is about a year and a half left
on the project. We’ll get it done.
– Your Ministry was establishedin 2012. At that time you worked in
Blagoveshchensk, where you held
various positions at the regional level.
You became Governor in 2015. Backthen did you feel that the Ministrythat you now head could do somegood for the region?
– How can I explain it? The Ministry set
many important and necessary processes
in motion. However, federal officials were
not always sufficiently clear about thekind of result they wanted to achieve,
and the Governor’s staff encountersand solves problems that are somewhat
different. They are more local and specific.
Meanwhile, the people who are on the
ground are the ones responsible forcarrying out tasks. They must understandwhat is expected of them and, mostimportantly, why.
The various levels of government mustbe aligned in such a way that people
understand why the legislative process isnecessary and how it will affect their lives.
For example, the Ministry is overseeing theconstruction of 193 social infrastructure
facilities. This is a big deal! We are usingfederal funds to purchase KAMAZ vehicles
and other equipment, as well as to build
kindergartens and schools... We were able
to secure nearly RUB 6 billion in additional
funding for these projects in the Russian
Far East. That’s great!
Every state programme is currently
required to include a section about the Far
East. Previously, many ideas did not findtheir way into plans; they got lost during
the drafting process due to trivial reasons.
This can no longer happen. Recently, we
worked out a programme with the Federal
Agency for Tourism. The agency’s head,
Oleg Safonov, called me: “Your staff arerefusing to sign it!” I told him: “We’ll

42look into it right now.” It turned out that
Kamchatka had been put off until 2021.
Kamchatka, of all places! We asked that it
be moved up the schedule. They fixed it...
In other words, the Ministry is still
functioning as a project office. Back when
I used to work at a factory, I was taught:
the plan is only 50% of the success. The
second half is executing it.
For me, the key issue right now is
finding specialists who are capable ofleading projects from start to finish. Thisapplies to everything – advanced special
economic zones (ASEZs), funding,drafting legislation... Some of theprocesses are hampered by the lack of aregulatory framework, whereas others arestalled by underfunding. In some places
we simply need to remove red tape. To
accomplish this, we need people withspecific skills: construction workers,
lawyers, economists, and tax specialists.
Take ASEZs, for example. They haveaccepted over 1,000 residents, andanother 300 have submitted applications.
Roads are being constructed, utility
ser vices are being extended, andinfrastructure is being built. This activity
deserves closer examination. We needpeople to monitor the execution andobservance of deadlines, and they must becompetent officials. In order to move theprocess forward from two sides, we need
the assistance of the governors’ teams.
Investor activity is frequently regionspecific. Let’s say that the responsible
local actors did not install gas lines orelectricity, and the farmer was not able
to start using his greenhouse. As a result
he suffered losses, and local residents had
no access to fresh tomatoes or cucumbers.
And it’s terribly expensive to fly vegetables
to Magadan or Anadyr! The question is
not even social, but political.

There’s no such thing as
superfluous knowledge, only
learning that you’ve not yet put
to use– And have you claimed a free land
plot under the Far Eastern Hectare
programme, Mr Kozlov?
– No, I haven’t. If you take a landplot, you have to work it. Continuously.
If, after a full day of work, the Governor
told his wife that he was heading out tohis hectare, I think she’d propose that hestay there.
– Nevertheless, you have set a
personal example for improving thedemographic situation in the Russian
Far East.

– Yes, my daughter Alisa is six months
old, and I’m proud to say that her
birthplace is recorded as Blagoveshchensk.
I myself come from Yuzhno-Sakhalinsk...
– You are educated in two fields:
law and mining. Which has been morevaluable for your role as Minister?
– As you know, there’s no such thing
as superfluous knowledge, only learningthat you’ve not yet put to use. Of course,
for the sake of fairness it should be notedthat I did not complete my studies at theFar Eastern Federal University, but I did
receive a degree in law from the Academyof Entrepreneurship of the Governmentof Moscow 15 years ago. That’s mybackground.
Now to address your question. There’s
a good saying: a sensible lawyer always
knows where to find what he is looking
for. And a mining engineer knows whereto dig. Everything should be clear, specific,
and transparent. Then you can demanda result.
Communication is another importantpart of the Ministry’s activities. We value
the ability to listen to each other and to
the regions.
I have long understood that no detailof my work is too small. And the global
scope of a project is not determined by theamount of money that has been invested
in it. Or rather, it is not determined by thisfactor alone. During my time as Governorof Amur Region, I oversaw the opening offour kindergartens. You know, each time I
got tremendous pleasure when I, together
with the builders, handed over the keys
to the principal. Then we would have tea
and cake with the teachers... I felt a certain
euphoria that I had taken part in a gooddeed that had brought concrete benefits
to people.
My grandmother lives in a village inAmur Region called Raychikhinsk. Once,
she was showing me pictures from the
middle of the last century, where you
can see how poor the place looked. There
were no pavements, and there were only
direction signs, no actual roads. The only
standing houses were those built after theSecond World War. Then the region began
to actively extract brown coal, and they
opened a plant with two open pit mines(Severo-Vostochny and Yerkovetsky). Afterthat the city changed for the better andflourished.
A new period of decline set in during
the 1990s.
As Governor, I launched a three-year
programme to reconstruct, repair, andimprove the streets and courtyards in theregion, including in Raychikhinsk. The

Сергей Пятаков/РИА Новости

If I’m persuasive, then I’ll secure funding
for next year.
The next stage is to monitor how the
allocated state funds are spent. It makes
no sense to look at construction sites
during the winter. Everything is hidden
under a blanket of snow. Hence, the next
period of scheduled trips will be delayed
until the spring.
In addition, there are events andfunctions that we must attend, including
the EEF among a number of others.
International activity is another important
topic. So this is how we schedule thecalendar for the year.
H e r e ’ s a n e x a mp l e . We h ave
communicated our priorities to the
Ministry of Transport. Minister Yevgeny
Dietrich wrote a series of instructions. I
met with Mr Dietrich, and we made someslight adjustments to the plans.
It’s much simpler when you have someunderstanding of what you’re talking
about. So this is how the system works.
This is how it should work.

In Blagoveshchensk, Alexander Kozlov served as mayor and governor

installed and updated pavements will now
be able to provide ten to fifteen years ofservice. After that, a new regional head
will take office, who will also focus on
updating the infrastructure using other,more modern technologies, which will
surely be developed.
We must remember: we are not the firstand not the last, but only the present link in
the chain of people who inhabit the Earth.
And we should not be shy about getting
our hands dirty and examining things on
the ground. We must make every effort
to ensure that every penny goes where it
will bring the maximum benefit. At thenational level, there is a need to forge thelinks together.
Several years ago I brought thenMinister of Agriculture Alexander
Tkachev to the Agrarian University in
Blagoveshchensk. I would be happy toshow you around as well. It has a beautiful
and historic red brick building from the
Tsarist period, though it has been left to fall
into disrepair. Mr Tkachev has dozens ofspecialized universities across the country.
There are so many that it would be hardto list them all. I say: they do not take thatmuch money to run if you support andmaintain them.
We now have a new Minister ofAgriculture, and I’m no longer a governor.
However, federal funds were allocated tothe university in 2018, and repairs are
currently ongoing. The renovated building

43

will really add to Blagoveshchensk’s beauty
That’s the trick!
– The EEF will, in fact, be your debut
at the national level. It will be a test ofwhether the many links have actually
been forged together.
– I’m not a magician. Nothing canbe done in an instant. At this stage I
see my task as launching the processof implementing previously adopted
decisions and developing a decisionmaking procedure that will not undermine
the plans for the Far East that have been
proposed by the country’s leadership. We
need amendments to laws, monitoring ofspending, and to determine which facilities
are feasible and necessary...
The Forum is a place to look backover the results of the work that has been
completed during the last year. We needto verify which of the tasks that wereannounced in September 2017 were carriedout and which were not. In the case of thelatter, we need to know why they were notcompleted. This process provides a wayof reconciling and scheduling tasks. We
met, and we discussed, analysed, adjusted,
and identified tasks. That’s how we madeheadway.
Let me remind you that the Far East
occupies 36% of Russian territory. The
region’s contribution to the Russian
economy should be comparable in scale.
It’s the only way!

THE far East | BUSINESS CARDДА ЛЬНИЙ ВОСТОК | ВИЗИТНАЯ КАРТОЧКА

The FEFD’s
storehouse

The Far Eastern Federal District (FEFD) is truly Russia’s treasure trove, offering
ideal internal and external conditions for investors. The district comprises
regions that are unique in many respects, with vast reserves of biological andmineral resources. Major markets in the Asia-Pacific region are located nearby.

Material by Vladislav Kovalenko
The FEFD is the largest federal
district* by area in Russia.

=

Area, % of the total area of
the Russian Federation
OthersUral
Siberian

23.4

36

10
FrancesFar Eastern

10.6
30

Source: Rosstat*here and below, cities of federal
significance are excluded

Far Eastern
Federal District
The FEFD has:In recent years, thegovernment has launchedseveral programmes aimed
at increasing the investment
attractiveness of the
district.
In the FEFD:

70%
of itsdiamondstocksCentralFar Eastern
Northwestern

15.7

25

16.6

17.7

30

Siberian

20

Ural

15

Volga

2.5

plots have been
allocated through the‘Far Eastern Hectare’programme

35

22.5

40.20040

28.1

electronic visas have been
issued to citizens of 18
states35.2

34.000Share of exports in GRP by district,the FEFD holds second place

forests

34.8

18

The district borders thelargest economies in
the Asia-Pacific region,
offering attractive
consumer markets.

advanced special
economic zones (ASEZs)
have been set up

44

37%
of Russia’s

100Southern
North Caucasus

Source: Rosstat, calculations provided by the Eastern Economic Forum45¼
of itsgold
reserves

THE far East | BUSINESS GAME

Accelerated
path to successin the FEFD
9

Strategy board
game

Urengoy90

Matrosov

13

The Natalka gold deposit belonging to
Polyus Zoloto contains

11%of Russia’s gold reserves.
You have struck a rich vein,take another turn.

12

225.000

Magadan is thecapital of theregion which bears its name.
It emerged in 1929 as asettlement for workers engaged
in mining precious metals andis the construction centre of theregion.

18

Mirny
The Mirny mine isthe oldest mining
enterprise of theworld’s largest
diamond producer,
ALROSA.

Take a step back to climb thetwo active volcanoes locatednearby.

20

21

Petropavlovsk-

Magadan 31

22 Kamchatsky

Yuzhno-Sakhalinsk

Northern Sea of Okhotsk Subzone

Verkhoyansk
Population:

312.000

Our game begins in
Yakutsk whose foundationin 1632 by the Yenisei
military commander
Pyotr Beketov launched
the exploration of theRussian Far East. Востока.

Yakutsk

3

1

2

30

34

Northern Sea of
Okhotsk Subzone

First ASEZs

35

80%

37 Solnechny

Take a step forward tovisit the Chekhov Museum(the author visited theisland in 1890).

18

28
27

Solnechny

The capital of Amur Region. The UstZeysky military outpost was founded
here in 1856. It is the only city in Russia locateddirectly on the border, half a kilometre from the
Chinese city of Heihe.

Blagoveshchensk

Yuzhno-Sakhalinsk

of Russian tin is produced
by Seligdar at the Pravoormysky deposit.

41

42

43

25

26

Congratulations, youare monopolists,
move two squares forward.

Birobidzhan

40

24

100%
38

225.000

Yuzhno-Sakhalinsk
is the centre of
Sakhalin Region. It was founded in1882 as a convict settlement.

23

Skip two turns to fish.

A total ofadvanced special
economic zones (ASEZs)
have been created in the FEFD. The first ASEZs
were set up in Khabarovsk Region.

Blagoveshchensk

199.000

29

36

39

Population:

Almostof all fishin 2017 were caught in the Far Eastern basin. The leading
supplier is the Northern Sea of Okhotsk Subzone.

Your business has taken off,have two more turns.

Move back.

Khabarovsk
44
Vladivostok

Khabarovsk

Population:

605.000
Birobidzhan
Population:

74.000

The administrative centre of the Jewish
Autonomous Region. The history of thesettlement began with the Tikhonkaya station backin 1912.
Skip a turn to admire the bronze
statue of the violinist on Theatre
Square.

45
Population:

618.000

Khabarovsk is the capital of theregion which bears its name. It
was founded as the Khabarovka
military outpost in 1858. It is
the largest city in the FEFD bypopulation.
Skip a turn to see the larch
planted by Yuri Gagarin in thepark that is now named after him.

46

The capital of Kamchatka
Territory and one of theoldest cities in the Far East,
founded by navigator Ivan Elagin back in 1740.

Skip a turn to look at the fragmentsof the petrified forest of the Upper
Paleocene epoch stored at the
Chukotka Heritage Centre.

MatrosovPopulation:
Skip a turn – youcannot miss thisbeauty.

181.000

AnadyrFirst ASEZs

MirnyPopulation:

32

Successful site
selection, takeanother turn.

4

Petropavlovsk-Kamchatsky

Anadyr is the most easterly city in Russia,
the capital of Chukotka Autonomous Area.
The military doctor Leonid Grinevetsky
founded the city in 1889.

Turn over the pageto learn more about
Magadan Region.

11

6

The FEFD comprises nine
regions in which thegovernment is creating
favourable conditions
for accelerated economic
development: ASEZs. We
suggest taking a short breakfrom our topic and playing
a game while learning
more about what makes theRussian Far East unique.

Population:

33

Yakutsk

reserves are foundin the Prognoz mine
operated by Polymetal.

Skip forward to Anadyr.

Population:

19of Russian silver
reserves

5

Anadyr17

10
Verkhoyansk

7

Magadan

93.0008

billion cubic
metres of gas
were extracted by
Gazprom and NOVATEK
in 2015 at the Urengoy
Gas Field, the thirdlargest in the world.

The game was developed by Vladislav Kovalenko

15

14

8%

Urengoy

EEF–2018

16

47

Congratulations, you havereached the finish line!

Vladivostok is the capital of
Primorsky Territory. It is thepolitical, economic, and cultural
centre of the FEFD, and, of course,
everything is just beginning here.

46 Vladivostok

THE FAR EAST | REGION

Magadan:delayed startwith highpotential

Experts estimate Kolyma mineral reserves
at USD 3.3 trillion, which is ten times theannual budget of the Russian Federation.
Today, Magadan Region not only has hugeresource reserves, it also offers special
economic conditions for investors andan energy industry ready to serve newenterprises.

Sergey Nosov
Acting Governor of Magadan Region

Dear friends,
I have no doubt that the 4th Eastern
Economic Forum will become an
important platform for communication
between government leaders and thebusiness community, the outcomes ofwhich will include attracting investment

The region’s energy sector is booming.
There are two hydroelectric power stations in theregion — Kolyma and Ust-Srednekanskaya. The
capacities of both stations reach 1,500 MW. The
development strategy for the next seven years entails
construction of high-voltage lines:• Ust-Omchug – Novaya – Omchak for businesses
in Tenkin District that are developing fields in the
Yano-Kolyma gold-mining province• Orotukan – Seymchan for the municipal energy
sector and development of zinc, lead, and copper
deposits in Srednekansky District• Omsukchan – Peschanka for connection of the
Bilibino District in Chukotka to the Kolyma powersystemThe Kolyma Special Economic Zone
provides special conditions for doing
business in Magadan Region.

126 participants
are currently involved in the Magadan Region SEZ

Residents enjoy customs and tax incentives. In particular, the SEZ offers exemptions from corporate profit tax, and themineral extraction tax as well as importduties and payments. Russian President
Vladimir Putin has extended the operation of the Kolyma SEZ until 2025.

and modern technologies to the regionsof the Russian East, adopting concretedecisions on the launch of breakthroughinvestment projects, and creating new
advanced special economic zones(ASEZs).
Twelve priority national programmes
are currently being implemented acrossall areas of the economy in Russia.
President Vladimir Putin has set thetask of ensuring that Russia’s economic
growth rates exceed global rates to enable
the country to take fifth place among theworld’s leading economies by 2024.
A working group charged withmaking preparations for the meetingof the Presidium of the State Council
for the Development of the Far East,
which I chair, has made proposals
for the implementation of national
programmes in the eastern regions of
our country. Being aware of the attention
that the federal government devotes tothe development of the Far East, I am
confident that our proposals will receive
support.
We are working to set up the Kolyma
ASEZ. This will bring together the mostpromising projects in the energy, fishing,tourism, and mining sectors in Magadan
Region.

48

Kolyma is rightly known as the golden
heart of Russia. Magadan Region ranks
among the top ten regions in terms ofmineral reserves. It is the country’s
leading region for silver mining and insecond place for gold mining. Like theentire Russian Far East, our northern
region is famous for the unique beauty of
its natural landscapes and has everything
it needs for accelerated socioeconomic
development.
We will be proudly showcasing ourachievements on at the ‘Far East Street’
exhibition. The business community
will be offered detailed information
regarding investment opportunities
as well as the benefits and incentives
available to investors through the
Magadan Region Special Economic
Zone regime.
A unique exhibition of gold nuggets
and a chance to learn how mining
companies operate await. Enjoy a virtual
immersion into the waters of the Seaof Okhotsk, pan for grains of alluvial
gold using old-fashioned gold panningtechniques, and experience the original
culture of the indigenous peoples ofKolyma.
Join us at the Magadan Region
exhibition on the ‘Far East Street’!

The development potential of the regionis enormous.

Population of Magadan Region
over the past 50 years (thousands)

The fishing industry can attract bothtourists and investors.

USD 80 million

Cape Island, Magadan Region

Governor’s greeting

6 reasons to invest in Magadan Region:

The export of crustaceans and frozen fish
accounts for USD 80 million earned by
Magadan Region from foreign exports, whichis even higher than the proceeds from the saleof silver.
Belarus, China, Korea, Japan, and35 regions of Russia purchase fish
and fish products. Commercial
invertebrates (crabs, whelks, shrimp,
squid, sea urchins), along with
pollock, herring, cod, and capelin
represent the bulk of the demand
for fish products. The rivers of the
Sea of Okhotsk basins are the largest
spawning grounds for Pacific salmon,
including chum salmon, pink salmon,
coho salmon, and sockeye salmon.

Private investment in 20 approved
projects is up to RUB 215 billion.
There are plans to attract federal andregional funding to create social,transport, and electric grid infrastructure.
For example, the Magadan agglomeration
expects to modernize four vocational
education institutions, carry out major
repairs on the children’s regional hospital,
and build swimming pools.

340

451

550

221

166

148

1968

1978

1987

1998

2008

2018

The single-industry economy of Kolyma
did not present a problem in the midtwentieth century, but the 21st century
requires drastic changes. The outflow
of people has resulted in a current
permanent population of 148,000 (75%of whom live in the regional centre).
Manual labourers are worth their weightin gold today –migrant workers accountfor 25% of the labour force. The roads
are in need of repair, the energy sector –of consumers, and the resources – ofinvestors. The points at which pressure
can be applied have not been chosencorrectly. Magadan Region’s delayed
start has resulted in the accumulationof potential. It’s time to realize it.

Infrastructure connects the region’s businesses to key consumers:

2,000
km

2,300
km

length of the Kolyma federal length of the future Kolyma –highway that connects the Sea
Omsukchan – Omolon –of Okhotsk coast with Yakutia Anadyr road, construction onwhich began in 2012

60km

1 million
tonnes per year

400,000
passengers

of roads a year are expected
to undergo major repairs
carried out by the regional
government with support
from the federal budget

the volume of cargo handled by
the Magadan Sea Trading Port

passed through Magadan
Airport in 201749

THE Far East | Investment
Text: Dmitry KRYUKOVYury Smitryuk/TASS“We need entrepreneurial
wizards”

The exquisite beauty of the Far East’s natural environment reflects its enormous potential for tourism

Alexey Chekunkov:“Development institutes
help the state makea pinpoint pass to business”
The Far East Development Fund (FEDF) is a key newsmakerwhen it comes to the regional economic agenda. The Fund’sinvestments include major infrastructure projects andprogrammes to support small and medium-sized enterprises,
agriculture, and high-tech solutions. FEDF CEO Alexey
Chekunkov discusses four areas of potential in the Russian
Far East, the preferences of Asian consumers, and the magicof the speculative market.

50

Alexey Chekunkov,
CEO, Far East Development Fund

– What trump cards do you holdin negotiations? How do you hookinvestors?
– There is a law of physics whichstates that the most massive bodies
exert the strongest gravitational
pull. From an economic point ofview, the most massive bodies arein Asia: China, Japan, and Korea. In
contrast, the Russian Far East is notan economically massive body, eventhough it is physically enormous.
Herein lies the opportunity.
Everything that helps to connect theRussian Far East with the Asia-Pacificregional economy has huge potential.
This means mainly the commodities
that Russia trades with Asia: hydrocarbons, precious metals, coal, lumber,and organic resources...
Then there is potential in logistics.
Take the Belt and Road Initiative, forexample. Currently, 90% of Chinese
exports essentially pass through theStrait of Malacca, which is controlled
by an American military base. There istotal dependence on a single route. So
China’s goal is to create a wide overland channel via which it can movegoods to Europe. This will require
the construction of a huge number ofroads and railways, and an energy infrastructure.
The third vital aspect is what I call“food and water”. Over two billion people live in Asia, not counting India.
Rapid economic growth in China has
disturbed the food balance. The soil
has been aggressively cultivated, andindustry has grown without regard forenvironmental issues. As a result, in anation of 1.5 billion people, there’s notenough land to till. The Russian Far
East has millions of hectares perfectfor crop farming. In the south, along
the Chinese border, wheat, soy, and anamazing coastal rice variety grow wonderfully. We simply need to support exports properly, and develop integrated
projects, in which, for example, someproduction will be located in Asia, withprocessing in Russia. Why is it profitable to export drinking water to China
or Korea from France, but not fromthe Russian Far East? The Primorsky
Territory is closer.Finally, but very importantly, there is the economy of lasting impressions, tourism. These places

FEDF investment (%)
Infrastructure
projects

40

Agriculture
22

24
14
Other
Source: FEDF, 2018

are beautiful and European in spirit.
There’s nowhere else like them in Asia.
I’ve seen the reactions of my Asian colleagues, people who have seen a greatdeal, when they first lay eyes on Russky Island in Vladivostok. And so few
of them have been to Kamchatka yet!
Tourism is also a market worth billions.
– Given all that, what are welacking when it comes to realizing
this potential: investment or properly designed projects?
– Imagine that you and I are talking about interesting literature. What
are we lacking there? Paper, letters, or
writers? Money is the paper. It can always be found for a worthy endeavour.
The Chinese banking system has double the assets of the US banking systemand something like 25 times the assetsof the Russian system. Trillion-dollar
figures are no longer surprising formany projects in Asia.
The projects are the letters. Specific people dream them up. So themost important precondition, the catalyst, is the entrepreneurship factor.
We need wizards who can conjure up areal-life business from an abstract theory, something that requires enormous
amounts of effort and commitment.
At the national level, we need toMiningsectorconcentrate efforts on supporting talented entrepreneurs and developing
management technologies. Our eastern partners serve as good examples
for us here. China was once called
the world’s factory. People thoughtthat clever Americans invented Apple phones in California, and theChinese just assembled them in theircramped dormitories for paltry salaries. But that’s not the case. Now wehave Xiaomi, HTC, and Lenovo. Or
look at the Koreans. Who would deny,
today, that Samsung is a world-classcompany? And what about Korean
car manufacturers? Over the past 20
years, these countries have managed
to create world-class consumer brands.
Russia can do the same.
– Which sectors might see breakthroughs?
– Agriculture, for one. Here, companies can increase their capitalization
by a factor of ten. Rusagro is currently
building a major pig farming complex
in the Far East. For now, it is counting
on domestic demand. Six million people can eat 77,000 tonnes of pork, but
the market is fairly saturated. However,as soon as the eastern markets open
up, they will be in place with production capacity at the ready. Or Amura-

RUB 27.4
billionApproximately 36%
of FEDF investment

invested by the FEDF in projects worth
a total of over RUB 166 billion, as ofJuly 2018

goes to projects in advanced special
economic zones (ASEZ) or Vladivostok
Free Port51

EEF 2018

Sergey Savotiyanov/TASS

THE Far East | Investment

There is already a base for the development of high-tech enterprises in the Far East: the assembly of the Sukhoi
Superjet aircraft, for example...

grotsentr, the leading soy producing
enterprise.
Asia is very selective when it comesto imports. They see themselves as producers of goods for the world, but consumers of their own, tasty domestic
products. Japanese rice is eight times
more expensive than global brands, butthat is what they choose. Every American CEO has dreamed of conquering
Asia. In the 1970s, they liked to saythat if every Chinese person drank one
can of Coca-Cola, they’d be USD 1.5
billion richer. But that never happened.
– Why do you think we’ll succeed in teaching the Chinese todrink Russian Coca-Cola?
– There is an unprecedented trade
war underway in the world. We do notknow where it will lead. Many companies may close up shop, unable to pay
back their loans, and some banks may
collapse. Under these conditions, it isunwise for neighbouring countries tokeep their markets closed to one another. This is an opportunity for us. We
must take advantage of it as a country,
particularly at the Eastern Economic
Forum. We must strengthen Russia’s
position and expand our exports. It
is interesting, complicated work. Our
president always discusses open markets when he meets the leaders of Chi-na, Japan, and Korea. It’s a vital partof any negotiation.

“Our strategy is to support
powerhouse projects”– Under what conditions does
the FEDF get involved in a project?
– We are a development institute.
Our strategy is to support powerhouseprojects. If one of those turns out to be
successful, dozens more will follow. At
the same time, the FEDF has a fundamental obligation not to lose money.
In 2011, after the financial crisis,
there was unfettered growth in investment. When I took over as FEDF director in 2014, Vladimir Putin made amemorable statement in an address to
the Council of the Federation: “Manydevelopment institutes have become adumping ground for bad debts.” This
is not a problem afflicting only Russia,
actually. There are plenty of examples
around the world in which the road tohell has been paved with good intentions. Private businesses do not takeon problematic projects. Government
officials are left to solve those problems using government funds – andend up getting into trouble.
We are a conservative investor. We
need strong partners. We hand out
money for an extended term at a 5%

52

annual interest rate, which is on average half as expensive as the banks.
But if something goes wrong, we musthave an understanding about how wewill get our money back. Even if anasteroid lands on a project, our portfolio remains balanced, and the Fundcan return every invested rouble to
the government with a return, even if
only a small one.

BACKGROUND– How much money should
every rouble you invest earn for
the economy?
– There are three parameters: howmuch they generate in taxes, howmuch for the GRP, and how many productive jobs are created. There is noone single metric. A high-tech projectmight only create ten jobs, but thosewill all be brilliant programmers whowill change the world. A thousand jobs
at an oil refinery bring in several billion dollars to the GRP.
A development institute is not supposed to strive for maximum profits.
Our goal is for every invested rouble to expand the volume of the new
economy. Here is one example. A couple of years ago, Yury Trutnev and I
met in Vietnam with the owner of TH
Group, the country’s biggest producerof dairy products. As a result of thatmeeting, she invested RUB 1 billion in
the Russian Far East to develop dairy
farming. It is absolutely a world-classcompany. Businesses like these bringbetter diversity and higher quality to
the economic business landscape of
the Far East.

Housing for employees of the Zvezda
shipbuilding complex in the Bolshoi Kamen
ASEZ (Primorsky Territory).
Fund investment: RUB 3.3 billion
Dom.rf investment: RUB 7.7 billion– In spring 2018, a Russian–
Japanese investment platform
was launched. Could you explain
the need for that project? And are
there plans to create similar platforms with other Asian partners?
– We don’t have plans with othercountries. This is a thoroughly Japanese story, but it is extremely important for them. Prime Minister Shinzō
Abe is always emphasizing that point
in meetings. The platform enjoys thecomprehensive support of the Japan
Bank for International Cooperation(JBIC). Essentially, it is a consulting
company with a very narrow mandate
focused on advising Japanese companies about how they can develop
projects in the Russian Far East. Every
Japanese company understands that it
offers a ‘single window’ to help resolve
all sorts of issues, that can raise theirconcerns at any level necessary, up to

Infrastructure for Sakhalinsk State District
Power Plant 2.
Fund investment: RUB 5 billion
Private investment: RUB 41.3 billion

Key FEDF projects
Construction of a vertically-integrated pig
farming cluster in the Mikhailovskaya ASEZ
(Primorsky Territory).
Fund investment: RUB 5 billion
Total investment: RUB 24.5 billion

Shaft for mining metallurgical coal and anore-dressing plant with capacity of 4 million
tonnes per year in Yuzhnaya Yakutia ASEZ.
Fund investment: RUB 4 billion
Private investment: up to RUB 17.2 billion
First trans-border railway bridge from
Nizhneleninskoye to Tongjiang (Jewish
Autonomous Region).
Fund investment: RUB 2.5 billion
Private investment: RUB 7.5 billion
New passenger terminal at Khabarovsk Airport
with a capacity of 3.4 million passengers per
year, and airport-related infrastructure.
Fund investment: RUB 2 billion
Private investment: RUB 2.9 billion
Advanced soy processing plant in Belogorsk
ASEZ (Amur Region) with a processing capacityof 240,000 tonnes per year.
Fund investment: RUB 1.75 billion
Private investment: RUB 3.36 billion

Two car and rail ferries at Amur Shipbuilding
Factory for use at the Vanino-Kholmsk ferry
crossing.
Fund investment: RUB 4.3 billion
Ministry of Transport investment: RUB 5.6 billion

and including the Presidential Plenipotentiary Envoy to the Far Eastern Federal District. The Japanese themselves
wrote the platform’s business plan,and it is very ambitious: financing 35
projects with RUB 83 billion of ‘smart’investment over five years. Right now
the platform is running ten projects.
I personally believe in this model, be-cause it has already proven successful
in other countries: India and Myanmar.

“I’d like Russian entrepreneurs
to have the ability to sell their
dreams”– How are you addressing recapitalization of the Fund?
– Naturally, we don’t have enoughmoney for the full slate of projects weare considering. The Prime Ministerhas taken the decision to add RUB 11
billion to the Fund. Normally, the FEDF
can invest around RUB 20 billion peryear, and we will continue to work atthat pace.
– The Fund for the Development
and Commercialization of Advanced Technology which you recently launched with Rusnano and
RVC – is that an attempt at venture
financing?
– The President has issued instructions to increase the share of high-techbusinesses in the Far Eastern economy.
There is already a framework there
for us to flesh out. Aircraft assembly
for the Sukhoi Superjet, the Vostochny Cosmodrome, United Shipbuilding
Corporation, modern lumber industry technologies... But how have weapproached this task? Dictating thecreation of a venture fund is risky. So
we called our project the Fund for theDevelopment and Commercializationof Advanced Technology. The word‘commercialization’ is very important
here. Up to 90% of the fund will go towards commercializing existing products that have a client base and have
proven their ability to perform. This
includes promoting them in foreign
markets, drawing on Rusnano’s experience and cooperation with Asian partners. But there will be a small amountof seed funding as well.
– You’ve spoken about the possibility of creating a ‘crypto valley’in Vladivostok. What is the background for that project?
– The authorities in different countries have different attitudes towards
blockchain technologies. Meanwhile,the business world has already createdprojects worth hundreds of billions ofdollars in the sector, and entrepreneurs
are searching for the most accommodating jurisdictions. I believe that our
proximity to Asian markets and Vladivostok’s special status gives it quite high53

potential as a platform for blockchain
development. We have surveyed market interest, and it is very high. But for
now, government agencies are taking
a conservative approach.
– A good investor provides notjust money, but also know-how andconnections. How does the FEDF
make itself useful to business?
– We are an ideal local partner,
forging contacts on the ground andaccelerating project implementation,
while significantly reducing risks. We
spend a great deal of time in the Russian regions, so we know this area
well, right down to the mobile phone
numbers of every deputy mayor anddirector of a regional enterprise. It’s
also vitally important that we do not
merely advise, but also invest ourown money. We are motivated to fight
tooth and nail for these projects. Allsorts of difficulties can arise. To draw
an analogy with the recent World Cup,even the most gifted footballer cannot
score a goal on his own. A good passing game is essential. Development
institutes help the state make a pinpoint pass to business.
– The 2018 World Cup is over.
The Eastern Economic Forum lies
ahead. What are your expectations
for the event?
– Every year, the Forum seems toachieve perfection, and yet each subsequent Forum is better than the one
before. I think that China will play a
big role at EEF 2018. We have beenworking for a long time to create a‘Generational Fund’ with our Chinese
partners for investment within theBelt and Road Initiative. This fundwill be different from many similar
platforms that have been announced
in that it was created from the outset
by private investors: two major entrepreneurs investing a billion dollars
each. Only later was it joined by traditional, big companies such as China Gold, China Construction, andothers. We hope that the first deals
that will bring large-scale Chinese
investment to the Russian Far East
will be announced at EEF. They canbe measured in the tens of billions ofdollars, so the FEDF is acting more asa content supplier than as an investor
in these projects. That is, we attract
the billions by investing our own experience and knowledge. That is exactly the development impact we are
striving to achieve.

THE far eastern | MEGAPROJECTSTHE FAR EAST | MEGAPROJECTS
Stalin’s tunnel

Igor Mikhalev / RIA Novosti

The idea of a rail link between Sakhalin and the mainland was considered bynone other than Joseph Stalin at a meeting of the Soviet Council of Ministers in
1949. By May 1950, three possibilities
had been researched: a bridge, a ferry,
and a tunnel. At that time, building a tunnel underneath the Gulf of Tartary wasseen to be the most economical option.
On 5 May 1950, the USSR Council of Ministers therefore issued a resolution on thebuilding of the tunnel. The intention was
to have trains running through it as early
as 1954–1955. Work began in 1951, but
continued for only two years.
By the beginning of 1953, more than
27,000 people had contributed to building the railway, laying 120 kilometresof track in the process, and the tunnel

The photo depicts the laying of rails during construction of the Baikal-Amur railway

The Trans-Siberian: the longest
railway line in the world*
The Russian Far East’s main problem is its distance from the more developed western regions of Russia, while its main
advantage is its proximity to the countries of the Pacific Rim. This means that most projects in the Russian Far East
have something to do with transport links connecting East and West.

A road from the mainland
to Sakhalin

The first great step forward in thisrespect was the Trans-Siberian, which,at a length of 9,288 kilometres, is thelongest railway line in the world. The
main section of the line is around 7,000
kilometres long and was built between
1891 and 1916. Thanks to the Trans-Siberian Railway, travel between St. Petersburg and Vladivostok became a matterof weeks, not months.
Later, the Baikal-Amur Mainline, themost ambitious of all Soviet projects,
provided another overground routeacross the country. A more recent example would be the construction of theAmur federal highway, which is 2,165

kilometres long and links Chita with
Khabarovsk.
Other ambitious plans have been
made for the Far East, but have not yet
become a reality. Still, they are not forgotten. From time to time, these files
are rescued from the archives and dust-

From time to time, thesefiles are rescued fromthe archives and dusted
down for their potential
to be pondered once
again. Similar plans will
also be debated in one
way or another in themargins of the Eastern
Economic Forum 2018

* Paraphrased line from a famous Soviet song about the construction of the Baikal-Amur Mainline.

54

The idea of a rail link
between Sakhalin andthe mainland wasconsidered by noneother than Joseph
Stalin at a meetingof the Soviet Councilof Ministers in 1949.
By May 1950, threepossibilities had been
researched: a bridge,
a ferry, and a tunnel

itself was being cut into the ground…
However, after Stalin’s death, work on
the railway ground to a halt.
The Russian Far East experienced
a very difficult year in 1953. After thedeath of the ‘Leader of the Peoples’, almost all of the projects begun on Stalin’s initiative were abandoned, including
those related to energy, downstream
industries, and the region’s transport
network. Work on the Baikal-Amur Mainline, the Amur-Yakutsk-Magadan Mainline, and others was also terminated.

Brezhnev’s bridge

Still, the idea of connecting Sakhalin
to the mainland resurfaced from time
to time. During the 1970s and the early
1980s, the Ministry of Transport proposed that the project be resumed. It wassuggested that a bridge might be built
instead of a tunnel. The usual arguments
were put forward: the need to open up
the economy of the USSR and the necessity of development in the Russian
Far East. After the fall of the USSR, theRussian Minister of Transport, Nikolay

ed off for their potential to be pondered
once again. Similar plans will also be
debated in one way or another in themargins of the Eastern Economic Forum 2018.

A road from the mainland
to Sakhalin

For instance, one of the topics of conversation during both official sessions
and behind-the-scenes discussion at
EEF 2018 will be the idea of building
a rail link to the island of Sakhalin. In
many respects, this idea is of strategic
significance for the region. Although
no final decision on the project has yet
been taken, engineers are already preparing documentation for the bridgeand calculating its total cost. Work
could begin in 2021 and be completed
in five years.

Giprostroimost InstituteText: Viktor Ilyinykh

During construction of the Trans-Siberian, the longest railway line in the world (9,288 km)

Who knows, perhaps this type of bridge will connect Sakhalin in Russia with Hokkaido in Japan55

EEF 2018

Photo: kfss.ru

A map from the Sakhalin Tunnel project documentation

Far Eastern diggers investigate the remains of the Stalin-era tunnel to Sakhalin

Aksyonenko, made the same proposal
in 1999, but no final decision was taken.
The next time the topic of a bridgeconnecting Sakhalin and the mainland
was raised was during the Q&A TV programme Direct Line with Vladimir Putin.
Answering a question about the likelihood of the project coming to fruition,
President Putin noted that all the economic and geopolitical arguments would
need to be weighed up.
These words set the next stage ofthe project in motion. Unsurprisingly,
the project has won strong support in
Sakhalin. Governor Oleg Kozhemyako
believes that linking the island and themainland will allow Russia to harness
the potential of Sakhalin’s five ice-free
ports and expand the country’s export
and transit options.
It is expected that the Russian Government, after weighing the arguments
for and against, will come to a reasoned
decision on whether to go ahead with the
project in December this year.

Linking Sakhalin in Russia to
Hokkaido in Japan

The idea of building a tunnel from
Russia to Japan as a continuation of theroute between Sakhalin and the mainland first surfaced in 1999, championedby the then Minister of Transport Nikolay
Aksyonenko.
The Department of Railways’ thinking
was clear: building two railway lines atonce in order to connect European Russia
to Sakhalin and then Sakhalin to Japan
would create a unique transport corridor.
It would halve the distance trains had totravel between Japan and Europe andmean that freight could be transported
three times faster than is possible by sea.
For Sakhalin, the project has the potential to stimulate an influx of foreign
investment, create new jobs, and slash
the cost of products and materials delivered to the island, which would improve
the islanders’ quality of life.

Building two railway
lines at once in order
to connect European
Russia to Sakhalin
and then Sakhalin to
Hokkaido would createa unique transport
corridor, halving the
distance trains have totravel between Japanand Europe
56

But the project has not yet reached
the stage of financial calculations or
making the case for investment. The
reason for this is no mystery: since theend of the Second World War, numerous political questions affecting the relationship between Russia and Japan
have remained unresolved. If the Russian Government does indeed decideto go ahead with a bridge or tunnel to
Sakhalin, then discussion of a Japaneseextension to the line will inevitably begin again.

A tunnel from Chukotka
to Alaska

The idea of linking the coasts of Russia and Alaska is more than a century
old. Back in 1890, the Governor of theState of Colorado, William Gilpin, wasthe first to propose the idea of a railway
joining the two continents, which werethen linked only by a ferry. A joint stockcompany, the Trans-Alaska-Siberian Railway Company, was even created to implement the project, but the Imperial
Government refused to grant land for theconstruction of the railway. Tsar Nicholas II later approved the project, but theFirst World War and the Russian Revolution meant that the project could not
be carried through.

Throughout the twentieth century,
the project was repeatedly evaluatedand almost always found to be entirely realistic. After all, at its shortest, thedistance between the coastlines of thetwo continents across the Bering Strait is
only 84 kilometres, and even in the lastcentury, it would have been technicallypossible to build a 100-kilometre tunnel.
The lack of railway lines in the vicinity of the Strait was more of an issue:
there were (and are) no such lines oneither the Russian side or the Americanside. Taking the lack of existing tracknear the Strait into account, the resulting
railway line could end up about 6,000
kilometres long. This is why the cost ofbuilding a tunnel and the railway tracks
leading up to it has generally been estimated at hundreds of billions of dollars,and expected to take approximately 15
years.
Nevertheless, both the Russians andthe Americans have taken the project
entirely seriously, both in this century
and in the previous one.
In 1996, the United States included the tunnel on a list of priority programmes to be considered by theCommittee for Asia-Pacific Cooperation.
At that time, specialists from both Russia and America were busy analysing
the possibility of putting the idea into
practice, and the plan found favour in
Russia among the Ministry of Economic
Development, members of the Federation
Council, and a number of other agencies.
In 2007, a link between the twocontinents even received a mention ina document approved by the Russian
Government, A Development Strategy
for Rail Transport in the Russian Federation to 2030. A cost of around USD 100
billion was given in the document. Unfortunately, economic and political crises have repeatedly stood in the way ofthe project.

From the two Koreas to Europe
via the Trans-Siberian Railway

The Trans-Korean Mainline project
and the possibility of linking it with theTrans-Siberian Railway remain up in theair, largely because of political complications. How can we talk of a trans-continental route when rail links between thetwo halves of the Korean peninsula weresevered as a result of the war in 1953?

There are two options
for extending the TransKorean Mainline to link
the Korean peninsulawith Europe: theeastern route, fromSouth Korea throughNorth Korea and Russia,
and the western route,whereby the railway
line between the two
Koreas and Russia
would pass through
China
Talks on reviving the project began
in earnest after the first Inter-Korean
Summit in Pyongyang in 2000. In 2003,
the peninsula’s railways were in fact reconnected, but the political crisis which
followed, connected with Pyongyang’s
development of nuclear weapons, threwa spanner in the works once again.
There are two possibilities for a railway line from Korea to Europe. The
eastern option would provide a rail link
between South Korea, North Korea, Russia, and the countries of Europe. If thisoption were chosen, the Trans-Korean
Mainline would link directly with theTrans-Siberian Railway via the Russian
towns of Khasan and Ussuriysk. There is57

also a western option, whereby the route
between South Korea, North Korea, Russia, and Europe would also take in China.
In this case, the Trans-Korean Mainline
would meet the Trans-Siberian Railway
only at one point, in the city of Chita.
The first option is obviously moreadvantageous for Russia, since it would
maximize use of the Trans-Siberian Railway, but China has persistently lobbied
for the second option, for obvious reasons.
As things stand, the ‘eastern route’ islooking more likely. Pyongyang favours
it, and in 2008–2014, Russian Railways
reconstructed a 54-kilometre stretch of
track from the Russian town of Khasan
to the North Korean port of Rason.
In 2018, the North and South Korean heads of state once again reached anagreement to reintroduce rail links between the north and south of the peninsula. Russia has quickly become a key
player in this process – a process turning
what was a failed political project into a
reality. Senior executives at Russian Railways have already estimated the cost of
linking the Trans-Siberian Railway and
the Korean Mainline at USD 3–4 million and the duration of the project at
between three and five years.
Various other projects with varying
degrees of originality and ambition havealso been planned for the Far East at one
point or another, but not come to fruition. Then again, Vladivostok’s bridge,
the Vostochny Cosmodrome, and theAmur highway, all of which now grace
Russian banknotes, seemed more likedreams than potential realities in the
not very distant past…

Vitaly Belousov/RIA Novosti

Giprostroimost InstituteTHE far east | MEGAPROJECTS

Amur highway

THE far East | ENERGY
China has been created. In addition,
hundreds of measures to ensure a reliable supply of electricity to various social and industrial facilities have been
implemented. In total, around 3,700
MVA of additional transformer capacity
have been put into operation along with
4,300 kilometres of transmission lines.
Today, the largest of the Federal Grid
Company’s projects in the Far East isconnected with the Baikal–Amur Mainline (BAM) and the Trans-Siberian. The
President has asked for a 50% increasein their capacity, which requires the development of an external power supply
system for the railways. The Federal
Grid Company will build 21 facilities tosupport the BAM and the Trans-Siberian, including over 1,200 kilometres oftransmission lines in the Far East alongwith an additional 830 MVA of transformer capacity.

Development of the power grids by the Federal Grid Company is meeting the Far East’s growing electricity
requirements

Growthinfrastructure

Developing the main electrical grid in the Russian Far East is one of thepriorities of the Federal Grid Company’s investment policy. Since 2009, thecompany has spent over RUB 155 billion on implementing various projects
in the region, and it will have invested at least RUB 37.5 billion of additional
funds by 2020. There are plans to put into operation more than 1,900 MVA
of additional transformer capacity and 2,200 kilometres of new powertransmission lines.
Text: Valery KARPOVAf ter taking of f ice, President
Vladimir Putin signed a decree outlining the strategic directions for Russia’s
development over the next six years.
The government has been instructed
to develop a comprehensive plan formodernization and expansion of criticalinfrastructure. Ensuring a stable supplyof electricity to consumers in the Far
East is one of the tasks that has been set.

The Federal Grid Company, which
operates Russia’s main electrical grids,
is a key participant in this process. Since
2009, the supply of power by the largest
power plant in the Far East (Bureyskaya
HPP) has been ensured, constructionof the 500 kV ring has been completed, resulting in the elimination of theenergy deficit in the south of Primorsky
Territory, and the infrastructure for thedevelopment of the Eastern Siberia–Pacific Ocean (ESPO) oil pipeline system
and increased exports of electricity to

58

Today, the largest of theFederal Grid Company’s
projects in the Far
East is connectedwith the Baikal–Amur
Mainline (BAM) andthe Trans-Siberian. The
President has asked fora 50% increase in theircapacity, which requires
the development of an
external power supply
system for the railways

In 2018, one of the important stagesof the project will be completed – theconstruction of the high-voltage ‘Komsomolskaya – Selikhino – Vanino’ 220 kV
transmission line. It is a complex structure, stretching almost 390 kilometresalong the Sikhote-Alin mountain systemand the valleys of the rivers flowing into the Sea of Okhotsk. However, thispower line is necessary not only for thedevelopment of the BAM, but also forsupplying electricity to the growing portzones of Vanino and Sovetskaya Gavan.
The Federal Grid Company has alreadydoubled the capacity of the key energy transit element, the Vanino 220 kV
substation.
There are specific problems in the
Far East associated with the fact that a
number of power sectors operate in an
isolated mode. This creates high risks as
there is no technical option to transfer

electricity from other regions when alocal failure occurs. In 2018, the Federal Grid Company will commission infrastructure that will enable the central
power sector of the Republic of Sakha(Yakutia) to be connected to the Unified National Electrical Grid. This will
significantly improve the reliability ofelectricity supply to consumers in the
Republic, including the ESPO pumping
stations. In addition, construction of the
facilities that will resolve the problemof an isolated western power sector in
the Republic is underway.
One of the tools for socioeconomic
development in the Russian Far Eastis the establishment of advanced special economic zones (ASEZs), whose
residents enjoy tax benefits and simplified regulation. According to datafrom the Ministry for the Developmentof the Russian Far East, investment in
the fixed capital of the region grew by
17% in 2017, against a Russian averageof 4.4%. Over half of this came frominvestment by ASEZ and Free Port residents, confirming the effectiveness ofthese tools. Creating modern infrastructure for these zones is key to ensuring
their subsequent successful operation.
The Federal Grid Company has already put into operation the 220 kV
Zvezda substation in Primorsky Territory, built to supply power to the shipbuilding complex Zvezda, an anchor
resident of the Bolshoy Kamen ASEZ.
Reconstruction of the 220 kV Parus
substation has been completed. It supplies energy to the site bearing thesame name in the Komsomolsk ASEZ in
Khabarovsk Territory, where an aircraft
production centre is currently underconstruction. A set of projects related
to supplying three other Far Eastern
ASEZs, i.e. Khabarovsk (Rakitnoye site),Nadezhdinskaya, and Mikhailovskiy,
with electricity will be completed thisyear. The residents of these ASEZs include polymer processors, logistics companies, and food industry enterprises.
Furthermore, the next stage in the provision of energy to the Bolshoy Kamen
ASEZ will be completed.
In the near future, the Federal Grid
Company is planning to implement projects that will enable the organizationof an external power supply system for
the Power of Siberia gas trunkline andthe Amur Gas Pipeline. This will be thelargest in Russia and one of the world’s
largest enterprises for processing natural gas. It will be the anchor residentof the new Svobodniy ASEZ.
In addition, development of the infrastructure necessary for the implementation of other significant Far Eastern
projects continues. The development ofelectrical grids to increase the volume
of oil transported throughout the entire ESPO system, as well as to support
the new capacities of Albynsky Rudnik, which is developing a large depositof precious metals in Amur Region, isamong the largest projects.
Abundant natural resources andproximity to the Asia-Pacific region
provide unique opportunities to develop the Russian Far East. New network
infrastructure introduced by the Federal Grid Company not only improves thereliability of the supply of electricity toconsumers, but also contributes to improving the investment climate and thesocioeconomic situation of the region.

Energy consumption in the Federal Grid Company’s
electrical grids in the Russian Far East, billion kW/h

2011
12.43

2014
12.54

* forecast

2017
13.12

Developmentof Federal Grid Company
electricity grids by 2020
At least 2,200 kilometres of new powertransmission lines
7 new high-voltage substations
1,900 MVA of new transformer capacity
At least RUB 37.5 billion in investment between
2018 and 2020

Five major Federal Grid
Company projects
External power supply
system for the Baikal–
Amur Mainline andTrans-Siberian Railway toincrease capacity to
180 million tonnes ayear
1,232 kilometres ofpower transmission lines
827 MVA of capacity
Connection of isolated
central power district inYakutia to Eastern Unified
Electrical Grid
757 kilometres of powertransmission lines
440 MVA of capacity
Power supply for ASEZ
residents
41 kilometres of powertransmission lines
378 MVA of capacity
External power supply
system for the ESPO
oil pipeline to increase
capacity
to 90 million tonnes a
year, and for
the Power of Siberia gas
pipeline
475 kilometres of powertransmission lines
304 MVA of capacity

More energy

2008
11.58

BACKGROUNDPower supply for
Albynsky Rudnik, which
is developing a precious
metals deposit
174 kilometres of powertransmission lines
63 MVA of capacity

2020*
13.91
2023*
14.87

Source: Federal Grid Company
59Vitaly Ankov/RIA Novosti

THE far east | SPECIAL ZONE

Advanced special economic zones
in the Russian Far East: a secretresource for Asian market growth
Back in December 2013, Russian President Vladimir Putin defined the development of theRussian Far East as a national priority for the 21st century. That was the beginning of thelatest chapter in the history of the region, which, since the Tsarist era, has been seen as notjust Russia’s window onto Asia, but as the key to the formation of the entire Eurasian space.
Text: Leonid K r u takov
Great transit opportunities
and a huge resource baseIn addition to transit (the Northern
Sea Route, the Trans-Siberian Railway,
and the Baikal-Amur Mainline), theFar East has many competitive advantages, primarily in the form of natural
resources. A total of 81% of all diamonds in the Asia-Pacific region, 51%

of forests, 37% of fresh water, 33% ofaquatic biological resources, 32% ofgold, 27% of gas, and 17% of oil areconcentrated in the Far East of Russia,
as well as globally significant depositsof coal, uranium, tin, and polymetals.
“The rapid transformation of the
Asia-Pacific region into a major global
factory has again put the issue of Russia’s presence in Asia on the agenda.
It has required the launch of special
programmes to develop the region”,

60

said Deputy Minister for the Development of the Russian Far East, Alexander Krutikov. “The Asia-Pacific region
accounts for 59% of the world’s GDP
and 50% of foreign direct investment.
The region is the world’s largest importer of goods and services, with total
revenue of more than USD 8 trillion.”
The resource superiority of theRussian Far East over the other countries of the Asia-Pacific region creates, on the one hand, opportunities

for growth (the roll-out of new, largescale production plants), while on theother hand, it embodies a key risk (becoming nothing more than a raw materials supplier to Asia).
The phenomenon of the Asian ‘global factory’ is built on the principle of‘industrial offshoring’, based on cheap
labour. Foreign capital was offered apreferential investment regime, withthe proviso that most of the output
would be exported to investor countries. It is no coincidence that lastyear, the US trade deficit with China
came to USD 375 billion.
A whole network of such ‘offshore
companies’ has been deployed in the
Asia-Pacific region. In India, there are
345 special economic zones, and in
China, there are 253 areas offeringa preferential investment regime. In
Vietnam, as of the beginning of 2017,
437 regions with a preferential regime
for investment and entrepreneurial activity had been established. It was vitalto create the conditions for investingin future growth areas in Russian Asia
that were at least equal to other countries in the region.

Advanced regional
development

On 24 October 2013, the first meetingof the Government Commission on the
Far East was held, at which the modelfor the development of the region wasapproved: advanced special economic
zones (ASEZs); Vladivostok Free Port;
infrastructure support for investment
projects; reduction of electricity tariffs
for industrial consumers; the Eastern
Economic Forum; electronic visas forforeign citizens visiting Vladivostok;
and investment quotas for fishing.
“Over 1,300 new investment projects have been initiated, representing
total investment of RUB 3.8 trillion.
Of these, 953 projects with investment
worth a total of RUB 3.15 trillion andresulting in the creation of 120,000
new jobs are being set up on the basisof agreements”, says Nikolay Zapryagayev, Director of the Department for
the Development of ASEZs and Vladivostok Free Port at the Far East Development Corporation. “Investors from
India, Singapore, Australia, China,
Japan, and the Republic of Korea arecoming to us, even if they are being
cautious.”In the advanced special economic zones and Vladivostok Free Port,
one of the lowest tax burdens on investors in the Asia-Pacific region has

RUB 2,267 billions
will be invested in 267 projects,
which are being carried out in 18 ASEZs in the
Far East

been created. On joining the preferential regime, the tax burden will be nohigher than 4.5%, and over 13 years
of project implementation it will average out at 16.76%. According to thisindicator, the Far East is second only to Malaysia, where the level of thetax burden at entry point is 3.3%, and7.47–9.4% over 13 years.
Today, 267 projects are being implemented in the Far Eastern ASEZs,
and 680 more within Vladivostok Free
Port. One of the results of applying
the new model of advanced development for the Far East is the macroeconomic data for the previous year:
the industrial production index of theregion exceeded average Russian levels, and industrial growth was 2.2%;
growth in investment in fixed assets
was 17.1%; the Far East accounted for
30% of foreign direct investment into
the economy of the Russian Federation; construction increased by 9.2%,
and agricultural production by 8.2%.
As Nikolay Zapryagayev points out,
the growth of the Far Eastern economy in terms of the region’s domestic
market has almost been exhausted.
Around 6 million inhabitants cannot
bring about an increase in production,
so it is vital to slot into the value-added chain of the ‘world factory’.

Increase in surplus value

Reserves for extending the processingof raw exports in the region do exist.
Of 2.5 million tonnes of fish products,
more than 80% are products with low
added value, while 90% of exports arestill frozen fish. Meanwhile, more than

2 million hectares of the Far East’s waters are suitable for cultivating marine
culture products which are in demandin Asia-Pacific markets.
Last year, the Russian Government
approved a ‘package’ of interconnected laws and regulations covering the
distribution of investment quotas. As
a result, quotas for the production of
aquatic bio-resources were fixed in
exchange for investment obligations
to build ten fish processing plants andnine fishing vessels at Russian shipyards. Total investment will amountto RUB 53.4 billion.
Last year, production of round timber in the Far East increased by 6.5%
compared to 2016 (from 12 million
to 12.75 million m3), and the output
from advanced processing was 5.1 million m 3. Processed products make up
28% of timber exports. The estimated annual cut in the Far East is 91.5
million m 3 of timber. The level of its
current development is barely 17.5%.
Two resolutions were adopted by
the Russian Government on timber
tariff quotas and customs duties in December last year. Quotas are granted
to companies that export processed
products made from Far Eastern timber. Within the quotas established in
2007, the customs duty on round timber will be 6.5%. Outside the established quotas, the duty rate for roundtimber will increase to 40% in January next year, and to 80% in January
2021.
China’s reorientation towards developing the market in favour of domestic consumption (‘Asia for Asia’),announced by Xi Jinping at the recent
congress of the Central Committee of
the Communist Party of China, opens
up a historical window of opportunity
for the Far East in particular, and for
Russia as a whole. This is a chance not
to be missed.

Infrastructure for investors in the Far East
(number of facilities)

48

36

under construction

have been built
Source: ERDC

61

30

have passed thedesign stage

63

at the design stage

THE far east | CLUSTERNIPIGAS

They are resource-intensive and actively
involve local producers of services andproducts. They have already created jobs
for more than 1,000 people living in theregion. The commissioning of two plants
in the city of Svobodny will result in morethan 4,000 highly skilled jobs and over
5,000 jobs in related industries being
created.
Svobodny’s social infrastructure
will also be improved. New housing
infrastructure and social facilities will
be built, and the city’s central streets
and the Svobodny-Blagoveshchensk
highway will undergo comprehensive

Installation of large-capacity equipment at the Amur Gas Processing Plant

Federal cluster

The investor andcommissioner
for the Amur Gas
Processing Plant
construction project isGazprom Pererabotka
Blagoveshchensk (partof Gazprom Group).
The construction
will be managed by
NIPIGAZ, the leading
Russian design, supply,and construction
management centre(part of SIBUR Group)

St. Petersburg, 25 May 2018. Valery Golubev, Deputy Chairman of theManagement Committee at Gazprom, and Dmitry Konov, Chairman of
the Management Board at SIBUR, signed an agreement on the supply of
ethane fraction from the Amur Gas Processing Plant to SIBUR’s planned
Amur Gas Chemical Complex

renovation. Not only will the face ofthe city change, but also the qualityof life within it.
Attracting highly qualified specialists to Amur Region will lead to an im-

The biggest gas processing and gas chemical cluster in the country is being created in Amur
Region, and will give new impetus to the development of the Russian Far East. Gazprom isbuilding the Amur Gas Processing Plant and SIBUR is currently working on another production
facility, the Amur Gas Chemical Complex.
Text: Andrey SERGEEV
Gazprom is building Russia’s biggest gas processing plant

The Amur Gas Processing Plant willbe among the world’s largest natural gas
processing facilities, and the biggest in
Russia. Its estimated capacity is 42 billion
cubic metres of gas per year.
The plant will consist of six production trains, and commissioning of thefirst two is planned for 2021. In addition to natural gas, the plant’s commercial output will include ethane, propane,butane, pentane-hexane fraction, andhelium. The ethane extracted will serveas raw material for the gas chemicalcomplex currently being developed by
SIBUR. This material is the basis for manufacturing products for the automotive,
construction, food, transport, and manyother industries.

SIBUR starts basic design workfor gas chemical complex

After signing the main agreement forthe supply of ethane with Gazprom in
May 2018, SIBUR started basic design
work, and by mid-2019, it may reach a
final investment decision on the project.

62

More than 4,000 highly
skilled jobs and over
5,000 jobs in relatedindustries will becreated in the city of
Svobodny
To date, the configuration of the project, and the content and capacity of theplants have been determined.
These projects will make a significant
contribution to the development of Amur
Region and the entire Russian Far East.

Gazprom’s Amur Gas Processing Plant will supply raw materials to SIBUR’s Amur Gas Chemical Complex

63

provement in the quality of educationand the creation of a suitable environment in which to develop the workforce
within the region and in the Far East asa wholeTRUST
Is the Foundation of International Cooperation
and a Stable WorldTo build an economy of trust, it is vital thatinternational cooperation is strengthened throughmutually beneficial open economies while unilateralprotectionism, sanctions policies, and domination of
the information space are opposed, said SPIEF 2018
participants.

The strategic conclusions of SPIEF 2018 andother up-to-date information about major
conventions, exhibitions, and business events
are available in the Roscongress Foundation
Information and Analytical System.
64

65

ROSCONGRESS.ORG

EEF 2018

THE Far East | THE PEOPLE’S HECTARE

Reasons
to careabout
a hectare

Pineapples from Kamchatka

Valentin Druzhinin

An engineer from Petropavlovsk-Kamchatsky is treating tourists
to tropical fruits

Text: Irina Khryaeva

On 1 June 2016, the Far Eastern Hectare programme, a Russian initiative offering the chance to obtain a plot of land in the
Russian Far East of up to one hectare – for free – was launched. The programme has been running for just over two years now,
during which 120,000 people from all over Russia have exercised their right to land. They have come up with all sorts of different
ideas about what to do with it, from running dog sledding trips to growing tropical fruit in Kamchatka or building a shopping andleisure centre. Below is a selection of some of the most unusual ways people are making their hectare their own.

Treasure island
Muscovite Narek Oganissian is now the owner of an entire uninhabited island,on which he is planning to create a pirate adventure tourist attractionT

he more Narek Oganissian learns
about the Russian Far East, themore convinced he becomesof how underappreciated it is, withmore than 6 million square kilometresof exquisite natural environment
unspoilt by civilization. Just nextdoor are the most densely-populated
and economically vibrant countries in
the world: China, Japan, and South
Korea. “I see enormous potential forthe development of agriculture andtourism, and eco-tourism especially,
since its neighbouring countries havesome major environmental problems.
The Russian Far East is simply destinedfor economic success”, Oganissian says
confidently.
He expects to achieve commercial
success himself on the island of Chakmut,
which he has obtained through the Far
Eastern Hectare programme. The island
is located in the northern part of the
Gulf of Tartary, between Sakhalin andKharabovsk Territory.
“It’s very rare for the population to
be offered things for free, and especiallyplots of land, on an official basis atstate level”, the lucky owner of theuninhabited island says in amazement.
“Where else can you sit down at yourcomputer one evening, select a plot of
land on a map, and be granted ownershipof a piece of the planet for free three
weeks later?”
Chakmut will entice tourists not onlywith its pristine setting, but also withadventure quests. Visitors to the island
will follow a ‘treasure map’, completing
various tasks and solving riddles as theygo. The most successful will be rewarded
at the end with treasure, in the form ofinvestment coins or an artefact that canbe exchanged for a cash reward on offer.
Narek Oganissian also promises a grandprize of RUB 1 million. In the initial stage,
he will establish the prize fund using his
own money. The entrepreneur anticipatesthat a similar amount will come from thefirst round of investments in the project.
The money will be used to purchaseinflatable boats, life jackets, and container
homes, and to pay for construction, oneoff partner services, consumables, andongoing operating costs.
Lovers of the pirate life have proventhemselves to be in plentiful supply as
well, with 3,500 requests to take part
arriving in the space of seven months.
The first media reports on the project
were written on 18 December 2017,
followed by a second wave between
April and May 2018. Requests sent to thewebsite chakmut.ru and to nakrayzemli.
ru (a shared website run by hectareowners hoping to develop tourism on

66

Narek Oganissian

plots obtained under the Far Eastern
Hectare programme) show no sign ofslowing down. Potential partners are also
showing an interest. “A lot of people are
getting in touch with me to offer theirassistance and services”, Narek says.
He plans to welcome his first customers
before the end of the summer season,
although the quest has yet to be built.
One of the most recent requests camefrom a group of co-workers planningtheir own kind of corporate adventure:living on an uninhabited island.

Chakmut IslandAlexey Zhuchkov is no ordinary
Joe. A qualif ied electronicengineer and a specialist roadtraffic accident investigator, Alexey
spends his evenings working in his own
workshop. During the day, he is the
director of the Kamchatka Regional
Puppet Theatre. He has been working
in the arts since his time in the army,
where he served in the early 2000s as
Assistant Director of the Armed Forces
Concert Ensemble in the Northeast of
the Russian Federation.
Alexey explains his interest in
the Far Eastern Hectare programme
partly as the result of having to beconstantly on the lookout for ways
to earn money, and partly as chance.
“In 2016, a friend of mine asked me todesign and build an automatic climate
control and lighting system for hisgreenhouse. I agreed. We ended up
with this incredibly advanced supergreenhouse, with automatic lighting,automatic temperature and humidity
regulation, automatic irrigation… Once
that was set up, all my friend had to
do was pop in occasionally to checkeverything was working. Now he feeds
me tomatoes and cucumbers. Very
tasty ones, too. That got me thinking:if I could do that for a friend, why not
for myself? And at that very time, FZ119, the law granting everyone landin the Far East, was being passed.
Everything came together”, says theentrepreneur.
On his hectare, Alexey decided tocreate an agritourism site. Nothing
unusual in that, but Alexey is not thesort of person who gets involved inan average project. He would provide
traditional tour ist facilities andservices, to be sure: accommodation(five prefabs, each for four people),a barbeque area, Kamchatkan herbal
tea, and tours of Kamchatka’s beauty
spots. But, more unusually, he would
also treat his guests to pineapple andother tropical fruits grown right here,
next to the geysers and volcanoes, in
special greenhouses.
Describing his project, Alexey
tells us, “Tourist infrastructure in
K amc hatka has been improving
recently. People are flooding in, andyou can see things are progressing.
I’m essentially offering what mycompetitors are offering, but I havesomething that makes me stand out:
the tropical fruits, and a site poweredby green energy.” He believes that his
use of alternative energy sources for
power and heating could become alocal attraction in itself.
The site is heated by water. Using
solar panels, a hydrogen generator (orelectrolyser), water traps, non-return
valves, and other equipment, water issplit into hydrogen and oxygen. The
hydrogen is then burned in a boiler.
“The mix of hydrogen and oxygen is
explosive, so I’ll be paying particularheed to safety”, the engineer assuresus. “I’ll be putting the heating module
together myself.”

According to his calculations,using alternative energy sources willbring the cost of production down
considerably. A kilo of high-quality
tomatoes costs RUB 500–800 in
Kamchatka, while Chinese tomatoes
can be bought for RUB 200. The
challenge Alexey has set himself is
to grow quality produce that can besold at something close to Chinese
prices. But he won’t be selling his fruitand vegetables to his guests alone:
educational institutions, for instance,might also buy them.
Currently, RUB 3 million have been
invested in the project. Some of theequipment and building materials
have been bought, and contracts
are in place for the generator, thefoundations, and the electricalconnection. A government subsidy
awarded to Alexey by the Kamchatka
Centre for Entrepreneurship to build
the greenhouse complex accounts for
RUB 2 million of this investment. The
plan is to attract around RUB 12 million
overall. One of Alexey’s acquaintances
has already stepped up to invest in theconstruction of a campsite.
Alexey believes that, in order for the
project to be a success, everything on
the site needs to be up and running,both the tourist facilities and theagricultural production. Then, thesite could make as much as RUB 3
million a year. Once you’ve seen just
how absorbed Alexey is by his project,however, it’s hard to say whether thisis more a commercial venture or acreative one.

Alexey will grow lemons and pineapples here, on the territory of geysers and volcanoes, in special greenhouses

67

EEF 2018

THE Far East | THE PEOPLE’S HECTARE

Harnessing a hectare

Moscow – Pozhiga – Moscow

How a tale of lost love became the start of one man’s life’s work

An economist from Moscow will be growing asparagus in Primorye and sellingit in the capital. Why is this a profitable plan?

There are plenty of people willing to take pictures with Alexey Tkachenko’s huskies“Do you want to hear ar o m a n t i c s to r y ? ” a s k sAlexey Tkachenko. “I had
a girlfriend who really wanted a dog,so I gave her a Siberian husky as a gift.
She left; the dog didn’t.” Five years later,
Alexey has 28 huskies – and soon, he’ll
have 36.
He started off as a dog sledder,
becoming the best musher in Sakhalin, themushing champion of the town of YuzhnoSakhalinsk, and a multi-award-winningmaster of the sport. “I started off practisingin town with two dogs, and then moved
to my own plot on the community land”,
Alexey tells us. Then, his passion evolved
into something bigger. Alexey became
hooked on this unusual sport and left hisjob. Soon after, the Far Eastern Hectare
project came along.
Together with his father, Alexey
acquired two nearby plots of land in thevillage of Novoye in the Krasov district. He
began by making the first plot habitable,building a small house, a Siberian yurt,
and indoor and outdoor kitchens, andbuying the machinery and equipment hewould need. Investment in the projectamounted to RUB 2–3 million.
Before becoming a kayur, or dog
sledder, Alexey had gone through anumber of professions: he had been achef, a builder, worked in advertising…
Now all of this experience is coming in
handy. “You see, it’s not enough just tolove dogs. You have to understand how
to get things done, too”, explains theentrepreneur. “The jobs I used to do –building, advertising, cooking – havehelped to give me a sense of how best toorganize projects, build things, and get
initiatives off the ground.”Six months before the launch, Alexey
began spending time talking about his
project on social media, putting up photosof himself and the dogs. “After all that, ourlocal journalist noticed me, and then otherreporters approached me too”, he says. He
was also helped by some sporting friends,
who spread the word about his project.
Aina-Tour was officially launched on
4 January 2018, and immediately caused
a stir. “I was getting groups coming,
generally seven or eight people. They’d got

68themselves together; I hadn’t organizedanything in particular”, says Alexey insurprise. He found himself booked up
throughout the winter.
Guests were offered a trip out withthe dogs and a dog musher, withAlexey himself acting as tour guide andphotographer. “I show them the dogs
and we all get to know each other. The
dogs go very fluffy in the winter. I givethe visitors instructions: what they cando, what they can’t, which dogs they cantouch and how, that sort of thing”, theentrepreneur explains. “Then, we harness
up a team of dogs and set off. If someone
gets cold, they can always go inside andwarm up, eat a few of our little pancakes
and drink tea with homemade honey or
jam. The others join them later. If guests
let us know beforehand, we can cookthem traditional Northern Russian meals.”
There is no dog sledding in the summer,
but Alexey has set up a photography zone
and organizes dog sledding photo sessions.
He also leads excursions and takes tourists
hiking with the dogs.
In the winter, during high season,
tourists from more than 20 countries
went on Aina-Tour excursions, mostly
Russians and expats working in the oiland gas industry on Sakhalin. However,in the near future, Alexey is hoping tostart attracting ordinary tourists too,
as well as schoolchildren and children
on summer camp. He plans to open abase on the second plot of land which
will provide enough space for 20–25
people to visit at once, rather than the
8–10 who can be accommodated now.
Moreover, the second plot is in a better
location, not far from where the cruise
ships stop. “I’ll want to tailor it for themand come up with something interesting
to offer. But that will be when I’ve got
things up to a European standard”,
decides Alexey.
It won’t be easy. Alexey himself calls his
project “very complex”. For instance, badweather can throw a spanner in the works:
last winter, Sakhalin had heavy snowfall
for a month, with snowdrifts of up to three
metres, meaning that sledding tracks had
to be cleared over and over again. But theentrepreneur is not daunted. “I wanted thebusiness to take off so that I wouldn’t haveto go back to work”, he laughs. “I started
from absolutely nothing, set a goal for
myself, and now I’m going for it.”An economist from Moscow will be
growing asparagus in Primoryeand selling it in the capital. Whyis this a profitable plan?
Nikita Kovrizhin came up with hisbusiness idea after a trip to the USA
four years ago. While he was there,
the economist, who is originally fromthe Far East (his family are from Amur
Region and lived in Primorye for a longtime), tried some asparagus. In America,
asparagus was consistently in demand,
and was sold on every street corner.
But, back in Russia, Nikita found that
only a few large retailers were selling
asparagus, and for crazy prices: RUB
1,400 a kilo. Soon, the Far Eastern
Hectare programme was announced.
“I started thinking about taking up thestate’s offer as soon as the programme
was first widely advertised in the
media”, remembers Nikita.
Together with his wife, he applied
for three hectares for his family in thevillage of Pozhiga, about 300 kilometresfrom Vladivostok and 120 kilometresfrom the regional centre and its local
airport. There were three things to besaid for this particular choice. Firstof all, a survey has shown that thecomposition of the soil in Pozhiga is
substantially better than is needed
to grow asparagus. Secondly, the site
is located on the f loodplain of theMalinovka River, and is surroundedon all sides by clean fresh water. It isalso sufficiently elevated: perfect for
asparagus. The fact that he can only
reach his land by wading across a

stream in wellingtons does not fazehim. Finally, his parents live relatively
close by, about two hours’ drive away;
they keep an eye on the plot, and on thehired worker from the next village whodoes the weeding and checks up on theplants. When the time comes to harvest
the asparagus, Nikita intends to hire
another seven workers. Nikita himself
makes flying visits to the Far East,
spending around three months there
in total, at times when the asparagus
needs the most attention.
Being an economist, Nikita has
it all worked out. According to him,certain varieties of asparagus (MaryWashington and High Yield) are lowmaintenance and grow very well inthe extreme continental climate of theDalnerechensky region of Primorye.
Winters here bring a great deal of snow,
but summers are warm, so temperatures
vary between -30 and +30°C. “The mostimportant thing is to ensure the crop
has enough water and is weeded”, notes
Nikita.
Asparagus can take up to three years
to produce a harvest. “If you plantnothing but asparagus, you end up
with a three-year gap. That’s the time
it takes for the asparagus to mature
after the last crop has been planted andharvested”, explains Nikita. To avoid
this issue, he has planted asparagus in
only one of his three hectares. He uses
the rest of the site to grow grains suchas barley and maize, which will end up
as animal fodder: he has already cometo an agreement with one of the region’s

The first crop of asparagus from Nikita Kovrizhin is expected only in 2020

69

Nikita Kovrizhin

agricultural organizations. However,Nikita assures us that he is planningto gradually increase the amount of
asparagus growing on his land.
An estimated RUB 5 million havebeen invested in the project. Some ofthis was spent on heavy machinery to
set up extra flood defences on the site.
Nikita is using only his own savings tofund the project. He does not intend to
take out loans, as this would increase
the cost of production, and his main
aim is to keep this figure down withoutcompromising on quality.
According to Nikita’s calculations,even taking logistics costs into account,asparagus from Pozhiga will cost
no more than RUB 800. “This is myestimate of the average price it will gofor in shops. The simple fact that no
major investment was needed keeps theprice down, and if you take exchange
rates into account, the cost of labour inrural Russia is practically the same as
in China”, he says.
But then, asparagus from Pozhiga
will be of better quality than the Asian
asparagus which tends to be sold in
Moscow, promises Nikita. “There’s nopoint arguing about which varieties
taste better, because taste is a personal
thing. But when we grow asparagus
here, we don’t use any chemicals to
speed up the maturing process orincrease the yield. We don’t need to,
because the asparagus is growing on aformer agricultural field that has lain
fallow for more than five years”, heexplains.
He is also hoping that his business’s
image will play a role: “For instance,
would you rather buy Chinese clothingor Russian clothing, if they cost thesame? You’d probably go with thesecond option.” Although the first
harvest of asparagus will not be ready
until 2020, one chain of greengrocers
in Moscow has already agreed to sell
asparagus from Primorye.

EEF 2018

THE Far East | THE PEOPLE’S HECTARE

A gift to the town

A businessman from Sakhalin has decided to build a shopping and leisurecentre on his Far Eastern hectare

Sergey KrylovIn the town of Okha, 849 kilometresfrom Yuzhno-Sakhalinsk, there is nota single shopping centre. “And why
should there be?” any investor might
think. On 1 January 2018, there were
20,715 people living in Okha – and oneof them decided that, in fact, a shopping
and leisure centre would be just the
ticket.
Sergey Krylov had spent most of hislife working for various companies in
Okha, but in 2010, he started his own
business, working as a builder anddecorator. “We started small: won a
few contracts, earned a bit of money,
invested in equipment and materials,
and carried on working – until thisprogramme, Far Eastern Hectare,appeared”, Sergey tells us.
He was initially sceptical about thestate initiative, but after a few months,
he visited the programme’s website andsaw that not a single application had
been made for land in Okha: absolutely
nobody was interested in the town. Then,
Sergey resolved to act: he registered,sent off the paperwork via his council
one-stop shop, “to avoid dealing withbureaucrats as much as possible”, andby the end of October 2016, he was theproud owner of a Far Eastern hectare.
By May 2017, construction of a shopping
and leisure centre on the site was alreadyunderway.
“What you have to understand isthat Okha is a small town that people
are leaving in droves. By now, several

generations of children have grown up in
Okha who have never been to the cinema
and don’t even know what a cinema is”,
says Sergey sadly. “Your average investor
wouldn’t invest in this town. You’re notgoing to make a lot of money, but we
in Okha had been tossing around theidea of building a shopping and leisurecentre, because we actually live here. I’dcall it a social project. A gift to the town,
if you like.”
The town is short of places where
people can simply meet, sit with theirfriends, or play with their children,
and Sakhalin’s harsh climate means astroll in the fresh air is not always themost appealing prospect. A 1,400m 2
shopping and leisure centre should fillthis gap.
According to Sergey, the buildingis already almost 90% completed, andit’s now the finishing touches that areunderway. The centre is due to open

in autumn 2018. The ground floor willhouse retail outlets, while the firstfloor will be given over to children’s
entertainment. This is how Sergey
describes his vision for the centre:“There will be a few little shops, perhaps
some small stalls with stuff for children,a pet shop. There’ll be a playground andsome cafés. Somewhere where you cango and just sit and have a break, likewe said.”
Sergey estimates that RUB 50–70
million have been invested in the project,both his own capital and contributions
from his partners. “In all honesty, I
haven’t totted up how much people haveinvested so far. I don’t want to jinx it.
Let’s get the project launched and thecentre open first, and then we’ll workout the final figure”, he says.
Sadly, though, there will be no
cinema. “I’m not a serious enoughentrepreneur to invest money in acinema”, says Sergey apologetically. “Ifthe regional or municipal authorities
helped me – a sort of socio-commercial
partnership – then the project might get
off the ground. A modern cinema, withdecent sound and image quality”, headds, a dreamy look in his eye..

Sergey Krylov’s shopping and leisure centre will be the only one in Okha

70

71

There is a gorgeous cathedral in the centre of Tokyo. It is known as Nikoray-do, i.e. Nicholas’ CathedralIt is a fascinating and all-embracing
exhibition. We have decided to talkabout just one theme today: theestablishment of an Orthodox mission in
Japan and its spiritual father Archbishop
Nicholas of Japan…

An Orthodox cathedral against
the background of Tokyo’s
skyscrapers

In the very centre of Tokyo is acathedral which looks majestic evenagainst the background of the modern
skyscrapers. The majority of the Japanese
capital’s residents know it simply as‘Nikorai-do’, i.e. ‘Nicholas’ Cathedral’. The
Orthodox Cathedral of the Resurrection,

Archbishop Nicholas of Japan

built and consecrated in 1891, was thetallest building in Tokyo at that time.
Father Nicholas, a missionary who
was a graduate of the St. Petersburg
Theological Academy, arrived in Japan
in 1861, when he was just 25 years old.
At that time, under the shogunate regime,

In the last years of hislife Father Nicholas
was elevated to theoffice of Archbishopof Tokyo and All
Japan. He wascanonized in 197072

preaching Christianity in Japan was
forbidden on pain of death. However, theMeiji Restoration changed the ideological,
moral, and cultural foundations ofsociety. The ban on preaching Christianity
was lifted. Having started his mission
in secret, Father Nicholas now began topreach openly and, at the same time,
to study Japan, its traditions, the social
morals, and the psychology of the nationin earnest. He studied Japanese language
and classical literature, so penetrating thespiritual world and cultural specifics of
his future flock…

Russian missionary Nicholas ofJapan

RHC Archive

Text: Tatiana FILIPPOVARHC Archive

In 2018, the Year of Russia in Japan and the Year of Japan in Russia will be celebrated. As part of the programme of events
for this bilateral year of exchange, and also bearing in mind the planned meeting of the countries’ leaders in the margins of
the Eastern Economic Forum in September, the Russian Historical Society is staging an exhibition devoted to the history of
Russian–Japanese relations from the first official contacts in the late eighteenth century to the present day.

By the time of his death he had converted
42,281 people in Japan to the Orthodox
faith.
The success of Father Nicholas’
mission in Japan is explained not onlyby the fact that he arrived in the country
at a time of great change in society, butalso by the fact that he was able to graft
Orthodox teaching on to traditional
Japanese values, employing enormous
tact, caution and delicacy.
If one reads his works, his basic idea
becomes clear: the faith of Orthodox
Christianity does not contradict the
morality of Confucianism. One of Father
Nicholas’ best-known pronouncements
w a s : “ W h e n Ru s s i a n s a c c e p t e dChristianity from Greece, Greek
Orthodoxy became Russian Orthodoxy.
Russian Orthodoxy should also become
Japanese in Japan.”In the last years of his life Father
Nicholas was elevated to the office ofArchbishop of Tokyo and All Japan. He
was canonized in 1970.
The Cathedral of the Resurrection of
Christ in Tokyo is now a visible symbolof the Japanese Autonomous Orthodox
Church, just as it was in Archbishop
Nicholas’ lifetime. Today the Japanese
Orthodox Church is alive and well.
Many parishioners are descendants ofthe first believers. They all love Russian
literature, admire our culture, and study
our history. And the very existence of
the Japanese Autonomous Orthodox
Church demonstrates the keen ability of
the Japanese to grasp the spiritual valuesof other nations and cultures.

Fat her Nic holas ’ mission was
successful. Thank s to his g reat
enthusiasm, strong character, and theFather Nicholas
passed away in1912. By the timeof his death he had
converted 42,281
people in Japan to the
Orthodox faithmoral and financial support from Russia,
many Japanese people converted to
the Orthodox faith. Coming from amysterious neighbouring country, heliterally subjugated those Japanese
who wished to save their souls. Father
Nicholas spent the entire Meiji period inJapan, proving himself to be a strong andhonest man in the eyes of his Japanesecontemporaries. He passed away in 1912.

73

RHC Archive

The history of Orthodoxy
in Japan

RHC Archive

THE far East | ARCHIVE

Japanese Orthodox priests

The Global Economy
In the photo: A whale slaps its tail in greeting
Photo location: The Sea of Okhotsk
Photographer: IGOR OLKHOVSKY
A famous wildlife photographer and explorer from the Far East, an organiser of unique expeditions inremote places of the Khabarovsk Krai and neighbouring regions of the Far East, a photographer andpublisher ofвзмах
photoalbums
showingПриветственный
тихоокеанского
кита the beautiful flora and fauna of the Khabarovsk Territory

THE GLOBAL ECONOMY | PARTNERSHIP OF EQUALSThanaprus. N/Shutterstock

The 8-Point Cooperation Planis being updated as we speak

Russians can feelfor themselves
how life is changing
for the better
Japanese Minister of Economy, Trade, andIndustry Hiroshige Sekō is the man directly
responsible for developing economic relations
between Japan and Russia. As a frequent visitor to
our country, he shares his views on the prospects
for economic cooperation with the Russian Far
East, and on Japan’s priorities in the region
76

Hiroshige Sekō, Minister of Economy, Trade,and Industry– 2018 has been designated a‘crossover year’ for Russia and Japan.
What does this mean for economic
relations between the two countries?
– This is the first year in the history ofJapanese–Russian relations to be declaredboth the Year of Russia in Japan and theYear of Japan in Russia. The plans for this‘crossover year’ were announced as one ofthe outcomes of Russian President Vladimir
Putin’s visit to Japan in December 2016as part of efforts to expand humanitariancontacts. The aim of the year is to achievea deeper mutual understanding between
our two peoples, through fundamental
expansion of people- to-people interaction.
The Japan- Russia Year encompasses
a wide range of areas beyond culture
alone. Economic issues in particular havebeen identified as an important area forcooperation.
As part of the Year of Japan in Russia,
Japan took part in the St. Petersburg
International Economic Forum as a guest
country in May 2018. I myself participatedin the Forum, alongside Japanese Prime

Thanks to advanced
special economic
zones (ASEZs) and the
Vladivostok Free Portregime, a number ofJapanese companies
active in the Russian
Far East are enjoying
a range of incentives,
including tax benefits.
Their assessment ofefforts on the Russianside is positive

Minister Shinzō Abe. In the course of theJapanese–Russian business dialogue, theleaders of both countries and leadingbusiness executives were able to engage
in an open exchange of opinions on how torealize the potential of bilateral economic
relations.
In addition to this, other important
events are being held which arecontributing to the implementation of theEight-Point Cooperation Plan, including
the opening of Hokuto Rehabilitation
Centre in Vladivostok, launch ceremonyof a new production line at a Takeda
Pharmaceuticals` plant in Yaroslavl,

and business seminars devoted to urban
planning in Russia. I hope that the eventsof the Year of Japan in Russia and theYear of Russia in Japan will activate
exchanges in the economic field and thus
strengthen Japanese–Russian economic
relations.
–What is the status of these relations
at the moment?
– The Eight-Point Cooperation Plan isbeing materialized. The plan was proposed
by Japanese Prime Minister Shinzō Abe
at a summit meeting which took place in
May 2016 in Sochi. The main purpose of
the plan is to use Japanese technology andexperience that allow Russian citizens tofeel for themselves how their lives arechanging for the better. For example,
significant results have been achieved inextending healthy life expectancy and increating a pleasant urban environment,
including by reducing traffic congestion.
These achievements make a directcontribution to the enhancing of the living
standards of Russian citizens.
During the meeting in May this year,
the two leaders welcomed plans for around
130 projects created by private companies.
Tangible actions have already begun on
approximately half of these.
Work is also progressing on thecreation of financing systems which will
provide support for the Cooperation Plan,
including a joint investment mechanism
from the Japan Bank for International
Cooperation (JBIC) and the Russian Direct
Investment Fund.

BACKGROUND

HokutoRehabilitation
Centre
The creation of a rehabilitation centre in
Primorsky Territory was first discussed at theSecond Eastern Economic Forum in 2016. The
Hokuto Centre opened less than two years
later, on 16 May 2018, as one of the projects
under a Japan–Russia economic cooperation
plan. Investors in the project include the
JGC Corporation and Hokuto Social Medical
Corporation. The medical facility specializes inpatient rehabilitation following major injuries,
surgical procedures, and strokes. Alongside
traditional methods such as manual therapy,
the facility also makes use of the latest
developments, including exoskeletons andmodern fitness equipment. The facility is able
to receive around 100 patients every day.

77

It would be good
to see the Russian
Government andbusiness representatives
continuing to workon improving theinvestment climate, andalso on providing more
information about theRussian market and its
points of attraction
As the minister responsible, I havebeen endeavouring to demonstrate as
many concrete results as possible from the
Cooperation Plan, including new projects atthe East Economic Forum. I would also liketo make it more ambitious still, including
with respect to the themes to be discussed
at the Forum.

Japan’s priorities: agriculture,
forestry, fishing, infrastructure, andenergy– What do you think about thechanges taking place in the Russian Far
East? How do Japanese companies andinvestors assess these changes?
– Thanks to advanced special economic
zones (ASEZs) and the Vladivostok Free
Port regime, a number of Japanesecompanies active in the Russian Far East
are enjoying a range of incentives, including
tax benefits. Their assessment of efforts on
the Russian side is positive.
At the same time, Japanese companies
do not currently have sufficient information
about business and systems in the Russian
Far East. In March this year, a presentation
was held in Tokyo with the aim offacilitating investment in the Russian Far
East. More than 130 people attended andfrankly exchanged their opinions. I also
welcome the opening a Tokyo Office of the
Far East Investment and Export Agency. I
expect the Russian side to be more active
in providing information to Japanesecompanies and investors.
The Japanese Government is placing
a great deal of emphasis on cooperationin three areas: developing agriculture,
forestry and fishing in the Russian Far
East; improving infrastructure to create
an export base; and developing energy. In
February this year, JBIC created a company
in the Russian Far East with the purposeof promoting joint Japanese–Russian
investment in the region. Contracts havealready been concluded with JapaneseEEF 2018

THE GLOBAL ECONOMY | PARTNERSHIP OF EQUALS
companies to provide mediation and advice
with associated procedures. In July thisyear, a joint delegation of government
officials and business representatives visited
Primorsky Territory and Amur Region to
discuss cooperation in the agricultural
sector. In addition will continue to support
efforts to expand cooperation in the
Russian Far East.
– What projects in the energy sector
are of the most interest to Japaneseplayers?
– Considering Russia’s enormous
resource potential and geographicalproximity cooperation in the energy
sector is important for diversifying thesources of Japanese energy imports

There are a
multitude of Russian
oil and gas projects
in which Japanesecompanies are very
interested. Two
examples are the
Sakhalin-1 andSakhalin-2 projects.
Negotiations aretaking place as partof the Sakhalin-2
project to expand
the third stage of an
LNG plant
and ensuring stable supplies. As Prime
Minister Abe noted in his address at the
St. Petersburg International Economic
Forum, we envisage the developmentof mutually beneficial relations between
Japan, which is the world’s largest
importer of LNG and possesses extensive
experience in shaping markets anddeveloping pricing mechanisms, andRussia, with its enormous resource
reserves.
There are a multitude of Russian oil andgas projects in which Japanese companies
are very interested. For example, theSakhalin-1 and Sakhalin-2 projects areproducing crude oil and LNG. Negotiations
are taking place as part of the Sakhalin-2
project to expand the third stage of an
LNG plant. Japanese companies have also
contributed to building a plant in the Yamal
LNG project which I also inspected at theend of April. The plant was launched at
the end of last year. Negotiations between
Russia and Japanese companies are alsoin progress on a project to build an LNG
transshipment terminal on Kamchatka, as
well as on the Arctic LNG-2 project.

More information is needed about
the Russian market– In an interview with Tatsuo
Yasunaga, the President and CEO of
Mitsui and Co., in the St. Petersburg
International
EconomicForummagazine, noted that approximately
200–300 Japanese companies arepresently active in Russia, whereas
there are 32,000 Japanese companies
doing business in China. What can
Russia do to attract Japanese small andmedium-sized businesses?
– Small and medium-sized businesses
have been taken into account in the
Eight-Point Cooperation Plan. Japan is
supporting Japanese small and mediumsized companies doing business in Russia
using the small and medium-sized businessplatform created in 2016. This includes
helping them to take part in exhibitions
held in Russia, including Innoprom, as
well as sending corporate missions andorganizing business matching between
Japanese and Russian companies. As aresult of these efforts, Japanese companies
have begun doing business in such sectors
as Japanese cuisine and services, in Russia.

Minister Hiroshige Sekō inspecting Yamal LNG

78

Trade volume between
Russia and Japan (USD
billion)
18,26
16,06
7,76

6,98

10,5

9,38

2017

2016

As part of the EightPoint Cooperation
Plan, Japanesecompanies inpossession of highly
advanced technologies
are working on further
improving the lives of
Russian citizens via
a number of digitalprojects, including
systems to assist
with remote medical
diagnosis...

activity, companies, people, machines,
and other facilities, and at the sametime, to my knowledge, Russia, where a
Digital Economy in the Russian Federation
programme is being promoted, is home
to world-class artificial intelligencedevelopers. The country possesses
significant technological capabilities in thefields of software and information security.
Japan and Russia have potential here
to establish mutually beneficial relations,and to achieve new economic growthand cooperation by making use of their
existing advantages in these areas. I would
like to continue working on strengthening
cooperation on digital economy projects.

of Russian citizens via a number of digitalprojects, including systems to assist
with remote medical diagnosis and theimplementation of high-tech traffic lightsystems.
Japan enjoys advantages in the
manufacturing sector of the economy
based on its wide-ranging technologicalcapabilities. As Digitalization andthe Internet of Things, and artificial
intelligence are expanding, Japan isworking to improve competitiveness inthis way, and is promoting the conceptof Connected Industries, which aims
to create new values and solve social
challenges by linking different kinds ofExport between Russia and Japan

Russia’s import from Japan

What Russia sells

What Japan sells

Russia’s export to Japan

Types of goods % from the total export volume

Types of goods % from the total export volume

Source: Russian Federal Customs Service

On the other hand, Japanese companies
are still saying that they do not receive
enough information about the Russian
market and Russian companies. They
also have concerns about the instabilityof the Russian legal system and complex
procedures associated with investment. I
would like to ask the Russian Governmentand business representatives to continue towork on improving the investment climate
and also to provide more information about
the Russian market and its attractiveness.
– Japan is a global leader in thetechnology sector. Russia is also
devoting considerable efforts todeveloping its digital economy. Does
Japan have any experience andapproaches which Russia can adopt?
– As part of efforts to strengthen
cooperation between our two countries
in the digital economy, I signed a joint
declaration on cooperation in the digital
economy with Minister of Economic
Development and Special Representativeof the President of the Russian Federation
for Trade and Economic Cooperation withJapan Maxim Oreshkin in September lastyear, following which we developed a joint
plan of action in May this year. We are using
various meetings and events to work on anumber of joint projects together.
As part of the Eight-Point Cooperation
Plan, Japanese companies in possessionof highly advanced technologies areworking on further improving the lives

Mineral products

75,27 %

Cars, equipment and transport vehicles

80,90%

Metals and metal products

9,59%

Chemical products

10,94%

Wood, pulp and paper goods

4,81%

Metals and metal products

3,10%

Precious metals and stones

4,59%

Textiles and footwear

0,91%

Food and agricultural raw materials

2,83%

Other goods

4,15%

Other goods

2,91%

Source: Russian Federal Customs Service

79

THE Global economy | PARTNERSHIP OF EQUALSText: Irina KHRYAEVA
Impossible to say which country
is senior partner

Yury Smitryuk/TASS– How important are Russia andChina for each other, economicallyspeaking? Is it possible to label oneof them the ‘younger brother’?
– Based on the current stateof
Russian–Chinese
strategic
cooperation, in which the economy
plays a very important part, it is
impossible to say exactly which is thesenior partner and which the junior.
We are talking about a relationshipbetween two great powers, each ofwhich has its own unique advantages
in certain areas, providing a balanceof about 50/50. For example, inthe military–strategic sphere, inspace, in nuclear power, and increating
one-of-a-kind
military
aviation engines, Russia has set abar that China has not yet reached
and is unlikely to attain in the near
future. On the other hand, China’spurchasing power parity today isgreater than that of the US. That is,
it can be said that, in comparison,both the US and the European Union
are China’s juniors.

The new Russian-Chinese passenger aircraft

Russia and China needeach otherto create a new world

More and more, Russia and China are declaring joint
interests in politics, the economy, technologicaldevelopment... Is the relationship more of a partnershipor a competition? Why is it so hard for us to negotiatewith the Chinese? To find the answers to these questions,
we talked to Dr Sergey Luzyanin, Professor, Directorof the Institute of Far Eastern Studies of the Russian
Academy of Sciences, and author of the book Russia andChina: Creating a New World.
80

Dr Sergey Luzyanin, Professor,
Director of the Institute of Far
Eastern Studies of the Russian
Academy of Sciences– In which areas in particular doour countries need each other?
– Russia is an important supplierfor China. Of course, this includes
energy, but it’s not just about oil andgas pipeline megaprojects. There arealso new ground-breaking projects
for the production of liquefied naturalgas (Yamal LNG). There is also active
cooperation in the construction of
future high-speed railways. Other
areas of collaboration have emerged:
space exploration, the developmentof nuclear energy, and the supplyof certain types of agro-industrial
products.
In turn, advanced high-quality
technologies are arriving in Russia
from China. China is also importantfor us as a potential investor in future
projects. For example, advanced
special economic zones in the Russian
Far East have proved very attractive
to Chinese investors.
Our countries are, after all,neighbours along the great Amur
River (Heilongjiang). New roads havebeen built. The Nizhneleninskoye–
Tongjiang railway bridge will open
soon. Moreover, while in 2000

economic cooperation was mainly to
be found in border areas, today that’s
not the case at all. For example, theVolga–Yangtze project was started in2013 to establish cooperation between
the Volga Federal District and regionsin the upper and middle reachesof the Yangtze River. The bilateralyears (2018–2019) of Russian–Chinese interregional cooperation
are designed to give cooperation aboost by linking Russian regions andChinese provinces with hundredsof contracts and projects of various
types.
At the Eastern Economic Forum,
the focus is not on major state projects,
but on interregional cooperation and

We are talking about arelationship between
two great powers, eachof which has its own
unique advantages incertain areas, providing
a balance of about
50/50
the development of new priorities
and sectors. It is no coincidence that
this year President of the People’s
Republic of China, Chairman andGeneral Secretary of the CPC Central
Committee Comrade Xi Jinping
will come to Vladivostok. Both heand Vladimir Putin attach great
importance to qualitatively changing
their trade and economic agenda sothat it is not reduced to two or three
megaprojects, but covers thousands ofundertakings.

What the US–China
confrontation on the global
market means for Russia– Nevertheless,despiteourpolitical rapprochement, the UnitedStates remains China’s largest
economic partner...
– Under Hu Jintao, China really
believed that, for the sake of economic
development, it was important torefrain from any, even the slightest,
confrontation with the United States.
In the last three or four years, thisposition has undergone radical
change. For China, money and theeconomy are fine and all, but the main
national interest lies in confronting

81

BACKGROUND

Increase in trade
Trade between Russia and China from January
to April 2018 increased 27.3% when comparedto the same period last year, reaching USD
31.1 billion, according to statistics from theGeneral Administration of Customs of China.
Of these, China exported USD 13.9 billion ingoods and services and Russia exported USD
17.2 billion. And these numbers will grow. The
Chinese Ministry of Commerce has announced
that, by the end of the year, trade between
Russia and China could rise to a historic highof USD 100 billion. The Russian Ministry of
Economic Development agrees with thisassessment.

the global hegemony of the US,
which is the main threat. Moreover,it was the Americans who officiallylabelled China and Russia their main
opponents.
Trump’s protectionist moves are
only the first steps to which China
will respond, and trade turnover
will decline somewhat, while still
being substantial – almost USD 700
billion. Donald Trump is introducing
tariff sanctions because the Chinese
sell USD 370 billion more in goods
to the US than the US sells to China.
Surprisingly, the structure of Chinese
exports is made up of electronics andmachinery equipment. The largest
American export is soy. This is theresult of a skilful Chinese policy, and it
will take the American president morethan one blow to knock it out. The
country faces a long and exhausting
struggle.
– Can Russia benefit from thisconfrontation?
– The Chinese have not yet
used their main weapon; it is very
dangerous and double-edged. I’m
talking about the money invested by
the Chinese Government in American
securities, a total of USD 1.1 trillion.
Logically, they will gradually andcarefully discard assets and transfer
money to other investment projects
and securities. For Russia this opens
up an enormous market: even if atenth of this trillion is invested in
Russian projects, it will be an entirely
new investment resource. And theChinese really have no place else togo: Europe doesn’t trust them very

EEF 2018

THE Global economy | PARTNERSHIP OF EQUALSWang Kai/ZUMAPRESS– How much is our relationshipinfluencedbythesanctions
imposed on Russia by the US andthe EU?
– China is an integral part ofthe international financial system.
Moreover, Xi Jinping has declared apolicy of openness and transparency
in the financial and economic
sphere: no isolation or protectionism.
Consequently, Chinese companies
cannot ignore the sanctions imposedon our country. However, at thesame time, entrepreneurs use their‘Chinese’ tricks, which are difficult
to prove in Western courts. Basically,
Chinese business is on our side,although it observes the sanctions
imposed by the West.

The Russian-Chinese EXPO in Khrabrino Sea port of Yamal SPG in Sabetta at South Tambey gas field at the shore of the Gulf of Ob

much, and Russia is close by and moresimilar politically. Our countries havea common rival – the United States.
This is not said out loud, but Xi
Jinping and Vladimir Putin are awarethat neither Russia nor China will
be able to stand up to the Americans
alone.

Our countries’ strategic interestsin this respect fully coincide– Your words suggest that a newgeopolitical union is growing to
confront the West?
– Our countries’ strategic longterm interests in this respect fully
coincide. However, Moscow and
Beijing do not want to return to theclassical alliance between Stalin and
Mao Zedong, either. In general, theera of classical military alliances
has passed. Today, cooperation in
the format of strategic partnershipis more common. We support eachother in the Security Council; wehave a shared position on Syria andthe Korean Peninsula. The meetingin Singapore between Kim Jong-un

Russian–Chinese
cooperation has reached
the global level. The
Chinese have Belt andRoad initiative, andRussia has the Eurasian
Economic Union and theShanghai Cooperation
Organisation. These
projects need to be
combinedand Donald Trump was worked out
by Beijing and Moscow two or threemonths before the meeting. Although
the US President took all the credit, infact, the North Korean leader flew to82

consult with Xi Jinping twice and met
with Sergey Lavrov twice [Minister of
Foreign Affairs of Russia – Ed.] before
the meeting.
Russian–Chinese cooperation hasreached the global level. The Chinese
have the Belt and Road initiative, andRussia has the Eurasian Economic
Union and the Shanghai Cooperation
Organisation. These projects need
to be combined. The leaders ofthese associations believe that thisenormous area – Eurasia – should
not be American. Although even herea problem arises: the Chinese would
like to adapt it to suit their projects
and Russia wants it for theirs.
Kazakhstan also has its own interests.
Consensus is very important here.
Negotiations with China are always
extremely difficult.
– Why do you think that is?
– The fact is that, in the thousandyear-old mentality of China, theconcept of absolute equality and

38 frameworkagreements
have been concluded between
Russian regions and the Yangtze
provinces within the format ofVolga–Yangtze as of July 2018.
These agreements cover trade,
economic, scientific, technical, andhumanitarian cooperation. The
Republic of Bashkortostan, theRepublic of Mordovia, the Chuvash
Republic, and Samara Region madethe most use of the project, eachconcluding four agreements. On the
Chinese side, Sichuan, Anhui, Hubei,
and Chongqing were the most active
participants.

Vladimir Smirnov/TASS

compromise has not been laid down.
Over 5,000 years, 12 empires and
14 dynasties have been built on
subordination and hierarchy, andthis remains in their subconscious.
Therefore, it is easier to reach acompromise with Europeans, whereas
the Chinese perceive compromise asa defeat. That’s why negotiations onlarge oil and gas projects have been
taking 15 years. Agreements werereached in the end, but it took an
incredible amount of effort, literally
blood and sweat.

Sea port of Yamal SPG in Sabetta at South Tambey gas field at the shore of the Gulf of Ob

Demographic expansion is notneeded to benefit economically– What other difficulties do
Russian companies face whenentering the Chinese market?
– One of the main problems is that
Russian entrepreneurs believe that, oncethe contract is signed and the goods havecrossed the border, that’s it, the work isfinished. In fact, that’s just the beginning,
because in China, Russian products lose
their name: large Chinese companies
immediately appropriate them forthemselves and distribute them throughtheir dealer networks. Thus, in terms of
its PR and image, Russia is disappearing.
We need our own dealer network in
China to bring Russian goods to the Asian
consumer.
Another big set of problems is
associated with a poor knowledge ofChina’s legal system. Russian state
corporations know the law perfectly well,
but most medium and small businesses,
which have a fount of unused resources,
can only hope for a chance. We havebegun to develop a road map to explain
the main problems that an entrepreneur
may face in China, but for now thedemand is limited. We need a more
ambitious and systematic approach.
– Returning to the interestsof China in the Russian Far East,

83

We need our own dealer
network in China tobring Russian goods to
the Asian consumer
how realistic is the scenario of a
Chinese demographic expansion in
Russia?
– This is an old myth that arosein the 1990s. Then there really wasan uncontrolled flow of Chinese
immigrants, not to the Far East itself,
actually, but in transit to Moscow,
St. Petersburg, and further on toEurope. And even then, the figures, as
counted by sociologists, did not exceed
450,000–600,000 people a year. Now,
the situation has changed drastically.
First, rigid quotas for foreigners
were introduced. Second, after thescandalous closing of the Cherkizovsky
Market in Moscow, where billions
were in circulation, the spontaneous
shadow market of Chinese products
was completely destroyed.
As for the Far East itself, you
couldn’t get the Chinese to move
there if you tried. They live in theirown country and conduct their own
business, why should they leave?
Demographic expansion is not needed
to benefit economically.

THE Global economy | NEIGHBOURS

EEF 2018

Russia–China Year of
Regional Cooperation
set to bear fruit
At the Eastern Economic Forum, new growth areas
will be found for regional cooperation between
Northeastern China and the Russian Far East, which
will become a powerful driving force for trade andfor the economies of both countries – believes
General Manager of China Chengtong International
Investment Zhou Liqun, who is also Chairman of theUnion of Chinese Entrepreneurs in Russia, Head ofRepresentation at the Centre for Trade Development
and Investment Management in Europe, and Presidentof the Greenwood International Trade Centre.

Text: Tatiana BIBIKOVA
Russia has changed a great
deal within the last decade– When did you first visit Russia?
What, in your view, are the threemost important changes to have taken place since that time?
– I came to Russia to study in thelate 1980s, and have witnessed thedevelopment of your country overthe last 30 years. Several significant
changes have taken place during thisperiod. Firstly, people’s quality oflife has steadily improved (which there-election of President Putin only
goes to confirm). Secondly, there has
also been a degree of improvement in
the business environment: corruption
has been brought under control, thestructure of the market and legislative
base have been improved, and investor confidence in Russia on the part ofChinese business has grown steadily.
And thirdly, Russian–Chinese relations
have reached a historic peak.
– China’s trade turnover with Russia is approximately USD 80 billion.
Where do you see areas for growth?
– In my view, Russia and China
should work first and foremost on

China and Russia areneighbouring states thatshare a common borderthat is 4,300 kilometreslong and together havea population of morethan 1.5 billion people.
Our countries havea fantastic basis forcooperation
Zhou Liqun, General
Manager of China Chengtong
International Investment

strengthening cooperation to develop production capacity. Both countries
have strong and complementary areasof activity, including mechanical engineering, producing transport equipment, extracting and processing raw
materials, and manufacturing finishedproducts. Secondly, Russia and China
should expand financial cooperation
and bring together finance and production. Thirdly, we need to foster
small and medium-sized businesses,of which there are many, and which
are a key force in the growth of tradeand economic cooperation.

With the supportof Chengtong
Holdings
Group, we areengaged in
preparations tocreate a RussianChinese fundfor developing
industrial
cooperationworth
USD 5 billion
84

You haven’t stood still amid
sanctions– To what extent are Westernsanctions against Russia affecting
trade?
– Western sanctions have taken atoll on the investment climate in Russia as well. This isn’t just affecting domestic companies; levels of confidencewith regard to investing in Russia havealso fallen substantially among companies with foreign capital.
Russia hasn’t simply stood still: an
import substitution programme has
been adopted, aimed at stimulating
industrial development and innovation domestically. China has supported Russia steadfastly during this time.
Our countries have taken a further
step towards strengthening businesscooperation.

The yuan has become aninternational reserve currency– You have said that Russia andChina need to transition to dealing
in their national currencies. How
realistic would it be to implement
this plan?
– The yuan has recently become
an international reserve currency,
and also a settlement currency inmany countries. In 2014, our countries concluded a bilateral currency

swap agreement for CNY 150 billion(RUB 815 billion), but from the pointof view of effectiveness the liquidityof the currency was insufficient, andfell short of expectations. The rapid
development of trade and economic
cooperation between Russia and China
has been accompanied by a significant
increase in the quantity of settlementtransactions. In order to reduce ourdependence on the value of the US
dollar and the cost of transactions, it
is vital that we expand the scale of ourtransactions in local currency further
still, and that we build and perfect a
direct settlement system. Implementation of these plans is inevitable inthe context of trade and economic cooperation between Russia and China.

The statistics refute
pessimistic statements– There exists a view that, although Russia and China are actively making declarations about
cooperation, in reality projects aredeveloping extremely slowly. Can
the work of the Union of Chinese
Entrepreneurs in Russia and of China Chengtong International Investment, both of which you lead, refute
this thesis?
– The statistics on trade and economic cooperation between Russia
and China refute it entirely. And as for
China Chengtong International Investment, we have already been working
closely with Russia for 20 years, andhave invested at various times in theconstruction of the ‘Friendship’ trading house, in two major logistics andwarehouse centres, and also in China’s largest foreign investment project – the Greenwood International
Trade Centre.
In November 2017, China Chengtong International increased its investment. We began construction on
the second stage of Greenwood. Total investment in the project has now

reached USD 220 million. We plan
to have finished construction andlaunched the centre by 2020.
– What other projects or sectors
in Russia interest you?
– We are actively studying innovative financial methods. With the support of Chengtong Holdings Group, weare engaged in preparations to createa Russian–Chinese fund for developing industrial cooperation worth USD
5 billion. We are devoting special attention to such areas as infrastructure
construction, mechanical engineering,
agriculture, innovative technologies,
and building industrial parks.

Chinese investment in pulp
and paper mill constructionin the Russian Far East

– What point has been reached so
far in discussions on the construction of pulp and paper mills in Russia, and in the Far East and Amur inparticular?
– According to preliminary estimates, investment in the project will
total USD 145 million, which will be
used to build modern pulp and paper
mills with a production capacity of
500,000 tonnes per year. There are also plans to extend these, and to build
an industrial park with the ability toprocess wood and industrial chemical
products.
On 28 November 2017, a Memorandum of Understanding on a Project to Build a Pulp and Paper Mill in
Khabarovsk Territory was signed. Preliminary research has already been
carried out on supplies of raw materials, transportation of the finishedproduct, human resources, environmental protection, associated legislation and regulations, and design
solutions. Site selection and consultations are progressing according toplan.

The Russian Far East holds
special significance– How interested are Chinesecompanies in the Russian Far Eastin general?
– The Russian Far East holds special significance for us compared with
Russia’s other regions, given its geographical location as well as the factthat it has clearly complementary production structures and a wealth ofnatural resources. The last few years
have seen our two countries cooperate actively in such areas as building85

infrastructure and expanding tradeand investment, which has allowed
us to achieve certain successes. I believe that the Russia–China Year of
Regional Cooperation will result in
local Chinese authorities and companies investing more in the Russian
Far East.
– One of the key problems whenit comes to cooperation between
Russian and Chinese businesses atthe ‘region-province’ level is a lackof knowledge of business legislation. What work is being done inthis area?
– Russian companies planning toinvest in China need to know the laws
‘On Chinese–Foreign Joint Ventures’,‘On Chinese–Foreign Cooperative Joint
Ventures’, and ‘The Law of the People’s Republic of China on Foreign
Ventures’.

We beganconstruction on
the second stageof Greenwood.
Total investmentin the project
has now reached
USD 220 million.
We plan tohave finishedconstruction andlaunched the centre
Joint conferences need to be held
in all areas and at all levels to explain
poorly understood issues, discuss existing trade and economic issues in
China and Russia, and settle issues using intergovernmental working mechanisms. It is also important to develop
the role of platforms like Greenwood
and the Union of Chinese Entrepreneurs in Russia, and to take concrete
steps to provide services to Russian
and Chinese businesses.
– What is your key objective at
the upcoming Forum?
– I believe that the Forum will yield
new growth areas for cooperation, andthat discussions on regional collaboration between Northeastern China and the Russian Far East will help
make this a powerful driving force fortrade and for the economies of bothcountries.

THE GLOBAL ECONOMY | NEIGHBOURS
activities such as the policies being
pursued in the Far East. They are keen
to invest in electronics, mechanicalengineering, the food industry, andother sectors. I think the level ofinvestment is going to increase.

What can be done to increase the flow of goods andinvestment between Russia and South Korea?
Text: Irina K h rya e vaR

elations between Russia andSouth Korea are looking up.
In 2017, trade between thetwo countries increased by a record
41% to USD 19 billion. Kim Jongkwon, General Director of t he
Korea Trade-Investment Promotion
Agency (KOTRA), tells us about thepotential for economic cooperationand the main issue with the Russian
Far East’s advanced special economic
zones (ASEZs).

Kim Jong-kwon, General Director of the Korea
Trade-Investment Promotion Agency (KOTRA)– South Korea is actively investingin other countries’ economies, butless than 1% of this investment isgoing to Russia. Why such a modest
figure?
– It ’s tr ue t hat, between 1989
and 2016, Sout h Korea invested
around USD 2.5 billion in Russian
manufacturing, which was just
0.72% of South Korea’s total foreign
investment. However, what you
need to understand is that Korea

86

Ramil Sitdikov / RIA News

From the World Cup to a gas
pipeline across North Korea

historically and culturally prefers
Western countries. Most Koreans get
their information about Russia fromthe West and from America, and thisinformation is often incorrect. It’s areal problem. That said, the situationis starting to change. The change ofgovernment in South Korea last year
has allowed us to take some important
steps towards expanding cooperation
with Russia and the number of Koreanbusiness leaders who are interested ininvesting in Russian companies has
dramatically increased due to Russian

Background

About KOTRA
KOTRA has 127 overseas offices allover the world and 10 offices in the CIS.
KOTRA opened an office in Moscow
as early as 1989, during the Sovietera. It went on to open offices in
St. Petersburg, Vladivostok, andNovosibirsk.

– What do you think about thesteps Russia is set to take in responsein the near future? The creation of
ASEZs in the Far East, for instance?
– The investment climate in Russia
is changing very quickly, and for the
better. According to the Doing Businessrankings compiled by the World Bank
every year, Russia has made a real leap
forward and is now 35th in the world
for ease of doing business. This makes
Russia much more attractive than even
China, which is 78th.
As far as the attractiveness of the
Far Eastern ASEZs is concerned, I’mafraid the problem of low population
density is making itself felt. Japan,
China, and Korea want to work with
Russia’s eastern regions, but there’s
less of a market there: trade mostly has
to go through Moscow, St. Petersburg,or other large cities. It’s the west of
Russia that Korean companies are
attracted to because of its developed
business infrastructure and extensive
consumer markets.
On the other hand, during last year’s
Eastern Economic Forum, the Export–
Import Bank of Korea and the Far East
Development Fund signed a cooperationagreement, according to which South
Korea will invest RUB 2 billion in projects
across the Russian Far East over the next
three years. Initiatives like these areintended to significantly improve thesituation.
– When the President of South
Korea, Moon Jae-in, visited Russia in
June 2018, he suggested increasingbilateral trade between Russia andSouth Korea by 50%, bringing it to
USD 30 billion by 2020. Are there
prerequisites for this increase?
– Of course. During 2014–2016,
trade between Russia and Korea
stagnated. In 2017, we saw t he
beginning of efforts to improve thesituation: last year, trade between
our countries was worth almost USD
19 billion. Russia needs to ensure its
market has the necessary equipment
and technology, and this is where
South Korea could become a reliablelong-term partner. Since an agreement
to remove visa restrictions was signed
in 2014, the number of Korean tourists

visiting Russia has been increasing,and the World Cup, hosted by Russia,
really sparked Koreans’ interest. These
factors also have an impact on trade.
Moreover, trade could increase manytimes over if Korea and Russia were tosign a free trade agreement. I believe
Korea should be importing moreenergy resources from Russia. If therelationship between North and South
Korea is improved and gas begins to besupplied across North Korean territory,
then we might well be able to reachthe figure that was stated, or at least
get close.
– You mean the project to build
a gas pipeline from Russia to South
Korea across North Korea? How
realistic is that?
– Relations between North andSout h Korea are c hanging quite
significantly. North Korea is changing
its policies, as the recent meeting
between Kim Jong-un and Donald
Trump demonstrated. However, North
Korea is still facing sanctions andremains in what is essentially economic
isolation. If joint projects allow us toimport Russian gas through North
Korea to South Korea, that would havea very beneficial impact on trade andother areas of cooperation between
our three countries. Cooperation with
Russia would also allow North Korea toenter European markets, for instance.
That would be very good to see. Still,this is a political issue, and I’m afraid
I can’t tell you how long it will taketo resolve it.
– Would the question of creatinga free trade zone between Korea
and the Eurasian Economic Unionbe easier to resolve?
– Creating such a free trade zone
would certainly stimulate trade between
our countries. However, as I understandit, Russia’s main aim at the moment
is to promote its own industry anddomestic manufacturing. This would
be quite a challenge if the country were

Trade between Russia andSouth Korea increased

by 41%
in 2017 to USD 19 billion

87

to act as part of an economic union –the Eurasian Economic Union, in thiscase. Our government has recently
offered to begin talks with Russia
specifically, to discuss investment andareas of mutual interest. In this way,
we will move forward sector by sector,
country by country, gradually entering
the markets of members of the Eurasian
Economic Union.
– In an interview, you mentionedthat KOTRA sends 200 entrepreneurs
from Russia to Korea every year andvice versa. What line of business arethey in?
– They are not necessarily
representatives of any particularsectors; they work in all parts of theeconomy. However, KOTRA’s maininterest is in collaborating with small
and medium-sized enterprises. Large
companies with a sizeable network of
subsidiaries and all the professionals
t hey need can do ever yt hing forthemselves. Our aim is to organize as
many meetings as possible between
businesspeople. For instance, manybusiness events are held in Korea, atboth the government and regional
level, which we advertise and promote.
– What changes are you seeing interms of the requirements of Russiancompanies wanting to begin doing
business in Korea, and vice versa?
– Things are moving in the right
direction. Nowadays, many sectors of
the economy are coming together andwanting to work in tandem. One of theprerequisites for successful development
is ensuring that the technologies
our countries use can be integrated.
When it comes to the fourth industrial
revolution, Russia possesses certain
advantages: it is scientifically andtechnologically advanced, and has ahighly-qualified workforce. Korea, on theother hand, knows how to commercialize
technologies. What we are trying to dois bring together these sectors and thecompanies who work within them.

According to the Ministry of Economic Development,

more than 50%
of South Korean investment in Russia goes to the Central Federal
District. The next most attractive area is the Northwestern Federal
District, with 27%. The Far Eastern Federal District receives 14%

THE GLOBAL ECONOMY | NEIGHBOuRS

Vitaly Ankov/RIA Novosti

By intensively
developing urban areas,
primarily Vladivostok,
and creating appealing
living and working
conditions, it will, inmy opinion, be possible
to attract people to theregion and establish amarket of 1–1.5 million
peopleA View from the Landof the Rising Sun
Shigeru Murayama, the President of the Japan Association for Trade with Russia and the Newly Independent States(ROTOBO), talks about how to iron out economic fluctuations, increase the competitive attractiveness of the Far Easternadvanced special economic zones (ASEZs), and introduce high-tech Japanese developments to Russia.
Implementation of
Cooperation Plan will benefit
business and society

Shigeru Murayama,
the President of the Japan
Association for Trade with
Russia and the Newly
Independent States(ROTOBO)– How is the Eight-Point Cooperation Plan which Japanese Prime
Minister Shinzō Abe proposed to
Russian President Vladimir Putin
being implemented?
– Since Prime Minister Abe presented this plan to President Putin in
Sochi in May 2016, over 130 agreements and memoranda concerning
Japanese–Russian projects have beenconcluded. More than half of theseare specific in nature and are currently underway, as far as I know.
The subheading of the Cooperation Plan – ‘for innovative reforms in
the industry and economy of Russia
as a leading country with favourable
living conditions’ – highlights the factthat it is not just Russian or Japanese88

From the perspectiveof the Japanesebusiness community,
we hope that the
dialogue between the
USA and Russia will
be resumed, and that
all of the problems
complicating therelationship between
them, including
sanctions, will be
resolvedbusinesses that will benefit, but also
Russian society as a whole. The plan
aims to improve the quality of life ofRussians, and its purpose is to diversify and modernize Russian industry.

Specif ic examples of cooperation include the establishment of
the Japanese Project Promotion Vehicle in the Far East (JPPV) by theJapan Bank for International Cooperation (JBIC) in cooperation with
Russian partners, and the openingof a medical rehabilitation centre in
Vladivostok by Hokuto Social Medical Corporation together with JGC
Corporation. These are projects thathave already been implemented.
The development of the business
relationship between Japan andRussia still faces various obstacles,
including those related to communication, i.e. the language barrier andlack of information support. Under
these conditions, it is very importantfor government agencies in Japanand Russia to support and incentivize business.

We hope to see better
infrastructure and an
improved investment
environment– There is a widespread opinion that the volume of trade between Russia and Japan does notmatch the real capabilities of thetwo countries’ economies. Would
you agree with this?
– It has been correctly suggested
that foreign trade between Japanand Russia does not live up to thetrue potential of both countries. The
reason lies in the structure of Japanese–Russian trade, which is currently characterized by imports of
raw materials (oil, LNG, and coal)to Japan from Russia and exports offinished products (for example, cars)in the opposite direction.
Obviously, this kind of trading
structure dominated the old era, before globalization processes took overthe entire global economy. In addi-tion, trade in goods such as cars andoil depend to a significant extent on
world commodity prices and otherfluctuations in the economy. Indeed,
trade between Japan and Russia saw
several sharp drops, for example in2009 and 2015. In other words, theformat of our trade relationship isvery outdated and has a very unstable structure.
– How can this be fixed?
– It is important to support thepromotion of Japanese manufacturing companies in Russia, the development of joint manufacturing
networks across the two countries,
and the expansion of trade in intermediate goods. Something similar
happened after the signing of the Plaza Agreement in 1985, when, against
the backdrop of a rising yen, many
Japanese companies moved their production facilities abroad, particularly to other Asian countries. As
a result, extensive production networks – global value chains – gradually developed between Japan andthe countries concerned. The trade
in intermediate goods essential tovarious production processes, suchas spare parts, expanded.
Here, we hope to see a further increase in the efforts of Russian federal and local authorities to develop
better infrastructure, improve theinvestment environment, further
strengthen investment incentives,and so on.

Three conditions that will
accelerate the developmentof ASEZs in the Far East
– Do the changes underway in
the Russian Far East correspondto your expectations?
The economic development of theRussian Far East, a region locatedgeographically close to Japan, canexert a huge positive inf luence on
Japanese companies conducting business with Russia. The governments ofour countries pay special attention tocooperation in the Far East. The Japanese business community highly appreciates the Russian Government’s
ambitious policy with respect to thedevelopment of the Far East – for example the creation of ASEZs and thefree port system — that has been accelerated in recent years.
I would suggest here that it is important to consider observing three89

BACKGROUND

What did Shinzō Abe
propose to Vladimir
Putin?
The Cooperation Plan between Russia andJapan covers collaboration in eight areas:
1) Healthcare and increasing life expectancy2) Modernizing the urban environment3) Developing cooperation in the SME sector
4) Power engineering5) Diversifying industry and increasing
productivity6) Developing industrial operations and export
activities in the Russian Far East
7) Exchanging advanced technologies
8) Intensifying people-to-people exchanges

conditions that will enable ASEZs in
the Far East to succeed.
Firstly, reducing costs. Thus far,conditions in the Russian Far East
have hampered the manufacturingof products capable of competingin international markets in terms ofprice. I’m talking about the high costs
associated with logistics and communications as well as the relatively
expensive labour. It is important toimprove infrastructure and maintainthe current rouble exchange rate inorder to achieve a reduction in thesecosts, including staff-related costs.
Secondly, ensuring a concentration of industrial enterprises. Companies, as a rule, are attracted to places
where related industries have converged. This helps to reduce transport and communication costs as wellas other unavoidable costs associatedwith business. In this respect, theconcentration of industrial enterprises in ASEZs in the Russian Far Eastis still insufficient, and this makes it
difficult to attract Japanese companies when compared with the special
economic zones of other countries.
The advantage the Russian Far East
has is its abundance of valuable
natural resources. It would therefore be prudent to create clusters ofprocessing industries, for example
petrochemicals, and attract relatedindustries on this basis.
Thirdly, the availability of markets. The products and services created in the ASEZs need a consumer
market. Despite the fact that ASEZs
seem to be encouraged to attract ex-THE Global economy | PARTNERSHIP
port-oriented industries, it is dangerous to rely solely on exports. The
fact is that rising oil prices and thestrengthening of the rouble will decrease the competitiveness of Russian
products. In this regard, it remains
essential to ensure constant domestic demand.
E n s u r i n g p o p u l a t i o n g r ow t hthroughout the Russian Far East is
not an easy task. However, by intensively developing local urban areas,
primarily Vladivostok, and creating
appealing living and working conditions, it will, in my opinion, be possible to attract people to the region andestablish a market of 1–1.5 million
people. This is fully in line with the
new concept of the ‘spatial development of Russia’ and the ‘cities of the
future’, which President Putin spoke
about at SPIEF 2018 and the 8th Urban Forum recently held in Moscow.
– Apart from the listed risk factors, how strong is the impact ofsanctions?
– From my perspective as President of ROTOBO, I can say that weare against the economic sanctions
as they impede transactions on thefree market. Yes, Japan joined thesanctions against Russia. However,the content of Japanese sanctions canbe described as ‘light’, and they really have no significant impact on thebusiness conducted between the twocountries. It seems to me that Russian officials hold the same opinion.
However, the impact of the US
sanctions on Japanese–Russian business is relatively strong. For example, the sanctions list announced by
the US Government on 6 April thisyear includes the leading Russian aluminium company. Russia accounts
for approximately 15% of Japanesealuminium imports. This share will
be reduced to almost zero on 23 October when the sanctions come into
force and this will have a relatively
significant impact on Japanese industry, particularly the automotive
industry. The sanctions will complicate settlements in dollars and they
provide for second-level sanctions
imposed by the United States on Japanese companies that continue to dobusiness in defiance of the sanctions.
On 16 July, US President Donald Trump and Russian President
Vladimir Putin held a bilateral meeting in Helsinki, a year after their previous meeting. From the perspectiveof the Japanese business community,
we hope that the dialogue between
the USA and Russia will be resumed,
and that all of the problems complicating the relationship between
them, including sanctions, will be
resolved.

The need to attract JapaneseSMEs possessing advanced
technologies and know-how
to Russia– Generally, when economic relations are discussed, we talk about
large investment projects. How aresmall and medium-sized Japanesebusinesses doing in Russia?
– Indeed, the main business exchanges between Japan and Russia
have so far involved large companies.
The line of products manufactured
by Japanese small and medium-sizedenterprises is relatively narrow. However, there are many such SMEs thathave developed world-class and evenunique technologies. In the future,
we hope to see Japanese SMEs thatpossess these advanced technologies
and know-how conducting businesswith Russia.

The main businessexchanges between
Japan and Russia
have so far involved
large companies.
There is a need to
expand the line ofproducts manufactured
by Japanese small
and medium-sizedenterprises– What is hindering the development of small but high-tech companies?
– Their weakness is that they usually face limitations in terms of staff,
time, and funds. Accordingly, there
is a limit to what they can achieveon their own and they need support from the government and public agencies. Last year’s INNOPROM
2017 was attended by a large numberof Japanese small and medium-sizedenterprises, and ROTOBO, in conjunction with JETRO [Japan External
Trade Organization – Ed.], organized‘Business Matching between Japa-

90

nese and Russian SMEs’ to support
the movement of these enterprises
towards Russia. I think it is important
to continue these attempts.
Furthermore, for companies located in the coastal prefectures close to
the Sea of Japan – areas such as Hokkaido, Niigata, Toyama, and Tottori– Russia, lying literally on the other shore, can become an importantbusiness partner. Efforts to revitalize
Japanese–Russian exchanges at theregional level, especially in the Far
East, are important.

Together we can find new
ways to cooperate in thedigital reality– Which technologies implemented in Japan would be particularly useful in Russia?
– The formation of a super-smart
society and the creation of new values based on digital technologies
are currently being promoted in Japan as part of the ‘Society 5.0, Related Industries’ concept. In Russia,
the ‘Digital Economy’ government
programme was adopted in 2017.
The digitalization of industry andsociety is a prerequisite for survival
in a rapidly changing global economy. Neither Japan nor Russia will
be able to survive if they miss thiswave. In September 2017, the countries signed a joint statement on cooperation in the digital economy,
and adopted a joint action plan forcooperation in this field in May thisyear. The Japanese business community, probably much like the Russian
business community, supports thisinitiative.
The practical cooperation between
Japan and Russia in this area is currently developing in three main areas. The first aims to improve labour
productivity and competitivenessthrough digitalization of the production sector. The second involves
the creation of smart cities and theformation of a favourable urban environment. Finally, the third area entails the use of digital technologies
in medicine.
I hope that we will be able to find
new ways to live and cooperate in
the digital reality together by combining the know-how and technological solutions of Japanese companies
with the excellent human resources
and industrial infrastructure to befound in Russia.

91Personality
In the photo: Russian Explorer Fedor Konyukhov
Photo location: Shantar Islands
Photographer: IGOR OLKHOVSKYPERSONALIT Y | ENTREPRENEURSHIP
We are strongly oriented
towards government– One of the major topics discussed
at the Eastern Economic Forum isdeveloping entrepreneurship. How
should it be developed, in youropinion?
– There’s one figure that’s pretty
hard to argue with – the share of small
business in GDP. In Russia, this figure
is around 20%. And throughout theentire history of the new Russia, since
entrepreneurialism was legalized here,
it has not risen above 25%. Developed
countries create approximately half of
their national wealth through small andmedium-sized companies, with a figureof 50%, on average. And the share of
SMEs in Chinese GDP, for example, is61%.
If somebody only weighs half as
much as the average person theirage, that means that something isn’tright. It’s the same with undeveloped
entrepreneurship. It’s just a medical
fact.
Delving further into the problem,
if you look at the structure of small
business, you’ll see that we have very
few high-tech companies – the kind thatwork at the interface of manufacturing
and science (as in Ger many, forexample). This is the second layerof our problem with undeveloped
entrepreneurship.

While small and medium-sized businesses are the foundation of developed economies,
in Russia they still play a relatively modest role. Andrey Sharonov, President of Moscow
School of Management SKOLKOVO, talks about how Russians view entrepreneurship– and what entrepreneurs think about the government, what separates a leader from aboss, and why businesses shouldn’t operate ‘in factory mode’.

94

Roman Peshkov

Fish look for deeper waterand people look for the fish

– What can be done to create more
entrepreneurs?
– A year ago, we conducted two
independent studies in collaboration
with the Russian Public Opinion
Research Center (VCIOM) on attitudes
towards entrepreneurship in Russia. We
asked our own graduates and student
entrepreneurs what support they would
like to receive from the state. Threekinds of expectations were identified.
The first related to financial support,
including reduced taxes and increased
access to loans and subsidies. The
second was an independent judiciary.
The third was a reduction in the numberof audits.
To my mind, making these changes
will have an incentivizing effect on
those who are presently just thinking
about becoming entrepreneurs.
One recent study showed a solid
trend. Young people increasingly preferto seek out government positions andposts in state corporations, looking forjobs as tax inspectors, police officers,
Gazprom employees, and so on. Choices
like these are a reflection of what we seearound us every day, the stories that
we read in the media and hear on theradio. We need to engage in a certain
kind of propaganda – telling people
how to get started and what mistakes
to avoid, and making people understandthat entrepreneurs are respected andsupported by the government.
– Is it right to rely so much on thegovernment?
– Obviously, there’s a degree of sinkor swim involved and people need to
be able to help themselves, but Russia
is very much a statist country. We arestrongly oriented towards government,
and government is responsible forthe regulatory environment in any
country. Another important thingthat entrepreneurs expect from thegovernment is stability.
– What do you mean exactly?
– That we shouldn’t keep changing therules of the game so rapidly. Imagine you
operate a railway and offer transport andtravel services. You manage carriages,
to put it crudely. You’ve sold everything
you had and bought three not very new,
but perfectly good carriages that are 15
years old, and now want to use them toearn money. You’ve written a businessplan. The carriages take a long time to
pay for themselves – between 18 and 30
years. But suddenly, Russian Railways
decide to write off carriages older thana certain age, because they could be asafety hazard, although yesterday they
weren’t. You couldn’t have known thiswhen you bought your carriages. You had
an asset that you invested your money
into, and then you read in the paper thatyou no longer have the asset, it’s now
scrap.

The specifics of the Russian Far
East– Are there specific problems
associated with developing
entrepreneurialism in the Russian
Far East?
– I haven’t lived there myself, butwhat I hear from people who have
lived there and who travel there is thatlarge numbers of people are leaving,and moving instead to countries in Eastand Southeast Asia, or in many cases toCentral Russia. Unfortunately, it’s themost able people who are leaving.
– How can the outflow of people
from the region be stopped?
– My football coach used to say: “Fishlook for deeper water, and people look95

for the fish.” The same can be applied
to the Russian Far East, I think. The
region has some disadvantages due to its
remoteness from the rest of Russia. The
administrative burden on the Russian
Far East is two and a half times thenational average. The reason is thatstrategic security is the priority, rather
than entrepreneurial freedom and theinvestment climate. With respect tothe number of supervisory measures
affecting entrepreneurs, the situation
is worse than the Russian average.
But there should also be some obvious
advantages there so that people will
still stay.
And there are advantages. There’s
the proximity to the Asia-Pacific region.
Two billion people live within a threehour flight of Vladivostok. This means ahuge market, supply and demand, andeconomic activity. Last but not least, italso means culture.

Developed countries
create approximately
half of their national
wealth through small
and medium-sizedcompanies, with a figureof 50%, on average.
And the share of SMEs
in Chinese GDP, forexample, is 61%
But there needs to be additional
infrastructure to enable the region to
become part of this enormous melting
pot, participate in the distribution oflabour, and reap the benefits.
This can be so much more thanjust trading in natural resources.
Agriculture, logistics, clean water andair, education – ours is no worse. We
have things to offer that will makepeople want to live there.
– What do you think about One Belt,
One Road initiative?
– It looks like it will become an
opportunity for a large number of
economic agents to get involved inprojects oriented primarily towards
trade between China and Southeast
Asia on the one hand and Europe andthe Middle East on the other. Experts
have already counted USD 900 billion in
investment in projects mentioned in thecontext of the initiative. Russia occupies
a geographically favourable position
here, as part of the ‘silk road’, and theEEF 2018

PERSONALIT Y | ENTREPRENEURSHIP
a little different. Leadership is when
you convince people to consider a job or
project or goal that is important to you
as their own. If you’re successful, thenyour colleagues will work in a way thateven a lot of money might not persuade
them to. That’s leadership.
– So entrepreneurs aren’t
appreciating the importance...
– ...of working with people to createa corporate culture. Peter Drucker
put it well: “(Corporate) culture eats
strategy for breakfast”. If you spit andstub cigarettes out on the wall, it’s at
the very least extremely difficult to talkabout respect for clients and staff. If
that’s the sort of corporate culture you
have, then whatever strategy you mightcome up with, it won’t catch on among
the group. That’s why it’s important
to start not with the strategy, but with
eradicating this culture.

Moscow School of Management SKOLKOVO

investment capabilities of the Chinese
are far above those of Russians in termsof the amount of capital involved.
– Tell us about your involvementin the project.
– One Belt, One Road initiativeis addressed directly by our joint
programme with Hong Kong Universityof Science and Technology (HKUST).
It is no secret that the countries ofEurasia are key to the implementationof China’s initiative. Our programme
has the direct objective of preparing a
new generation of Eurasian businessleaders. It takes the form of an Executive
MBA programme that ends in the award
of a double diploma. It will be offeredin several countries. Modules will betaught in Russia, China, Kazakhstan,
Armenia, Israel, Switzerland, and theUSA. Israel boasts the best culture forcultivating startups. Switzerland has
made a name for itself in the hightech sector. The USA is the ‘Mecca’ ofinnovation. As for the other countries,
they are part of that same ‘silk road’. We
believe that this will be an extremely
effective international programme,
and note the considerable interest of
our partner – HKUST Business School’s
Executive MBA has been rated number
one eight times by the Financial Times.

The most important thing forfactories is to manufacture
goods, and the most important
thing for companies is to sellthem

– And what can entrepreneurslearn at SKOLKOVO Business School?
– A colleague of mine from theschool recently conducted a study –she was looking at the differences inmanagement approaches between
Russian and Chinese entrepreneurs.
The Chinese progress quickly to themarketing and sales phase, before
they have a good working model. They
aren’t afraid to enter the market withan average-quality product, planningto simultaneously master the market

When it comes tobosses, we’re fine. We’ve
got a lot of them andthey’re all great. But
leadership is somethinga little different.
Leadership is when
you convince people toconsider a job or projector goal that is important
to you as their own
96

and work to improve quality. Our
entrepreneurs, on the other hand,
believe that they aren’t yet good enoughto enter the market, and so lose theadvantage.
A long time ago, when I was still very
young, an American entrepreneur asked
me what the difference was betweena factory and a company. I answeredthat I didn’t know. He told me that themost important thing for factories was
to manufacture goods, and the mostimportant thing for companies was
to sell them. Our entrepreneurs very
often operate in factory mode. They’ve
made something, and that’s important,but sales and negotiations are the real
challenge. Blabbering away all day –what kind of work is that, you mightask? The thing is that if you keep yourmouth closed, you might lose your job!
I’m simplifying a bit, but this is very
important. People overvalue hard skills
and strongly undervalue soft skills –negotiating, leadership, and emotional
intelligence.
– What skills are we most lacking?
Surely there’s no problem when it
comes to leadership?
– When it comes to bosses, we’refine. We’ve got a lot of them and they’re
all great. But leadership is something– Can a lack of sof t skills be
described as the most significant
shortcoming among entrepreneurs?
– I think so, yes. Once again, it goesback to our statist society. We still havethe primacy of the collective over theindividual, and of the government oversociety. We swear out loud that this isn’t

Andrey Sharonov with his students

so, and reject it on a rational level. Thatis our ‘strategy’. But at a subconscious
level we are heirs to the ideology of theearly twentieth century – to the periodof collectivization and industrializationin which every person was a cog. Thatis our ‘corporate culture’.
We believe that the product ismore important than the corporate
environment, and that individual people
have no value. If we can’t see eye-to-

What gets in the way of startinga business in Russia?

eye with somebody, then we fire them!
But as founder of the World Economic
Forum Klaus Schwab says, we are slowly
entering an era of ‘talentism’, in which
the highest value is represented not bycapital or the means of production, but by
talent. And it is this that corporations andcapital will be fighting for. Everythingelse is easy enough to obtain, but humanbrains that can come up with original
solutions are a rarity.

What needs to be done to support
entrepreneurialism in Russia?

(% of those asked)(% of those asked)

2009
2017

2

13

10

The economy
27
26

18

12

Lack of seed capital
27

Bureaucracy/
administrative barriers

Simplify accounting/reduce bureaucracy

Make it easier to access loans
36

Source: SKOLKOVO Business School and VCIOM

Lower taxes

Source: data from a SKOLKOVO Business School survey

97

EEF 2018

PERSONALIT Y | THE STRONGER SEX

GIRL POWER

How to do businessin Russia if you’re
not a manAnna Tsivileva, Kolmar:“Mine is not

a Cinderella story”“W

e have been abandoned
and left alone, and I willneed your help” said Deputy CEO Anna Tsivileva as she addressed
her staff at Kolmar, a coal mining company, in February 2018. The reason for the
speech was a change of management:
the company’s CEO, Tsivileva’s husband,
was leaving to become Acting Governorof Kemerovo Region.
Kolmar, previously Neryungriugol,
now combines underground and openpit mines for the extraction of premium
grades of coking coal. The company also has two ore-dressing plants, a powertransmission line, a railway line, and a terminal under construction on Muchke Bay
in Khabarovsk Territory. Anna Tsivileva
owns 70% of the shares. The media wrotethat when her husband left the company,
he made her a generous gift in the formof shares. However, Tsivileva says, “Infact, mine is not a Cinderella story. We
both earned the ‘gift’ through hard work.”
When her husband became a shareholder in 2012 and started managing,
restoring, and expanding the coal com-pany, Anna Tsivileva already had a successful career thanks to her medical andfinancial education.
The Tsivilevs spent more and more of
their evenings discussing the new business. In 2014, when Russia was grippedby the currency crisis, coal prices fell
sharply, and production dropped almost twofold. Kolmar was on the vergeof bankruptcy.
The hired foreign consultants’ advice
was to flood the unfinished mine in Neryungri and write off the costs. “We had achoice: to say goodbye to the company or
to mobilize and start doing something”,
said Anna. “We chose the second option
although Kolmar didn’t even have themoney to pay wages back then and thegeneral director had to forego a salary
for the first year.”At the same time, the company was
faced with the need to finish building
a mine, since underground mining is amore reliable method for extracting coalof stable quality. As Anna explains, “In
addition, we took the decision to build
three coal beneficiation plants so that
we could produce concentrate, which
is much more valuable than unbeneficiated coking coal.”

The story in figures
2014
Employees: 1,200 people
Revenue: RUB 1.2 billion
Production volume: 0.8 million tonnes
2017
Employees: 3,500 people
Revenue: RUB 6 billion
Production volume: 6.5 million tonnes

98

The first enrichment plant, Ignalina-1, with a production capacity of 2
million tonnes, was launched in May
2016. The second enrichment plant,
Denisovka, with a production capacity of 6 million tonnes, was erected by
May 2018.
Anna continues: “We realized that
our coal was superior to Australian coalin a number of respects, so I focusedon finding clients in the Asia-Pacificregion. There were a lot of demanding
business trips. My colleagues and I flew
to Japan, and just a day later we went
on to South Korea. The next stop was
Vietnam. We were constantly changing
time zones. Sometimes I couldn’t evenremember what country I was in when
I woke up.”Today, 70% of the coal that the company extracts and processes is exported,primarily to China, Japan, South Korea,
and Vietnam. It takes coal five to sevendays to travel by rail and two to threedays to be shipped by sea to countries in
the Asia-Pacific region. That is, it reaches
buyers’ ports in literally 10 days. Tsivileva adds: “This is a very short supply
chain, which means we can ship bothlarge and small lots of coal. The lattercan be very convenient for small factories. This kind of flexible approach gives
us an advantage over the Australian coalminers, who are forced to contend withgreater distances and so need to use larger ships.”
Over the four years, Kolmar’s coalreserves increased from 385.5 million tonnes to 1.1 billion tonnes. Annachanged the senior management teamfour times.
Anna herself got so used to the newjob in the Far East over the four-year
period that she fell in love with thoseplaces. She is planning to develop local tourism and a separate department
will be created at Kolmar specificallyfor this purpose. She and her husband
and three children are already spending
their second summer holiday in Yakutia.
When friends ask why, she simply showsthem pictures of the beautiful sights tobe found in the region, which immediately bring an end to the questions.

Today, more and more women are successfully opening businesses in the Russian economy simply because they are interested in
becoming entrepreneurs. The Eurasian Women’s Forum will be held on 19–21 September in St. Petersburg. In the meantime, we
decided to investigate the progress women have achieved in business on the basis of several success stories.
Text: Yulia DUDKINA, Laboratoriya Odnazhdy, especially for the EEF magazine

Daria Ustyuzhanina, TimePad:“Being an entrepreneur means
doing all the dirty work yourself”T

en years ago, in May 2008, college students Daria Ustyuzhanina,
Ludmila Pavlova, and Artem Kiselev sat down to come up with a name for
their project. The friends came up with
their business when all three were still
students at the Higher School of Economics. At the university’s Business Incubator,
Ustyuzhanina and Pavlova organized lectures and seminars on entrepreneurship,
and Kiselev was responsible for developing the website. Emailed newsletters, aguest database that was kept as an Excel
spreadsheet, and endless pages featuringlists of participants all took a lot of timeand effort to create and maintain. They
needed a tool that would allow them tocreate lists of participants and automatically generate newsletters. “There was nosuch solution on the market”, says Daria,“so we decided to make our own.”
The new service, which was started ona shoestring budget, made their work somuch easier that Ustyuzhanina and her teambegan to recommend it to friends. Ustyuzhanina continues: “And then it clicked in
our heads: we could make this a business.”
The RUB 100,000 that the three of us
were able to raise was enough only fordesign, interfaces, a logo, and domain
registration. Investment covered the nexttranche of work.

In 2009, they officially announced thelaunch of the project. TimePad received aninvestment of RUB 1 million from a friend.
The Foundation for Assistance to Small Innovative Enterprises in Science and Technology then awarded another RUB 1 million
and the company was able to hire its firstfull-time programmer, but there were still
no ideas for monetizing the service. Services
with paid subscriptions were not particularly popular. Then a new business model
was born: sell tickets for events over theInternet and collect a commission on sales.
As Ustyuzhanina recalls: “Potential
clients at first thought we were crazy.”
But then they tried TimePad. The company secured its first 100 clients “literally
through in-person demos.” Its revenue inthe early days was RUB 10,000 per month.
At the beginning of 2010, TimePad had
500 clients; by the end of the year, thishad increased to 2,000. But despite theinitial successes, the atmosphere became
tense. The team burned through its initial
RUB 2 million investment, and it seemedthat the business was about to collapse.
But, as the saying goes, the darkest
hour comes before dawn. You need tohave patience. First, TimePad received
a small order from the Higher School of
Economics, and this was enough to keep

The story in figures:
2010
Employees: 6
Clients: 2,000
Revenue: RUB 600,000
2017
Employees: 55
Clients: 120,000
Revenue: RUB 200 million

99

the company going for another couple ofmonths. The income started to flow in. A
decision to launch a digest of interesting
events proved key. This service proved to
be popular, and it helped keep the company in business until the ticket sales model
started gaining traction.
In 2011, the company managed tobreak even. Ustyuzhanina notes: “Suddenly we had a viable business. At thispoint, investors began to seek us out.”

The new service,
which was started on ashoestring budget, madetheir work so mucheasier that Ustyuzhanina
and her team began torecommend it to friends
In 2012, the holding company Afisha-Rambler, which launched Rambler
Kassa to service large events and cinemas,
invested in TimePad. According to the plan,
the service would be totally bought out by
the holding within several years. But in
2013, when the investor’s share in TimePad had grown to 49%, a new management team with a new set of requirements
took over Afisha-Rambler. The startup teammanaged to quickly come to an agreementwith a new investor: in 2014, Target Global invested USD 1 million in the service,bought out Afisha-Rambler’s share, andacquired a 50% stake in the company.
Four years later, at the beginning of
2018, the co-founder of Qiwi, Sergey
Solonin, bought up shares from Target
Global and TimePad’s owners for USD 10
million. Ustyuzhaninа, Pavlova, and Kiselev became rich, and they started working
for their own company as consultants forthe first time.

EEF 2018

PERSONALIT Y | THE STRONGER SEX

Natalya Kaspersky, InfoWatch:“Money is something that you
can reinvest in your business”

A

s a child, Natalya Kaspersky
dreamed of becoming a vet,but after high school she
enrolled in... the Faculty ofApplied Mathematics at the Moscow
Institute of Electronics and Mathematics. After she graduated, she chose a
job at a design firm near her home,
but she found the work to be boring.
In 1994, she got a job at the computer
shop attached to KAMI.
Her husband, Eugene Kaspersky,
worked at the same company. His office was on the second floor of thebuilding, where he wrote software.
Natalya sold computer accessories
and software on the ground floor. The
store’s product range included Kaspersky Antivirus – AntiViral Toolkit Pro.
As Natalya explains, “it wasn’t routinely promoted and it didn’t sell.” Itturned out that the software did noteven have the required licence fromthe software registration agency. Natalya registered the appropriate licence and began to actively promote
the antivirus software on the market.
In just two years, sales increased to
USD 600,000.
As Natalya explains, “I had no
ambitions to become CEO.” But her
husband refused the management position, and they could not find anyone
else to hire for the position.
Natalya was responsible for scheduling work with distributors at the new

business. She continues: “Paradoxically, the fact that I’m not a great salesperson helped us.” Rather than selling
the product herself, she tried to findpeople on the market who knew how
to do it better. She did this without
realizing that this is exactly how you
build out a distribution network. The
strategy worked. In 2007, the company’s turnover exceeded USD 200 million. By this time, Kaspersky Lab had
managed to break into international
markets. In the US, it was the sixth
best-selling antivirus software product, and in Germany and Austria it led
the market.
In 1999, the Kasperskys divorced,
but Natalya continued as the company’s CEO until 2007. Over time, disagreements over how to develop theirshared business emerged, so they decided to divide it: Natalya received
Kaspersky Lab subsidiary InfoWatch,
among other assets. InfoWatch specialized in the development of software to protect against information
leaks.
InfoWatch was founded in 2003,
and it was well ahead of its time. As
Natalya relates: “The business grewslowly and was deeply unprofitable.
When I took over this company in2007, the situation was worse than I
thought. We needed to generate demand on our own in order to put thebusiness back on its feet. We began tocollect information on data leaks thatwere publicized in the media. Gradually, potential clients began to showinterest in this market niche.”

The story in figures:
2012
Clients: 200
Revenue: RUB 365 million
2017
Employees: 500
Clients: more than 1,000
Revenue: more than RUB 1.5 billion”

100

In 2012, the company became profitable for the first time ever, and it began to grow by 60–70% per year. In
2016, sales exceeded RUB 1.5 billion.
The Russian data loss prevention market is still small: Natalya estimates that
it is no more than RUB 10 billion. At
the same time, half of the market iscurrently controlled by InfoWatch.
The company’s clients include stateagencies, large banks (Sberbank andAlfa-Bank), oil companies (Gazprom
VNIIGAZ and Transneft), and telecommunications operators (Beeline and
MegaFon). InfoWatch started entering
foreign markets in 2009. Since geopolitics is complicating the situation in theWest, the company decided to turn east.

At the same time,
Natalya Kaspersky
admits: “The morebusinesses I have, themore I realize how little
I understand”
Now, its clients include banks in
Bahrain and Kuwait Finance House. In
May 2017, Natalya opened an office inDubai, and another followed in Kuala
Lumpur in September.
In 2017, ForbesWoman named
Kaspersky one of the richest womenin Russia with a fortune of USD 270
million. However, she herself is sceptical about such rankings. She considers
money to be primarily a resource thatcan be invested in business. In 2012,
she acquired a 16.8% stake in the German antivirus software developer G
Data Software, and a controlling stakein the German company EgoSecure,which develops software to protect
corporate information. In February
2018, InfoWatch bought an 80% stakein the HandyBank payment system. At
the same time, she admits: “The morebusinesses I have, the more I realize
how little I understand.”Marina Domracheva, 3D Smile:“When is ‘some day’? ”

In February 2014, Marina Domracheva installed a 3D printer in her
mother’s apartment in Moscow, andher mother was horrified. When thedevice started up, it shook the floor of
the apartment. However, it wasn’t theprinter itself that bothered her mother. She was categorically opposed toher daughter’s decision to go into business instead of science. Marina’s mothersummed up her feelings as follows: “It’sall downhill from here.”
To start her own business, Marina
raised RUB 2 million. In fact, her father contributed some of the funds. By
the way, it’s worth mentioning that hedidn’t like his daughter’s business idea
either. “My father hoped that my business would quickly burn out and that
I’d go back to a ‘normal’ job.”
In 2013, a year before the story of the
3D printer that shook the floors in her
mother’s apartment, Marina got into a
conversation with a friend at a meetingof classmates. He wanted to straighten
his teeth, and the doctor advised that
he use aligners, which are transparent
devices made of a special orthodontic
plastic that is more comfortable andinconspicuous than braces. The American company Align Technology produced the aligners in Mexico using 3D
printing technology. Customers had to
wait three months, and the product cost
about EUR 5,000. As Marina recalls: “Aclassmate asked me why no one in Russia made these aligners. I told him that I
was no dentist, and that the only 3D I’dseen was at the cinema.” But after that,

Marina took a greater interest in the issue, and she began to read a lot about
3D printers and scanners. She studied
programs for modelling dental alignment, and she conducted an independent study of the market. She dropped in
at clinics and asked: “Hello, I’m doing
market research. Can I speak to yourorthodontist?” Generally speaking, theclinics helped her out. She discoveredthat the leading Moscow specialists werealso interested in these dental aligners,
but it was a very expensive service.
As Marina relates: “By the end ofsummer 2013, I had a marketing plan.
I knew how much a 3D printer and consumables cost. I assumed that I could
some day create a great business aroundthis idea, but when is ‘some day’?”In December 2013, she resigned fromher job at a pharmaceutical company.
She spent about EUR 150,000 purchasing the equipment to make the aligners.
The funding came from a combinationof her own savings and contributions
from family members. In addition to
a 3D printer, she needed a special orthodontic 3D scanner and software formodelling the alignment of teeth. To
develop models of how teeth move, sheneeded to hire a clinical expert. As Marina recalls: “Irina Dmitrienko was oneof the first Moscow orthodontists to startworking with American aligners. WhenI first told her about my idea, she did
not take it seriously. But I called again
a couple of months later, and I said thatthe equipment was ready and that we
could start working.”
Eighteen months later, Marina’s company was posting nothing but losses.

The story in figures:
2014
Employees: 5
Clients: 4 physicians, 18 patients
Revenue: RUB 700,000
2018
Employees: 35
Clients: 970 doctors, almost 2,000 patients
Revenue: more than RUB 35.5 million

101

The aligners could not be sold until they
were certified by the Federal Service for
Surveillance in Healthcare (Roszdravnadzor). In order to gain certification,
she would have to pay for a medical
expert and dental technician and purchase more consumables. It was only
after the company received certificationthat it was able to post revenue of RUB
700,000 in 2014.
And then the crisis struck. The costof foreign consumables doubled. “2014and 2015 were horrific. I went personally to dental clinics to try to tell the dentists about my company. In nine cases
out of ten they didn’t let me past thereception desk.” However, slowly but
surely the client base grew and in 2015,
the company made it out of the red.

Just four years after thelaunch of the company,
3D Smile became
the largest producer
of dental aligners
in Eastern Europe,
producing 8,000
products per month
According to Marina: “It became easier after that. In 2017, we developed software that creates 3D anatomical models
for computed tomography.” Thanks tothis software, 3D Smile is already entering foreign markets, including theUS, India, China, and the EU.
Just four years after the launch of thecompany, 3D Smile became the largest
producer of dental aligners in Eastern
Europe, producing 8,000 products permonth. For patients, the average costof the service is RUB 200,000–250,000.
Thanks to the company’s entry into international markets, Marina hopes toachieve revenue of USD 100 million by
2021. In 2016 the company became a
Skolkovo resident. Now, 3D Smile has
35 full-time employees and its own laboratory, which prints the aligners using seven printers. Here, the floors nolonger shake. And there is no reason
to fear that the neighbours will complain.

PERSONALIT Y | ROOT SYSTEMPERSONALIT Y | ROOT SYSTEM

Maternal lineage:
the Russian Gusevs

Viktor Tsoi’s
two ‘blood types’

Photo: Valentin Sklyarov

Viktor Tsoi’s mother’s family name, Gusev,
could hardly be more Russian. The earliest
surviving mention of this branch of Tsoi’s
family tree (or, more precisely, of Tsoi’s
great-great-grandfather, Aleksey Gusev)
can be found in an archive in Minsk, ina record of the transfer of state land to agroup of peasants from Vitebsk. Although
the Gusevs lived in Little Russia, in what
is now Belarus, they were natives ofGreat Russia: Tsoi’s great-grandfather,
the peasant Filimon Gusev, was born in1880 to an indigenous Russian peasantfamily, although he grew up and worked
the land in what is now Belarus. He was
the first of the Gusevs to set foot in the
Russian Far East, although not on his own
initiative.
The 86th Villmanstrand Infantry
Regiment, in which Filimon Gusev
served, was mobilized, leaving thetown of Staraya Russa near Novgorod tofight in the Russo–Japanese War. Tsoi’s
great-grandfather fought in 1904–1905,
mostly in China and with great courage.
Once the war had ended, in May 1906,

Filimon Gusev received the Cross of St.
George from Tsar Nicholas II at a militaryinspection in Peterhof (high military
honours were awarded to soldiers andothers by the Russian tsars in person).
Viktor Tsoi’s great-grandfather
car ved out t he most illustr ious
military career possible for a peasantin the Russian Empire: he became a
podpraporshchik, one of the highest
ranks a non-commissioned officer
could attain. After the revolution, as
an ordinary collective farmer, Filimon
Gusev was chewed up and spat out by
the machine of collectivization. In the
1930s, he was arrested and sent to aforced labour camp, where he died oftuberculosis in 1939.

Tsoi’s great-grandfather
fought mostly in China
and with great courage.
Once the war had ended,in May 1906, Filimon
Gusev received the Crossof St. George from Tsar
Nicholas II at a militaryinspection in Peterhof

Viktor Tsoi with his father (in the middle), mother (right) and Russian relatives: aunt (standing at the left) andgrandparents (sitting)103

Picture from R. Tsoi’s archive

Text: Viktor ALEXEEVPhoto from the R.M. Tsoi’s archive

Many believe that Russian culture and Korean culture are like two different
blood types: each unique and impossible to combine. But there is one reallife example where the two did indeed combine, and to great effect. The
work of the cult Soviet rock musician Viktor Tsoi is a landmark in the historyof Russian rock, and Tsoi himself is the result of the convergence of two
lineages: Korean migrants who settled in the Primorsky region of the Russian
Far East, and native Russians from Vitebsk province in the Russian Empire.
BACKGROUND
Viktor Tsoi (21.06.1962–15.08.1990) was acult Soviet rock musician, the leader of the
popular rock group Kino, a poet, a songwriter(lyrics and music), and a film actor. He was bornto engineer Robert Tsoi and teacher Valentina
Tsoi, whose maiden name was Guseva. He wasan only child. He died tragically in a traffic
accident: he collided with an Ikarus bus whilebehind the wheel of his car, a Moskvich-2141,
on a highway near Riga in Latvia.

Paternal lineage: the Korean
Tsois

Viktor Tsoi’s paternal great-grandfather,
Tsoi Yon Nam, was born 13 years after
Filimon Gusev, in 1893, and on the otherside of the continent, in a Korean fishingvillage called Songjin on the coast of the
Sea of Japan (now the town of Kimchaek
in North Korea). However, he left his
homeland at an early age, emigrating to
Vladivostok with his family in 1907 when
he was still a teenager.
This was most certainly not the firstwave of Korean migration to Russia,
nor would it be the last. In 1860, justafter China had officially transferred
the Primorsky region to Russia, 5,130
Koreans were already living north of
Tumangan, the settlement on the border
between China, Korea, and Russia. They
immediately received Russian citizenship.
In fact, migration from Korea to theRussian Empire and then to the USSR
continued almost uninterrupted for 70
years, spanning two centuries, from1860 to the 1930s. The stimulus for thismigration was the incredible shortage ofavailable agricultural land on the Korean
Peninsula which could support a family(Korean families tended to be large).
In other words, to put it simply, it washunger and poverty that drove Koreans toemigrate to Russia. They tended to makethe journey in the winter, crossing thefrozen River Tumangan with their entire
extended family, their belongings, andtheir livestock.

EEF 2018
No prizes for guessing what they were,
if you consider that they bequeathednames like Beijing, China, Korea,
and Seoul to many of the streets anddistricts of Vladivostok.
Of course, the beginning of thet we n t i et h c e n t u r y w a s n o t t h eeasiest time for national diasporas in
Vladivostok. Hard, unskilled labour
was the lot of most migrants – but they
didn’t go hungry. At any rate, historians
do not know of any cases where large
groups of migrants returned to their
homeland. Quite the opposite: they
started families, had children, and theircommunities flourished.

Photo: TASS

Grandfather: Maksim Petrovich
Tsoi

Viktor was very charismatic

Most of the migrants worked thefertile and plentiful land of the Russian
Far East, but Viktor Tsoi’s ancestors
settled in a town. At any rate, historian
Dmitry Shin, who has conducted themost in-depth study of Viktor Tsoi’s
genealogy, found a mention of a Tsoi
Yon Nam (an unskilled labourer andBuddhist) in a list of Korean families
living in Vladivostok in 1913. Viktor
Tsoi’s great-grandfather was registeredas living in the suburb of New Korea inthe capital of Primorye, in the modernday district of Pervaya Rechka, at 13
Seoul Street. Are you surprised by theseplace names? You shouldn’t be. At thattime, Vladivostok was a multinational
town consisting of a number of suburbs
where different ethnic groups had
settled. There were two main diasporas.

In 1962, they had ason, Viktor, who wasto become a shining
example of the merging
of two families andthree cultures: Russian,
Korean, and Soviet.
Viktor Tsoi has passed
into legend as the
genius working on thecusp of perestroika in
the late 1980s whocreated the youth
anthems of the time…

104

It was in Vladivostok that Tsoi Yon Nam
met a fellow Korean who was alreadyregistered under a Russianized name,Anna Vasilyevna Yugay. They married
and had two children, including, in
1914, Viktor Tsoi’s grandfather, who
was given two names, one Korean and
one Russian (or almost Russian): Tsoi
Syn Jun and Maksim Petrovich Tsoi.
Viktor Tsoi’s great-grandfather andgreat-grandmother both died in 1917.
His grandfather Tsoi Syn Jun, however,
became a comparatively well-educatedand distinguished figure in the new
Soviet state, especially considering
he was a second-generation migrant.
Between 1934 and 1937, he taught
the lower classes at School No. 8 in
Vladivostok. In this same period, hemarried Kim Khe Den, another secondgeneration Korean migrant born in
Vladivostok in 1917. One of the things
that Viktor Tsoi’s grandfather liked
about his wife, Viktor’s grandmother,
was the fact that she sang in a choir(perhaps not too surprising…) which
performed during Korean broadcasts
on Primorye regional radio.
Incidentally, the school where
Maksim Petrovich Tsoi taught became
known for its talented former students.
During the 1930s, the school’s drama
group, the Stalin Club, nurtured Yon
Senen, a director honoured by theSoviet Socialist Republic of Kazakhstan
for his contribution to the arts, and Tsoi
Girchun and Li Genkhi, both recognizedby the Soviet Socialist Republic of
Uzbekistan for their cultural and artistic
achievements.

The Korean deportation

Many ethnic Koreans attended theschool. Why did they all suddenly
move away to other regions of theSoviet Union? In the USSR, before
and during the Second World War,various ethnic groups were deported.
Ethnic Koreans were first on the list
for mass deportation with the aimof moving them further away fromunrest at the border, provoked first bytensions between the USSR, Japan, andChina, and then by border conflicts.
The Soviet leadership considered
it dangerous to have ‘unreliable
peoples’ living on what could become
the front line – and not without
reason. Sources suggest that, by 1926,
Korean migrants and their offspring
constituted as much as a quarter ofthe population of Primorye, and wereeven a majority in some regions. The
discovery by the security services ofa series of cases where ‘Koreans’ had
spied for Japan also played a role: it
was thought that Japanese spies andsaboteurs could easily pass as Russian
Koreans.
So, on t he eve of t he militar y
conflicts on Lake Khasan, the entire
Korean diaspora in Primorye was sent
to the Soviet Socialist Republics of
Kazakhstan and Uzbekistan (which,as later became clear, was of benefit
to both the workforce and the cultural
life of the two republics). This was not
the cruellest of deportations, however.
Those subject to deportation were givena relocation allowance and permitted totake their property and small livestockwith them. If they wished to return totheir homeland (and almost nobody
did), nobody stood in their way. So, in
September and October 1937, 36,000
families, almost 171,000 people, weredeported.
The Tsoi family, too, would havebeen in one of the carriages of the train
speeding towards far-off Kazakhstan
in 1937. Their second ‘Russian’ home
was the city of Kyzyl-Orda (presentday Kyzylorda). Here, Tsoi Syn Jun
g raduated from t he Kyzyl-Orda
Pedagogical Institute.
In 1943, at the height of the war, hefound himself an officer in the NKVD,
working in counter-intelligence. On
the NKVD’s orders, he returned to
the Far East, and from August 1957
to March 1958, he worked as a senior
representative for the security services
on Sakhalin, where many ethnic
Koreans were living at the time.
Tsoi Syn Jun was awarded the For theVictory over Germany medal, while hiswife Kim Khe Den received a seconddegree Maternity Medal. Together,
they raised five children; Viktor’s

Photo: TASSPERSONALIT Y | ROOT SYSTEM

Viktor Tsoi with one of the icons of Leningrad rock club, Boris Grebenshikov

Most of the migrants
worked the fertile andplentiful land of theRussian Far East, but
Viktor Tsoi’s ancestors
settled in a town. At
any rate, historian
Dmitry Shin, who has
conducted the mostin-depth study of
Viktor Tsoi’s genealogy,
found a mention ofa Tsoi Yon Nam (anunskilled labourer
and Buddhist) in alist of Korean families
living in Vladivostok
in 1913. Viktor Tsoi’s
great-grandfather was
registered as livingin the suburb of New
Korea in the capitalof Primorye, in themodern-day districtof Pervaya Rechka
105

father, Robert Maksimovich Tsoi, wasborn in 1938.

Father: Robert Maksimovich
Tsoi

Robert Tsoi studied in Leningrad, where
the Russian and Korean branches of
Viktor Tsoi’s family tree chanced tointersect.
Viktor Tsoi’s maternal grandfather,
Vasily Gusev, had moved to Leningrad
before the war broke out and survived
the siege. He was a labourer born andbred, and worked as a blacksmith at theYoung Shock Worker factory.
It was his daughter, Valentina
Guseva, who Robert Tsoi happened tomeet. In 1962, they had a son, Viktor,
who was to become a shining exampleof the merging of two families and threecultures: Russian, Korean, and Soviet.
Viktor Tsoi has passed into legend
as the genius working on the cuspof perestroika in the late 1980s whocreated the youth anthems of the time:
Our Hearts Need Change, Blood Type,and dozens of others. His songs remain
popular in Russia – and, they say, in his
ancestral homeland of Korea.

PERSONALIT Y | LEADER

Gazinsky scored the first goal of the 2018 FIFA World Cup with his head

How theFar East’s Gazinsky
made his mark on
international football
Text: Artem LOKALOV
Encouraged by mum– Yuri, by scoring the first goalin the first match of the 2018 World
Cup, you left your mark on the history of international football. How doyou feel about that?
– It was an unforgettable experience!
However, it’s already history...
– By the way, how did you do inhistory in school?
– I was a good student until I reachedeighth grade. The problems started later, because I started to focus more on

football, and school took a bit of a backseat.
– I’m surprised your mother let
football get in the way of school –she’s a teacher, isn’t she?
– Yes, my mother is a geography andbiology teacher. But she always trusted
me, and she was the one who got me into
football when I was 6 years old. Just to playa sport. There were no plans or dreams ofa professional career. When I went outside
I would ask if I could play football with theboys in the yard, but they never let me. I
was little. So I had to go to football school.
–You grew up without your father?

106

5:

The final score as Russia secured
a triumphant victory over the Saudi
Arabian team in the championship’s
opening game

– Mum and Dad divorced when I wasfive. Mum did it all by herself, but mysister and I never wanted for anything.
– When a boy grows up without
a father, his relationship with hiscoach becomes especially important,would you agree?
– Probably. My first coach was Tagir
Galeev. I’m still in touch with him. During the World Cup we were constantly
in touch.

Remember your roots– Smena, your first club, will
not be playing in the professional league this season. It looks like

professional football is over in yourhometown...
– Yes, first there were problems withfinancing, but they promised to find money for the club. And then the situation in
the Vostok group changed. The League
suggested that the club be based not in
Komsomolsk-on-Amur, but in some othercity, in Siberia. But Smena refused. And
rightly so. The club plays for its fans, intheir city. What’s the point of players
from Komsomolsk-on-Amur living andtraining in Tomsk or Novosibirsk?
– Do you help the Smena footballschool?
– You have to remember your roots.
I help pay for equipment, flights, andtravel. Going to competitions is especially important for Far Eastern
teams.
– Recently you helped with the installation of a memorial plaque to
Nikolai Starostin in Komsomolsk.
The Spartak legend played here fora spell and served as a coach from1945 to 1952. But you never playedfor Spartak...
– They shot a movie about Starostin in
Komsomolsk, and they mentioned me init. When his sister was interviewed, they
started talking about the plaque. That’s
how I learned about it. There was no talkof sponsorship. I just asked how muchthey needed and helped out.
– Has it been a while since you’vebeen back?
– I haven’t been back in three years.
After my daughter was born, there wasno time. Now I see my Far Eastern friends
in Krasnodar.

– People are the same everywhere.
It’s just that the people there love football too, but they have fewer opportunities. It’s not easy to travel to the cities
where the World Cup matches were held
and watch it live. But they rooted for theteam, like everywhere else.
– And before that were you offended by the criticism from the same
people or from journalists?
– Right before the World Cup, Artem
Dzyuba said: "Before you bury us, first let

BACKGROUND

Yuri Gazinsky is a midfielder for theRussian national football team. He wasborn on 20 July 1989 in Komsomolsk-onAmur in the Russian Far East. He playedin Russia’s Second Division for local club
Smena, followed by stints with Luch-Energiya
Vladivostok and Torpedo Moscow. He now
plays for Krasnodar. Gazinsky marriedAlexandra Ivanova, stylist for the TV show
Fashionable Sentence in 2015, and in2016 they had a daughter.
On 14 June 2018, Yuri scored the first goalin the game between Russia and Saudi Arabia,
the first goal in the World Cup championship.

Thanks to everyone
for believing in us– I heard you invited Sergey Ignashevich out here?
– We talked and I told him what there
is to see and do here. Hunting, fishing,skiing...
– Ignashevich is ten years older than you. Why was it that, out of
everyone on the team, you became
friends with him?
– In general, I hang out with everyone.
But I feel comfortable with Sergey. We
talk about the games and just about life.
– There’s a video of people in
Khabarovsk watching the first matchof the Russian national team at theWorld Cup in the early hours of themorning, local time, in the pouringrain. They ignored the downpour
and celebrated the victory, standing knee-high in water. What kind ofpeople live in the Far East?

us play!" We understood that we needed
results. But his absence from friendly
matches was no excuse to talk and write
nonsense about us. We know ourselves
when things aren’t going well. You haveto be more patient with our game. We
are people, not robots.
– You mentioned Dzyuba. He wasparticularly eloquent, both before
and during the World Cup. Remember, before the penalty shoot-out
against Croatia, he shouted to you all"I love you! I’m proud of you!"– Of course I remember. Only there
was no time to respond or to be surprised. All we could think about were
the penalties.
– Fedor Smolov, your teammatefrom Krasnodar, failed to find the netwith his penalty shot...
– The greats didn’t score penalties either. Don’t pin it all on Fedor.
– He was considered the most important striker on the team before
the World Cup, but in the end youscored more than him.
– Fedor knows he didn’t play how
he would have liked to or how he was
expected to. He’s a strong guy and astrong footballer. He’ll sort it out inthe future.
– After your loss to Croatia, thewhole team travelled to Sparrow
Hills to meet the fans. Some players addressed the people from a podium. What would you have said if
you’d been given the microphone?
– I would have thanked everyone
for believing in us and for coming together to root for us. Thanks to them,it turned out to be the best tournamentfor Russia.

Alexander Wilf / RIA Novosti

DPA/TASS

roscongress | Taste for life

1-0! Russia leads the game! The moment of delight107

PERSONALIT Y | RAISE RUSSIAly different, as each element has its own
purpose in helping to achieve the overall
aim – ‘To Raise Russia’.

How is the RUSSIA hot air
balloon, the largest in the world,being constructed?

How is the safetyof the pilot ensured?

RUSSIA heads towards Crimea

Fedor Konyukhov wants
TO RAISE RUSSIA
25 KM INTO THE AIR
The well-known explorer and traveller intends to soar into the stratosphere in
the enormous RUSSIA hot air balloon and set a new world record.
Text: Vladislav YASHKIN
Director of Fedor Konyukhov’sGreen Planet Charitable Foundation
Who currently
holds the record?

The current world record height fora hot air balloon was set in 2005 by
the 67-year-old Indian pilot and businessman Vijaypat Singhania. He took
off in Mumbai and reached a height of
21,027 metres in his balloon. RussianFedor Konyukhov intends to beat that
achievement by 4,000 metres!

Whose idea was the project andhow is it being taken forward?

The idea of a stratospheric flight camefrom the renowned Russian traveller andexplorer Fedor Konyukhov. The ‘Raise
Russia’ project is bringing together innovative Russian and foreign companies
which are leaders in their fields. Specialists from Britain, Belgium, the Netherlands, Russia, the USA, and France areworking on the construction of the huge
air balloon.
The project is being led by Fedor
Konyukhov’s Green Planet Charitable

108

Foundation as part of the international
megaproject ‘Russia in Search of Ideas’,run by the Archbishop Luka of Crimea
Charitable Foundation with support
from the Presidential Grants Foundation.

What other aims does the
project have?

The sporting aim is obvious: toreach a height of 25 kilometres andbeat the world record for a hot air
balloon ascent. As far as the scienti­
fic research aims are concerned, they
are wide-ranging: from the study ofnoctilucent clouds to determining theeffect of humidity in the stratosphereon weather conditions in the surface
layers of the atmosphere and the possibility of restoring the ozone layer. To
date, the stratosphere has been insufficiently studied. This is because helium
probes, which are launched in great
numbers, are at maximum heights fora very short time, while for thoroughscientific research the balloon has to beat the necessary point at a given height
for as long as possible.

The larger the volume of the hot air
balloon, the higher it can go. For example, the Indian balloonist needed
an envelope with a capacity of 65,000
cubic metres to reach a height of 21
kilometres. To reach 25 kilometres
will require a balloon with a capacity of 100,000 cubic metres. Of course,
it must have some unique features toenable it to fly into the stratosphere. It
needs a special gondola: a hermetically sealed construction that will endure
substantial reductions in pressure inorder to create a liveable environment
for the pilot. It needs special burners
which operate in a particularly rarefied
atmosphere where the oxygen content
is no more than 1%.
The huge RUSSIA hot air balloon issimilar to its smaller prototype in appearance only. In other respects it is massive-

Prototype of the RUSSIA hot air balloon

During theEastern
Economic Forum,
the balloon will
fly from Russky
Island to themainland part of
Vladivostok

On the whole, a hot air balloon
is one of the safest types of aircraft.
However, taking into account the specifics of this record-breaking flight,
in the event of a departure from thenormal mode of operation a parachutesystem similar to those used in spaceships is in place. There is also a shock
absorption system in the event of a
hard landing. The pilot’s capsule isalso equipped for landing on water –in that case it operates like a hermetically sealed life raft.

Where will the test
flights take place?

The first flight of the RUSSIA balloon’s predecessor was over the Kerch
Strait, just before the opening of the
Crimean Bridge, as a symbol of thephysical joining of Crimea with mainland Russia. That flight did not reachany great height – just 300 metresabove sea level, but the actual maximum height for that balloon is around
8,000 metres.
The balloon will also carry out flights
in a number of key locations, both inside
Russia and beyond. Flights are plannedover Mount Elbrus (and later over Mont
Blanc) and over Lake Baikal. And during
the Eastern Economic Forum, the balloon will fly from Russky Island to themainland part of Vladivostok.

FIRST PERSON
Fedor Konyukhov, traveller:

The gondola’s
capsule is equippedjust like a submarine
I have already seen the capsule in which I
will fly. It is pressurized and will be filled withair, so I won’t be wearing an oxygen mask. The
capsule is equipped like a submarine.

Oscar Konyukhov

Vladislav Yashkin

Why is such an enormous
envelope necessary?

Vladislav Yashkin

An experimental prototype of thisballoon with a capacity of 4,000 cubic
metres was designed and constructedin Russia at the RUSBAL Research andProduction Enterprise.
The unique balloon for the record
flight has been commissioned from the
British company Cameron Balloons. Its
envelope with a capacity of 100,000 cubic metres will be the largest hot air balloon envelope in the history of world
aeronautics. By way of comparison, theenvelope of the RUSSIA balloon is ten
times the size of the balloon in which
Fedor Konyukhov and Ivan Menyailo set
the world record for the longest flight –55 hours. About eight kilometres (!) ofa special fabric and 40 kilometres of
thread will be used to make this gigantic envelope.

Fedor Konyukhov inspects the gondola in which he will climb to 82,000 feet109

PERSONALIT Y | EXPOSITION

Raise the sails
and take a picture!
Several regattas will be held during the Eastern Economic Forum in Vladivostok. These include the Tallship Race,a class-A sailboat race in which multi-mast vessels from Russia, Japan, Vietnam, Indonesia, and South Korea willcompete. Each Forum participant will have the chance to appreciate their majesty at the exposition, which will
be presented by Russia’s best marine photographers. Photography guru Yury Maslyaev shares the secrets of his
trade with EEF Magazine.

Yury Maslyaev,
marine photographer

Text: Dmitry KRYUKOV

Krusenstern Barque

The most frequent question Yury
is asked at his seascape photographymaster classes is “How do you takesuch cool pictures?”“I spend seven months at sea”, heanswers jokingly. Of course, experienceand good optical equipment are important, but as Maslyaev notes with his
usual irony, “there’s a grain of a jokein every joke”, and, to shoot sailboats
like him, you have to love the sea andbe a sailor yourself.
Yury fell in love with marine photography about 30 years ago when hewas sent by the magazine Around theWorld to Petrozavodsk to photographlocal craftsmen making replicas of ancient sailboats (kochs) from the WhiteSea coast. Then he sailed them himself
along the Volga.
In 1992 Maslyaev ended up in
Genoa, Italy, where the Atlantic regatta
was launched on the 500th anniversary of the discovery of America. Seeing
all the multi-mast sailboats lined up,
Maslyaev instantly used up all the film
he had.

Yury Maslyaev

Yury Maslyaev

The sea was createdby God, and sailboats
by a God-given gift

Sedov barque, Russia

111

EEF 2018

The first exhibition of the Marine
Photographic Collection, ‘Aristocrats

Sailing tackle geometry

Pomorsky Kizh regatta of traditional vessels

Yury Maslyaev

Yury Maslyaev

Pass from Nikolskaya Ulitsa in
Moscow to Russky Islandof the Seas’, opened in late 2016 in
Moscow at the Red October Art Centre. The following year, 14 photo exhibitions were held, visited by morethan 200,000 people. The works were
exhibited at the Central Naval Museum of the Ministry of Defence of theRussian Federation in St. Petersburg.
The exhibition was opened by Commander-in-Chief of the Russian Navy
Admiral Vladimir Korolev. Appreciating their artistic value, the museum acquired the photographs for its
collection.
In 2018, works by the Marine Photographic Collection were shown in
Spain, at the Russian House in Barcelona and at the Teatre Tarragona. The
Kruzenshtern barque was brought in
especially for the opening of the exposition in Barcelona.
The most notable exposition was‘The Sails of Russia: Between the Past
and the Future...’ exhibition, which
opened at the height of the World Cup
on Nikolskaya Ulitsa, the favoured
hangout spot for football fans in Moscow. In September, the Marine Photographic Collection exposition can beseen during the Eastern Economic Forum on the campus of the Far Eastern
Federal University.

Yury Maslyaev

Since then he has made three voyages around the world, made theswitch to digital (although he has still
not completely abandoned good oldfilm), and infected fellow photographers Alexander Kilmet and Alexander
Alyakrinsky with his love of seascapes.
Three years ago, they formed the Marine Photographic Collection.
As Maslyaev explains, their creative
manifesto is: “The sea was created by
God and sailboats by a God-given gift.
Our task is to show this beauty usingclassical photography.”
Most often, they photograph sailboats during regattas. To get the rightshot, you have to sit in a boat watching
the flotilla for hours and then, quickly, 15–20 minutes before it goes out
into the open sea, shoot as much as
you can.
It’s not easy. For example, in astorm, when even the crew dares not
venture on deck, the photographer
captures the fury and power of the elements. That’s the job, even if it meanstying yourself to the mast...

Alexander Kilmet

PERSONALIT Y | EXPOSITION‘When Krusenstern sails make noise over my head’

Kaivo Maru II sailing ship, Japan

The prestigious regatta will be attended by sailboats from Russia,
Japan, the Republic of Korea and Indonesia
In September 2018, Vladivostok will welcome
participants in an international sailing regatta
for the first time. Ships from Russia, Japan, China,
South Korea, and other countries will be taking
part in the SCF Far East Tall Ships Regatta 2018,the slogan of which is ‘Maritime Brotherhood andCooperation’.
The competition is one of the events organizedas part of the Year of Russia in Japan and the Yearof Japan in Russia. The arrival of the ships in Vladivostok is timed to coincide with the Fourth Eastern
Economic Forum (EEF): the race will begin in the
town of Yeosu in South Korea on 1 September, andend at the Russian port on 8 September. The ships
will then be moored in Vladivostok for a week, until
14 September. During this time, a series of events
connected with the regatta will take place acrossthe city: local residents will have the chance toboard the ships, watch the crews battle it out insports competitions, visit the ‘Sea Village’, enjoy thefestive Parade of Sails, and, of course, watch thewinners of this prestigious race receive their awards.
Six tall ships will be taking part in the regatta:
the Russian ships Nadezhda and Pallada will bejoined by Japan’s Kaiwo Maru and Ami, theKoreana from South Korea, and the Bima Sucifrom Indonesia, as well as around 15 Class C andD cruising yachts from South Korea, China, South
Africa, and Russia.
Traditionally, international sailing regattas areheld under the patronage of the heads of participating states. The main aims of the regatta are tostimulate interest in maritime careers among young
people, promote a healthy lifestyle, support maritime education, and develop international cooperation and neighbourly relations in the Asia-Pacificregion.
The regatta is being organized by Sail Training
International and Russia’s Sail Training Association.
The principal sponsor is Sovcomflot, Russia’s largest

maritime shipping company. All the events held
during the regatta are supported by the Russian
Ministry of Transport and regional and municipal
councils with the participation of various maritime
organizations.
During EEF, a traditional Roscongress Cup regatta in Platu 25 class will take place for the third timeon September 12-13 in Ayaks Bay. The competition
will feature the best professionals of the Far Eastand other Russian regions. Among 14 teams there
will be Roscongress yacht headed by Sergey Bryuzga. The path will be located in front of the campus
quay of the Far Eastern Federal University, rather
close to the shore so that the guests of the Forumcan enjoy the competition.
All Platu 25 yachts bear symbolic names of Russian and foreign rock bands and are based at Russia’s most famous yacht club, Seven Feet, headed byVice President of the All-Russian Sailing Federationand the Club Commander, Mikhail Yermakov.

The era when the might of anaval power was determined by
the strength of its sailing fleet
has long passed, but sailboats
themselves have been carefully
preserved to this day. Moreover,Russia possesses the world’s
largest state sailing fleet, with
six vessels: Kruzenshtern,
Sedov, Nadezhda, Pallada, Mir,and Khersones.

The Sedov against the light of the setting sunYury Maslyaev

Maritime brotherhood

Yury Maslyaev

Russia, Queenof the Seas

Start of the Black Sea regatta

112

113

PERSONALIT Y | CHARIT Y
panies. We were the first to assume an
obligation to transfer 0.5% of our global
spend on advertisements where imagesof animals are used, to support projects toprotect wildlife species in their habitats.
According to the statistics, approx. 20% of
advertisements globally use photographs
and videos of wild animals, while 90% of
the most popular wildlife species are at
risk of extinction.

Power of love for pets

Responsible
business means

responsible
marketingValery Schapov,
President, Mars Russia

The world is about to change evenfaster. The pace of digitization,
increasing life expectancy andother global trends is accelerating,requiring a different level ofcorporate responsibility in solving
humankind’s critical problems.

Approach to using resources ofour planet

Mars is a family-owned business withmore than a century of history operatingworldwide and now a quarter-century in
Russia. We are committed to investing in
growth of our associates and in the economies of the countries where Mars operates.
In order to implement these long-termplans, a steady basis must be established.
An environment must be created in whichpeople will continue to take care of theirpets, care about dental health, cook, andenjoy the taste of chocolate.
The only way to achieve this is tochange our approach to using the plan-et’s resources and to supporting people.
One objective of Mars’s global ‘Sustainable in a Generation’ plan is ‘Nourishing
Wellbeing’. As a part of the initiative, we
strive to create innovations and develop
marketing models which help millions ofpeople and their pets live healthier andhappy lives. The objective is to continue
our efforts in the area of food safety andresponsible marketing.
Many Mars initiatives have global
coverage. For instance, joining efforts
with the United Nations Development
Programme (UNDP), Mars became aco-founder of The Lion’s Share foundation, which will unite many leading com-114

Non-profit organizations are often
among our partners in implementing responsible marketing projects. Cooperation
with professionals ensures a greater social
impact. In 2016, Mars, represented by thebrand Pedigree, and the Charitable Foundation Downside Up conducted Russia’s
first study of occupational orientationsof young men with Down’s syndrome,in which they were taught to work withdogs. We were able to convince societythat people with Down’s syndrome (nearly 2,500 “sun babies” are born in Russia
annually) can achieve success in occupations requiring interaction with pets, particularly at pet kennels. Such projects helpchange attitudes in society and, above all,among employers to recruiting young men
with Down’s syndrome.
Another initiative associated withbuilding responsibility in children is
the educational project called ‘1st Grrrade’. This Russian initiative received
an award at the International Festival of
Creativity, Cannes Lions 2018. The objective of the project was to help adults
understand whether their children wereready to adopt a dog or not; and young
participants learn how to be responsible. We carried out a 5-week course forstudents of a Moscow school and shot amovie based on its results. Then, we also
published an online interactive course ‘1st
Grrrade’ on the web-site Дневник.ру. In
this way, the course was made available
to 7 million children and their parents.
The project results exceeded our expectations! The most amazing fact was that
we received many messages from grownups saying they were prepared to takesuch a course!

regard to waste. The programme is basedon eco-classes for children in the second
to fourth grades, which were preparedwith support from experts in the field of
education. The explicit plan of lessons
helps teachers cultivate in students, quickly and informatively, a careful attitude tonature, and teach them how to be more
responsible. In 2016, the programme wasrecognized as the winner of a contest ofenvironmental projects by the St. Petersburg International Business Association inthe ‘Best Environmental Volunteer Project’ category.
The expertise accumulated by the company means that we can develop initiatives that are useful to society, first of allin the area of education. A good example
is the ‘Kids Smile Russia’ project which,since 2017, has been implemented together with the Russian Dental Association with support from the Wrigley
Company Foundation. Children obtainfree dental treatment and take part ineducational master classes on oral care.
The programme is intended to present ahealthy smile to poor children, those living in multi-child families and in families
in challenging situations, where parents
have been left unemployed or the children
are being brought up by a single parent,
and in families with disabled children.
During its first year, the programme washeld in Chelyabinsk, Lipetsk and Vladivo-

stok, and by the end of 2018, it will cover
three more cities in Russia.

Healthy habits

Another example in the pet care business is the Royal Canin public awarenesscampaign. The brand used professional
knowledge to launch a project promoting
clinical checkups for pets. During autumn
2017, mobile vet stations were introducedin six Russian cities. Cat and dog owners in
Moscow, St. Petersburg, Rostov, Krasnodar,
Perm and Yekaterinburg could come with
their pets to take advantage of free checkups and consultations from professional
vets. In total, physicians examined morethan 13,000 dogs and cats. It was determined that 45% of pets have problems withhealth that require diagnostics or therapy.

Essentials of communication

These are a few of examples of social
projects which have been implemented byMars in Russia and globally. How about
our standard marketing communications?
We realize that advertising is a powerfultool for communication with our consumers. That is why we have developed andimplemented a strict marketing code committing to over 50 voluntary obligations.
In particular, Mars does not target our advertisements to kids under the age of 12.
We realize the important role foodproducers can play in resolving truly

global problems that are relevant to people around the world, such as obesity.
We believe in a complex approach: wechange recipes, reduce recommended
portions and offer a range of products
for people who follow a healthy lifestyle.
All of our food product packaging indicated the recommended GDA (Guideline
Daily Amount). This is one of the best
methods to help people make rational
consumption choices. Our company always informs consumers on how to stick
to a balanced diet using our products.
Businesses are interested in sustainable growth and wellness of people.
Without this, no company will have afuture, irrespective of where it specializes. I am confident that by taking the rightaction and encouraging all participantsof the supply chain and consumers to
act responsibly, we can make our world
better together.

Responsible generation

There is no doubt that the word ‘responsibility’ does not relate to domestic
animals alone. Two years ago, a Wrigley
environmental programme called ‘Clean
City Starts With You’ was launched atschools in St. Petersburg, Ulyanovsk, Sochi and Moscow Region. The programme’s
objective is to make the behavior of therising generation more responsible with

People with Down’s syndrome can achieve success in occupations requiring interaction with pets, particularly at pet kennels

115

We realize theimportant role foodproducers can play inresolving truly global
problems that are
relevant to people
around the world, suchas obesity

EEF 2018

PERSONALIT Y | Taste for life

Rediscovering
cognacCognac may be enjoyed on its own, or with ice. At an informal meeting with business partners, or ata cocktail party. The experience of several generations of the Hennessy cognac house proves that it’salways worth being bold enough to experiment.
Text: Anton OBREZCHIKOVRoyal ice

Cognac is one of the most exquisite
representatives of the matured spiritfamily. The best cognacs are often
synonymous with great style, and areclassed in the category of expensive
and very expensive hand-made goods.
Perhaps that is the reason why cognac
is often perceived as a ‘mature’ drink,requiring rituals and an extremely
meditative attitude, similar, in a way,
to the process of smoking large cigars:
you have to devote at least an hour toit, whether you like it or not. To someextent, this is true, especially when it
comes to old releases, whose ages arecalculated in decades. The process offully developing their bouquets canrequire a substantial amount of time.
And yet this does not mean that there
is no place in the world of cognac fordifferent views and innovations.
It is believed that the cold harms
cognac, and attempts to cool it strongly
are considered by many to be bad form.
The main argument of those who argue
against cooling is that it robs thebouquet of its flavours. So it may seemall the more strange that the Hennessy
cognac house promotes sales of its XO
cognac (which is more prestigious thanits main VS or VSOP cognacs) using alarge ice cube. In fact, this originaltechnical solution delivers ‘gentle’
cooling, and the process of consuming
the cognac is truly unusual from a visual
point of view.
The main advantage of a large, clear
cube of ice, the so-called King Ice Cube,
is not even that it looks very impressive,
but rather that it melts very slowly,
which, on the one hand, maintains thedesired ‘aperitif’ temperature, and, on
the other, despite the ice in the glass,116

still allows the texture of the cognac
itself to be felt, which is, fundamentally,
the main reason behind it all. This ice
enables the drinker to prolong therelease of the taste and aroma of the
cognac: as the ice melts, powerful notesof oak and spices will smoothly give way
to subtle notes of flowers and ripe fruits.
The fact that a little water gets into
the cognac is no cause for concern. If
you talk to professional tasters of strong
alcohol, you will learn that water insmall amounts softens the bouquet of
matured spirits, and the tasters take fulladvantage of this. If you are still doubting
whether you should really put ice in yourcognac, then you should know that infact, a much worse crime with regards
to this drink is to warm it up.
Stands with special candles are still
being developed: some believe thatthese may help to reveal the flavours.
The reality is that a good cognac does
not need extra heat to release its
flavours; even the heat of one’s hands issuperfluous, never mind a naked flame.

A gastronomic pair

Another important trend when it
comes to cognac is that it is increasingly
being enjoyed as more than a digestif.
Cognac served with ice in this way canbe an excellent option for a more refinedalternative to a cocktail, especially when
you are officially invited to a cocktail
party, experts at Moët Hennessy say.
And cocktails featuring cognac are,ultimately, a very serious matter: thefirst recipes for cognac punches dateback to the eighteenth century. Cognac
with ice also makes a wonderful aperitif.
Developing the theme of digestifs, which
implies, for example, drinking withcheeses or desserts, cognac is also agreat candidate for pairing with food.
Cognac is an elegant drink with acomplex aromatic profile, so it can bematched with a very wide variety of117

gastronomic partners. Ageing in oakbarrels adds flavours of vanilla, caramel,and caviar, and spices such as cinnamon,cloves, ginger, pepper, and allspice, toits bouquet. A long period of maturingadds a note of dried fruits, such as figs,
dates, and prunes, and also hazelnuts,
almonds, and flowers. The taste of
cognac can be more or less mineral,
depending on which part of the Cognac
AOC it was made in. Properly conducted
distillation can create an ideal balanceof fruitiness and acidity in the taste. In
short, there is no reason why we cannot
combine cognac with food.
The secret to choosing the rightcombinations is not to let the strengthof the alcohol obliterate the taste, andto find the right marriage of aromas
and flavours in the cognac and thefood. For this reason, many possiblecombinations involve products or disheswith a complex or vivid taste. The best
examples in this regard are foie gras,pâtés, and other dishes with a deep,rich texture. The acidity and mineralityof cognac will add a freshness to the‘heavy’ taste of such foods.
Another option is to start from theearthy notes of the bouquet, and thenthe best pairing will be dishes basedon mushrooms, including truffles. Dueto its flawless balance of fruity notes
and acidity, cognac can be a perfectaccompaniment to raw or nearly-raw
seafood – oysters, lobsters, sea urchins,
and almost all types of molluscs, whichis especially important in Vladivostok,
where the cuisine is famous for its
abundance of marine life. Cognac
can also be an exceptional choice toenjoy with sushi and sashimi, or it canperfectly complement Asian dishes,
infused with the complex aromasof spices. This may explain why thedemand for good cognac in China
and other Asian countries is growing
steadily.

Technologies
In the photo: A lion’s mane jellyfish (Cyanea capillata, Cyanea
arctica)Photo location: On the shores of Nedorazumeniya Islandin the western part of Taui Bay (Magadan Region)
Photographer: ALEXEY VORON
A distinctive wildlife photographer (including underwater wildlife)
from Magadan Region; an explorer, free diver, and blogger

EEF 2018technologies | STARTUPFirst Person“The Technopark is a mechanism
for collaboration between business,
education, science, government bodies,and the consumers of new technologies.
Technoparks are built at universities for areason. They provide a space where major
companies can open research offices andstudents and scientists can locate theirstartups. Technoparks make it easierfor them to collaborate with different
foundations, development institutes, andoutside parties that help new companies
enter the global market. In 2017, theTechnological Entrepreneurship Support
Foundation was also created at the FEFU.
Its objective is to gather together young
entrepreneurs, while serving as a buffer
between them and the bureaucraticmachinery that is often set up in a waythat can crush new startups without evennoticing. We will be helping successful
startups to enter promising global markets,
including in the Asia-Pacific region.

Nanotechnologies are very important

An underwater robot of the Far Eastern Fedetal University is tested in a pool

12 technologies of the future
The university as a regional economic powerhouseogy called supercritical fluid extraction(SFE) for the food, pharmaceuticals,
and cosmetics industries. Carbon dioxide is used for the extraction process,with no organic solvents.
In the FEFU’s Nanotechnology Research and Education Centre, active
SFE experiments are underway whichhave already obtained extracts of ginseng, Amur cork, eleutherococcus, andmore.
These new extracts have alreadybeen used to prepare sample batchesof healthy products. For example, chocolate with ginseng and... gold, which
has adaptogenic properties.
Public interest was also piqued by‘nanochocolate’ supplemented with
seaweed, as well as innovative en-hanced mayonnaises, marmalades, andjellies using Far Eastern ingredients.
At the DalAgro exhibition in March
2018, the School of Biomedicine showcased its achievements in food product technology. There was bread withscallops, a dessert made of actinidia,
muesli with chaga mushroom extract,sausages with kelp, mayonnaise dress-

Text: Alexander ZVEREV and Maria LUKINAT

he Far Eastern Federal University(FEFU) was formed by the merger of the four biggest higher education institutions in the Russian Far
East, the oldest of which, the Eastern
Institute, was founded in 1889. Today,
the FEFU is the main centre for the development of science and technology
in the region.

Russky Technopark

Scientific research at the FEFU takes
place across nine different schools
equipped with the latest research laboratories. One of the university’s key
priorities is to forge a better connection between science and the real sector of the economy. That is the goalof the Russky Technopark, located on
the FEFU site.

The synchrotron of the future

In the coming years, Russky Island will
become home to a synchrotron witha source of terahertz radiation. The
machine will help tackle challenges
in biology, quantum materials, and ultra-high speed information processing. The synchrotron will also allow
researchers to examine the structureof new biopolymers discovered during
studies of deep-sea organisms. This
will help resolve issues in pharmacology and medicine, including oncology.

A unique chocolate withginseng and... gold?

FEFU researchers are taking advantageof the biodiversity of the Russian Far
East to develop a fundamentally new
natural product using a green technol-

120

23,000undergraduate andaround 500 graduate
students are enrolled
at the FEFU. In 2018,
84 young scientists
completed theirgraduate studies
at the FEFU. Someof them alreadyhave made notableachievementsin theoretical physics,
biotechnology,
engineering,
information security,
and radiation safety

Roman Savin

FEFU Rector Nikita Anisimov

Marmalades and jellied desserts made from an infusionof kelp with additives made of Far Eastern berries

ing enriched with carotenoids fromocean molluscs, bread enhanced withgreen seaweed, gluten-free baked
goods, meat spreads, marmalades andjellied desserts made from an infusionof kelp with additives made of Far Eastern berries and an extract of the fruitof the Manchurian walnut, and more.
Food made with sea organism extracts helps to counter diabetes andpre-diabetes, lowering cholesterol. The
use of extracts of Far Eastern plants andsea organisms in food production technology is protected by patents in the
Russian Federation. Manufacturing
standards that allow the manufacturing of these products in production-line
conditions have been developed.

New prostheses
and exoskeletons

The Neurostart cluster is home to a newteam developing neuro-engineeringsolutions. Artur Biktimirov, the FEFU
Medical Centre neurosurgeon who isthe mastermind behind the project,
notes that future engineers and doctors have already created a functional bionic prosthetic foot and calf, an
exoskeleton for the upper extremities for rehabilitative use and a system for sensitizing it, a programme
for monitoring the condition of patients with Parkinson’s disease, myographic data transmitters, implanted
neurostimulators, and other promisinginventions. The developers are led bya team of students who consult with
doctors, engineers, and people dealing
with health challenges.

Battling stress

FEFU master ’s student Sergey
Vasiltsov proposed using neurobiological feedback technology (NFB)
to reduce stress. His work is basedon a simple principle: an encephalograph records indicators from areas of
the brain cortex responsible for concentration, self-control, and discur-

Chocolate with ginseng and... gold has adaptogenic properties

121

EEF 2018technologies | STARTUP

The students have already created a functional bionic prosthetic foot and calf, an exoskeleton for the upper
extremities for rehabilitative use and a system for sensitizing itsive reasoning. At the same time,
the sound of rain is played throughheadphones. The higher the volume
of worries, streams of thought, andstress, the louder the sound plays.
The subject’s task is to subdue hisor her emotions, calm down, and reduce the volume in the headphones.
Feedback enhances the subject’s ability to manage stress independently. This invention can help people totrain their own minds. Initial testing
revealed that 15 days of daily exercises yield reliable results. After the
test, all participants in the experiment reported feeling better about
themselves, and experiencing a lower
overall stress level.

Discovering new
deep-sea organisms

As a result of the 2016 KuramBio II expedition, scientists discovered almost
500 new species of previously unknown
deep-sea organisms. Scientists from the
FEFU School of Natural Sciences andthe Far Eastern Branch of the Russian
Academy of Science are studying macro- and micro-organisms from samples
taken near the Kuril-Kamchatka Trenchat a depth of 9,500 metres.

Cleaning up radioactive waste
and processing wastefrom coal combustion

FEFU scientists have developed newnanostructured sorbents from natu-

Roman Savinral materials, which will help clean up
waste products generated during therepair and operation of nuclear-powered ships.
The use of nanotechnology is an
important technique: when creating
the sorbents, an extremely thin film
forms on their surface, making thembetter able to purify liquids containing
petroleum products.
The FEFU has developed techniques
for the comprehensive recycling ofbottom ash waste from power plants.
Some of the products obtained fromwaste materials at Vladivostok andKhabarovsk power plants include purified blast-furnace slag sand and pelletized unburned carbon.

The experiment has utilized a pneumatic underwater
acoustic projector

Sound travelling under ice acts peculiarly: the signals change significantly, and there is powerful reverberation off
the ice and the sea floor

Micro-particles in internal
combustion engine
exhaust gases

cles. This is caused by the grinding ofengine parts and components, and by
the use of catalyst systems.
Government support is extremely important to research such as this.
Studying these problems will be the key
to understanding future directions ofdevelopment for automotive technology and will help us understand how
best to use legislative tools to protect
the environment.

When internal combustion engines
run, they generate exhaust gases containing 200 different chemical compounds. A majority of those are toxic
and carcinogenic to living organisms.
Pollution from the products of exhaust gases leads to increases in awhole array of respiratory illnesses,
diseases of the circulatory system, andcancers.
FEFU scientists, under the leadership of prominent European toxicologist Aristides Tsatsakis, are doing
experimental research on the impact
of solid particles from exhaust gases on
the biocenosis of the modern-day city.
They have discovered that exhaustgases from new vehicles with minimal
mileage are the source of a large quantity of metallic micro- and nano-parti-

Rectifying
environmental damage
in Golden Horn Bay

The FEFU is running a comprehensive
programme to rectify the environmental damage that has built up in Golden Horn Bay in Vladivostok. To searchfor sunken ships and their wreckage,and for underwater cable lines placedon the surface and the near-bottom
layer of the bay floor, FEFU scientists
and staff worked to conduct a marine
magnetic survey. Its results have already been used to generate a digitalmodel of the floor of the bay, chart its
depths, and create sonar sea-floor imagery. Eight underwater objects havebeen identified that require inspection
by divers. Moorings and coastlines havealso been examined, and 3D models
made of sites that have suffered environmental damage.

Research to fight cancer

Zero-waste sewage
runoff processing
Roman Savin

Maria Sidorova, a master’s student at
the FEFU School of Natural Sciences,developed a new way to synthesize organic ocean substances that fight tumours. Developing this method willallow scientists to obtain formerly unavailable compounds and study their
biological potency, and may lead tothe invention of next-generation medicines.
Scientists at the natural compounds
synthesis laboratory are also studying
the interaction of biologically active
alkaloids and therapeutic targets, using computer modelling, and they are
working to purposefully synthesize themost promising compounds for additional biological testing. This research
may result in a new generation of medicines, including cancer drugs.

FEFU students developed a rotary windmill with a vertical axis, which can serve as a local source of electricity
in a city or remote area

122

Methods currently used to sanitize
sewage runoff require a great deal ofspace for sanitation equipment andprocessing sludge. This kind of sanitation equipment is expensive andhas an adverse impact on the envi-

ronment. At the FEFU, engineers aredeveloping a biogas unit to process
sewage runoff using a combinationof technologies for high-temperatureliquid-phase oxidation and anaerobic
fermentation. The unit can be used
for sewage sanitation both in individual homes and entire municipalities.
It produces highly valuable outputs:
a biogas that can be transformed into electricity or thermal energy andwater-soluble humates for agricultural use.

FEFU scientists
are developing theworld’s first sub-ice
communicationslines withcolleagues from
Harbin Engineering
University. The
project has special
significance for oil
and gas explorationand drilling in the
ArcticRobotics
and a windmill

In 2017, a robotics team from the FEFU and the Far Eastern Branch of theRussian Academy of Sciences took second place in the International RoboSub
Competition in San Diego. The FEFU
students’ unmanned craft can movein five degrees of freedom and even doa somersault. The FEFU team has won

123

prizes every year since 2012 in the autonomous robots category at RoboSub
tournaments and at the Singapore AUV
Challenge championships.
FEFU students developed a rotary
windmill with a vertical axis, which
can serve as a local source of electricity
in a city or remote area. The windmill
can operate in extreme climatic conditions in the Arctic. At a wind speed of
10 m/sec., the finished windmill has
a capacity of 2,500 watts, and operates at wind speeds from 2.5 m/sec to
40 m/sec. It works with wind comingfrom any direction, and stays operational during gusting winds, storms,
and hurricanes.

Under-icecommunications
for the Arctic

FEFU scientists are developing theworld’s first sub-ice communicationslines with colleagues from Harbin Engineering University. The project has
special significance for oil and gas exploration and drilling in the Arctic.
“Sound travelling under ice acts peculiarly: the signals change significantly, and there is powerful reverberation
off the ice and the sea floor. In combining the physical methodologies of theRussian researchers with techniques
for information processing from ourChinese colleagues, we will be able to
make a breakthrough in Arctic exploration”, says Professor Vladimir Korochentsev, who is Head of the FEFU
School of Engineering and the experiment’s director.
The experiment has utilized apneumatic underwater acoustic projector developed by Engineering
School scientists which emits soundwaves that spread through the waterand the ice, as well as lensed reception antennae.

EEF 2018

TECHNOLOGies | GROWTH POINTS

Alexander Galitsky,
founder of Diamond Capital:“Ideasthemselves
are worthvery little”
One of the key themes of EEF 2018is the digital economy. Alexander
Galitsky, founder of venture fund
Almaz Capital and one of the bestknown entrepreneurs in the Russian
IT industry, discusses whether
it has become more difficult for
Russian companies to break into theinternational market, the culture ofbuying innovation in Russia, and why
blockchain is the future.
Text: Irina LI– What difficulties do Russian
startups experience in accessing the
global market?
– All companies have the samedifficulties, no matter which country
they come from. You have to position
yourself correctly and, most importantly,
not make any mistakes when it comesto key people. That’s why networking
in person at various forums andconferences is so important. You cannot
trust the job of creating your team to
artificial intelligence. Of course a robot
can find potential candidates for jobs likecashiers or retail salespeople. But when
specialists are required for leading posts
you need to carry out a ‘manual search’
among a trusted pool. Even then you
have to take into account the specificnature of each market. When we werelooking for people for the American
office of one of our companies Lev

Sheremetyev, a descendant of Count
Sheremetyev, warned me: “Be carefulwhen hiring Americans, because every
American is, above all, great at sellinghimself.” And that’s very true. In Europe
there is a different problem: you haveto distinguish the person who is reallyburning with a desire to do somethingfrom the person who leaves at the endof the eight-hour working day regardlessof whether there are still fires to put out.
I’m now very interested in China,
since in the not too distant future it will
be second in the B2B market after theUSA, but I honestly fear the country
because I do not understand it at all. I
recently travelled around seven Chinese
provinces and saw how diverse andmulticultural it is. There are about 60
different nationalities in China!
– Isn’t it true that the politicalsituation presents additional
problems?

124– Of course it has become more difficult
for Russian companies. The distrust of theRussian state has undoubtedly affectedbusiness relations. But you have to learn
to overcome that, grit your teeth, andBACKGROUND

Three facts about
Alexander Galitsky
One of the first in the world to work on WiFi and VPN technologies
Key investment projects include Yandex,
Parallels, Evernote, and CapriceIn investing in businesses in Russia, Europe,and the USA Alexander Galitsky has madeabout 200 transatlantic flights over the lastquarter century

move forward – there is no other way.
It is important that the world, especially
technology, has become international:
entire global technology and production
value chains have been formed. The mostvaluable assets are not natural resources but
people. There are clever people in Russia
and we need to use this resource correctly,
both in the interests of the country and tocontribute to world progress.
One of the problems is that Russia has
no great success stories, where somebody
has launched a company and has become
wealthy in a short time. Yandex andMail.Ru are solitary examples. But
there is no history of mass purchasesof companies by Yandex. For example,
in 2016 Google alone bought over 200
companies to guarantee its growth andits position as a technological leader.
The culture of buying innovation has
only just started to manifest itself in
Russia; it is still far from being fully
developed. And this leads to anotherproblem: entrepreneurs are afraid oflosing ownership of their company andsee any startup they engage in as thelast and only one in their lives. When
my international partners look at Russiancompanies they say that all Russian
entrepreneurs are greedy.
In addition, there are virtually no
product management specialists in
Russia. You take on one programmer,then a second – that’s all fine, butassembling a whole team is not soeasy. It is as though the ‘communist
cell’ mentality kicks in: work becomesa collective struggle for leadership, forsorting out the strong from the weak.
However, there are some pluses. For
example, once a team has been formed
it is very loyal and can survive difficult
times, something that you will hardly
ever find in Western companies.
– The world is seeing a boom incryptocurrencies. Might the ICO
replace the venture industry?
– I don’t think so. An ICO is essentially
crowdfunding. Remember how popular
Kickstarter was at one time for creating
new gadgets? People threw lots ofmoney at it, but then problems arose:some did not receive the goods they
paid for; others did not receive what
they were expecting. And the Kickstarteridea wasn’t so popular any more. In thetechnology business, ideas themselves
are worth very little – it is only theputting of that idea into practice that isof value. An ideal ICO story would be if awell-known and successful businessman
like Bill Gates or Elon Musk were tolaunch a startup and conduct an ICO.
Naturally many people would offer
money in exchange for tokens. But the
problem is that for an investor, even a
professional one, it is quite difficult toassess the initial and eventual valueof new tokens. And it is difficult for anentrepreneur to assess how much capital
he will truly need during the five to sevenyears it takes to establish a company.
However, I do believe in ICO, as
special systems will emerge to help
investors make more measured decisions
when purchasing tokens. At the moment,
unfortunately, it is all built on theemotional element.
– To broaden the discussion,
what is your attitude to blockchain
technology?
– I am a great believer in blockchain
tec hnology and I see suf f icient
applications for it in cases where a
distributed end-to-end environmentof trust is required. It is probably
comparable with the introduction of
the IP protocol and the Internet into
our lives. For example, if public moneyis ‘coloured’ with the number of a ‘coin’
and its movement accommodated ina blockchain environment, that will
obviously help in the fight against
corruption. Whichever way you look atit, blockchain is the future.
– One of the themes of EEF 2018is the trust economy. Uber and manyother companies throughout theworld are built on the principle oftrust. Some think that the futurelies in shared consumption, whileothers are of the opinion that thisbubble will soon burst. To whichof these points of view are you
inclined?
– The question is not whether Uber
will die, but whether car sharing willsurvive. And it will. It is no longer
expedient to own a car in Moscow.
Even if I always travelled using UberBlack [the most expensive option – Ed.],
it would still cost less than owning a
Mercedes of the same class. So why do
I need my own car?
It will be the same with housing.
Now, you buy somewhere to live thatis very expensive, but its value does
not increase over time, it only falls.
Previously, the spaces in which people
lived saw very little improvementfor decades or even centuries. Now
everything is different. Children will
not live in the houses their parents arebuilding as those houses will simply
grow old in technological terms in a
fairly short space of time. As a result
you are investing in heaven knows
what. In developed countries, people
do not buy property, they live in rented
accommodation – near their work, forexample, or their child’s school. So the
bubble will not burst, because there
is no bubble. It is an economic trend
based on a new technological wave.

Where venture investors are looking
Top 10 industries in terms of attracted funds
0.4
Travel3.6
E-Commerce

1.1
Augmented Reality/
Virtual Reality

3.3
Finance

1.1
Navigation

1.9
Business Solutions

1.3
Artificial Intelligence

1.4
Education

1.3
Advertising

1.3
Healthcare

Source: IIDF

125

TECHNOLOGIES | Security

Photo: airportus.ru

Germany and the US. They make itpossible to structure passenger flows,
minimize queues, and actually increase
security levels. Border guards willoften just check that your documents
are in order. Do you think anyone reallycompares you to your passport photo?
Biometric systems control every stageand exclude the human factor. Airports
have been their starting point, but wecan expect to see them appear at roadcheckpoints and seaports in the future.

Yuzhno-Sakhalinsk was one of the first airports in Russia to introduce the Speech Technology Centre’s smart track system

Smart trackboardingТext: Irina LI

General Director of
the Speech Technology
Centre Dmitry Dyrmovsky
discusses how biometrics
will shape the future ofaviation. The transformationis already underway, withcertain smart elements
being introduced at
Yuzhno-Sakhalinsk
and Saransk airports.

If passengers don’t have toqueue, they spend more timein duty free
– How can biometrics solve
problems for airports?
– We are seeing airports transformaround the world in three ways. First,
there is an attempt to reduce the amountof time spent on airport formalities,
such as flight and baggage check-in,boarding passes, and passport andsecurity checks. Biometrics both cut
the amount of time these procedures
take, and bring in money for airports:
if passengers don’t have to queue, they
spend more time in duty free. And themore time they spend there, the moremoney they spend.

126

The second point is comfort. We’ve
already achieved a certain comfort level,
and we don’t want to make any sacrifices.
Everyone’s used to checking in online
now, for example. Throughout the world,
we’re all trying to use a lot less paper.
The third focus is on ensuring that
cutting back on formal procedures does
not come at the detriment of security.
Biometrics is a threat prevention tool.
After 9/11, as we all remember, theUS brought in biometric passports,
and Russia followed suit a little later.
Then systems known as e-gates wereintroduced, making it possible to crossborders without encountering a border
guard. These are essentially barriers
which scan your face, passport, andfingerprints, and give you an electronic
entry stamp in return. Solutions likethese haven’t reached Russia yet, butthey have already been launched in

The classic method
for identification is‘I am what I have’ –documents, PINs, andso on. Biometrics workon the ‘I am what I am’
principle. It’s much
more difficult to falsify
or steal biometric data
– Why has their starting point
been airports?
– Airports bear the most responsibility
with regard to security. There’s aneconomic effect at play here, also.
An airport is like a shopping centre.
Their task is to maximize passenger
satisfaction.
Biometric solutions are notconfined to single airports, either. The
International Civil Aviation Organization(ICAO) recently produced a new set of
regulations governing the transfer ofbiometrics between airports. Say you’re
flying from Airport A to Airport B, andthe first passes your data on to thesecond. When you arrive, you won’t be
subjected to any serious security checks,
since you’ve already been through them
all at your starting point.
– We already have e-boarding
passes in Russia, which operateusing QR codes. Is this not enough?
We always have our smartphones on
us, and it takes just seconds to scan
your pass.
– Sure, but with biometrics there
will come a stage when we don’t need aboarding pass at all. The classic method
for identification is ‘I am what I have’ –documents, PINs, and so on. Biometrics
work on the ‘I am what I am’ principle.
It’s impossible to falsify or steal biometric
data.
Smart phone identification doesn’t
work because you can pass that QR codeon to whomever you like. Airlines facea great financial liability for boarding
the wrong person – a huge fine. In fact,airlines will even check visas before
boarding passengers, because if they
fly you over and you don’t have a visa,
they’ll have to foot the bill for your flightback home.
This is the advantage of biometricsystems. They benefit everyone. Airlines
eliminate risks, the government improves
security, and passengers receive a better
quality of service.

When it comes to security,
passengers are never notified– We have a bright future withtechnology. I can see that. But what
are you working on at the SpeechTechnology Centre?
– We’re developing a solution we callsmart track. It’s a software platform
which interfaces with airport systems,
ticket reservation services, and loyalty
programmes to create a complete digitalprofile for a passenger. As soon as you
buy a ticket, your data will be stored
in the ticket system. After checking in,your data enters the check-in system,and so on. We see every step, right up toboarding. As things stand, if a passenger
is delayed at check-in, the airline doesn’tknow whether he or she has arrived
at the airport. With our system, thisinformation will be available. Cameras
at the airport entrance will log eachindividual who enters.
– Is the government aware of thebenefits of introducing your system?
– Yes, absolutely. The processes
are underway, but there is a lot of
bureaucratic complexity. We need a lotof coordination between the Federal Air
Transport Agency, border services, andsecurity services. So at the moment,
we only have certain aspects of smart
track up and running. We started withsecurity, with the initial identification
system at airport entrances. This kindof system has already been installed at
Yuzhno-Sakhalinsk and Saransk airports,
and is currently being introduced at
Nizhny Novgorod Airport. The system
identifies blacklisted passengers. The
identification process is carried out
discreetly upon entering the airport,
without the involvement of security
staff, and so it doesn’t cause any
additional delays.
– This raises a privacy issue: arepeople notified and do they agree127with their biometric data being
collected discreetly when they enteran airport?
– W h e n i t c o m e s to s e c u r i t y,passengers are never notified. Youmight be aware you’re passing througha metal detector, for instance, but you
are never given an explanation of all
the procedures being carried out. The
authorities are under no obligation
to explain how their security systems
function, ot her wise t hey would
be opening the door to any and all
criminals. All these measures are set
out in government decrees. It’s the law.
– Right, but we also have aconstitution
which
guarantees
confidentiality and transparency.
– That’s true. But it’s not quite so
simple. Europe has adopted the General
Data Protection Regulation (GDPR),
for instance, which takes privacy to a
new level. Information about how data
is used and where it is stored is now
completely transparent. But even within
this law there are limitations wheresecurity issues are involved. The cameras
at airport entrances do not currently
store your data, but simply compare itagainst the blacklist.

Biometrics is somethingpeople will gradually
get used to, just as wecame to realize thatonline check-in is moreconvenient and secure.
Believe me, you giveup a lot more of yourpersonal data on social
media
Regarding smart track as a whole,no one will force you to hand over yourbiometric data at check-in or boarding.
There will always be alternative routes
where airline staff can manually checkyou in and stamp your passport. If you
do wish to take advantage of the new
system, then you are making a conscious
decision to provide biometric data andconsenting to its use. So there are nocontradictions.
This is somet hing people will
gradually get used to, just as we cameto realize that online check-in is moreconvenient and secure. Believe me, you
give up a lot more of your personal dataon social media.

EEF 2018

TECHNOLOGIES | SCIENCE AND SHOWSThe Ocean on
Russky Island

Text: Yevgenia Kuznetsova
Opened in style

Yury Smitiuk / TASS

This has been a far-reac hing,long-awaited, and prestigious project –the opening ceremony for the aquarium
was attended by three heads of state:
Russian President Vladimir Putin, Japa­
nese Prime Minister Shinzō Abe, andthe former South Korean President Park
Geun-hye. Acting as their ‘guide’ wasfamous biologist and member of theRussian Academy of Sciences Andrey
Adrianov.
The aquarium was built on the directive of the Russian President, and has become a part of the Far Eastern Branch of
the Russian Academy of Sciences. The

idea for the project came about as far
back as 2004. At that time, the notion of
combining science, education, and astoundingly beautiful sights under one roof
seemed almost impossible to implement
in reality. Today, however, it’s safe to saythat everything has gone swimmingly.
Similar approaches are now being
actively developed in aquaria throughout the world. Everyday visitors arewelcomed here to tour the exhibits andthe dolphinarium, schoolgoers and students are treated to lectures, exhibitions, and seminars, and six laboratories
equipped with the latest facilities carryout research. All of these areas of activity serve to complement one another. It
is this multitude of projects that makes
Primorsky Aquarium unique.

The spectator arena at Primorsky Aquarium, part of the Far Eastern Branch of the Russian Academy of Sciences

128

A bird’s eye view of Primorsky Aquarium

BY THE WAY

A socially
responsible facility

Numbers

In 2018, Primorsky Aquarium received
an award as a ‘Socially Responsible
Business’. Although it obviously isn’t
a business in the standard sense, theorganizers of the competition felt thatthe efforts of the aquarium’s staff andvolunteers were deserving of recognition.
Throughout the academic year, themiddle of the week sees this building on
Russky Island fill with participants in the‘Educational Environment’ programme.
Pre-schoolers are accepted free of charge
by the educational studio ‘Seal Cubs’, andchildren from care homes and correctional
facilities are regularly invited to fun events
organized by the charity ‘Ocean of Hope’.

Alexander Ryumin / TASS

Primorsky Aquarium

Yes, that’s right – we’re not talking
about an island in an ocean, but
about an entire ocean, complete with
its own unique underwater world,
located on Russky Island. Join us ona visit to Primorsky Aquarium, which
opened here just a couple of years
ago.

The underwater tunnel of Primorsky Aquarium, part of the Far Eastern Branch of the Russian Academy of Sciences, on Russky Island

129

The total area of the aquarium’s
indoor space measuresover 37,000 square
metres – that’s nearly five
football pitches, making theaquarium the third largest in
the world. Here you can findnine permanent exhibitions
consisting of 135 tanks
holding a total of 15,000
cubic metres of water, amain tank with a 70-metre
underwater tunnel, and adolphinarium with a pool arena
and seating for 800 spectators.

EEF 2018

Technologies | SCIENCE AND SHOWS4

In a world where few aquaria are located on islands, the employees of Primorsky Aquarium are especially proudof the building’s exclusive architecture
and interior design. The dolphinarium
has been built to resemble a giant shell,
and the aquarium itself a gigantic wave
rolling onto the shell as it carries it towards the picturesque shore.
Some of the tanks here are of such impressive dimensions that they had to

be installed before the walls and ceiling that surround them were built. The
inhabitants of Vladivostok’s aquarium
include representatives from all of theworld’s oceans and climatic zones. Scientists visiting Russky Island from theUSA, China, and Japan unanimously voted our aquarium among the five
best in the world.

5
3

Yury Smithyuk/TASS

2…with full-scale grey
whalesVisitors to the aquarium are amazed
most of all by the dimensions of thebuilding and its magnificent installations filled with marine life. Guests
are especially fond of the sculpturesof creatures found in the waters of theRussian Far East that decorate the museum. All models reflect their real-life
subject down to the finest detail, differing only in their noticeably increased
size. In the hall near the main entrance,
a dramatic and realistically portrayedunderwater scene shows a female grey
whale protecting its calf from predatory killer whales. Biologists were on
hand to advise the sculptors and artists
at all stages of their work, so you canrest assured that all fins, thorns, moustaches, and every other detail are just
as you’d find them in the natural world.

130

Alina Kaufman, Nina Khoreva, Alexander Khitrov

1...with an enormousshell on a gigantic wave

ocean
spots
to takeselfies…with contemporariesof the dinosaurs

The interest shown by visitors inhorseshoe crabs and nautliluses (or‘living fossils’), which lived alongside
the dinosaurs, is quite understandable.
Millions of years of evolution have leftthese creatures virtually unchanged.
The freshwater bitterling is a fishthat can be found in any pond in Russia’s Far East, but is unique in laying
its eggs in the cavities of bivalve molluscs.
If you’re passing by the Lake Khanka exhibition, make sure you don’t missthe skygazer. This species of fish is difficult to keep in captivity, but scientists
have succeeded in adapting this fussiest of lodgers and growing it to sizes of
up to 70 centimetres.

A separate exhibition is devoted to
the giant octopus. Unbelievably elastic,these creatures can squeeze throughopenings significantly smaller than theirown dimensions. The molluscs are aconstant source of fascination to specialists from the world’s leading aquaria.
Not long ago, the main building of
the aquarium became home to Humboldt penguins – the first to settle in the
Russian Far East. Aquaria are naturally
the only place where we can see with
our own eyes the creatures that inhabit the tropics. It’s almost impossible tocatch sight of Sepiola atlantica in thewild – they are only caught in the dark
during the spring months. The fugu isalso difficult to catch, and the albino cucumaria is not only rare, but also uniqueto local waters. Don’t miss the blennius
in this exhibition either: their heads that
resemble faces with wide-set, astonished eyes are bound to raise a smile.
What’s more, scientists say that the
specimens on display in this collection
are unique in their own way. Keeping and caring for each one involves
its own set of challenges. Each exhibition is a complex habitat filled withcreatures that are sometimes far fromfriendly towards one another.

…with a walrus during his
morning exercises

At the dolphinarium, visitorsof all ages can reward spectacular jumps
performed by bottlenose dolphins and beluga whales with their enthusiastic applause. But the undisputed star of the show
is walrus Misha and his fun exercise routine, performed under the supervision of
his trainer.
In the Ocean Abyss exhibition, feedingtime for the sharks and rays has evolved into the gripping show Dances with Rays. Biologist divers have trained the creatures intheir care to do various tricks that are practically impossible from a biological point ofview, with some moves that you won’t see
anywhere else in the world.
And in a section devoted to Lake Baikal,
you’ll find three freshwater seals that havemade the habitat their home. This trio arevery sociable and well suited to training. In
the space of only a few sessions, they weretrained to twirl in the water, shake theirflippers, and perform somersaults.

5…with participantsin scientificexperiments

Primorsky Aquarium has become a major site for an entire seriesof scientific experiments in the field ofbiohydroacoustics. Research recently
began here on the acoustic activity ofbeluga whales. These ocean mammals
are able to hear across an astonishingly wide acoustic spectrum. Their mapof the world is one that consists predominantly of sounds. Although scientists throughout the world have beenrecording the signals of dolphins andwhales for several decades, an unambiguous ‘translation’ into human language has yet to be produced. Efforts
to understand the language of theseocean-dwelling giants are now being
made by local researchers with thehelp of trainers from the aquarium. The
trust that exists between beluga whales
and humans makes it possible to avoid

placing them under stress, which ensures that the creatures’ natural reactions can be observed.
The aquarium also has plans to conduct joint projects with Skolkovo resident Hydrobionica. The company’s
specialists are developing methods for
managing the behaviour of commercial
marine life. More precisely, they havebeen ‘observing’ the behaviour of mammals and attempting to imitate it withthe help of modern technology. Moreimmediate scientific projects will examine beluga whales and Japanese flying squid.
Equally interesting are recent
achievements by scientists working on
synthesizing the cells of marine mammals: by carrying out a special process
on the biological material, researchers
have managed to synthesize male andfemale cells from it, regardless of thesex of the donor animal participatingin the experiment.

131

FIRST PERSON
Andrey Adrianov,Vice President,
Russian Academy of
Sciences;
Director, National
Scientific Centreof Marine Biologyof the Far Eastern
Branch of the Russian Academy of Sciences– The exhibitions at Primorsky Aquarium
are all designed with a single scientific idea inmind. This is a journey that takes us from thevery beginning, when the planet was formed,
through the formation of the oceans, following
all stages of life as it appeared within them, andending with how this life is represented in theworld’s seas today.

Alexander
Mikhailyuk,
Director, Primorsky
Aquarium– Creating a base for researching aquatic mammals in an aquarium is a very complex
task. As a rule, research like this is conductedin a closed environment. As a state facility, theaquarium has initiated an open research format,
which entails the creation of working groups
bringing together various scientific disciplines
and integrating fundamental science and applied
developments on a single site.

Marat Khaydarov,
Member of the Far
Eastern
Aquatic Life Team– My studies are focused on the clinging
jellyfish. We have prepared a scientific article on
jellyfish populations together with a colleague
from an American institute.
The jellyfish we have in the Sea of Japan aremuch closer to Atlantic than to Pacific varieties,
and far from all of them are toxic. As they do
not live for very long, it isn’t always possible tocatch them in sufficient quantities. That’s why
we try to breed them ourselves, overcoming alldifficulties through patience and perseverance.

Roscongress
In the photo: View of the Staritsky Peninsula andZavyalov Island
Photo location: The outskirts of the village Ola(Magadan Region)
Photographer: ALEXEY VORONROSCONGRESS |Social Platform

Tatyana Golikova, Deputy Prime Minister of the Government of the Russian Federation for Social Policy, at the opening of NPO Lab at SPIEF 2018

Changes
for the better
Increasingly substantive discussions on Russia’s future social structure are
becoming the focus of national forums, and the 4th Eastern Economic Forumis no exception.
Text: Dmitry BUTRIN, KommersantWhile, a few years ago, discussion of social reforms wasan add-on to the main economic agenda, now, as we embark on
major new reforms of the social security system, in the light of the priorities announced via national projects
for raising the Russian population’s
standard of living, improving the demographic situation, and creating anenvironment where people can live
comfortably and seek personal fulfilment, a dialogue between the state andsociety that could become a tool to educate and jointly seek effective solutions
is no less an important part of the EEF
than the economy.

The Roscongress Foundation, whichorganizes the EEF, is a socially-oriented
development institution, and so attention has always been paid to dialogue
which includes representatives drawn
from government, business circles, andnon-profit organizations. But in 2018, theFoundation’s social activity has reacheda qualitatively new level and this theme
is becoming a vital part of forum agendas. The Foundation’s key partners indeveloping the social agenda have been
identified, with whom large-scale projects such as the Innosocium Centre forDeveloping Social Communications havebeen planned.
The NPO Lab is the calling card of the
Roscongress Social Platform at the forums. This is a unified communications

134

platform that brings together non-profit
organizations, business, and government.
At the NPO Lab, charitable foundations
and non-profit organizations have theopportunity to present their social projects and the social technologies they
have developed on a national stage, andto initiate and support focused discussions on topical issues. Finally, the NPO
Lab is an incubator for collaboration onsocial issues for non-profits: the project
offers all forum participants a chance toagree on cooperation and joint projects
in the social sector.
On 11 September, the environmental
agenda will be launched at the EEF NPO
Lab. The day will feature a plenary session, ‘Drivers of State Policy on Environmental Development’, discussions on the

problems of preserving biodiversity in
the Russian Far East and marine reservesin the region, and two themed sessions,‘Introducing Innovative Technologies to
Improve Environmental Performance’,
connecting the Forum’s economic andenvironmental agendas, and ‘Public Initiatives as an Integral Part of Regional
Development’, which will also be a discussion of related issues, devoted to third
sector integration strategies in the Far
East in relation to other sectors.
Perhaps the main item on the NPO
Lab’s agenda at the Eastern Economic
Forum will be a presentation of the Innosocium Centre for Developing Social
Communications and the panel session‘Social Communication as a Driver of Socially Significant Change’, in which thejury and experts of the Innosocium Nationwide Social Project Competition will
present the programme for the contest,
and the criteria for evaluation and selection. Keep in mind that the Innosocium
Nationwide Social Project Competition
is a Centre event, through which there
are plans to support promising Russian
projects, with the aim of developing andscaling them, and to identify and showcase the best international social communication projects. The winning projects in
key communication competitions (Silver
Archer, Silver Mercury, ADCR, and Effie),selected by the Organizing Committee
in eight main categories (environment,
education, active ageing, inclusive society, healthcare, women’s leadership,
regional development, and culture) will
be presented by experts at EEF, and will
become a benchmark for all contestants.
It is in Vladivostok that the start of thesubmission period for online entries tothe competition will be announced.
It is important that the start of thecompetition is not so much about thepresentation of a ready-made form, butalso discussions at EEF of how it mightdevelop further. Addressing social issues
is impossible without the participationof the corporate sector and charitable,
public, and volunteer organizations. Asa rule, these are the sources of innovation in social communications. The main
aim of the discussion on this matter, on
the second day of the EEF, is, therefore,
to talk about what the particular features of effective social communication
technologies in Russia are, as well as
successful examples of this in Russia, toanalyse the applicability of best international practices, and to assess possible
strategies for all aspects of the process
in modernizing social communications
in Russia.

In addition, part of the ‘social’ agenda
at the NPO Lab will involve discussions
on the development of human capitalin the Far East, and discussions of active ageing programmes and initiatives.
In addition, part of the NPO Lab’s ‘social’ agenda will be devoted to discussing
demographics and developing humancapital in the Russian Far East, as well as
the development and implementation ofprogrammes and initiatives to promotean active lifestyle in old age. These topics
require special attention in light of efforts
to make the region more attractive as aplace to live.
Another discussion at the NPO Lab will
focus on sociocultural inclusion and anaccessible environment for people withspecial needs in Russian society. The factthat this issue is being raised at the EEF
shows the distance travelled by society inrecent years. Nearly all the discussions ofrecent years have mainly concerned thesocial side of inclusion, addressing thematerial and social problems experienced
by people with disabilities. Discussion of
the cultural component of inclusion is themost important stage in the developmentof society: the EEF as a national forum
will pioneer the discussion of this crucial
issue, without which it is unlikely thatsociety can move forward.
Another aspect of the NPO Lab is theinclusion of panel sessions and roundtables in forum business programmes
which feature leading Russian and international experts and representatives
drawn from government, the business
community, and non-profit organizations, on global trends in philanthropy,social development in Russia, existing
problems, and prospects for resolving
them. These events not only enable anopen and constructive dialogue between
participants in Russia’s social sector, butalso allow an exchange of experienceand views with representatives of theinternational community.
In one of the panel sessions that has
been organized, invited experts will discuss the face of modern social communications in various countries, and how
to make these a genuinely effective tool
for attracting the attention of society tosocial challenges and teaching peoplesocially responsible models of behaviour. The inclusion of this discussion in
the Forum business programme reflects
the relevance and international nature ofthis topic, and it can be anticipated thatthe results of the discussion will becomea source of ideas and future initiatives
for developing social communications
for the Innosocium Centre.

135

At the initiative of the Roscongress
Foundation, the EEF agenda also includes a discussion of the issue of women’s full participation in the digital
economy and overcoming the gender
gap in technology. Discussion participants will talk about innovative solutions
created by women and for women, about
promoting training platforms to support
female entrepreneurship, and about how
the changing role of women in the digital age can facilitate economic growthand sustainable social development. It
is worth remembering that during thissession, Roscongress will continue its
initiative to create a community of women leaders supporting social wellbeing
and increasing the role of women in addressing issues of global socioeconomic
development.
The third session will also address
the topic of modern technologies: experts in the field will discuss their influence on the upbringing and educationof children. How should society regulate the social impact of digital technologies, which the younger generation
master much faster than their parents?
Despite the seemingly childish nature of
the question, it is one which will determine how the social landscape looks in
20–30 years.

FIRST PERSON
Anton Kobyakov
Advisor to the Presidentof the Russian Federation“The social space created by the
Roscongress Foundation across Russia’s
largest business forums opens up aplatform for social enterprises to share
their plans and achievements in tackling
important social issues with the broader
public.
We must fully analyse and push forthe best practices and social technologies
which could form the basis for sustainable
development and a tangible improvement
in quality of life for our citizens.
The demand for and effectiveness of
this social platform can be seen in its
role as a catalyst for social processes
involving various parts of Russian society,from the state and business community
to non-profit social enterprise andvolunteer activists. It also promotes a
joint discussion about social change anda search for acceptable ways to achievesocial development.”

EEF 2018

ROSCONGRESS |Social Platform

The Year of Volunteering makes the perfect
starting point

FIRST PERSONMaria Krasnikova
Director, Art, Science and Sport“One of the key areas of work for theSpecial Sight programme is systemic
support for organizations involved
in raising awareness and promotingsocial initiatives to help visually
impaired people, including throughgrant competitions. We hope that thiscontest will help to draw attention to
the problems faced by the blind andvisually impaired, and also raise the ideaof equality for people with and without
disabilities in all sections of society.”

NPO Lab venue at SPIEF 2018: Deputy Prime Minister of the Russian Government Tatyana Golikova (in the middle),
CEO and Deputy CEO of the Roscongress Foundation Alexander Stuglev and Elena Marinina

It is impossible to handle these issues without
correctly built communications
Tatyana Golikova
Deputy Prime Minister of the Russian Federation for Social Policy“Social development, improving quality of life, and developing integrated
solutions and responses to the global challenges we face form an essential
part of what the state and society must do. Yet solving all these issues is notpossible without a proper communications structure to make people thinkboth about global issues of sustainable development, and about the issues
facing specific people living on our doorsteps, and to build a culture of social
responsibility.
The Innosocium Centre for Developing Social Communications was createdto support and develop effective mass social communication tools to inform
people about important issues and opportunities for them to get involved intackling them. It also aims to foster a culture of social inclusion. This initiativeis one which addresses society’s current need to build an open and effective
dialogue between all members of the social ecosystem.”
Elena Marinina
Deputy CEO and Head of the Directorate for the Socio-Economic Agenda,
The Roscongress Foundation“Innosocium is essentially an infrastructure project developed by the
Roscongress Foundation’s Directorate for the Socio-Economic Agenda and theArt, Science and Sport charity foundation. Its purpose is to study, support, anddevelop tools for mass social communication, an extremely important task in
Russian society: no social reform is possible without the evolution of a cultureof social inclusion and socially responsible behaviour in society. Creating ahigh-quality information environment is a task for society as a whole, but
informing people about significant social problems and opportunities to get
involved in addressing them is certainly the job of the third sector, and weneed to create the infrastructure for such communications as a priority.”136

Anna Shabarova
Vice President for HR and CSR,
Russian Copper Company“The idea for our company’s partnershipwith the Innosocium Nationwide Social
Project Competition developed partly outof our social project ‘Change your City for
the Better’, which Russian Copper Company
is organizing for the second year runningin the cities where it operates. We aresure that we can garner some deserving
projects from throughout the country which
will benefit people living outside Russia’s
major cities. Russian Copper Company’s
experience in social initiatives could be aninteresting example for socially responsible
Russian business, municipalities, and urban
developers. We are confident that thiscompetition will help us to take advantageof existing tools to improve quality of life forpeople living in our country and will mean
another step towards improving the social
climate in Russia.”

Katerina Kruglova
Executive Director,
Memory of Generations“In 2018, the Memoryof Generations charity
fund took the decision toback and launch a new
project jointly with the
Association of Volunteer
Centres called ‘Youngat Heart’. The aim of
the project is to develop
social communication.
The project is designed
to bring elderly people
together with a common
goal as volunteers
whose experienceand knowledge would

enable t hem to helpt hose in need, apply
t heir knowledge inpractice, and bring
benef it to many. We
believe that the Year of
Volunteering makes theperfect starting point
for projects like this,and that the Innosocium
Nationwide Social Project
Competition will give theproject new scale anddraw public attention to‘silver volunteering’ inRussia.”Social projects win more and more prizes
MikhailSimonov
President,
Silver
MercuryFestival“In recent years, international
PR contests have been awarding an
increasing number of prizes to social

projects. Silver Mercury, one of thelargest marketing communications
contests, has gone one step further,creating two separate categories forsocial campaigns – one for thosecarried out on behalf of non-profit
clients, and t he ot her for social
projects executed by commercial
companies. We will be happy to sharethe experience of our participants
with the social sector to help it growand develop more rapidly, and helpsocial communication to become
more creative and effective, and win
not only the Innosocium Nationwide
Social Project Contest, but also the2019 Silver Mercury.”Innosocium will assist in our search
for fresh ideas
Yakov
Minevich
Executive
Secretary of
the Boardof Trustees
for theSilver Archer
national
publicrelationsaward“ We are seeing an increasing
number of social initiatives in ourlives in recent years. In large cities,
especially, almost every single person
has some kind of relationship to acharity, volunteer, or social initiative.
To take social communication forwardand make it more effective, we haveto look outside the box, make our key
messages both clear and inventive
i n t h e w ay t h e y a r e d e l i ve r e d ,and be present in the information
fields of our target audiences. The
I n n o s o c i u m Na t i o nw i d e S o c i a l
Project Competition, which aims
to find the best new methods forpromoting any given social theme,
will assist us in our search for fresh
ideas.”

137

Contests
Alexander Alexeev
President, Art
Directors Club
Russia (ADCR)“Every Russian contest in professional
communications regularly awards prizes
for the best social communication
projects. Yet we have no competition thatis focused on this highly topical subject.
For this reason, it is only natural that thefirst stage of the Innosocium Nationwide
Social Project Competition involves
selecting the best winning projects fromother leading competitions to create aunique collection of work in a contest
of contests. This will raise the bar toan ambitious height for future contest
participants.”

Development
Elena Topoleva-Soldunova
Director, Agency
for Social Information; member of
the Civic Chamberof the Russian Federation“Until very recently, social issues suchas benefits, pensions, large families, people
with disabilities, and homelessness weregenerally seen as hopelessly boring anddepressing. The reaction to media stories
on social issues was one of apathy. Now,
things have changed. Social issues havebecome exciting and trendy, and attract a
lot of public interest. We are now seeing awhole spectrum of new projects, forums,
fairs, conferences, and flash mobs, alongwith new organizations, public figures,
films, and books, as well as public platforms
where these issues are discussed. To findlike-minded people, inspire them with new
ideas, and make them into partners for yournew social project, you need an effective
communications infrastructure. This iswhere we got the idea to hold the Innosocium Nationwide Social Project Competition.
We’re all really looking forward to it!”roscongress | Made in Russia
Russia on Asia-Pacific markets. However,it should be understood that in today’s
information space, the opportunities
and content in a single region, even one
as rich as the Far East, are insufficient
to shape a powerful information agendathat is visible to end users and potential
partners.
The disproportionate opportunities
and potential of regions require a
special approach and the developmentof tools that will compensate for these.
This requires the consolidation ofefforts as part of a single strategy, as
previously mentioned. This strategy
must be capable not only of helping
regions which are lagging behindbut also of bringing them up to thelevel of successful regions throughdissemination of the best and mostNational and local
branding as a regional
development tool
Swapping
hyperprofits
for initiative

The challenges
faced by Russia
become more
complex every year, requiring changes in
the conceptual approach to developing
economic potential. The latest roundof sanctions may be restricting the
growth of the Russian economy, but it
is also creating the conditions for the
introduction of initiatives and solutions
that were previously not attempted
because of the dominance of dullroutine and the hyperprofits pouring
into the budget from commodity sales.

In a restrictive environment, the key
factors of success are consolidation,communication, and the ability tofind compromises when working onstate tasks and achieving strategic
targets. Today these words should
be a mantra for any manager, notonly in the public sector but also in
private business. The success of thenational economy should be one of
the main aims to which everyone iscommitted.
The development of national
branding and the creation of anational communications strategy
aimed at consolidating the efforts
and resources of the state, business,
public organizations, and individual
Russians can be powerful drivers ofregional development and regional
business.

138

A universal aggregator

All of these goals can be achievedby the creation of the ‘Made in Russia’
national brand, which is based onpractical and useful tools to support
regions in marketing, branding,communications and IT.

The ‘Made in Russia’ brand has
become a universal aggregator anda platform for providing regions witha whole range of services aimed at
economic development, guaranteeing
broad coverage, and attracting an
additional audience consisting ofpotential partners and consumers. This
non-standard approach transforms
the national brand into a genuine
development tool, guarantees resultsin f inancial ter ms, and makes it
possible for regions to supplement
it with a wide range of ideas andcontent based on the unique potentialof our people, their achievements,
and their multicultural identity. Thisapproach is capable of becoming oneof the principal elements in achieving
Russia’s national aims.”

FIRST PERSONThe Far East has the potential to become the key force for promoting Russia in the Asia-Pacific region

Mikhail SADCHENKOV,
General Director,‘Made in Russia’effective practices, the use of IT
to compensate for staff shortages(primarily with regard to translation
into foreign languages, sof twaredevelopment, branding, marketingand other specialities which facilitate
the digitalization of work processes),an increase in regional businesses’
awareness of state support measures,
and also through an increase in investor
awareness of state measures to support
the localization and transfer of business.

A unique driving force
to promote Russia on the
Asia-Pacific regional market

Today it is evident that national
branding, like any other tool, demands
a totally new approach based on thecreation of an environment whichshapes the potential and conditions
for growth in manufacturing, exports,
tourism, culture, human capital,
and investment in regional entities.
These tools should not only act as
conductors for the support measuresoffered by development institutions,but should also compensate for key
competences in the field of marketingand communications.
Here, the Russian Far East is a uniqueregion, capable of being not only an
independent national brand but also
the prime driving force for promoting

Andrey Nikitin
Governor of
Novgorod
Region“The development of regional
branding is an integral part ofunlocking the manufacturing,
export, cultural and tourism
potential of any region. Our
successful presentation of the‘Novgorodian Rus’ brand during
the ‘Made in Russia’ session at
SPIEF 2018 has provided a firmbasis for the future developmentof the brand. I am sure that theideas embodied in the brand andour region’s great cultural andtourism potential will have apositive influence not only on theeconomy but also on the generalcompetitiveness of Novgorod
Region. As one of the pilot regionsof the ‘Made in Russia’ project,
we also support and see thenecessity of consolidating theefforts of regions, business, andthe state to establish a single
promotion strategy and vector
of development, capable ofimproving the effectiveness of thework that is already underway.”

Anton Alikhanov
Governor of
Kaliningrad
RegionKirill Ilichev
General Director,
Moscow Export
Centre“We calculate that our
involvement in the ‘Made in
Russia’ project will not only bea new channel for promoting
our business but will also
provide real tools that will havea positive impact on economic
development. Kaliningrad
Region is a special region of
Russia. The development of
its own identity based on its
geographical position andindustrial and cultural potential
can be used as an effective
promotional tool. We also
support the idea that there is aneed to consolidate the effortsof the state, the regions, andbusiness to achieve nationaltargets in promoting Russia’s
manufacturing, export, cultural,and tourism potential, as wellas its human capital.”“Moscow helps to drive thedevelopment of the entire country.
‘Made in Moscow’ is the flagshipbrand of the national ‘Made in
Russia’ brand, created on the basisof the perception of the nation asa whole. Our overall objective is
to expand non-commodity exports
and increase the competitivenessof Russian products. The
Moscow Export Centre isalready successfully provingthat Moscow manufacturing
can produce competitive noncommodity exports for externalmarkets. We are delighted tosee that a systemic approachto collaborative interaction
between the state and businessis now being discussed and weare grateful to our colleagues fortheir support. We are also pleased
to see that work on a common
national communications strategy
is gathering momentum. The
national interest comes firstand developing its own identity
will always be a priority for any
nation.”139

Alexander
Kocherov
General Director,
Gzhel Association“Gzhel is one of Russia’s mostimportant cultural brands andis also rightly considered to
be a traditional Russian folk
craft. We heartily support andacknowledge the importanceof the state’s efforts to develop
regional branding, including theregistration and legal protectionof trademarks according toplace of origin. The folk craft
industry today is underrated, but
we consider that its potential,
including for export, is capable
not only of giving a boost to
the economic potential of theregions, but also of becoming oneof the most important ways of
promoting Russia, preserving its
originality, traditions, and culture.
We are pleased to be part ofthe ‘Made in Russia’ project andto contribute to its ‘soft power’for promoting our country’s
manufacturing, export, tourism,
and cultural potential.”

ROSCONGRESS | EVENT INDUSTRY
Text: Olga CHERVINSKAYA
The architectureof business tourism

The decision to hold the IPHS
conference in Moscow was taken at a
meeting of the Society’s programmecommittee in Yokohama (Japan) on 15
July 2018. This time, the theme of theevent, which usually attracts as many asa thousand professionals from all over theworld, will be City Space Transformation:
Renovation of the Urban Environment.
In addition to the Russian capital,
Lübeck in Germany and Oslo, the capitalof Norway, were also in the running to hostthis prestigious event – but Moscow cameout on top. President of the Concord Group
Natalya Yevnevich, who championed the
project before the international society,made no attempt to hide her joy: “I feela great deal of satisfaction when I think
about the work we did to prepare the bid,
submit it, and finally present it to the IPHS
Council. We have been on this journey foralmost a year, and it has now come to a
successful close.” Concord was chosen as
the operator for the IPHS conference, but,as Yevnevich says, its success was madepossible by the involvement of its partners,
who contributed to the project at various
stages, putting forward new ideas andpossibilities.

Moscow outplays Osloand Lübeck with successful bid
In July 2020, a conference of the International Planning History Society (IPHS) willtake place in Moscow for the first time. One of the most respected business eventsin the field of urban studies, the conference is held every two years in different
cities across the world. The IPHS was convinced to choose Moscow thanks to theefforts of a large team of specialists, including the Russian Convention Bureau.

Yokohama Port Opening Memorial Hall, where the decision to hold the IPHS conference140
in Moscow was taken at a meeting of the Society’s programme

Taking into account the
IPHS’s planned budget
of RUB 34 million,
the expected economic
impact of the eventin 2020 could
amount to as much
as RUB 129 million,
with another
RUB 19.6 millionof anticipated tax
revenue
The fundamental academic expertiseneeded to support the Russian bid wasprovided throughout by the Moscow
Architectural Institute and Moscow State
University. The Russian architects wereable to show that the Russian capital
has enjoyed some real successes intown planning and preserving its built
heritage. As Dr Alexey Krasheninnikov,
President of the Russian Bid Committee,
Director of the Centre for Urban Studies
at the Moscow Architectural Institute,and Professor in the Town Planning

Faculty, assured us: “It was precisely theway that we have preserved and thenrenovated architectural monuments in
our city in recent years while faced with
rapid transformation of the urban space
which motivated the decision in favourof Moscow.” Dr Krasheninnikov believes
that the experience of the Centre for Urban
Studies will be in demand once more when
the conference’s academic programme isbeing prepared.
Moscow State University also put
forward some interesting ideas about how
to vary the IPHS’s traditional conference
format. “For instance, we suggested
an addition to the classic conference
programme: a youth programme heldin parallel with the main conference,
including a competition for architecturalprojects and a youth forum”, explained
the Director of Moscow State University’s
Science Festival Leonid Gusev. “We needto broaden our horizons to hold the best
possible conference!”

Direct benefits
and potential developments

The Russian Convention Bureau
has also helped to broaden horizons.
Supported by the Roscongress Foundation,
it promotes Russia as a potential venue
for events. The involvement of anorganization like the Convention Bureau
is a guarantee that preparations for the
conference will be carried out with theutmost professionalism.
Taking into account the IPHS’splanned budget of RUB 34 million,
the expected economic impact of theevent in 2020 could amount to as
much as RUB 129 million, with another
RUB 19.6 million of anticipated tax
revenue. However, these direct benefits
are not the only factor to be considered.
International exchange stimulates manydifferent sectors of the economy, mostly
as a result of the import and export of
new knowledge, technologies, andsolutions, believes Alexey Kalachev,
Director of the Convention Bureau.
It can also lead to the construction of
new urban infrastructure, as well associal, cultural, tourism, and sports
facilities. All this paves the way for urban
development in cities and regions. A joint
session on this issue will be organizedby the Convention Bureau, VEB and ASI
during EEF 2018.
Of course, participating in the tenderto host the IPHS conference is not the
only project the Convention Bureau isworking on. “We currently have eightbids in progress to hold international
events for various sectors and academic

141

FIRST PERSON
Yevgeny Dridze
Deputy Head of
the Department ofExternal Economic
and International
Relations of the Cityof Moscow:– Over the last few years, Moscow
has become a suitable venue for hosting
prestigious international conferencesand exhibitions, and possesses all theinfrastructure required to hold this particularconference. Many international events on
various themes take place in the capital.
The Department of External Economic
and International Relations of the City of
Moscow supports the hosting of this 2020
international conference on the history of
town planning, and is happy to provide any
assistance it can.

Elena Myakotnikova
Corporate Directorof the Agency for
Strategic Initiatives
to Promote New
Projects:– The theme of regional urban
development is one of the topics on the
Agency for Strategic Initiatives’ current agenda.
Regional development is a multifaceted task
which involves finding solutions to many
problems affecting all areas of people’s
lives. The Agency has developed a unique
way of effectively exchanging best practicein regional development: our ‘successful
solutions brochure’, a collection of examples
of successful solutions to urgent social andeconomic problems in the regions. Projects
which have been successfully implemented
in one region are described and broken down
step-by-step so they can subsequently be
replicated in other regions. Our intention
is to provide a fresh stimulus for regional
development, including promoting the regions
as venues for conferences, exhibitions, andtourism.

disciplines”, says Kalachev. The Bureau issimultaneously preparing bids for morethan 50 other events. If it manages toattract even a fraction of these events
to Russia, that will be a real stimulus forfurther development.

Aleksandr Khitrov

Vladivostok

VLADIVOSTOK | I’M A LOCALMaria Mitrofanova

Obviously, bridges
have been built that
I remember from city
development planson display in the local
history museum in the
1970s – these are justamazing achievementsthat should also help
to stimulate the city’s
growthIlya Lagutenko:

There’s no other city like itin the country
Text: Elena HANYAN
I’m in Vladivostok several
times a year
– Ilya, you were born in
Vladivostok and grew up here. How
do you think it differs from mostmajor cities in Russia, and in whatways is it similar to ‘mainland’
towns in the rest of the country?
– Vladivostok’s geography is unique.
There’s no other city like it in the
country. It’s nature’s own port. On

the other hand, it’s entirely like all theother regional cities in Russia in termsof its Soviet architecture.
I’ve also always been convinced that
Vladivostok is a city with unlimited
potential. This makes it like every
other place in Russia as well.
– How of ten do you cometo Vladivostok, and how is t he
Vladivostok of today different fromthe one you knew in the past?
– I come here several times a year.
It’s certainly different from the city
I knew as a child a few decades ago.
Obviously, bridges have been built that144

I remember from city development
plans on display in the local history
museum in the 1970s – these are justamazing achievements that should also
help to stimulate the city’s growth.
Unfortunately, the post-perestroika
years have had little impact on plans
for architectural development. The
city’s transport infrastructure, housing,green spaces, and commercial facilities
over the last 20 years have all seemed
rather soulless, and not especiallyeffective at meeting citizens’ needs.
– Do you see Vladivostok now as
being a functioning ‘window into
Asia’, or is it a window that we’re
only just starting to install?
– We h a v e n ’ t m a d e i t t o t h einstallation phase yet. All we’ve been
doing so far is trying to wipe the dirtout of the hole where the windowneeds to go. And while we’ve been
sitting around for the last 20 years
waiting for somebody to bring us
a cloth, some amazing things have

– As far as summits are concerned,
three days of the EEF ever y year
certainly has the effect of causing
f light and hotel prices during thistime to skyrocket. What people needto think about is how these high-level
events can be integrated with the livesof the people lower down the scale.

I tried to get holdof a Far Eastern Hectare...
– You’ll of course be aware that all
Russians now have the opportunity
to obtain a hectare of land in the Far

Natalia Rodina

been happening on the other side ofit. We’d have done a lot better to simply
break down the door with a shovel andget out into the fresh air to meet ourneighbours.
– But Vladivostok has, essentially,b e c o m e R u s s i a ’ s Fa r E a s t e r ncapital. Major summits and serious
international forums (the Eastern
Economic Forum in par ticular)
are hosted here, bringing businessleaders, heads of the Far Eastern
Federal District regions, and relevant
Russian ministers together with
political leaders from China, Japan,
South Korea, and other countries.
What effect has this had on the city?

Ilya Lagutenko is an unrivalled icon for several generations

East for free. Let’s imagine that you
decide to apply for one...
– There’s no need to imagine. I
tried to get hold of one. I looked fora little plot by the sea in southern
Primorsky Territory using the websites.
I was one of the first people to try itafter it was launched, by the way.
Alas, I couldn’t find what I wanted.
Either there must be problems withthe system, or maybe everybody else
got there before we did. I might havefarmed razor clams in my retirement,
for example. Or founded a creative
residence for musicians and artists.
Or a combined data centre and music

festival (laughs). But what would I do
about roads, airports, electricity, andeverything else? How many different
people’s hectares need to be joined
together to sort these out?
– How often are your children in
Vladivostok, and what do they dothere?
– They visit every summer. They
take part in ever y V-ROX festivalwith me. And they’ve been to thedolphinarium. We go on walks by thesea. We collect shells. We go diving insearch of scallops and sea urchins. We
go to places from my childhood. We sitin the courtyard of the building where
I grew up and kick our feet against thetree that’s still there. Not much haschanged. There isn’t a lot for kids to
do in Vladivostok. When the weather’s
bad we sit at home and read. We fly toTokyo, to KidZania. It’s not far.

I never thought that
Vladivostok 2000 would turninto a RUB 2,000 banknote

The RUB 2,000 bank note has become an illustration of Lagutenko’s song Vladivostok 2000

145

– What do you think about
Vladivostok being chosen to go on
Russia’s new RUB 2,000 banknote?
People are saying that it’s mostly down
to your famous song...

VLADIVOSTOK | I’M A LOCALVLADIVOSTOK | QUOTED– When the song Vladivostok 2000
was written in the 1990s, I could never
have imagined it appealing to anybody
apart from me and my friends from theFar East. And now we sing it at every
gig – with the audience singing along.
The song portrays some of theless happy realities of local life atthat time, yet it’s become almost the‘hymn of a generation’ – well, that’s theexpression I keep hearing journalists
use in any case. But I certainly neverthought that decades later the song
could be ‘monetized’ in quite such away (laughs).
– Are
you
in
favourofcommunicating with fans via social
media?
– I don’t have my own social media
accounts, but our fans are alreadyaccustomed to seeing regular, updated
announcements on the official Mumiy
Troll pages sooner than they can findthem anywhere else.

Text: Sergey PAVLOVWhat to tell you about...
the edge of the world?
Vladivostok is truly the edge of the world. And not just for Europeans, but also for the
majority of Russians living in Western Russia, in the Urals, and even in Siberia. It takes
a daunting 8–9 hours to fly here from Moscow.

– What can you tell us about yournew album, Vostok X Severozapad(East X Northwest)?
– I can tell you that we laid it
down in record time for us – it took
just two weeks. That only compareswith Morskaya and Ikra (Caviar), but
the difference was that, unlike 20
years ago, we turned up at the studiowithout any specific concept for thealbum or even any finished songs. The
entire recording process is turning into
something like a mix between a crosscountry march and a brainstorming
session. But it seems to me that we dida pretty good job of it. And we’ll keep
doing it that way as well.
– What did your fellow musiciansfrom Japan make of Vladivostok?
– We come here and the musicians
taking part in the festival are crazy
about Vladivostok for the very same

Eliot Lee Hazel

The girls listen todifferent kinds ofmusic at home, andlike hanging out withmy fellow musicians
and making music
themselves. My
daughters have known
how everything works
behind the scenes since
they were little“I
will not quote
the prices of various goods
sold in Vladivostok’s shops, they
can be worked out by anybody who
multiplies by three, and sometimes evenby four, and only in rare cases by two, theamount that the item in question costsin Europe.”
Nikolay Przhevalsky, Russian
traveller and naturalist, 1867.

“You
have a beautiful
city here, even with all thehills and slopes. It is tough forlarge people to get around though.
You need to walk with people who
can keep you propped up
all the time.”
Alexander Semchev,
Russian actor, 2014.

If you want to travel from the Russian
capital to the capital of Primorsky
Territory by train, that’ll mean covering
9,288 kilometres on the Trans-Siberian
Railway – almost a week’s journey! En
route, your train will cross two continents(Europe and Asia), passing through 14 ofRussia’s regions, three of its territories, one
autonomous region, and one autonomous
district. You’ll cross 15 of the RussianFederation’s largest rivers, including theVolga, the Vyatka, the Kama, the Irtysh,
the Ob, the Yenisei, the Oka, the Selenga,
the Amur, and the Ussuri. Looking out ofyour window, you’ll see around 90 cities as
they rumble past. You’ll pass through seventime zones and several climatic ones. Even
Papua New Guinea is closer to Vladivostok
than Moscow.
But that doesn’t stop every Russian‘from the mainland’ from dreaming of
making the trip. And Vladivostok neverfails to make an impression. Readbelow what various famous individuals(Russian and other wise) visiting
Vladivostok in their own eras had tosay about this ‘city“Andon the edge of
we thought thatthe world’.
you couldn’t grow anything

here, and that there was nobody
around apart from soldiers.”
Gerald Ford, 38th Presidentof the USA (during a visit to
Vladivostok for negotiations withLeonid Brezhnev), 1974.

Ilya Lagutenko with his band, Mumiy Troll

reasons that we often don’t like it –the remains of its Soviet past and its
irrational infrastructure. It’s a truly
unique place. But what also makes animpression and provokes a reaction –and in a good way – is the irresistible
spirit of adventure and inexhaustible
enthusiasm of the city’s locals. We
didn’t just take musicians and showbusiness promoters to the festival,
but also artists, photographers, andeven chefs. By the way, a lot of young
guys have come on the scene recently
who have finally started working withlocal seafood. It’s not just borscht andshashlik anymore, which is good news.
– You run a forum in Vladivostok
for young artists. What else would
you like to organize in your home
city?

146

– V-ROX was conceived as a festival ofopportunities, ideas, and discoveries –everything that the Russian Far Eastneeds so badly. It isn’t just an importantsocial project and a stimulus for growthin the region, especially its tourist
industry. It’s also something that will
help the region find its own cultural
identity. In spite of the festival’s successwith its audience and its recognition
in society, the last two years have seen
ongoing financial difficulties. This year,
my V-ROX colleagues and I have madethe difficult decision to suspend thefestival in the format that we have beenable to offer for the last five years. But I
believe in the city’s creative potential andits desire to do things for real, instead ofjust talking about them. We already havetons of plans for 2019, including ones
involving the tech industry.

“I
served on Russky
Island. When I was on
guard duty, and I was hungry,
exhausted, and frozen, I’d lookat your city and dream of being
there!”
Yevgeny Grishkovetz, writerand actor, 2013.

“Why,
your climate
here is better
than Sochi’s!”
Nikita Khrushchev,
political leader of the
USSR, 1954.

“This
place is home tobeautiful and talented people
who talk well about intelligent things(I’ve been introduced to a few of them). The
streets here are like the streets in San Francisco:
mountains and hills, turns and descents; here theocean is an energetic monster, the slowest waiters
work in the Montmartre café, large ships come fromall corners of the Earth, they have a holiday called
Day of the Tiger, and the new bridges stretch
almost into space...”Sergey Mayorov, Russian journalist
and television and radio
presenter, 2012.

147

and a profoundly Russian soul. Visitors
will find a lot of interesting links with
their own countries. At the beginning of
the twentieth century, for example, there
was a large Japanese population here,
which tended to meet and socialize at
the Urajio Honganji Temple. The site of
the temple now features a sakura garden
and a memorial symbolizing friendshipbetween our two peoples.
Vladivostok also has a Chinese quarter– the famous Millionka district. In thislabyrinth of streets you can still findthe well-preserved Northern Chinese
Theatre. We are planning to restore
the historical buildings of Millionka
and open museum exhibitions there, inorder to make this quarter the nucleus
of a tourism cluster in the historic centreof Vladivostok and a magnet for Chinese
tourists.
It is entirely logical that Vladivostok
should be the venue for Russia’s secondlargest forum held at presidential level.
The city plays an extremely importantrole in the country’s new eastward
trajectory of development. The AsiaPacific region of today contains theworld’s leading economies, and it isimportant for Vladivostok not only
to make itself part of the associatedintegration processes, but also to occupy
its rightful place within them.

A European citywith an Asian mentality
and a profoundly
Russian soul
Vladivostok is welcoming guests to the Eastern Economic Forum for the
fourth time. What does the capital of Russia’s southeastern coast have to offer
investors? Vladivostok’s Mayor Vitaly Verkeenko talks to us about the city’s
history, its present-day role, and where it is headed.
Text: Julia SHATINA
Vladivostok must becomea centre of international
cooperation between Russia
and the Asia-Pacific region– Vitaly, you have been Mayorof Vladivostok since 2017, and you
identified international cooperation
as a priority for the city from the very
start. Would it be silly to ask why?

– Well, Vladivostok is home to sevenconsulates general and 16 honoraryconsulates, including some belonging
to European states. No other Russiancity aside from the capital can claim toenjoy so much foreign attention. It’s nowonder that Vladivostok is increasingly
being viewed as Russia’s Pacific capital.
This started out as a thought, but has
since consciously been made a reality.
“You could rule the East from here” were
the famous words of Governor General of148

Alexander Wilf / RIA Novosti

Vladivostok’s Mayor
Vitaly Verkeenko:

It is quite naturalthat Vladivostok
has become thevenue for Russia’s
second-largest
presidential level
forum
East Siberia Nikolay Muravyov-Amursky
which gave the capital of Primorsky
Territory its name (Vladivostok, or ‘Rulerof the East’).
Vladivostok historically developed asa multinational and multifaith city at a
meeting point between cultures. It’s aEuropean city with an Asian mentality

We value our old friends
and welcome new ones
– What is being done to develop
economic relations with Asianpartners?
– The city has been grantedsome quite significant preferential
arrangements, and it is important tomake proper use of these. Last year,
for example, we celebrated the 120th
anniversary of the establishment ofconsular relations between Vladivostok
and China. Historically, however,the city and surrounding Primorsky
Territory have generally cooperated
closely primarily with the bordering
northeastern provinces of China. In
April, a delegation from Vladivostok
visited central China for the first time
when Bank of China invited it to takepart in the China Henan International
Investment and Trade Fair with a focus
on cross-border trade and investment.
Naturally, many people there hadheard of Vladivostok, but few wereable to point to it on a map. I hopethat following the visit to the Eastern
Economic Forum of our esteemed
guest, leader of the People’s Republicof China Xi Jinping, our city will become
the centre of attention for Chinese
big business. With 2018 having been
declared the Year of Interregional
Cooperation, it is our task to advancecross-border trade formats.
Vladivostok also occupies a special
place in Russian–Japanese relations.
Cooperation between us was given aboost following the Second Eastern
Economic Forum, when Prime Ministerof Japan Shinzō Abe proposed to help
Vladimir Putin make Vladivostok a more
comfortable environment for doing
business. The Japan External Trade
Organization (JETRO) is examining thepossibility of opening its third Russian
representation here. Japanese businessis also interested in pursuing large-scale
projects. Convenient logistics, direct
air links, and incentives for residentsof Vladivostok Free Port and regional
investment projects are enabling these to
be implemented quickly and effectively.
We also have plans to step up
cooperation with South Korea. We havereached an agreement with Mayor ofSeoul Park Won-soon in particular, who
himself proposed that we sign a joint
declaration of friendship and cooperation
between our two peoples. Vladivostok iswelcoming major South Korean investors
such as Lotte, a brand under which oneof our best hotel complexes is now
operating.
We value our old friends and welcome
new ones who are ready to assist in theimplementation of investment projects
in Vladivostok of any kind. This city is a
‘deep blue ocean’ which offers extensive
opportunities for growing business in any
economic sector.

In 2015 there were only a few
residents of Vladivostok Free
Port, and now there arearound 500– The First Eastern Economic
Forum took place on Russky
Island in September 2015. I expect
Vladivostok has changed over thelast four years.
– You could say that the city has taken
a big breath, and become more lively
and dynamic. The Eastern Economic
Forum attracted attention from allover the world to the new preferential
arrangements in place in Vladivostok, andinvestors appreciated the value of its new
business-friendly regime. We are now
seeing the opening of new manufacturing
plants and the development of small andmedium-sized businesses. While there

149

Yury Smityuk/TASS

Vladivostok | MAYOR

Vitaly Verkeenko became the head of Vladivostok
at the age of 44

were only a few residents of Vladivostok
Free Port in 2015, today there are alreadyaround 500.
Vladivostok is increasingly becoming
a platform for major Russia-wide andinternational events. It was here that theInternational Far Eastern Maritime Show
took place this year, with the participationof delegations and companies from Russia
and 14 other countries.
Last year, Vladivostok was visitedby 3.5 million of our fellow Russians.
The inflow of international tourists hasgrown by 25% over the last four years,
from 465,000 in 2015 to 620,000 in 2017,
and the first half of 2018 has seen further
growth of 19%. I consider tourism to be

Vladivostok isa ‘deep blue
ocean’ which
offers extensive
opportunities for
growing business inany economic sector
one of our development priorities, helping
to form a positive image of Vladivostok
within Russia and throughout the world.
I see the development of this economic
sector not in terms of ‘a city for tourists’,
but rather as ‘tourism for a city’. I am
also convinced that all investments begin
with tourism. Investors start by coming
here as guests, and assess the levels of
hospitality, comfort, and security on offer
before deciding whether or not to invest
in any projects. That’s why it’s our task
to make Vladivostok even more beautiful
and hospitable.

VLADIVOSTOK | genius loci

VLADIVOSTOK | genius loci

Crossing the bridgesof my memory

THE BRIDGESOF VLADIVOSTOKIn the Vladivostok where I was born, there were no bridges. We only dreamed ofthem. Now there are three – each one a structure that we could never have imagined.
Text: Vladimir MAMONTOV,
media manager and journalist,
with a background firmly rooted
in the Russian Far EastT

he first, linking the De-Frizpeninsula to Sedanka, is lowlevel. I see myself sailing acrossit, a schoolboy, in the little boatof my memory. Many years ago, overthere on the bank, stood a tent. Leonid
Leontyevich, a lame war veteran and ourpractical skills teacher, would bring ourclass here to learn orienteering. He wasconvinced it would be of use to us in life.
The second bridge spans Golden HornBay. I imagine myself as a student buying
a ticket at the Maltsevsky Crossing andsailing over it. It’s work experience; I’ve
been sent to write about a social club. So
I set off to the outskirts of Vladivostok, faraway, to the rough Churkin district. That

Ksenia Lokteva

The city must become
what it was destined
to be. A starting point foraudacious Far Eastern
projects. The centre of a
new Pacific economy. A
global crossroads for life150

was the name of that area of Vladivostok,
although the peninsula itself was called
Shkota, Churkin was only the very tip of it,
a promontory. Such things happen: somelittle scrap of land bestows its name on
a decent chunk of territory. A stretch oftime. A quarter of a lifetime.
The third bridge goes to Russky Island –where writer Evgeny Grishkovets servedin the Navy. Where our new, cuttingedge, federal university has been built.
A journalist now, I sail across it ina Navy boat. The boat is painted in grey
camouflage with spots of fiery red lead: thefenders, the lifebuoys. Russky Island, PopovIsland, Furugelm Island – all were fortified
islands. Outposts. I remember how, during
perestroika in the 1980s, we protested

against the targets they were going to set
up on Furugelm for naval artillery training:
fantastically rare black-tailed gulls kept
stubbornly nesting there. Inevitably, a few
times a year, they would be bombed – butthey kept coming back, again and again,
to settle there. Nothing unusual about thatin the Far East. Whatever happens, you
keep returning to your native rivers, likethe salmon, or to the nest where you wereborn, like the gulls.
These bridges are tall. From them, I see
the city as I never saw it from aboard a boat.
Many of my Far Eastern friends grumbled
when the bridges were being built. The
whole city was being dug up, and they
were throwing serious money at the project.
(Don’t cry, Mum; they ought to increase
your pension instead.) But now, they’ve
stopped grumbling. Over the bridges hascome new life, life which could never havebeen brought on a boat – it wouldn’t fit.
New vantage points have appeared. New
supports. Thousands of students speaking
different languages are studying at the new
university, taught by professors who weremy classmates. This is more interesting thangrumbling.
When I was last in Vladivostok, I looked
and looked for the house with the harpoon
cannons outside it. Maybe the house isn’t
there; maybe they’ve sold the cannons off
as scrap metal – in any case, I didn’t find it.
No sign of the whaling flotillas now, either:
the Aleut, the Soviet Russia… And no whalemeat pies for five kopeks a pop either.
Oh, alright then, let the whales live. Onceagain, the city is transforming its fate. It’s
hard to imagine that Vladivostok was oncea closed city, and then the murky home of‘Mouldering Corner’ and its market, famousthroughout Russia for selling right-handdrive cars. Now, it has its own Mariinsky
Theatre, and we have the chance to remindourselves of the old science of orientating
ourselves in space and time, drilled into
us long ago.
The city must become what it was
destined to be. A starting point for audacious
Far Eastern projects. The centre of a new
Pacific economy. A global crossroads for
life.

151

The NIZKOVODNY (‘low-level’) Bridge(length: 4,362 metres) is a multi-span bridge
joining the De-Friz peninsula to the MuravyovAmursky peninsula in the Sedanka district.
The ZOLOTOY (‘golden’) Bridge(length: 1,388 metres) is a cable-stayed bridge
across Golden Horn Bay, linking the city centre
to the surrounding regions. Its pylons are
226 metres high, and its central span is 737
metres. It hangs 60 metres above the water.
The RUSSKY (‘Russian’) Bridge(length: 3,100 metres) is a cable-stayed bridge
across the Eastern Bosphorus Strait, linking
Russky Island with the Nazimov Peninsula. It
has the longest central span of any cablestayed bridge in the world, at 1,104 metres,
and also the tallest pylons, at 324 metres. It
hangs 70 metres above the water.

Vladivostok | must look!

1

The viewing platform on Orlinaya Hill

Aleksander Hkitrov

2

The lighthouse is the most romantic place in Vladivostok

The top 12 sights

in the Primorsky Region
capital and surrounding area
Vladivostok isn’t a large city – you can drive around the entire place in just a couple of hours.
But there are places where you just have to get out of your car to take a walk, or stop andlook at sights that you’ll undoubtedly take away with you, in your heart and your memory.
152

1

Viewing Platform
on Orlinaya Hill
(3a, Aksakovskaya Ul.)This spot is considered to be the city’s
mystical heart. From here, visitors canenjoy a breathtaking panorama overGolden Horn Bay and the city centre.
Taking photos and videos is a must. The
best time to visit is between 17:00 and
20:00, close to sunset. You can reach theviewing platform by taxi or via a numberof different bus routes, but the best way
to travel is on the funicular railway. Get
on at the lower station (29, Ul. Pushkinskaya) to conquer a vertical climb of
about 70 metres in just a few minutes,
enjoying the view as it unfolds.

2

Vladivostok’s mostromantic location

There are actually arounda dozen lighthouses and beacons inand around the city, including on theroofs of multi-storey buildings, but
anyone in Vladivostok who mentions‘the lighthouse’ is bound to be talking

43

Railway station

Text: Andrey OSTROVSKY

Fortress: a unique network of defensive structures

Marine terminal

about the one on Tokarevsky Spit. Thisis the perfect place for a few minutes’
silence, skimming stones across thewaves and experiencing what it’s liketo be at the end of the earth. Any timeof day is perfect for a visit, but you can
only get there by car or taxi. Address:
Right at the end of Ulitsa Tokarevsky
Mayak.

3

Transport terminals

Because this is a place
where the rails meet thecoast, Vladivostok’s railway (2, Ul.
Aleutskaya) and marine (1, Ul. Nizhneportovaya) terminals are a mustsee. They are located about 50 metresfrom one another and connected via an
overpass. The first is a magical monument of Russian architecture, and thesecond offers an enchanting angle on
Vladivostok’s maritime bustle. Dozens
of bus routes serve the terminals, but
if you’re coming from the city centre
it’s best to travel on foot. The perfecttime for a visit is during a bright, sunnyday (although a night-time visit also
has its charms).

153

4

Fortress

Fourteen forts and dozens ofcoastal batteries. An entirely
unique (there’s nothing else like it in theworld) network of defensive structuresthat is a tribute to the genius of the Russian military engineers who built thema century ago. You’d need a week to seethem all (including their complex underground sections) in detail. If you’re justlooking for a brief impression, then thebest places to visit are the Novosiltsevskaya
and Pospelovskaya Batteries and Fort Pospelov. These are located near the end of
the Russky Island Bridge and are relatively
close to one another. The best time to visit is during the day. You can get there by
any bus destined for Russky Island, or bytaxi. The bridge is off-limits to pedestrians.

5

The Arch and Vysotsky

This ornate ‘Russian-style’ arch
(4, Ul. Petra Velikovo) was originally erected to mark the visit of heirto-the-throne Crown Prince Nicholas to
Vladivostok on 11 May 1891. The arch
was dismantled at the beginning of theSoviet era before being restored at theEEF 2018

Vladivostok | must look!

9

Brynner

The world’s only monument
to Hollywood star Yul Brynner(15, Ul Aleutskaya) can be found near
the house where he was born all the way
back in 1920. You won’t find a portrayalof Yul as the famous noble warrior of
The Magnificent Seven fame, however,but instead as the King from The Kingand I. The latter is less well known in
Russia, but this didn’t stop the monument from becoming an icon of the
Pacific Meridian Film Festival, held in
Vladivostok every September. The best
time to visit this monument is during
the day.

Monument to Vladimir Vysotsky

5Arch à la Russe

Golden Horn Bay embankments

start of the 21st century. If you climb alittle higher and cross Ul. Svetlanskaya,
you’ll find yourself in Lazo Square withits monument to the eponymous hero of
the Civil War in Russia’s Far East. Another monument, to Vladimir Vysotsky, waserected next to this one just a few years
ago. The highlight for visitors may well be
the loudspeakers lining the square thatplay Vysotsky around the clock. These
are great places to visit at any time of day.

6Golden Horn Bay
embankments

Korabelnaya Embankment (atthe same address) and Tsesarevich Embankment follow on from one anotheralong the north bank of Golden Horn Bay.
Here you can find a large number of monuments and memorial plaques, including
to the heroic submarine S-56, which is in-

9

Brynner6

stalled atop a plinth, the Krasny Vympel
museum ship, and monuments to the firstpioneers and to Alexander Solzhenitsyn.
This is also a great place to take a selfie
with the battleships of Russia’s PacificFleet in the background. Any time of day
is a good time to visit.

much more romantic than this. The only
way to reach the embankment is on foot –it’s the only way to experience it! The best
time to come here is at sunset.

7

A tiny (by modern standards)
MRS (small fishing seiner) set upon a diagonal pedestal as if soaring on a wave
serves as a monument to the Glory of theFisherman (178, Ul. Kalinina). The monument is located on Goldobin Cape, whichshelters Golden Horn Bay from the south.
This is another viewing platform, albeit one
less popular with tourists than others due
to its more distant location. Don’t let thatput you off though, as it offers a completely
unsurpassed view of central Vladivostok.
The best way to make the trip here is bycar. Come during daylight for the view.

This is Vladivostok’s oldest embankment, although it has recently been treated to a ‘restyling’. It’s alsoa favourite spot for locals to take a walk. If
someone says to you “Let’s head down to
the Bank!”, this is where they mean. With
one and a half kilometres of dedicatedwalking space, yachts filling the horizon,a crimson sun that sinks into Manchuria behind the distant hills of Amur Bay’s
opposite bank, the sea, and the company
of beautiful girls, atmospheres don’t get

154

This legendary bay, whichforms part of the larger
Ussuri Bay and is located about 20 kilometres from Vladivostok, is the inspiration behind the eponymous album fromcult rock group Mumiy Troll. Although
an attempt was made during the Soviet era to rename it Lazurnaya Bay, this11

Botanical Gardens

Situated in the suburbsof Vladivostok (142, Ul.
Makovskovo), the Botanical Garden andInstitute of the Far East Branch of theRussian Academy of Sciences, althoughsignificantly adapted, is still an area of
genuine Ussuri taiga. Practically all of
the region’s plants have been gathered
together here, including those not foundanywhere else. You can get here on any
suburban bus route, although it’s obviously quicker to drive yourself. The best
time to come is during opening hours,
which are between 10:00 and 19:00 during the warm season.

12

Collecting tigers

The cult creature that graces
Vladivostok’s coat of arms
can be found in a number of incarnations
around the city. If you choose to accept themission of tickling each of them behind theear, you’d do best to start your journey atSports Bay – Sportivnaya Gavan (at thesame address), where you’ll find two tiger sculptures, and finish it at the Ocean
Cinema (3, Ul. Naberezhnaya) and the Primorsky Stage of the Mariinsky Theatre (20,
Ul. Fastovskaya), each of which is home
to a fully grown tiger made of bronze. If
you’re hoping to see a live version of the
stripy feline in its natural environment (soto speak), then you’ll need to make thejourney to the safari park located not far
from the village of Shkotovo, about 80
kilometres from Vladivostok. It was here,a couple of years ago, before an astonished Internet audience, that the story of
the relationship between Amur the tiger
and Timur the donkey unfolded. You can
only get here by car, and naturally you’ll
want to come during the day!

7

Amur Bay Embankment

Amur Bay Embankment

10

Shamora Bay

ultimately failed. Its three kilometresof broad, sandy beach make the bay a
popular spot, not only during bathing
season from 1 July to 30 September,but also in winter, especially because
unlike Amur Bay, Ussuri Bay doesn’t
freeze over. The best way to get here isby taxi, and you should come at whatever time works best for you.

8

10

Shamora Bay features 3 km of sandy beaches

11

The Botanical Garden features endemic species from the Ussuri Taiga

The Glory of theFisherman

A small fishing ship

8
155

Little tigers on Sports Bay

12

| РУБРИКА
| BIG DIFFERENCE
VladivostokРАЗДЕЛ

Vladivostok | BIG DIFFERENCE
Vladivostok
residents areincapable of living
in a city where thesea is not visible
from the window

This is Vladik, baby!
Why is the capital of Primorsky Territory different from other cities on the planet?
Text: Andrey OSTROVSKY
Here, tigers walk along
the streets instead of bears

The toponymy of Vladivostok quite
clearly reflects the recent wild history ofthese places. One of the hills in the centreof the city is called Tigrovaya, and another – Eagle’s Nest. However, while eagles
hang over the bay even today, tigers areencountered mostly on the city’s coatof arms. And yet the occasional stripeda sunset, on the opposite shore, from
Peschany Peninsula, the leopards are
staring in exactly the same manner at
the lights of the evening city.

The most European city in Asia

For tourists from China, Korea, andJapan, Vladivostok is the closest ‘European city’, even though the architecture
here is eclectic as Russian Baroque ismixed with Lutheran Gothic, and Stalinist Empire with the Chinese style of the

However, whileeagles hang overthe bay eventoday, tigers
are encountered
mostly on thecity’s coat of arms

Today, historians andpolitical scientists
seriously discuss
whether it is time totransition from thearchaic ‘Far East’ tothe fashionable ‘PacificRussia’end of the Trans-Siberian Railway, where
the rails abut the sea.
One of the first newspapers publishedhere in the nineteenth century was also
called The Far Edge. And today, historians
and political scientists seriously discuss
whether it is time to transition from thearchaic ‘Far East’ to the fashionable ‘Pacific Russia’. They appear to refer to thesame thing, but you have to agree thatthe meaning is quite different.

Ksenia Lokteva

Ksenia Lokteva

In early summer,
we breathe through gills

156

master of the taiga may wander into thecity limits once in a couple of years andbe captured on film by the numerous
cameras and video recorders.
Unique neighbours – Amur leopards –live on the Peschany Peninsula on the opposite shore of Amur Bay. They happen
to live on land that is, on paper at least,
within the city limits, as absurd as thatsounds… However, they are relatively
comfortable over there – a lot of effort
and money have been spent on restoring
the leopard population in recent years.
So when you stand on an embankmentin the centre of Vladivostok and watch

Millionka district. It is this patchworkof styles that creates the unique flavourof the historical centre of Vladivostok.
The symbiosis of Europe and Asia,
the sea and the hills, the taiga and theocean, the dry and the damp are all partof Vladivostok’s DNA. Hence, the changeable weather and the impetuous natureof its inhabitants. The name of the region
also leaves its imprint: Primorsky Krai as
it is known in Russian, literally meaning‘Primorsky Edge’, is primarily perceived
precisely as the edge of the Earth. And
it is in fact so. It is here where you can
see the last kilometre post signifying the157

We know from biology lessons that it
is arthropods, and particularly crustaceans, which use gills to breathe. Well,
you might not believe it, but Vladivostok
residents also seem to have gills. Otherwise, how would they survive in a citywhere humidity levels generally reach
80–90% during the summer months?
Even on the hottest day, when barometers unanimously indicate a long dry
spell, native inhabitants of Vladivostok
will not leave home without an umbrella! They all know that the city can beinstantaneously inundated with rain or

When you stand on an
embankment in thecentre of Vladivostok
and watch a sunset, on
the opposite shore, from
Peschany Peninsula,
the leopards are staring
in exactly the samemanner at the lights ofthe evening city

EEF 2018fog at any time between the end of May
and the middle of July.
The true beach season here begins in
the middle of July and lasts until the endof September when the water temperature in the numerous bays surrounding
the city is above 20 degrees. In August,the area is sometimes visited by devastating tropical typhoons with deceptively
gentle female names. And that is when
streams of water rush from the hills into the city turning low-lying streets intostormy rivers. Seasoned locals will bequick to show off: “Well, that’s nothing...
I remember when ‘Judy’ came around…
That was horrific!”
These misfortunes are compensatedto a certain extent by the sunlight thatfloods Vladivostok between October andApril, despite the frost and strong windfrom Manchuria. That is why people
from Primorsky Territory find the dark
St. Petersburg winter so hard to endure.
A winter trip to both capitals is perceived
as a punishment.

The Russian capitalof right-hand drive

Vladivostok is the capital of righthand drive vehicles in left-hand Russia.
The city’s traffic jams are packed with
Toyotas and Mazdas, Hondas and Nissans, Mitsubishis and Suzukis belchingout smoke, all imported from Japan overa quarter of a century ago. For any true
Vladivostok native, left-hand drive vehicles are just nonsense; this is evidenced
by an ironic local joke: “A good steering
wheel cannot be located on the left!”

The true beach season
here begins in the
middle of July andlasts until the endof September when
the water temperaturein the numerous bays
surrounding the city
is above 20 degrees
Not for the first year, Vladivostok isbattling for the right to be called themost motorized city in Russia in termsof the number of cars per capita and it
always ranks among the top three. Thisis despite the fact that there are very
few wide streets and avenues becauseof the complicated terrain. So a traffic jam crawling up to the sky doesn’t
surprise anyone and the line from thecult song by Mumiy Troll lead singer
Ilya Lagutenko, “...a cruiser [motorcycle] looking sadly with its wheels in thesky” could only have been written bysomeone who grew up in Vladivostok.

Locals can’t live anywhere
without a sea view

The sea is the most important partof the city’s image. It is everywhere.
Apart from the fact that Vladivostok
is surrounded by water on three sides:
Amur Bay to the west, Ussuriysky Bay
to the east, and the Eastern Bosporus Strait to the south, there are alsoinland, so to speak, bodies of water:

158

The most openof all ‘closed cities’

Records by the Beatles,
Deep Purple, Rolling
Stones, Uriah Heep, and
Led Zeppelin appearedin Vladivostok earlier
than in Moscow and
Leningrad even during
the most difficult Soviet
times
gave the city the appearance of a grey
outpost. However, even then Vysotsky
prophetically sang “...the closed portof Vladivostok is open!”, and the‘closed’ status was relative anyway.
Thousands of citizens on ships whose
home port was Vladivostok travelledacross the world’s oceans docking indozens of countries.
Given that a Soviet timber carrier
could make the standard trip from Japan to its home port in just over 24hours, it is no wonder that records
by the Beatles, Deep Purple, Rolling
Stones, Uriah Heep, and Led Zeppelin
appeared in Vladivostok earlier thanin Moscow and Leningrad even during
the most difficult Soviet times.
Initially founded as a fortress anda naval base, Vladivostok has always
been the country’s gateway to trade,
flung open to the vast Asia-Pacific region. Before the revolution, dozens ofgeneral consulates representing foreign
governments were based here. The city
had free port status back in the nineteenth century, and now Vladivostok
Free Port is in operation.

If you decide to walk along the ‘nabka’ (embankment), then you will more thanlikely meet a ‘kunya’ (a girl from China)

While walking along the ‘nabka’(embankment) when it’s ‘zusman’(cold) outside, it’s always niceto ‘vtarit’ (have) a cup of coffee

Philologists note that Vladivostok
speech patterns are not characterized byexcessive unstressed ‘o’ and ‘a’ sounds.
The city is known for its fairly pure Russian language, and patter is a distinctive
feature of the local speech. However, you
might run into some difficulties if you
don’t know the local slang.
If you decide to walk along the ‘nabka’ (embankment), then you will morethan likely meet a ‘kunya’ (a girl from
China) – lots of tourists visit Vladivo-

In fact, from the end of World War II until the collapse of the Soviet Union,
Vladivostok was a closed city

In fact, from the end of World War
II until the collapse of the Soviet
Union, Vladivostok was a closed city.
The main base of the Soviet PacificFleet, ship repair and defence plants

For any true Vladivostok
native, left-handdrive vehicles are
just nonsense; this isevidenced by an ironic
local joke: “A goodsteering wheel cannot
be located on the left!”
159

Ksenia Lokteva

Golden Horn, Diomid, and Ulysses bayson the mainland, and Novik, Rynda, Voevodа, Ajax, and Paris bays on Russky
Island. Ancient Greek heroes have long
become a familiar part of the urban
toponymy, although few names are associated directly with the myths of theHellenes – the bays’ names were basedon the warships of the Siberian naval
flotilla that ploughed these waters.
The sea is happiness! Vladivostok
residents are incapable of living in acity where the sea is not visible fromthe window. Where it is impossible toeat fresh sea cucumber, scallop, or mussels whenever you feel like it. These
treats are most delicious, of course,
if they are caught by the eaters themselves and consumed without undergoing any heat treatment. A good soy
sauce, a little wasabi, maybe a drop ofvinegar – yum! What else do you needfor a feast?
In Soviet times, 60,000 Vladivostok
citizens – merchant seamen, fishermen, naval personnel, border guards,
and scientists – were at sea every day.
And ‘day’ is a conventional unit; trips
could last up to a year or more. Icebreakers headed to the Arctic fromhere, and whaling flotillas to the Antarctic. It was through the Vladivostok
Commercial Sea Port that the majorityof the lend-lease military supplies weretransported.
The thing is that the sea is also home
to sharks that are approaching theseshores more and more often (apparently as climate change takes effect),to ruthlessly stinging clinging jellyfish, and to the legendary pufferfish,
also known as fugu, the deadly yet favourite delicacy of our neighbours on
the opposite shore of the Sea of Japan.

Ksenia Lokteva

Well, you might not believe it, but Vladivostok residents also seem to have gills.
Otherwise, how would they survive in a city where humidity levels generally
reach 80–90% during the summer months?

Ksenia Lokteva

Vladivostok | BIG DIFFERENCE

Don’t try to complimentlocal residents by saying
something like: “Youhave such beautiful
mountains!” using theterm ‘gory’ or worse‘kholmi’ (mounds).
In Vladivostok, they’realways ‘sopki’ (hills)!
stok from its neighbouring country. If
you want to take a short cut, it is best
to use ‘ochkurs’ (archways), and if you
are hungry then you should drop by a‘chifanka’ (Chinese restaurant) – inexpensive and delicious. If you’re sitting
at home and someone tells you that it’s‘zusman’ (cold) outside, wear warmer clothes. If you are offered to ‘vtarit’(have) coffee, this isn’t an indicationthat you need to buy a bunch of stuff.
And the offer to ‘srastit’ (join) something has no connection to anything
surgical or horticultural – people want
to help you find something or someone
you need.
Yes! And of course, the most basic
thing: don’t try to compliment local residents by saying something like: “Youhave such beautiful mountains!” using the term ‘gory’ or worse ‘kholmi’(mounds). In Vladivostok, they’re always ‘sopki’ (hills)!
And the abbreviation ‘LGZ’ used inconversation simply stands for, albeit immodestly, ‘the best city on earth’.
Well, do you agree?

All thePresident’s Goubuli
Text: Oleg ANDREEV
Empress-approved

Baozi, which is the general termfor Chinese stuffed buns, can bemade according to an enormous
variety of recipes. The majorityof these date back to the earliest
histor y of Chinese cuisine, butt his doesn’t stop moder n chefs
from exper imenting wit h new
fillings that incorporate all kindsof ingredients.
Goubuli themselves have been
made since the mid-nineteenth
centur y. The chef who invented
them lived in Tianjin, the closest
port to the Chinese capital. Goubuli
quickly became popular, and it
wasn’t long before they made theirappearance at the imperial court.
Upon trying them, the emperor’s
wife declared that, simple as theywere, they were far superior to eventhe most sophisticated dishes.

Write it down!

At first glance, the recipe seems
straightforward – write it down! For
the dough you’ll need 600g of wheat
f lour, 112g of sugar (that’s right,
Goubuli have a hint of sweetness!), 11gof yeast, and 11g of baking powder (it’svital to be accurate!). For the stuffing
you’ll need 600g of minced pork belly,
37g of salt, 112g of oyster sauce, 180g
of sugar, 30g of sesame oil, 20g of fresh
ginger, 20g of spring onions, and 300gof cooled boiled water.
This quantity of ingredients will
make 15 Goubuli buns weighing about
100g each. Don’t forget that each bun
must have exactly 18 wrinkles at the
top – any other number is strictly
forbidden. All done? Now let the
Goubuli rest for 10 minutes so thatthe yeast can do its work.
After that, they’re ready to go in
the steamer. This part depends on the

160

Head Chef Pong Kak
Hou believes thateven in China, few
people know how tomake goubuli

3-6ОctoberMoscow,
ManegeRestaurant Chinese Stories

Our interview with Pong Kak Hou, Head Chef at favourite Vladivostok
restaurant Chinese Stories, played out as a top-level negotiation in whichnothing less than the secret of the delicious Goubuli stuffed buns was atstake. These are the very buns that Vladimir Putin and Chinese leader Xi
Jinping tried their hand at making during the Russian President’s recent
visit to China.

Aleksey Druzhinin / TASSVLADIVOSTOK | VIP DINING

intensity of the steam, but the Goubuli
should be ready after 5–6 minutes. No
seasonings or sauces are required –they are a completely stand-alone
meal.

A rare talent, even in China

Goubuli aren’t easy to make. You haveto work at it. Despite the abundanceof Chinese restaurants worldwide, thebuns are hard to find outside China.
Even within China, few people know
how to make them at home. In Chinese
restaurants, this is the job of speciallytrained ‘sculptors’ and chefs. And
did we mention that Goubuli haveearned themselves a place on China’s
Intangible Cultural Heritage list?
Wondering how President Putin and
Chairman Xi Jinping did when it was
their turn to make Goubuli? Pong Kak
Hou laughs. “I’m not brave enough toanswer that question honestly!”

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