Рубрика pубрика

To participants and guests of Third Eastern
Economic Forum
I would like to extend my warm greetings to allparticipants and guests of the Third Eastern Economic
Forum in Vladivostok.
The Russian Far East’s proximity to the large andrapidly growing Asia-Pacific market, its wealth ofresources and unspoilt natural environment, andthe unparalleled transport, logistics and industrial
potential to be found here are all attracting increasing
international attention. This is confirmed by
the growing number of Forum participants: officials,
business leaders, scientists, and experts from a varietyof countries.
Russia is faced with an ambitious target: to provide
the best possible conditions for doing business in
the Far East, to launch new manufacturing capabilities,
and to create additional jobs. It is with this objectivein mind that advanced special economic zones
have been set up, offering tax incentives, simplified
government regulation and oversight, and extensive
infrastructure. More than 700 Russian and foreign companies are alreadytaking advantage of these benefits, working on a range of highly promisingprojects in the Far East. We expect the number of such initiatives toincrease as a result of this Forum.
Russia’s Far Eastern strategy is based on openness to collaboration andan interest in promoting the broadest possible international cooperation.
As such, the theme of working together within multilateral structures
such as the Eurasian Economic Community, the Shanghai Cooperation
Organisation, ASEAN, and APEC takes up, by tradition, an important partof the Forum’s agenda. I am confident that your discussions will facilitate
the development of effective models for combining various integration
processes, and will help us to move further towards creating a Greater
Eurasian partnership.
I wish you all the best and a successful and productive Forum.
Vladimir Putin

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Dear participants of the Eastern Economic Forum,
The third Eastern Economic Forum, which is being held
here in Vladivostok, a leading city in the Asia-Pacific region,
presents a great opportunity to discuss the region’s future.
As Prime Minister of Japan, I am very pleased to see theEastern Economic Forum being held with such grandeur, andto be able to attend once again this year.
Vladivostok has enormous potential as a gateway linking
Eurasia and the Asia-Pacific region. The city has a richhistory and has seen the mixing of many different peoples
and cultures. The Eastern Economic Forum provides anopportunity to discuss the development of the Far Eastfostered through links with the Asia-Pacific region, which
is a powerful driver of the global economy. The event is
attracting ever greater attention as a major international
forum in East Asia and the number of participants is also
growing. Further development of the region requires thecreation of favorable business conditions that enablegrowth in all countries, including Japan and Russia. To that
end, this forum, which brings together so many businesspeople under one roof and draws on their great wisdom, isextremely significant.
Japan has for many years contributed to a broad range of economic
development in the Asia-Pacific region, and as a responsible member of this region
Japan will continue to promote various forms of cooperation. As part of this, Japanis aiming to increase the potential of Japan and Russia, and to strengthen mutual
trust, by adeptly combining Russia’s economic and social needs with Japan’s areasof expertise. For this purpose, I presented President Putin with an eight-point
cooperation plan last year, which is now being realized with steady results. Japanadvances further visible cooperation in the daily lives of Russian citizens, such as
extending the healthy life expectancy of Russian people using Japan’s medical
technology, undertaking urban development projects that shape the future of
Vladivostok in a manner befitting of a gateway to the Asia-Pacific region, andturning the Far East into a major export base. As announced last year, I would liketo confirm the progress in the cooperation plan with President Putin at the annual
Eastern Economic Forum and deepen Japan-Russian cooperation. I look forward toparticipating in the discussions of the forum, and hope that this forum will continue
to produce significant results in advancing regional and bilateral cooperation by
providing a venue for fruitful and future-oriented discussions.
Shinzo Abe
Prime Minister of Japan

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Dear Forum participants and guests,
The first Eastern Economic Forum was held in Vladivostok
in 2015. Over the intervening three years, it has become thelargest platform in the international arena for discussing
strategies to develop political, economic, and cultural links
between Russia and the countries of the Asia-Pacific region.
The Forum affords us an opportunity to present the work
we do, and to explain that the Russian Far East is a reliable,safe, and profitable place to do business. That is why centre
stage at this year’s third Eastern Economic Forum will begiven to projects that have already been implemented by
Russian and foreign investors. The main speakers in our
discussions will likewise be entrepreneurs who are creating
real businesses and new jobs.
So far, 15 federal laws aimed at developing the Russian
Far East have been adopted. A demographic policy for theRussian Far East has been approved for the first time. A
comprehensive plan to develop the city of Komsomolsk-onAmur is being implemented. A full range of essential cultural,
sporting, and social infrastructure will be built in the city.
We are creating a Far East Fund for the Development and
Implementation of Cutting-Edge Technology.
Seventeen advanced special economic zones have been established, together
with Vladivostok Free Port. Fourteen investment projects are receiving state
infrastructure support. Work continues on the ‘Far Eastern hectare’ initiative, andmuch-needed legislation has been adopted to launch a mechanism to bring energy
tariffs into alignment and to introduce special simplified procedures for foreign
citizens wishing to enter the Russian Far East. A full range of major investment
projects is now at the implementation stage: more than 750 projects have beenannounced, and are expected to create 100,000 new jobs. By the end of the year,
85 new companies will have been established, providing 5,500 new jobs.
I am certain that this Forum will assist us in our search for new ways to achieve
economic growth in the Russian Far East and expand international cooperation in
the Asia-Pacific region.
I would like to wish all participants and guests a productive and successful
Forum.
Yury Trutnev
Deputy Prime Minister of the Russian Federation
and Presidential Plenipotentiary Envoy to the Far Eastern Federal District3

Contents:Рубрика pубрика

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Event guide: all the information you need to work as productively
as possible at the Eastern Economic Forum venues

86

Alexander Galushka, Minister for the Developmentof the Russian Far East
Key Growth Points in the Far East: Development Strategy and Tactics

94

Ronnie Chan, Chairman, Hang Lung Group
Prospects for Cooperation among Countries in the Asia-Pacific Region(APR)
Andrey Bystritsky, Chairman, Valdai International Discussion Club
Development and Support Fund
Russia’s Pivot to the East and Its Geopolitical Consequences

Anisimov, Acting President, Far Eastern Federal University (FEFU)
44	Nikita
Areas of the University’s Development against the Backdrop of Existing
Trends in the APR

52

Ekaterina Trofimova, CEO, Analytical Credit Rating Agency (ACRA)
Special Aspects of Russia’s Foreign Trade with APR Countries

54

Alexander Ivlev, Managing Partner, EY Russia
The Pros and Cons of Investing in the Far East

58

Petr Fradkov, Head, Russian Export Centre (REC) Group
Non-Energy Export Support Mechanisms for Russian Companies

98

Grigory Ivliyev, Head, Federal Service for Intellectual Property
The Protection of Intellectual Property in Russia: Problems andObjectives
Igor Bulantsev, Senior Vice-President, Sberbank; Head, Sberbank CIB
Prospects for the Use of Blockchain Technology in Russia
Ruslan Karmanny, Head, ASI Project Centre for NTI Integration
and Digital Economy Programme
Prospects for Building a Digital Economy in Russia

Safonov, Head, Federal Agency for Tourism
110 Oleg
Main Areas of the State Tourism Policy in the Far East
Sadchenkov, Head, Made in Russia national brand project146	Mikhail(Roscongress Foundation)
Does the Far East Need a Separate Brand?

Foundation – key forums in Russia and abroad in 2017–2018.
148 Roscongress
You are invited to our unique events coming up in the next year
Bryusov, Deputy Director, Roscongress Foundation; Head,
156 Georgy
Sports, Entertainment and Special Programme OfficeSporting Events of the Eastern Economic Forum

Daisuke, Head, Japan Association for Trade with Russia &64	Saito
the NIS (Rotobo) Mission
Japanese Business in Russia Today and Tomorrow

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Alexey Kalitsev, Managing Director, Hyundai Motor CIS
What Is the Future of the Automotive Market in Russia?
Alexey Rybnikov, President, St. Petersburg International Mercantile
Exchange
Raw Commodity Exchange Trading Tools

Roscongress Magazine
Project Manager: Head of the Roscongress Foundation’s Information Service Dmitry Kryukov
For questions concerning commercial cooperation, please contact: camilla.spence@roscongress.org
Roscongress Foundation
Address: 12, Krasnopresnenskaya Nab. , Moscow, Russia, 123610
Tel./fax: +7 (495) 640 4440, Email: info@roscongress.org
The issue used photos from: TASS, Russia Today, Getty, Shutterstock, Alamy, Lori, and Evgeny TabalykinWelcometo the third Eastern
Economic Forum!

Event guide:
all the information
you need to work
as productively as
possible at the Eastern
Economic Forum venues
and have a pleasant
stay in the host cityof Vladivostok.

B u s i n e s s p r o g r a m ME

Forum:

BUSINESSPROGRAMMEECONOMIC POLICY IN RUSSIA’S EAST:
WHAT’S NEXT?
Advanced Special Economic Zones 2.0.
The View from Investors. Since 2015, theFar East has set up 17 advanced special
economic zones (ASEZs) in which morethan 300 investment projects are being
implemented and 20 new production
facilities have been created. How doinvestors rate the effectiveness of the
ASEZ programme and its influence on
the economic viability of projects? Whatchanges should be made to ASEZs toincrease profitability and reduce the risk
to investors?

Vladivostok Free Port: Successes
and Challenges. Putting Our Heads
Together. The sea ports of theRussian Far East connect Russia
with the countries of the AsiaPacific region. Vladivostok Free Port
was established to create globallycompetitive conditions for theirdevelopment. What is its effect on
the economics of new enterprises?
Extending the free port regime to all
ports and airports in the Russian Far
East: a necessary step?

Support for Major Investment
Projects. What Now? Fourteen
investors have already used themechanism of targeted state
infrastructure support. Has it lived
up to their expectations? How will it
function going forward?
The ‘Far Eastern Hectare’: Initial
Experiences. 2016 saw the launchof a programme allocating free landin the Russian Far East. More than
25,000 people have already become
participants in the programme. Why
are people taking land in the Russian
Far East, and what do they plan to dowith it? What improvements must be
made to the ‘Far Eastern hectare’ law
and the online applications system(надальнийвосток.рф)?
Lowering Energy Tariffs: The Impact
on Projects. A programme to lower
energy tariffs in the Russian Far East
was launched on 1 July this year.
What effect will this produce forbusinesses in the Russian Far East?
Can we expect growth in investment?
Could this experience of reducing
energy tariffs be applied to otherkinds of business costs in the Russian
Far East?

Small and Medium-Sized
Businesses. Everything for Growth!
New conditions for doing business in
the Russian Far East, ASEZs, and theFree Port are increasingly attracting
the interest of small companies. What
can the government do to help small
businesses in the Russian Far East
access the large Asia-Pacific market?
The Investment Climate in the
Regions of the Russian Far East.
Investors Comment on Changes.
In the opinion of entrepreneurs,
what positive and negative changes
have taken place in the regions of
the Russian Far East over the past
year? What are the major needsfrom business with respect to theregional authorities right now? How
do investors rate the effectiveness of
local governors’ teams?
Entrepreneurship in the Russian Far
East. Risks and Solutions. The level ofpressure on business fromadministrations and regulatory bodies
is a significant factor in the global
competitiveness of regions. What risks
do investors in the Russian Far Eastsee in working with the government?
How well protected do they feel?

Investments by State Companies.
A Focus on Russia’s Far East.
In accordance with a Russian
Government directive, 40 Russianstate-owned companies are prioritizing
their work in the Russian Far East.
Where and in what in the Russian
Far East are state-owned companies
planning to invest? And what support
are they counting on? How can amultiplier effect be achieved thatwill accelerate growth in the Russian
Far East?

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And also:· Protecting Investments and Creditors’
Rights in the Russian Far East:
Strategic Changes· Financing Innovation as a Driver of
Economic Growth in the Russian Far
East· Women Empowerment for Growthand Development

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B u s i n e s s p r o g r a m ME

Forests and Timber Processing: From
Timber to Pulp and Paper Factories.
The Russian Far East is home to
51% of forest resources in the AsiaPacific region. Vnesheconombank hasannounced the creation of a forestry
cluster in the Russian Far East, and in2017 a major Chinese investor declaredits interest in constructing a pulp mill.
In which regions of the Russian Far East
would investment in forestry bring themost gain? How can the share of deep
processing enterprises be increased?

DOING BUSINESS IN THE RUSSIAN FAR EAST
Chemical Utilization of Oil and Gas in
the Russian Far East: A New Business
Niche? Twenty-seven percent of gas
reserves and 17% of oil reserves in the
Asia-Pacific region are concentrated
in the Russian Far East. The levelof development of known oil andgas deposits is extremely low anddoes not exceed 12%. Is the Russian
Far East a competitive location forthe development of the gas- andpetrochemical industry? What gasand petrochemical facilities are themost attractive for localization in the
Russian Far East?
Agricultural Investment. Feeding the
Asia-Pacific Region. The Russian Far
East is located closer than any otherregion of the country to the largest
and fastest growing market of the AsiaPacific region, which has a population
20 times the size of Russia’s and 470
times larger than that of the macroregion. What food products for the
Asia-Pacific region could be produced
the most advantageously in the Russian
Far East? What steps must be taken totransform the Russian Far East into a key
supplier to the highly competitive AsiaPacific foodstuffs market?

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Russky Island: The Onset of Creatinga New Centre for International
Cooperation and Cutting-Edge
Technologies in the Asia-PacificRegion. In 2017 the Russian
Government adopted a programme
for the development of Russky
Island as a centre for international
collaboration and cutting-edge
technologies in the Asia-Pacificregion. What investment projects
could be implemented on Russky
Island? What conditions should
the government create on theisland in order to attract investment
from cutting-edge technology
companies?
Coal and Logistics: Export Potential.
A full range of major coal extractionand enrichment projects has now
been launched in the Far East.
However, there is a need to modernize
railway networks and optimize
transportation tariffs, which are
creating bottlenecks within the sector.
What is the potential for increasing
the effectiveness of investment
in coal extraction by developing
logistics? What are the prospects forcoal exports in the Russian Far East?

Gold. A New Chapter in the Gold
Rush. Thirty percent of gold deposits
in the Asia-Pacific region are locatedin the Russian Far East. What gold
deposits and investment projects forgold extraction are in need of Russianand foreign investors? How can thegovernment assist in establishingthe infrastructure required for thedevelopment of new gold deposits?
What initiatives must be created toensure the flow of capital into theprojects of junior companies?

Investment Fish Quotas. Whereand How to Invest in Processing andShipbuilding. In 2017, the Russian
Government launched a fishing quota
mechanism, under which fisheries are
obliged to build either new fishingvessels in Russian shipyards or new
seafood processing plants. A competition
for investment projects has also beenannounced. How can a company becomea participant in the competition andwhat aquatic bioresources can investors
expect to get? What are the economics
of investment projects for seafood
processing in the Russian Far East?

Mariculture: Establishing a New
Sector in the Russian Far East.
More than 2 million hectares ofthe marine area of the Russian Far
East are suitable for the cultivationof mariculture products which areespecially valuable and sought-after
on Asia-Pacific markets. In 2017 theRussian Government introduced
new procedures for making marine
areas in the Russian Far Eastavailable to marine farmers. In which
regions of the Seas of Japan andOkhotsk can marine aquaculture
be developed? What supportive
measures is the government making
available for marine farmers?
Airports. A New List of Projects.
A full range of private investment
projects to modernize airports isbeing implemented in the Russian
Far East. The most successful ofthese is Vladivostok International
Airport. What plans exist for
airport development in Russia’s Far
East? What mechanisms are there
for attracting investors to theseprojects?
Vladivostok, City of Diamonds: The
Start of Gem-Cutting. The Russian
Far East is a global leader in roughdiamond production with 81% of the
diamond deposits present in the AsiaPacific region. However, nearly every
rough diamond mined is exported andcut in another country. In 2016, theEurasian Diamond Centre was openedin Vladivostok. Alrosa has announced
the start of a programme to provide
financial assistance to diamond cutters.
How will it work? Could Russian
diamonds as an international brandprovide a competitive advantage for
Russian diamond cutters?

Sea Ports: In Good Hands. The
Russian Far Eastern coastline
is home to 32 trade and fishingseaports, as well as 300 small
ports and port facilities. Technicalstandards do not conform tomodern requirements, however.
What plans exist for theirdevelopment? Which ports in
the Russian Far East offer themost interesting investment
opportunities? What economic
impact have new customs
clearance regulations in theFree Port of Vladivostok had on
seaports?
Russia’s Digital Far East: Finding
Partners. As a neighbour of AsiaPacific countries which are leadersin the global economy, the Russian
Far East has the opportunity to
be first among Russian regionsin attracting new technologicalsolutions and laying a foundation
for Russia’s future development. In
what sectors could a digital cluster inthe Russian Far East be competitive,
what partners are needed in orderto create it, and how can they beattracted?
Tourism. An Economy Based on
Unique Experiences. Every year
more than 170 million tourists from
China, Japan, and South Korea travel
abroad, where they spend morethan USD 250 billion collectively.
The Russian Far East possesses aunique selection of recreational
resources capable of attracting asignificant part of the tourist flowfrom the Asia-Pacific region. How
do investor support mechanisms in
the tourism sector of the Russian
Far East operate? What further steps
can the government take to develop
incoming and domestic tourism?
And also:· How Can We Ensure an Inflow ofPrivate Investment into Developing
the Infrastructure of Russia’s
Far East?
· Specially Protected Natural Areas –Opportunities for the State andBusiness13

B u s i n e s s p r o g r a m ME

WE ARE NEIGHBOURS: EARNING THROUGH COOPERATION‘Russia’s Gateway to Asia’: the Roleof the Russian Far East in Asia-PacificIntegration Initiatives. Asia today is
growing ever more self-reliant, and,accordingly, more closed-off externallyand more open and competitive
internally as a market. Other EAEU
countries can gain access to thismarket via the Russian Far East. Whatneeds does the Russian Far East havewith respect to integration processes in
the Asia-Pacific region? How far are thesides prepared to go on the questionof creating a free trade zone? To what
extent would this be in the interests of
the Russian Far East?
The Export Potential of the Russian
Far East. Meeting Growing Demandin the Asia-Pacific Region. The
Russian Far East not only competes
with national Asian producers, butalso with companies from the USA
and Europe who have already been
exporting to these markets for sometime. How can a support system forexports from the Russian Far East be
formed? What are the most effective
channels for promoting exportoriented goods produced in the
Russian Far East? What role could beplayed by electronic platforms?

Competitive Customs Regulation:
Best Practices in the AsiaPacific Region. Russia has taken
unprecedented steps in recent years
to implement specialized regulations
targeted at the development of
the Russian Far East. Many of thepractices being applied in terms ofcustoms procedures in the advanced
special economic zones and in theFree Port of Vladivostok are uniquefor Russia. What practical results
have been achieved? What next steps
should be taken to improve customs
regulation mechanisms?
Connecting Europe and Asia.
International Transport Corridors in
the Russian Far East. An important
project for realizing the transit
potential of the Russian Far East is
the development of the internationaltransport corridors ‘Primorye 1’and ‘Primorye 2’, linking the northeastern provinces of China withports in the south of Primorsky
Territory. The potential total cargobase of these is estimated at around45 million tonnes annually. Whenand under what conditions will theconstruction of new infrastructure
for the international transport
corridors begin? How will support
for investors from both countries berealized as investment projects for thedevelopment of transport corridors
are implemented?

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Smart Energy: Balancing Demandwith Capacity. New Projects. The
major revolutionary breakthroughs ofthe last 300 years have been possible
thanks to the discovery of new kindsof fuel. But today the developmentof IT and technology is creating
colossal opportunities for increasingenergy efficiency, which in terms of
their scale are comparable with a newenergy revolution. What is the present
demand from the world economy
for new energy technologies? What
impact will big data, machine learningand other ‘smart’ technologies haveon this highly traditional sector of theeconomy? Could the Russian Far East
become a ‘smart’ energy hub for the
Asia-Pacific region?
The Potential of the Northern Sea
Route. From Words to Actions. The
Northern Sea Route is the shortest
sea route from Asia to Europe, andexperts estimate that by 2050 it will
be passable for non-ice reinforced
vessels all year round. Taking this
into consideration, it is strategicallyadvisable at this point to begin
developing the Northern Sea Route.
How can participation in the joint
development of the Northern Sea
Route be made attractive to China,
Japan, and South Korea? How cancompetitive conditions for container
cargo transit via the Northern Sea
Route be ensured?

Healthcare Investment in the AsiaPacific Region: The Economic andSocial Impact. In investing in healthcare,business is interested in returns, andthe government in extending the life
expectancy of its citizens, as well as theirworking lives, and accelerating the paceof economic growth. How is a balance
between the interests of the private
sector and the state ensured in healthcare
in Asia-Pacific region countries? What are
the key trends in healthcare developmentin the Asia-Pacific region? How canthe Russian Far East make use of theadvantages of Asia-Pacific healthcare
systems for its own development?

Logistics in Russia and Asia-PacificInterconnect under China’s Beltand Road Initiative. China is moving
its Belt and Road initiative froma framework discussion phase totangible projects, establishing thepreconditions for the developmentof routes across Russia. Sino-Russiancooperation in this area is supportedby the two countries’ heads of state.
How should Russia make the mostof the opportunities presented by
China’s Belt and Road initiative? What
steps need to be taken by the Chineseand Russian governments in the near
future to create conditions that will
foster increased cooperation in thisarea?

Competitive Law and the International
Arbitration Centre in the Russian Far
East. The examples of Hong Kong andSingapore show how important thepresence of systems of competition
law and independent centres ofarbitration is. Could the Free Port of
Vladivostok repeat the successes ofthese Asian phenomena? And if so,
how can this be achieved? Could it bepossible to establish an Asian axis ofarbitration linking Vladivostok, Beijing,
Hong Kong and Singapore?
New Technologies in the Asia-PacificFinancial Sector. How Blockchain isTransforming Reality. Perhaps nowheremore than in the financial sector dotrust and the availability of intermediarychains play such a crucial role. Blockchain
technology is potentially able to replace
both, and to increase drastically the
productivity in the sector. What role
can Russia and its Far East play in thedevelopment of blockchain technology?
Partnership for Greater Eurasia:
Expanding a Future-Oriented Joint
Development Space. Ensuring synergy
rather than competition between
Eurasian projects could advance theinterests of all the continent’s nations.
This is exactly the idea of the Eurasian
Economic Partnership (EEP), or Greater
Eurasia: building a space for joint
development by creating an economic
relations system that takes account of
the interests of all of its participants.
How and by what means can the EEP
be created? What benefits can theestablishment of the EEP bring to theregion’s countries?

And also:· Bilateral and Multilateral Space
Cooperation in the Asia-PacificRegion· The Asian Energy Ring. Are
Politicians and Energy Companies
Ready?
· Bonds as a Means of Attracting
Finance· Increasing Academic Mobility in the
Asia-Pacific Region· The Fight Against Social Inequality
and Polarization in Countries of the
Asia-Pacific Region· Pandemic Preparedness as a
Condition of Sustainable Economic
Growth in the Asia-PacificRegion· T V Debates of Russia 24 and the
Valdai Discussion Club. Russia’s
Pivot to the East: Outcomes and
New Goals· Valdai Club Session. New
Opportunities for Cooperation in
Asia: the Russia–China–Japan–US
Quadrangle· Seminar on Global Services in theIntellectual Property Sector

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Integrated Development in the Russian
Far East: Creating a Comfortable Living
Environment. Concentrating resourcesin ‘growth points’, measures to reduce
imbalances in quality of life, achieving
more equal levels of socioeconomic
development, and overcoming thelimitations of infrastructure are the main
challenges when it comes to formulating
integrated development plans for thenine regions of the Russian Far East. Whatneeds to be done now in order to createa safe and comfortable living space forhuman potential to be fully realized within
the regions of the Russian Far East?

THE RUSSIAN FAR EAST:CREATING A NEW QUALITY OF LIFE BY RESPONDING TO CHALLENGES
Creating 100,000 New Jobs.
Challenges and Solutions. By 2025,
100,000 new jobs will have beencreated at new enterprises in the
Russian Far East, and 70% of themwill be for qualified specialists.
It will be impossible to fill these
positions using only the region’s
existing workforce, however.
The government has proposed a
programme to attract specialists
from other regions. Labour mobility
programme 2.0: how will the newmeasures stimulate migration to theregion? Job rotation – a potential
way to lay down roots?
Comprehensive Development
of Cities. Initial Plans:Komsomolsk-on-Amur, Svobodny.
Initial experience relating tocomprehensive urban developmentin the Russian Far East comes in theform of long-term plans to develop
the towns of Komsomolsk-on-Amur(Khabarovsk Territory) and Svobodny(Amur Region). What have been theinitial results of applying this new
approach? In which other towns
in the Russian Far East will urban
development be prioritized as a taskof federal importance?

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Talent in the Russian Far East: To Importor Nurture? In Russia, a range of strategic
programmes are being implemented todevelop talent for participation in efforts
to upgrade the country’s scientific andtechnological base. The Russian Far East
should not remain on the sidelines as
solutions to these challenges are put
into effect since it is a territory of greatchallenges. What role could the Russian Far
East play in global competition for talent?

The Development of Human Capital
as a Critical Factor in Successfully
Modernizing Single-Industry
Towns. The Russian Government
first began implementing its priority
programme to promote the integrated
development of single-industry
towns in July 2016. The programme
encompasses 319 cities in 60 regionsof the Russian Federation. Which best
regional and international practices
for developing human capital could
be of use in single-industry towns?
How are single-industry town teams
working with social communities?
Who are the leaders of change inthese new times?

Environmental Consequences ofEmergency Situations: Topical
Problems and How to Solve Them.
Russia’s Ministry of Emergency
Situations is taking active steps to
implement a set of measures aimed
at improving day-to-day safety forthe population and businesses
alike, including in the event ofemergencies with environmental
consequences. How does effective
coordination between different
ministries and agencies result in
mitigating the environmental impactof natural disasters? What is the roleof international cooperation in thisregard?

The City of the Future: Strategies
for Development. Vladivostok is
set to become a leading force in thedevelopment of the Russian Far East’stransport and infrastructure sector.
The prerequisites are already in place
for this to happen, however achieving
this objective requires drawing up a
strategic development document – one
which will facilitate finding a balance
between the needs of the city’s
residents, local government, regional
businesses, and major corporations.
What changes can Vladivostok expect?
What specific features affect urban
planning in Russia?

And also:

Solutions from Russian State
Companies. The Far Eastern Priority.
State companies, which along withgenerating profit are solving thechallenge of improving the qualityof life of inhabitants of the Russian
Far East, are making a significant
contribution to forward-looking
development in the Russian Far East.
Such companies include Aeroflot, theAgency for Housing Mortgage Lending,and Rostelecom. What are theseand other state companies doing toaccelerate development in the region?
Developing Borderland Territories in
the Russian East: Opportunities andChallenges. Their geostrategic locationand existing economic potential of
their natural environment make theborder regions of the Russian Far East
stand out as the most attractive regions
for investment and economic activity.
With limited local budgets, how canauthorities keep pace with economic
processes while ensuring that the local
population, the incoming workforce
and visitors to the border regions haveaccess to high-quality infrastructure
and public services in a timely manner?
What steps need to be taken to activatecross-border cooperation?

· Healthcare for People.
What Will Be Done?
· Housing and Utilities.
What Will Be Done?
· Education.
What Will Be Done?
· Culture and Art.
What Will Be Done?
· Sport.
What Will Be Done?

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BUSINESS DIALOGUE
Russia–ASEAN. This year marks
the launch of a range of projects in
the Russian Far East that are being
implemented with the participationof companies from ASEAN member
states – in machine building,agriculture, timber processing,transport, and tourism. To ensure
their success implementation,
unprecedented conditions have been
put in place to ensure the highest levelof convenience. The Far East could
become a springboard for building
cooperation between Russia and
ASEAN countries. How can investors
from several ASEAN countries bebrought together for a single project?
What incentive measures are needed
to strengthen their trust? Whichsectors feature the most promisingprojects for working together?
Russia–China. Eighty percent ofinvestment in the Russian Far East
from the Asia-Pacific region overthe last two years has come from
Chinese companies. Altogether, morethan 20 investment projects, with a
total investment value of over USD 3
billion, are being implemented in themacro-region with the participation ofChinese capital. Which projects have18

already demonstrated their viability
and which ones are in the early phase?
What are the obstacles to theirimplementation? What mechanisms
could become additional drivers ofgrowth for the flow of investment
into the Russian Far East from China?
What effects can businesses in bothcountries expect from the launch of
the new cross-border corridors?
Russia–Japan. One year on from thelaunch of joint work on an eightpoint plan for economic cooperation
proposed by Japanese Prime Minister
Shinzō Abe, it is possible to speakof a significant uptick in cooperation
between businesses in the twocountries. Discussions on joint
investment projects in the oil andgas sector, agriculture, healthcare,and infrastructure have entered thepractical stage. Many of these projects
are connected with the Russian Far
East. What projects are already being
implemented by Japanese companies
in the region? How can theirconfidence be strengthened? Whichsectors are the most promising? What
improvements are required in eachsector from a regulatory point ofview?
Russia–Republic of Korea. The
majority of Korean projects areconcentrated in the seafood andagro-industrial sectors. At the sametime, such projects account forless than 1% of foreign investment
into the Russian Far East from
Asia-Pacific countries in the last
two years. What is obstructing theflow of Korean investment into theRussian Far East? What experiencecan South Korea draw on in the
Russian Far East to improve theinvestment climate? Are Russianand Korean businesses interested in
implementing megaprojects such as
the development of the Northern
Sea Route and the creation of an
Asian energy ring?
Russia–India. Both countries
are ready to work together toincrease their trade and economic
cooperation. In 2017, India made its
first investments in the Russian Far
East outside the oil and gas sector. A
number of Indian companies are at anadvanced stage of decision-making
about investing in machine building
and oil and gas extraction. What
projects are Indian companies already
implementing in the Russian Far East,and what is the key to their success?
What mechanisms and solutions
could act as a catalyst for the growthof Indian investment in the Russian
Far East and mutual trade?

19

Forum navigator

TRANSPORT ACCREDITATION
During the Forum and theForum preparation period, thevehicular access to the Forumvenue is limited. There may
also be limited vehicular accessto Vladivostok International
Airport, official hotels and various
cultural and sporting programmevenues.

can be collected in person
upon presentation of a passport
or by power of attorney fromAccreditation Centre 1 (building M,
FEFU). The power of attorney form,
as well as an example of how to fill
it out, is available to download in
the Accreditation section of theForum website.

Where restrictions are introduced,
access will only be granted tovehicles with an EEF 2017 transportpass.

To collect transport passes
and drivers’ accreditation
badges сopies of the drivers’
passports must be presented.
Copies of the passports will be
returned once the badges havebeen issued.

Once applied for, driver andvehicle accreditation badges

Venue

Accreditation
Centre 1

forum:

navigator

WELCOMETO EASTERNECONOMIC FORUM!

Far Eastern Federal University (FEFU)
Ajax Bay, Russky Island, Vladivostok
6–7 September
from 08:00 to 20:00
Please note that Forum venue will be
open from 08:00 on 5 September.
You are kindly requested to arriveat 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
30 minutes.

*

picking up
a participant
badge by a proxy

PARTICIPANT ACCREDITATION

The main events of the Forum businessprogramme and a number of culturaland sporting programme events may
only be accessed with an accreditation
badge.
The badge is personalized and may
not be transferred to third parties.
You must carry your badge as well
as your passport (or another identity
document) with you at all times during
the Forum.
You must present your badge forverification upon request by security
service officials.

Badges can be collected in personby presenting an identity document(passport) or by a third party using a
power of attorney.
The badge may be collected at theaccreditation point in Moscow or
Vladivostok.
To avoid complications with the accessto the Forum venue we advise
collecting your accreditation badge
before the start of the Forum events.
Participant bag can be collected inbuilding A (level 2) from 5 to 7 September.

If a participant’s badge iscollected by a third party
using a power of attorney,
the authorized person must
present:• Authorized person’s
passport• Original standard power ofattorney*• List of participants• Copies of participants’
passports*** T he power of attorney form,
as well as an example of how
to fill it out, is available todownload in the Accreditation
section of the Forum website.
** C opies of the participants’
passports will be returned uponcollecting the badges.

Address

Building M, FEFU,
Ajax, Vladivostok,
Russky Island

Date

Working hours

23 August –2 September

10:00–19:00

3 September

10:00–24:00

4–7 September

24 hours

Accreditation point hours of operation
Venue

Address

Date

Working hours

28 August –4 September

09:00–20:00(Mon – Fri),
10:00–18:00(Sat – Sun)

5 September

09:00–12:00

23 August–2 September

10:00–19:00

3 September

10:00–24:00

4–7 September

24 hours

MOSCOW

World Trade Center
Moscow

Entrance 7, 12,
Krasnopresnenskayanab.

VLADIVOSTOK

Accreditation Centre 1

Building M, FEFU,
Ajax, Russky Island

Vladivostok
International Airport

45, Portovaya Ulitsa,Artem

1–6 September

07:00–23:00

Hotel Hyundai

29, Semenovskaya
Ulitsa

1–6 September

08:00–23:00* Information is valid as at 20 August, 2017. The latest information about the Forum can be found on the official website www.forumvostok.ru

20

21

Forum navigator

INTERNETTHE ROSCONGRESS LOUNGEFINANCIALSERVICES
Participants can pay theparticipation fee and the costof any additional services incash or with a bank card at theForum financial services stand at
Accreditation Centre 1(building M, FEFU).
A 5.5% commission fee
is charged when paying
for participation and services
at Forum financial services
stands.
The financial services stands
will also provide participants
and representatives of payer
organizations with original copies
of contracts, work completionstatements and invoices signedby the Roscongress Foundation.
Documents can be picked up at
Accreditation Centre 1.

Forum financial
services stands
operating hours
4 September
5–6 September
7 September

08:00–19:00
08:00–20:00
08:00–17:00

For the convenience of participants,
complimentary high-speed Internet
access is available at the Forum venue.
This service is available free of charge
to Forum participants and guests andcan be accessed in all buildings of the
EEF business programme events on
the FEFU campus, as well as in the
Accreditation Centre 1 and the press
centre.
Network name: EEF2017
Password: eef-2017

The Roscongress Lounge is a special business networking
area provided by the Eastern Economic Forum operator, theRoscongress Foundation.
The Roscongress Foundation (previously the SPIEFFoundation) has been regularly holding business events in
Russia and abroad since 1997, creating favourable conditions
for economic cooperation between the business and politicalelites of Russia and other countries.
Visitors to this area can learn about all the opportunities
available for participants in the events and projects carriedout by the Roscongress Foundation: the St. Petersburg
International Economic Forum, the International Financial
Congress, the Eastern Economic Forum, the World Festivalof Youth and Students, the Russian Investment Forum, theInternational Arctic Forum, and others. Visitors who areinterested may apply to take part in these events or to organize
congress events at any level.

BROADCASTS OF
FORUM EVENTSLive video broadcasts of the plenary
session and other Forum events will
be displayed on TV screens locatedthroughout the Forum venue and in
the press centre. In addition to session
broadcasts, the TV screens will also
display information that will help
participants navigate through the Forum:
announcements about sessions, changes
to the programme, the schedule forupcoming events, notices regarding thecultural programme, the latest news andphotographs, and much more.
Footage of Forum business programme
events will also be broadcast live in the
Programme section of the official Forumwebsite, www.forumvostok.ru.
A broadcast archive will be available in
the Programme section of the Forumwebsite at www.forumvostok.ru, where
you will be able to search by date andevent title. Video material can be watchedin full or by section.

Renting meeting spaces in the Roscongress Lounge
For the convenience and comfort of its guests, the Lounge
is equipped with meeting spaces which can be booked inadvance, and a coffee break area. It will also screen broadcastsof key EEF 2017 events.
Meeting spaces in the Roscongress Lounge are available forrent for 20–30 minutes. If you wish to rent meeting spaces,
please go to the Roscongress Lounge administrator’s stand(level 4, building A).
This service is provided free of charge, subject to availability
when booking.

INFORMATION SERVICES
Information and services points
EEF information and services points
are located in building A (levels 2,
3, 4, 5 and 6), building B (levels 5
and 6) and building C (level 6) of
the EEF venue, in the Accreditation
Сentre 1 (building M), and at
Vladivostok International Airport.
At information and services
points you can obtain informationon the Forum’s business, culturaland sporting programmes,

22

available services, and directions
around the EEF venue and othersites.

cancellation of the text message
notification service for EEF 2017
participants

Additionally, the information andservices points at the Forum venue
also offer the following services:•C opying and printing of documents opying and writing information to•Celectronic media•D istribution of EEF 2017
information materials• Subscription to or

Service stands
at the EEF venue:• Cultural and sporting programme• Congress Attaché concierge service• Taxi booking and transport services• T heatre ticket and guided tour
booking• Russian Post
• Mobile device charging• Luggage room
• Lost property office
Text message notification service
The text message notification
service allows participants toreceive short messages providing
information on business andcultural programme events,
participant services, andchanges to the official EEF
2017 programme. This service isactivated automatically for themobile phone number indicatedduring registration on the official
EEF website. You may apply forthis service to be activated ordeactivated at the EEF informationand services points or by telephoneon +7 (499) 7000 111. This service isprovided free of charge.
For additional information, pleasecontact EEF information centre.
Tel.: +7 (499) 7000 111
Email: info@forumvostok.ru

SOCIAL MEDIA
en.forumvostok
Eastern Economic Forumjp.forumvostok
en_forumvostok
ko.forumvostok@forumvostok
vi.forumvostok

Official hashtag of the Forum:#EEF2017

The mobile app for the Eastern
Economic Forum is the best way
to get the latest information about
EEF and learn about services
offered at the forum. It can be
downloaded in the App Storeand Google Play (search term
“eef 2017”).
The app is a tool that participants
can use to plan their work andcommunication at the Forum.
Key app functions:• information about the Forum
programme• view video broadcasts of businessevents• exchange messages with otherparticipants• schedule meetings• create a personal schedule to attend
business, cultural, and sporting events• information on transport services• navigate the Forum venue
All the app’s functions and features
are fully available after you enter
your personal login and password
from the personal web office.

23

Forum navigator

SHUTTLES

HOTELS IN
VLADIVOSTOK

During the Forum, regular free shuttle buses will run from the official hotels,
city centre and Vladivostok International Airport to the Forum venue and back,as well as around FEFU territory.

Hotel Hyundai 5*
Astoria 4*
AZIMUT Hotel Vladivostok 4*

ROUTE 1. OFFICIAL HOTELS

Tigre De Cristal 4*

Route 1.1 Zolotoy Rog
Hotel Hyundai, Astoria, AZIMUT
Hotel Vladivostok, Avanta, A-HOTEL
Amur Bay Vladivostok, Zhemchuzhina,
Primorye, Meridian, Equator, Sunrise,
Slavyanskaya, Gavan, Sibirskoye
Podvorye, Arbat Vladivostok, MarineWave 5–7 September

Villa Arte 4*

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

Aurora Park Hotel 4*
Primorye 3*
Zhemchuzhina 3*
Meridian 3*
Arbat–Vladivostok 3*

Route 1.2 Vtoraya Rechka
Acfes Seiyo, Rial
Route 1.3 Sedanka
S tory, Aurora Park Hotel, Vlad
Motor Inn
Route 1.4 Artem
Villa Arte, Venice
Route 1.5 Muravyinaya bukhta
Tigre de Cristal

to FEFU
07:00; 08:00; 09:00
to hotels
18:00; 19:00; 20:00
interval: 60 minutes

ROUTE 2. CITY CENTRE
 ity centre (12, Ulitsa Svetlanskaya)
C

ROUTE 3. VLADIVOSTOKINTERNATIONAL AIRPORT 4–7 September

 5–7 September
08:00 – 20:00
interval: 30 minutes

 4–7 September
24 hours
interval: 60 minutes

 6–7 September

ROUTE 4. FEFUTERRITORYFEFU territory (hotel
buildings 1–11, buildings A,
F, G, S, ‘Far East Street’
exhibition)

 5–7 September
07:00 – 22:00
interval: 15 minutes

22:00 – 07:00
interval: 30 minutes

Please note: The free shuttle bus timetable and intervals might be changed.
You should enquire about exact shuttle departure times and places from Forum
personnel at the airport, hotels and Forum event sites. Please allow plenty oftime for your journey.

24

Gavan 3*

 5–7 September

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

TAXI BOOKING
You can book a taxi by contacting oneof the city’s taxi companies.
Official accredited taxi company of
the Forum: PrimAvtoLine
Tel.: + 7 (423) 244 4444,+ 7 (423) 255 5555,+ 7 (800) 555 4409.
Passenger pick-up and drop-off points
are located on University Avenue,
close to the EEF 2017 venue’s security
checkpoint and the FEFU hotel
complex.
Please note that only official
accredited Forum taxis will beallowed onto the FEFU site.
You can book an official accredited
taxi at the EEF 2017 transport services
stands at Vladivostok International
Airport.
There will be transport services
stands at the Forum venue on level 6
of building A, level 6 of building B
and in the Accreditation Centre 1(building M).

DINING AT THE FORUM VENUE
Name

Location

Hours

Equator 3*
Dining format

Cafes offering light snacks (free of charge)
Café for participants

Building В, level 5,
opposite conferencehall 3

Networking area

Building B, level 6

Networking area

Building B, level 7

Avanta 3*
Rial 3*Sunrise 3*
Vlad Motor Inn 3*

08:00 – 19:00

Coffee break

Story 3*
Venice 3*
Sibirskoye Podvorye 3*

Paid cafes and restaurants offering hot meals
Panorama Restaurant

Building А, level 12

11:30 – 18:00

Set menu

Onego restaurant

Building А, level 12

08:00 – 21:00

A la carte service

Polina Café

FEFU campus,
University Promenade

10:00 – 20:00

A la carte service

STAR COFFEE Café

Building А, level 8

08:00 – 21:00

Tea, coffee, salads,
hot meals,
desserts

Paid cafes at the Forum venue
No. 1 Coffee Place Café

Building В, level 5
Building С, level 6
Building D, level 4

Coffee City Café

Building С, level 5

Pryanik Café

Building D, level 5

08:00 – 20:00

Tea, coffee, snacks,
desserts

On Russky Island
FEFU 3* – hotel buildings 1–5
FEFU 3* – hotel buildings 6–8

If you would like assistancein booking accommodation,please email your request tobooking@forumvostok.ru, or
telephone +7 (499) 7000 111,
specifying your preferred hotel,
dates of stay, the full namesof guests, and the numberof rooms required. Media
representatives should email
mediabooking@forumvostok.ru.
Booking requests will be accepted
until 25 August 2017.

25

Forum navigator

FORUM:

Sporting
Programme

Far Eastern Corporate
Games

2 September 2017
Olympiets Sports Complex(Vladivostok, 2, Batareynaya
Ulitsa)09:00–17:00

The EEF World Sports
Forum
Business Programme:
reception andsporting programmepresentation,
plenary session

5 September 2017
FEFU Campus (Vladivostok,
RusskyIsland, Ajax)

Gala hockey match
between Team EEF andTeam Primorsky Territory
Administration
5 September 2017
Polyus Ice Arena(Vladivostok, 26V, Ulitsa
Ovchinnikova)
19:00–22:00

Charity run in aid of theAmur tiger and Siberian
leopard6 September 2017
School No. 5 (Vladivostok,
Russky Island, Kanal village)
06:30–09:00

Gala basketball match
between Team EEF andTeam Primorsky Territory
Administration

6 September 2017
Olimpiets Sports Centre(Vladivostok, 2, Batareynaya
Ulitsa)
19:00–21:00

26

Sailing regatta

6–7 September 2017
Russky Island, Ajax Bay
6 September:
11:00–14:00
7 September:
12:00–16:00

Annual International
Vladivostok Jigoro
Kano JuniorJudo Tournament
for under 21s

6–7 September 2017
Fetisov Arena (Vladivostok,
284, Ulitsa Makovskogo)
13:00–18:00 and 12:00–18:30

Tennis tournament for the
Roscongress Foundation Cup
7 September 2017
The Tennis House(Vladivostok, 7/2, Ulitsa
Kaplunova)
19:00–22:00

FORUM:EXHIBITIONSThe EEF 2017 exhibition space willfeature specific advanced special
economic zones, investment
projects as well as measurestaken by the federal and regional
authorities to develop thesocioeconomic, demographic, andinvestment potential of the Far
Eastern Federal District.
• The ‘Far East Development’exhibition presents mechanisms
for companies to enter the Far
Eastern Federal District (advanced
special economic zones, Free
Port of Vladivostok), investment
opportunities, activities, andthe objectives of development

institutions as well as ongoing andpromising investment projects.
level 6, building A• The ‘Welcome to the Far East!’
exhibition presents key industriesof the Far Eastern Federal District,the international cooperation
policy, industry investment
opportunities and preferences aswell as the mega-projects of themacro-region.
level 5, building B• The EEF partner networking areas
and EEF media partner studios
expand the Forum space and allow
for a visualization of the status andachievements of EEF 2017 partnercompanies.

levels 3,4 and 5, building A; level 6,building B; level 6, building C• The All-Russian nature festival'Primeval Russia' (jointly with SUEK)
demonstrates the work of Russia’s best
photographers who present Russian
nature in all its diversity: picturesquelandscapes and unique portraits of wild
animals.
level 5, building С• The TASS photo exhibition (jointlywith SUEK). Siberian Coal Energy
Company (SUEK) and Russian News
Agency TASS present a photo
exhibition that tells the story of
the coal industry in the Far East.
The history of the development ofdeposits, modern mining equipment,
and fantastic landscapes in uniquephotographs showing the coalindustry’s enormous resource potential
and massive role in the country’s
economy.
level 6, passage between
buildings A and C• The photo exhibition to mark the60th anniversary of the Russia-China
Friendship Association is organizedby the RCFA jointly with TASS. The
exhibition will feature more than 40
works – both from famous photocorrespondents around the country
as well as a number of unique photos
from the Association’s archive showing
numerous memorable moments ofRussian-Chinese relations from thesecond half of the last century to thepresent day.
level 6, passage between
buildings A and C‘Far East Street’ exhibition
The ‘Far East Street’ exhibition will beheld for the third time at EEF 2017.
The exhibition visitors will get
to know the results of the new
economic policy in the Far East, try
the fish products of the Kamchatka
advanced special economic zone,
view a sample of graphite producedin the Amur-Khinganskayaadvanced
special economic zone, and taste
honey products made by one of thefirst recipients of the Far East hectare.
Using virtual reality technology, you
can find yourself among the snow
slopes of the Mountain Air complex
or see the beauty of the Lena Pillars
natural park. The exhibition guests
can expect a magnificent concert
programme, a show on a waterfall, the‘Beauty of the Far East’ competition,and master classes on the applied
art of the indigenous peoples of theNorth.
The Fish Market that EEF
participants love so much will open its
doors again, offering the opportunity
to taste real Far Eastern delicacies
such as Japanese scallops, Kamchatka
crab, Magadan shrimp, and much more.
Representatives of the Republic ofKorea and the Republic of India willtake part in the exhibition for the firsttime in 2017.

27

Forum navigator

Vladivostok
Museums
During the Forum, participants
may visit the following Vladivostok
museums free of charge (by showing
their EEF 2017 participant badge):· Far Eastern Federal University
Education and Research Museum;· Primorye State Art Gallery;· Arseniev State Museum of
Primorsky Region;· ArtEtazh Gallery.

forum:CULTURALPROGRAMME
Reception given by the Governor of
Primorsky Territory
Guests at the reception will
have an opportunity to networkwith business partners in
an informal setting and makenew contacts. Classical music
will be performed throughout
the evening by the Chamber
Ensemble of the Pacific SymphonyOrchestra, led by Honoured
Artist of Russia Anatoly Smirnov.
The programme for the concert,entitled ‘Velvet Season’, will becomplemented by the coastal
surroundings and the sounds

28of the Pacific Ocean. Eastern
Economic Forum participants will
enjoy the comforts of an open-air
lounge, perfect for meetings andbusiness discussions.
5 September 2017
19:00 – 22:00
FEFU Campus, Polina Café,
University Promenade Premium Package participants may
attend the event by invitation. You
can find detailed information in yourpersonal web office.

Welcome cocktails onbehalf of the Chairmanof the Eastern Economic
Forum 2017 Organizing
Committee
6 September 2017
Guest arrival time: 19.30
S UPRA restaurant, 1B,
Ulitsa Admirala Fokina,
Vladivostok Entry to the event is
by invitation from theOrganizing Committee
Guests at the evening
reception will include Russianand international government
officials, some of the Forum’s
key speakers and moderators,
and heads of major
corporations. The programme
includes pop and jazz
performances by vocal andinstrumental groups.

A True Celebration of Song – national
karaoke with the Turetsky Choir.
A Concert on Vladivostok’s Main
Square for city visitors and residents.
 6 September 201718:00 – 20:30
Vladivostok, Ploshchad Bortsam za
Vlast Sovetov na Dalnem Vostoke Admission free
A concert for local residents andvisitors will be held on Vladivostok’s
main square. The audience will
have an opportunity to accompany
the Turetsky Choir singing songs
beloved by many generations of
Russians. The project was awarded
the tate Prize of the RussianFederation in February 2017.
The Celebration of Song in
Vladivostok has already become
a popular tradition; this will be
the second time the event has takenplace.
Before the Turetsky Choir maketheir appearance, event guests willbe treated to a concert programme
performed by the group ‘What Men
Sing About’. The group provides
a creative fusion of the best vocal
talents Vladivostok has to offer,featuring winners of regional andnational competitions and festivals
and a wide range of Soviet andRussian pop classics. The performers
will delight the audience with their

youthful energy and emotionallycharged renditions.
Concert by the Moscow Soloists
Chamber Orchestra conducted by
Yuri Bashmet
 6
 September 201719:30 – 21:00
Great Hall, Primorsky Stage of theMariinsky Theatre, 20, Fastovskaya
Ulitsa, Vladivostok Premium Package participants may
attend the event by invitation. You
can find detailed information inyour personal web office
A concert by the Moscow Soloists
Chamber Orchestra conducted byArtistic Director Yuri Bashmet andfeaturing young soloists from the
All-Russia Youth Symphony Orchestra.
The programme includes works by
Mozart, Tchaikovsky, Bruch, Rossini,and Sarasate.
Concert by fusion group Indian Ocean
 7 September 201718:00 – 20:30
Vladivostok, Ploshchad Bortsam za
Vlast Sovetov na Dalnem Vostoke Admission freeIndian Ocean are a fusion groupfrom Delhi, India, formed in 1990.
The group achieved fame with their
third album, Kandisa, and, since thebeginning of the century, they have

travelled and performed on every
continent and in many Indian cities.
Indian Ocean’s performance will
be preceded by a concert programmepresented by Vladivostok group
COIN, a team of musicians united
by a passion for performing quality
cover versions of popular foreign
songs. The genres covered by COIN
range from pop-rock and hard rock topopular melodies of the 1980s. The
group’s live performances are always
guaranteed to be filled with energy,
dynamism and drive. The group’s front
man is Alexander Pstyga, a finalist in
the Novaya Zvezda (New Star) TV
music competition.
Concert programme presented by
the Pacific Symphony Orchestra andsoloists from the Primorsky Regional
Philharmonic 8 September 201718:00 – 19:00
Vladivostok, Ploshchad Bortsam za
Vlast Sovetov na Dalnem Vostoke Admission free
The Pacific Symphony Orchestra is
Primorsky Territory’s leading musicalensemble, with a history spanning 82
years. This impressive longevity makes
it the musical ‘calling card’ of theregion. The concert programme willfeature some of the most vibrant andrecognizable works in the classicalrepertoire.
Ballet: Sleeping Beauty 7–8 September 2017
19:00 – 22:20
Stage of the Mariinsky Theatre,
Vladivostok, 20, Fastovskaya Ulitsa A ticket is required to attend thisevent; tickets can be purchased
via your personal web office.
The price of these tickets is notincluded in the package.
This vibrant and monumental
production of Tchaikovsky’s ballet,
based on Konstantin Sergeyev’s
version of Marius Petipa’s classic
choreography, has been adapted for
the Primorsky Stage by Eldar Aliev andfeatures sets and costumes designed
by Vyacheslav Okunev. The ballet will
be performed as part of the ‘Russian
Seasons’ programme, in anticipation of
the Year of Russian–Japanese Cultural
Exchange. The production will featuredancers from Japan.

29

GeopoliticsРубрика pубрика

32

36

INVESTORSCHOOSEthe Far East
MINISTER FOR
THE DEVELOPMENT
OF THE RUSSIAN FAR EASTALEXANDER GALUSHKA
SPEAKS ABOUT THE
STEPS THE GOVERNMENT
HAS TAKEN TO DEVELOPBUSINESS IN THE REGIONBIG CHALLENGES
for a big region
THE RAPIDLY GROWING ECONOMIES OF THE ASIA-PACIFICREGION LARGELY PREDETERMINE THE DEVELOPMENTOF WORLD CIVILIZATION, ENCOUNTERING A WIDE RANGE
OF BIG CHALLENGES. ACTING RECTOR OF FAR EASTERNFEDERAL UNIVERSITY NIKITA ANISIMOV TALKS ABOUT
THE ROLE OF SCIENCE IN THE SEARCH FOR ANSWERS
TO THESE QUESTIONSPILLARSOF A SUCCESSFULECONOMY –stabilityand predictability
HANG LANG GROUP CEO
RONNIE CHAN SPEAKS ABOUT
THE Importance OF RUSSIA'SFAR EAST IN THE NEW SILK ROAD

44

“Right before 38
our eyes,somethinghas
happenedthat proved
impossible
for a long time –Russia has made a real step towards
the East”
Chairman of the Board of the Foundation FOR
DEVELOPMENT AND SUPPORT OF THE VALDAI DISCUSSION CLUBAndrey Bystritskiy TALKS ABOUT THE RELATIONS OF LEADINGSUPERPOWERS IN THE ASIA-PACIFIC REGION, THE NORTH KOREA
FACTOR, AND THE DEVELOPMENT LOGIC OF EURASIA

geopolitics

T

Investors
Choosethe Far East
Alexander GALUSHKA, Russian
Minister for the Developmentof the Russian Far East, talks
about lifting administrative
barriers, innovative law,and foreign investors.

32

he region's geographic
proximity to the leading
economies of the AsiaPacific region is not in
itself a guarantee of successful
development, which requires
easy accessibility from a logistics
perspective. Two factors play a keyrole here: a developed cross-borderinfrastructure and a free market.
Today, while Russia is an active
participant in all of the processes
under way in the Asia-Pacific region,
demonstrating the highest rate ofdevelopment in recent decades, theFar East is still lacking in modern
infrastructure, including cross-borderinfrastructure: highways, railways andnew ports handling a cargo turnoverof more than a hundred million
tonnes.
What needs to be done toachieve this? It is vital to reach thepoint where the income tax rate in
the region not exceeding 11%, do not
exceed in South Korea, insurance
contributions does do not exceed
10%, as in Japan, and the time taken
to obtain a construction permit is 26
days or less, as in the USA.
What has already been done
to address these issues? Extensive
efforts are being made at all levelsin the Far East – from the very topof government down to regional
and local authorities – to rearrange
the entire system for managing
and collaborating with with foreign
partners, and to create a new
economic model for the region. The
aim here is to make the Far East acompetitive and fully-fledged partnerof the leading Asian economies:
Japan, South Korea, China, India,
Singapore, and others. And significant
work has already gone into achieving
this.
– First, we have introduced
a number of innovative laws
supporting the Far East’s accelerated
development. These have enabled
the appearance of new 'growth
points': 18 advanced special
economic zones meeting the needsof the region’s economy. The special
Vladivostok Free Port regime is inforce at the largest sea ports andadjoining areas, which are crossedby major transport routes. Hereinvestors enjoy income, land andproperty tax incentives, and reduced
insurance contribution rates. Eachinvestor has an opportunity to takeadvantage of the free customs zone
regime including duty and tax-free
import, storage and consumption offoreign goods. In addition, investors
operating in advanced special
economic zones gain access to readymade infrastructure.
– Second, the state has
started expanding the Far East’s
infrastructure capacity. The scaleof construction of electricity
transmission lines, roads, water, heatand gas supply lines all over theregion is unprecedented since Soviet
times.
– Third, maximum emphasis has
been focused on developing thecross-border logistics infrastructure.
Jointly with our Chinese partners,
we have started building bridges
in key areas – in the Amur andJewish Autonomous Regions – andmodernizing the Primorye-1 andPrimorye-2 international transport
corridors.
– Fourth, an investor support
institution network operating in'single window' mode has beencreated. This is a project support
information system which allows
investors to access support bysimply sending a message from theirpersonal account. In future, weare going to develop it as a single
integrated portal where investors
will not only be able to obtain//	
The development of logistics infrastructure is one of the key priorities for state
investment

We have introduced a numberof innovative laws supporting
the Far East’s accelerated development
information support, but also contact
the relevant tax and oversightauthorities. This information system
is also used by the agencies helping
foreign entrepreneurs successfully
implement their projects in the
Far East. For instance, the Far East
Investment and Export Agency, in
conjunction with the Japan Bankfor International Cooperation,
has created a company to support
Japanese investors who have decided
to invest in the Far East. A similar
Russian and Chinese company
has been set up and the Far East
Investment and Export Agency
also has representative offices in
Harbin and Beijing. The investment// The construction of Russia's largest natural gas processing plant began in Amur Region33

geopolitics

The scale of constructionof electricity transmission lines,
roads, water, heat and gas supply lines
all over the region is unprecedented
since Soviet times
have started building the biggest
natural gas processing plant in the
country, with a capacity of up to
42 billion cubic metres a year. No
projects of such a scale have been
implemented in our county for morethan 50 years. Construction work
will be divided into six stages, andthe foundations have already beenlaid. Russian President Vladimir
Putin, who launched this project atthe beginning of August, gave a very
precise description of its importancefor the social and economic
development of the region.
Another large-scale project – amining and processing plant at the
Natalkinskoe gold field in Magadan
Region – is being prepared forlaunch, representing an investmentof more than RUB 96 billion.
Merci Trade agricultural holding
is successfully implementing projects
in Primorsky Territory. The company
has already put into operation a
pig farm for 83,000 animals and iscompleting construction of an animal
feed mill and an elevator complex. In
total, the holding is constructing six
such complexes with a total capacityof 540,000 animals.
At the same time, it is perfectly
evident that the potential forcooperation between the Far Eastand the neighbouring countries of the
Asia-Pacific region is very high. We areready to offer our partners competitive
conditions and to work to improvethem. We will continue reducing thetax burden on businesses and taking
steps to eliminate administrative
barriers and obstacles preventing thedevelopment of logistics and free
trade between the Russian Far East andJapan, Korea, China, and other AsiaPacific countries.
All these projects and initiatives
will be reflected in the programmeof the third Eastern Economic
Forum. We look forward to seeing
our partners and are always open for
dialogue and cooperation.

advertising

agency Korea Eximbank and the
Korea Trade-Investment Promotion
Agency have reached an agreement
to establish a centre for supporting
Korean investors. A division of the
Indian investment promotion agency
will soon be opened for Indianbusinesses in the Russian Far East.
– Fifth, we have eliminated one of
the key factors hindering economic
growth – high energy tariffs, which
had significantly exceeded the Russian
national average for a long time. Now,
Far Eastern enterprises pay the same
price for electricity as businesses in
the rest of Russia, on average.
– Sixth, a vital step has beentaken to open up the Far East
to foreign investors as much as
possible. For the first time in Russia’s
history, an electronic visa has been
introduced within the Vladivostok
Free Port area. Visitors can obtain
one without even leaving home.
What has all this achieved? Owing
to the new support tools, the current
volume of investment in the Far Eastis about RUB 3.5 trillion, in more than
800 new projects – plants, factories,
agroindustrial complexes, logistics andtourism centres. Of these, more than
300 are already under construction
and 86 new enterprises are scheduled
to open by the end of the year.
Major projects are being
implemented all over the region.
For instance, in Amur Region, we//	Bureyskaya HPP supplies growing demand from the region's economy for electricity

34

geopolitics

T

Pillarsof a successful
economy –stabilityand predictability
Ronnie Chan, Chairmanof Hang Lung Group, oneof the largest property
development companies
in Hong Kong, talks about
why stability is more
important than the legal
system, and about the roleof the Russian Far Eastin the New Silk Road initiative.

36

he Russian Far East may
be considered the last
economic frontier for
mankind. It is rich in natural
resources although challenging
to develop. As such, international
participation may be desirable if notnecessary. The convening of theEastern Economic Forum with thepresence of Russia’s President Putin
is a strong signal to the world that thecountry may be considering exactly
that. For this Forum, we the overseas
participants have our host to thank.
Of all nations on earth, Russia
has by far the largest landmass. Due
to forces of nature, its development
was limited, but scientific andtechnological advancements have inrecent years made it possible. If thesmall country of Israel can make thehot desert bloom, so can Russia makeits Far East – indeed the entire cold
Siberia-blossom.
Human history is full of examplesof fast economic development –Western Europe in the late 19th
century, North America in the early
20th century, Japan and the FourAsian Tigers of South Korea, Taiwan,
Hong Kong and Singapore in thedecades after World War II. Thencame China of the past 30 years.
Economic development is today morea science than an art. It is duplicableas long as certain principles areadhered to. That also means that if aplace does not develop, there are few
others to blame, for it can be done.
The question is how. In recent
decades, massive amount of capitalhas been accumulated in many partsof the world – Japan, Western Europe,
the U.S. and China, just to name afew. In the cases of Japan and theWest, money is mostly controlled byindividuals and corporates. In thecase of China, even the governmentis cash-rich. The capital market,
in particular in London, New York
City and Hong Kong, can easily betapped as long as the storyline isright. The likes of Asian Infrastructure
Investment Bank (AIIB) makecapital more readily available, forinfrastructure development must be
among the first projects.
It is said in the West that rule oflaw is indispensable for economic
development. It is nice to have but

not a requirement at the beginningstage of growth. A relatively
corruption-free environment isuseful but again it is not an absolutenecessity. They can come later.
Experiences of post-World War II
Japan, Korea and Southeast Asia, allbear out these facts.
That said, certain conditions
must exist in order to attract
respectable businessmen. Successful
economies of East Asia all have
two characteristics – stability andpredictability. The social andmacroeconomic conditions must
be stable. Policies can gradually
improve over time but abrupt
reversals should be avoided
unless they are clearly wrong. By
predictability, I refer to the operating
environment for businesses, i.e. themicroeconomic conditions. Whena blue button is pressed, blue lightalways comes on; when a yellow
button is pushed, yellow light always
turns on. The presence of thesetwo conditions will to a good extent
mitigate risks for businesses.
Four years ago, President Xi
Jinping enunciated the Belt & Road
Initiative (BRI) or if you will, the New

Successful economies of East Asia
all have two characteristics –stability and predictability
Silk Road by land and sea. It is aneffort that no single country alone canundertake. It is an open and inclusive
system for all to play. Two thousand
years ago, globalization started there
anchored by the Roman Empire to
the West and the prosperous Han
Dynasty of China in the East. Yet,the huge landmass in between, once
thriving, is today one of the least
globalized parts of the world. That
spells great commercial opportunities
for all of us. What is important at thisstage is not who raised the subject,for sooner or later, someone forwhatever reason will come up witha similar idea. What is important is
who will today take advantage of it.
Anyone who does not do so will only
disadvantage himself.
Together with Japan, Korea,
Indonesia and China, the Russian Far
East is the easterly starting point of
this initiative. Given size, geography

and history, no one can doubt that
Russia must be a critical part of themultinational effort which will takedecades to play out. Equally sure is
the fact that it is already beginningto bear tangible economic fruits.
Pakistan is one such case. One of
their former Prime Ministers told me
not long ago that some US$40 billion
were being invested in their ports,
highways and railroads, among otherprojects.
On final analysis, economic
development for all will be but oneof the benefits of closer economic
cooperation. It should help maintainpeace in the region. Culturalinteraction between people will
improve mutual understanding
which may prove to be the greatest
dividend of this collective effort. The
present Eastern Economic Forum is an
important part of that process, and I
wish it every success.

37

geopolitics“Right before
our eyes, something
has happened thatproved impossible
for a long time –Russia has made a real
step towards the East”
Andrey Bystritskiy,
Chairman of theBoard of theFoundation for
Development andSupport of the
Valdai Discussion
Club, talks about
relations among
the leading AsiaPacific countries,
the North Korea
factor, and what
the developmentof Eurasia means.
The Valdai Club session at theEastern Economic Forum isdevoted to relations within
the Russia–China–Japan–USA
quadrangle. What role does eachof these countries play in thisconfiguration?
Each country plays a unique role.
Firstly, these are all independent
states. Each has its own logic,
traditions, and history of relations.
Some confrontations are evident.
There is obvious economic rivalry
between the USA and China.

38

//	
The Minister of Industry and Trade of the Russian Federation Denis Manturov (on the left) and the managing
Director of Commercial Aircraft Corporation of China Ltd, the Russian-Chinese project of a passenger plane

Relations between the USA andRussia are clearly complicated,certainly at the moment. A difficult
discussion is under way regarding
the consequences of territorialdelimitations following the Second
World War. So each country has its
own role to play.
At the same time, the UnitedStates is indisputably one of the maintechnological powers. Russia has
a fairly well-educated population,huge resources, and is geographicallylocated such that many trade routes
have no option but to pass through it.
Japan is known for technology, hard
work, and perseverance. China is theworld’s leading economy. How will
relations between them develop?
There is no question that all of thesecountries need one another. They all
want to trade with one another andto develop the region, not least since
the Eurasian region is comparatively
peaceful. Of course, that does notmean that there have never been
conflicts. On the contrary, they havebeen plentiful – one need only recall
the Second World War. There aresome tensions today, too. But, on thewhole, development is on the cards.
What brings these four countries
together? And what divides

Primarily political issues
and political competition
are a powerful force that has an adverse
impact on the development of economic
relationsthem? To what extent can thesedifferences be overcome?
We are witnessing an interesting
situation. Economically, all of thesecountries are interested in more orless intensive cooperation. Of course,
there is competition and jostling formarkets but, on the whole, there ismuch more scope for cooperation
than for confrontation. Yet it turns
out that primarily political issues andpolitical competition are a powerfulforce that has an adverse impact
on the development of economic
relations. Contrary to the traditional
Marxist approach of an economic
base and political superstructure,it has turned out that the politicalaspect is more of a hindrance than ahelp to the economy. The two thingsneed to be reconciled. Incidentally,
what is happening in the UnitedStates – the internal politicalstruggle in that country – is largelya battle between economics andpolitics. The future that will change
the world is meeting resistance from39

geopolitics

The whole point of developing
Eurasia was to link Eurasia
with Western Europe on one sideand the Far East on the otherthe elite, which does not want towithdraw.

elite is deep in thought about what ishappening.

How has US policy in the AsiaPacific region changed under
Trump? What are the implications
for Russia?

How much of a risk does theNorth Korea factor present for
the wellbeing of the Asia-Pacificregion?

Trump has not been in power longenough for any substantial changes
to be seen, although we can alreadydraw some conclusions. First ofall, Trump torpedoed the TransPacific Partnership. This is the mostsignificant step he has taken so far.
Whether or not it was a smart move ishard to say. It does not exactly makethings easier for Russia, but to someextent it gives Russia more of a free
hand. The Russian leadership has said
directly that, although Trump rejects
this form of globalization, there isno getting away from globalization
in some form – it is a necessary
condition for world development. The
question is what form globalization
will take. I think that Trump and hisallies and advisers are in the processof hammering out a policy, and it will
not be an easy task. There are several
incredibly dangerous challenges
which are undermining this policy
to some extent, above all North
Korea. We can see how events aredeveloping. God forbid that all thisleads to real clashes. In any case,
we are hearing loud rhetoric about“fire and fury” and “we’ll strike yourbases” that no one has uttered in along time. The problem is that words
have a magical power of their own.
As Jürgen Habermas wrote in histime, there exists a kind of preferable
definition when we name something;
we can, in so doing, evoke somethingthat did not exist before. There is adangerous trend here. I think the USA
has some hard thinking to do to workout its policy and make up its mind as
to what it is going to do. The country
has many problems and the entire US

It is a serious problem that has
been growing before our eyes.
North Korea’s position is clear. It isa rogue country strongly disliked
by everybody. A country with a bad
reputation and, many say, a population
which does not enjoy a very goodstandard of living. It is hard to know
because there is so much fake news,
many conflicting reports. But the signs
are that things are not all that good
there. The country built a nuclear
weapon to protect its elite. And it’s
working. If North Korea did not havenuclear warheads and a ballistic
missile capability, it would be all overby now, in spite of the incredible
prowess of the North Korean
commandos, who are said to be able
to catch squirrels in the woods with
their teeth. Or maybe it’s all lies.
Of course, it’s a big problem. Big
countries – Russia, China, the USA– have learned to interact somehow.
They have considerable experience.
Even when conflicts arise, there is a
general understanding of how things
stand; there are agreements on
mutual monitoring. There are evensome treaties. But here the situation
is not under control and this frightens
everyone. The fact that there aredifferences of approach about how
to resolve the situation is anotherissue. Some prefer to offer a carrot;
others favour the stick. This topic is
not on the agenda for our session at
the Eastern Economic Forum but, ingeneral, the big four in the Asia-Pacificregion should consider how to act inconcert over the North Korea issue. A
solution must be found because thesituation carries an element of risk.

40

Let’s return to the topic of thesession. How do you assess Russia’s
progress in developing the Far Eastand integrating it into the AsiaPacific region’s overall economic
agenda? What is motivating thisprocess? And what is holding it
back?
A lot has been said about this. On thewhole, the policy is a success. Could
it have been still more successful?
Perhaps. The Valdai Club has beenworking on this problem for quite awhile and, over the past few years,
we have been writing regularly about
Eurasia, issuing the reports Towards
a Great Ocean 1, 2, 3, 4, and 5. Right
before our eyes, in just a few years,
something has happened that proved
impossible for a long time – Russia has
made a real step towards the East.
Let me say straight away that
we do not think that Russia should
oppose the West, quite the contrary.
We should support each other.
This is the official Russian position.
When globalization was discussed,
Russia said that the whole point ofdeveloping Eurasia was to link Eurasia
with Western Europe on one side andthe Far East on the other. Everything
must communicate and interact.
Russia has undoubtedly madeseveral extremely important steps
in that direction: it has brought
about a real change in the situation,
become very much a part of it andachieved some concrete results.
There are many obstacles, above
all infrastructure, communications,and legal regulation. There are many
issues but they are not insuperable
and there are prospects. Barring a
massive change in current policy,
Russia may achieve a great deal in
the future and everything will beokay. This is not going to happen
automatically. But, on the whole, I
would say that we have had somesuccesses and they are obvious.
In Soviet times, China was thoughtof as a junior brother to the USSR.
The situation has since changed.
How equal is the relationshipbetween Russia and China today?
What is the outlook for thedevelopment of this relationship?

//	
One of the projects in the economic belt of the silk road will be the construction of HSR "Moscow-Kazan"

I think that the relationship between
Russia and China is equal from every
point of view, especially considering
the characters of the leaders and themood of the Russian and Chinese
elites. It cannot be anything but equal.
Of course, like any equal relationship,
it is marked by certain contradictions.
Indeed, it is not all that easy to agree
the interests of a vast number ofdifferent Russian and Chinese regions,considering the different situations in
the Russian and Chinese economies,
and so on.
The key issue is not equality
but development prospects andformulae. The most significant
forms of development have to dowith the Silk Road Economic Belt,
the space that is being developed.
What is the underlying idea here?
It is to see the Eurasian Economic
Union led by Russia and Kazakhstan
and other countries propose aframework, a matrix for mutually
beneficial development of Chinese
business and Chinese investments.
Creating a framework for all of these
relationships is no easy task. It entails
prolonged and arduous procedures

relating to regulation and so on. A lotof questions have to be answered. But
the goal is clear.
If we want to link the colossal
Western European and Far Easternmarkets by transport routes, thisis sure to involve development of
the infrastructure around all sortsof related enterprises and theemergence not only of latitudinal
corridors from West to East or from
East to West, but also corridors
from North to South. This would
benefit Russia a great deal and it
would be good for China, too. Anyclose cooperation involves a lot ofargument and friction. That is natural.
The question is how such disputes
are resolved. I think that, so far, bothsides have the possibility and the time
and the will to resolve the inevitablearguments that arise in a rational way
that promotes development. We areseeing that this development is taking
place.
China’s economy is slowing down.
It is no longer a cheap global
workshop, as a result of thegovernment’s policy of stimulatinginternal consumption. What does
this mean for Russia and for theRussian Far East in particular?
That’s a tough question. China has
lived through some hard times,of course. Until recently, it wasconsidered to be a poor, backward
country. Now it is not so poor andcertainly not backward. Does it haveproblems? Yes, lots. There are a lotof people in China. No one knows

We needn’t worry about Chinese
expansion because the Chinese
have clearly not yet developed theirown country
41

geopolitics

there are various developing
countries with huge populations.
Not as huge as China, but huge all
the same. There is India, which is inmany ways comparable to China. It is
not as strong economically, but it isdeveloping fast. All this makes for acomplicated situation. But when wasit ever not complicated?
Japan has talked about possible
joint development of the South
Kurils on an extraterritorial basis.
Is that acceptable to Russia? To
what extent does the Kuril issue
divide or unite Russia and Japan?
Of course this issue divides ourcountries. Our approaches aredifferent. Russia proposes developing
relations while leaving the Kuril issue
aside. I cannot speak for the Russian
Government, but I am almost certainthat Russia will not budge on the issueof sovereignty over the islands. Russia
will support economic collaborationand joint projects, but this should notundermine the sovereignty, integrity,and independence of Russia.
//	Indonesia is one of the most promising economies in Asia (photo sea port of Jakarta)

exactly how many, but there are a lot.
They have room for development
because by no means all Chinese
people live well. A large proportion
lives poorly. I have often been toldby my Chinese colleagues that
we needn’t worry about Chinese
expansion because the Chinese haveclearly not yet developed their own
country. The coastal zone is booming,but everything to the West is in a lesssplendid situation. China will change
in the near future.
It is well known that, long
ago, China was a very arrogant
country. One of the problems inthe development of Russia–China
relations in Tsarist times, in theseventeenth and eighteenth
centuries, was that the Chinese
rulers, the Manchu Dynasty at thetime, demanded such a show of
obsequiousness that any tsar who sent
his ambassador would be vexed thatthe ambassador had to kneel, pledge
loyalty, and satisfy all sorts of otherwhims. This impeded relations. At the42

end of the day, excessive arrogancelanded China in a lot of trouble.
Today, China is developing
very rapidly and in a much moreconsidered way than before. It istrying to strike a balance of sorts. Yes,
it has its own interests, but it is not
eager to pursue an aggressive policy.
It is not anxious to see a unipolarworld, on the contrary, in fact. But nor
does it want to see the world sink intochaos. The world’s leading players
must keep their finger on the pulse.
No one, including China, wants to see
a wayward country brandishing its
nukes right, left, and centre. Nobody
wants that.
Nobody knows the future. So far,the outlook is very positive. Even theoccasional spats between China andAmerica are accompanied by a lot offriendly gestures, so it is hard to say
how the situation will develop. China
has problems with Japan. In a way,
Japan is China’s rival. China and Russia
have problems with other East Asian
countries. There is vast Indonesia;

What other countries, besides
China and Japan, could become
Russia’s priority partners in the
Asia-Pacific region and why?
South Korea, as an economicallydeveloped country, and Vietnam
are already becoming our priority
partners. The whole of Southeast
Asia is interested in an independent
relationship with Russia and Russia isinterested, too. We’re talking about
Thailand, Indonesia, even Myanmar
and far away Australia. It’s good foreverybody. The more trade, the more
joint business that is done, the better
people live. The more money, themore goods, the more prosperity.
There are many areas in which
cooperation can be developed. We
have the entertainment economy:
Russian cinema and Russian
multimedia are in demand. China,
owing to its importance, territory, thesize of its economy, and the amountof resources it possesses, is, of course,
the number one partner. But othercountries are growing fast. They needtechnologies, support, relations,markets, and so on.

43geopolitics

U

Big
challenges
for a big region
The rapidly growing AsiaPacific economies are largely
determining the developmentof global civilization today,
while facing a variety of major
challenges. Acting Presidentof the Far Eastern Federal
University (FEFU) Nikita Anisimovtalks about the roleof science in responding
to those challenges.

44

niversities havehistorically been thecentres where humanity’s
intellectual capacity
has been concentrated. Theirprimary objective is to preserveand reproduce culture, and todevelop long-term strategies fortransforming the world. Thosestrategies have evolved over time
– from Bologna University serving
as the creator and custodian of
the legal system to Humboldt
University’s role as a driver oftechnological progress. Yet,throughout history, universities
have been the ones to tackle thebiggest problems faced by ourcivilization.
Since the early reports
published by the Club of Rome inthe second half of the twentiethcentury, the scientific community
has focused on socioeconomic
issues resulting from theconvergence of the natural andmanmade worlds. Those issues
include the problems of ecology,
climate change, demographics,
and human health, the depletionof natural resources, theexploration of new spaces (outerspace, the World Ocean, theArctic), and the transition to adigital economy and associatedcybersecurity issues.
The role of Russian science
in resolving these global issues isdifficult to overstate. It is not bychance that the Russian Scientificand Technological Development
Strategy approved by Russian
Presidential Decree in December
2016 is aimed specifically atanalysing the ‘big challenges’. The
FEFU is striving to become an
active participant in this process
on a global scale. As an academic
outpost of the country in the fastdeveloping Asian-Pacific region,
we are building contacts withleading universities and research
centres in Japan, South Korea,
China, and other Asian countries.
We understand that the only way
for a modern Russian university to
become truly competitive in theinternational arena is to engage
in global research networks, ‘bigscience’ and ‘big challenges’.

The challengesof new spaces
The Pacific Ocean is the biggest
ocean on Earth with an area ofaround 179 million square kilometres,
approximately half the area of theWorld Ocean. The significance of
the Pacific Ocean for economies in
the Asia-Pacific region is huge. It is
the key source of bioresources: fish,seafood, and seaweed. These make up
a substantial part of the diet of people
living in Asia-Pacific countries. In themedium term, use of these resources
remains a more economically viable
and efficient way to ensure foodsecurity than developing aquaculture.
The Pacific Ocean could be used foralternative power generation: floating
solar and tidal power plants, onshorewind-powered generators for coolingthe data centres where enormousvolumes of information are stored andautomatically processed. Moreover,there is a high chance that major data
centres will be moved offshore in themedium term. For instance, Microsoft
is already testing its first underwater
data storage and processing centre
called Leona Philpot.
Despite the increased
attention focused on alternative
energy sources, fossil fuels, i.e.,hydrocarbons, will remain the main
source of power for both vehicles
and thermal power stations over the
next 20–30 years. In this context,
the development of oil and gas
fields in the Pacific shelf using
submersible production units also
continues to be a priority area of
economic activity in the region.
The ocean is not just a providerof economic resources, but alsoa vast expanse of water whichharbours both opportunities andthreats for the huge population of
the Asia-Pacific region. Destructive
typhoons and storms, which will// A number of promising developments are being developed on the basis of the FEFU
laboratories

only grow in frequency with global
warming, threaten major cities in
the region and the sophisticatedinfrastructure of the technologicalworld. Apart from the direct threat
posed by high waves and coastal
flooding to human life, there is a riskthat power stations and water supply
systems will be destroyed, thatfarmland will be laid to waste, andthat outbreaks of disease will occur
amidst the unsanitary conditions
resulting from a catastrophe. The
Fukushima 1 Nuclear Power Plant
accident has demonstrated thevulnerability of technologicalcivilization in the face of naturalcalamities. In this sense, one of
the key long-term objectives ofcountries in the Asia-Pacific regionis to develop reliable tools forweather and seismic risk forecasting,early identification, and warning.
Today, the FEFU laboratories
and the institutes of the Far
Eastern Branch of the Russian
Academy of Sciences are working

The development of oil andgas fields in the Pacific shelfusing submersible production units
also continues to be a priority areaof economic activity in the region

on a whole range of promisingprojects, including designingengineering facilities for Arctic
field infrastructure, creating
underwater telecommunications
systems, developing ergonomic
manufacturing of marine vessel
parts and components, as well as
reliable marine engineering. Our
partners in these projects include
both plants based in the Russian
Far East (Dalpribor, Zvezda-DSMEetc.) and leading national high-techcompanies (Morinformsystem-Agatand Transas Group). The University
is a member of the University of
the Arctic (UArctic) network, andmanages the Centre for Research
into the Legal Status of the Arctic
and Asia-Pacific Marine Space.
On 30 May 2017, the Russian
Government approved the Russky
Island Development Concept,
which envisages, among otherthings, creation of a marine bio- andtechnopark to promote the intensive
development of marine aquaculture
on Russia’s Far Eastern coast.
At the same time, it is clear that
Asia-Pacific countries are interested
in developing their space industry.
More and more governments andprivate companies are seeking togain access to space, since it iscritical for delivering their economic
goals. Russia retains its dominancein the segment of payload delivery
into orbit. This is being reinforced45

g e opolitics
Ocean. Lead countries for catching fish
Country

2014 tonnes

2015 tonnes

Variation 2014-2015

China

14.811.390

15.341.000

3.4%

Indonesia

6.016.525

6.028.260

0.2%

Unate States of America

4.954.467

5.019.399

1.3%

Peru

3.548.689

4.786.551

34.9%

Russian Federation

4.004.242

4.172.073

4.2%

India

3.727.088

3.497.284

-6.2%

Japan

3.610.892

3.427.300-5.1%

Viet Nam

2.513.833

2.607.214

3.7%

Norway2.301.376

2.293.290-0.4%Philippines

2.032.763

1.948.136-4.2%

Chilie2.175.486

1.786.633-17.9%

Korea. Republic of

1.727.329

1.639.860-5.1%

Thailand1.488.280

1.496.450

0.5%

Malaysia

1.458.126

1.486.050

1.9%

Morocco1.350.147

1.349.637

0.0%

Iceland1.076.558

1.317.148

22.3%

Mexico1.396.176

1.315.787-5.8%

Myanmar1.118.020 F

1.090.060 F-2.5%

Taiwain (Province of China)

1.068.381

987.767

-7.5%

Spain

1.055.496

967.240-8.4%

Denmark

745.019868.892

16.6%

Canada835.196823.155-1.4%

815.355

795.415-2.4%

Total 23 major countries

Argentina

63.830.834

65.017.601

1.9%

Total other 172 countries

15.973.728

16.147.084

1.1%World total

79.804.562

81.164.685

1.7%

80.0%

80.1%

Share 23 major centuries

Source: Food and Agriculture Organization of United Nations

with the establishment of new
infrastructure in the Far East. The
first launch pad at Vostochny
Cosmodrome was completed in2016 and the first carrier rocket
was launched on 28 April 2016. The
new urban district of Tsiolkovsky
will become the support city for
Vostochny. International experience
shows that cosmodrome satellite
cities offer potential for creating
fully-fledged aerospace clusters anddeveloping associated industries:
component manufacture, R&D,
tourism, maintenance services, etc.
Today, most of the value-addedis created not in the launch segment
but in services using orbital satellite
constellations: satellite television,voice communications, Internet,
navigation, and Earth remote sensing.
In the long term, it will be critical for

46

Russia to create the conditions thatwill encourage new companies toemerge in those segments and attract
manufacturers from abroad.
Actions are being taken todevelop private astronautics in
Russia as part of the National
Technology Initiative – a state
programme for supporting Russiancompanies entering new hightech markets. For instance, the
FEFU has initiated an international
competition to develop and launch
micro-satellites (the NTI Sputnik
Challenge). The global aerospacemarket is valued at around USD
335 billion and is growing by
approximately 5% a year, with thestate segment accounting for about
a quarter of it. The remaining spacein the sector is occupied by privatecompanies, which not only provide

end services but are also changing
our vision of the entire industry.
Environmental andhealthcare challenges
Almost 4 billion people currently
live in the Asia-Pacific region
and this number is constantly
growing. Accelerated economic
growth is leading to improved
living standards – a better qualityof healthcare, mass immunization,and effective emergency care are
driving down child mortality andmortality from infectious diseases.
On the other hand, most countries
in the Asia-Pacific region are
experiencing demographic change,
with an increasing share of elderly
people in the total population.
This factor, coupled with the risein life expectancy, results in a
growing number of patients withcardiovascular, oncological, andneurodegenerative diseases, limiting
the age until which people are able
to work. This entails some serious
socioeconomic risks.
In order to respond to these
healthcare challenges, the FEFU
is developing its School of
Biomedicine and Medical Centre
on Russky Island, and embarking
on major international projects.
One example is a project aimed
at developing hadron therapy,
including the establishment of a
PET Centre and a Proton Therapy
Centre (PTC). Hadron therapy isan organ-saving cancer treatment
technology that raises five-year
survival rates and the quality oflife of cancer patients up to andincluding complete recovery. The
principal technology involves
the use of accelerating beams ofheavy particles – carbon protons
and ions. Heavy particles attack
cancerous cells at the set depth
defined by the power of the beam,
while leaving tissue almost entirely
intact. This technology is so far
unavailable in Russia. The FEFU isthe only Russian university that,
thanks to its geopolitical location,
is able to arrange cooperation withleading Japanese organizations inthis field – the National Instituteof Radiological Sciences, Hitachi,
Mitsubishi, and Sumitomo.

Almost 4 billion people currently
live in the Asia-Pacific region
and this number is constantly
growing
The downside of the rapid
economic development of the AsiaPacific region has been an extensive
deterioration in the environmental
situation. Atmospheric pollution
is contributing to global climatechange and a local deteriorationin air quality in major cities, aswell as increased mortality fromcardiovascular diseases and cancer.
Pollution of the lithosphere isresulting in soil erosion, and theacidification and alkalization of
farmland. As a consequence, yields
are going down, as is production oforganic foodstuffs, and countries
with large populations areexperiencing food crises. Pollutionof the hydrosphere is causing thedeath of marine populations, lossof biodiversity, the destruction ofmarine biological communities and– again – food crises in countries
where seafood forms a substantial
proportion of the diet.
To respond to these challenges,
in 2016 the FEFU initiatedinterdisciplinary research to conduct

a systemic analysis of global
models and regional environmental
monitoring. The research is
aimed at preserving ecosystems
and improving environmental
management. The project is being
implemented under the direction ofleading scientist Professor Riccardo
Valentini from the University of
Tuscia (Italy) at the Far Eastern
Climate Smart Lab. At the sametime, the University is raising theissue of the future of modern cities
by examining the compositionof nano- and micro-particles in

Diagram 1. Life expectancy at birth, total (years)
78
76
74
72
70
68
66
64

1990

Source: FEFU

1995

2000
APR

2005

2010

2015

World

47

geopolitics

20 most polluted cities in the world
The average annual concentration of solid particles with a diameter of less than 2.5 μm (PM2.5) (μg / m3)
in 2016
Peshawar, Pakistan

111

Handan, China

114

Lucknow, India

112

Firozabad, India

113

Hannah, India

115

Kanpur, India

121

Shijiazhuang, China

121

Dammam, Saudi Arabia

122

Ludhiana, India

122

Delhi, India

122

Baoding, China

126

Xingtai, China

128

Bamenda, Cameroon

132

Raipur, India

144

Patna, India

149

Al Jubayl, Saudi Arabia

152

Riyadh, Saudi Arabia

156

Allahabad, India

170

Gwalior, India

176

Zabol, Iran

Source: FEFU

217
0

the atmosphere and the actual
pollution sources – from vehicle
exhaust systems to galvanizing andwelding shops at industrial plants.
The project was launched in 2015
at the FEFU Nanocentre under theleadership of the then Presidentof the Federation of European
Toxicologists and European
Societies of Toxicology (Eurotox)
and Foreign Member of the Russian
Academy of Sciences Aristidis
Tsatsakis.
Virtual spaceand cybersecurity
The popularity of information
technology is growing both globallyand in the Asia-Pacific region: as ofMarch 2017, over 30% of Internet
users (more than 1.5 billion people)
were residents of China, the USA,
Indonesia, Vietnam, South Korea,

50

100

150

200

Thailand, the Philippines, Russia, andJapan. In the twenty-first century,
the centre of the global economy isincreasingly shifting towards Asia.
Labour costs in China and otherAsia-Pacific nations are growing andaltering the competitive strategiesof all countries. In 30–40 years, theregion will make a full transition
from servicing the ‘assembly’ needsof Western countries to developing
its own high-tech products. At thesame time, we are witnessing the
rampant development of ‘virtual
economies’ in the Asia-Pacificregion: the economies of social
networks and gaming universes thatare becoming the main pastime for alarge section of the population.
The FEFU was the first Russian
university to introduce a master’s
programme in virtual reality
technology and game development.

Labour costs in China and otherAsia-Pacific nations are growing
and altering the competitive strategiesof all countries

48

250

This educational programme is being
implemented as part of the Cyber
Russia project approved by Russian
President Vladimir Putin at the 26 July
2017 meeting of the Supervisory Boardof the Agency for Strategic Initiatives.
Students on the FEFU master’s
programme will study game design,development of user scenarios, andoperation of virtual, augmented, andmixed reality devices. The projectwill result in the production ofmarket-ready commercial products
developed at the request of
educational institutions, commercial
companies and corporations, and theestablishment of startups on AsiaPacific markets.
Unfortunately, the informatizationof most spheres of the economy isaccompanied by a parallel increase incybercrime. Computer viruses can beused to disable industrial equipment,
disrupt the operation of power grids,
undermine utility systems, seize
control of transport hubs, trace
people, gain access to weapons, andsteal electronic money, including
to finance terrorism. The ability tocounter cyber-attacks is critical tosustainable economic and politicaldevelopment. Cybersecurity has to beensured both at the level of individual
enterprises and organizations, and atthat of the entire state. Understanding
this, the FEFU and Kaspersky Lab are
opening a specialized educational
centre on Russky Island for joint
implementation of training andresearch programmes in the field ofcybersecurity. The main goal of thispartnership is to create a favourable
environment to nurture talent for thehigh-tech industry.
Challenges facing Russia’s
technological leadership
In the modern world, a country’s
competitiveness is largely
determined by its activity on newtechnological markets. At the 3
September 2016 plenary session of
the second Eastern Economic Forum,
Vladimir Putin called for setting
up “a system to support startups,
including through venture financing”
on Russky Island. On 30 May 2017,
the Russian Government adopted
Resolution No. 1134-r approving the
Russky Island Development Concept.

// FEFU takes active steps to develop technological entrepreneurship and create a "startup conveyor"

The document envisages assigning
the status of advanced special
socioeconomic zone to the islandand setting up a technology andinnovation park close to the FEFU
campus, where a dynamic, innovativeenvironment will be created andmaintained.
The FEFU is taking proactive
steps to develop high-techentrepreneurship and create a‘startup conveyor’ on the island. The
University is supporting the workof the Far Eastern Branch of the
Skolkovo Foundation and Technology
Transfer Centre (in partnership with
RUSNANO), and implementing
cooperation agreements with
the Fund for Assistance to Small
Innovative Enterprises (the Bortnik
Fund), the Internet Initiatives
Development Fund (IIDF) and
Kaspersky Lab. In 2017, the University
became the regional operator of
GenerationS, the Russian federal
accelerator for technology startups,
in which RVC is a general partner. A
series of measures to develop the
IT community and support hightech entrepreneurship is being

implemented in cooperation with
the Agency for the Development of
Human Capital in the Far East. The
University is undertaking systemic
work aimed at localizing the mostsuccessful Russian technology
startups on Russky Island. Agreements
have been signed to set up jointlabs and launch a pilot route for the
first Russian driverless bus, known
as MatrЁshka, and a pilot automatedfarming plot with the company
Aurora-Robotics. Both companies are

members of the National Technology
Initiative’s AutoNet task force.
Establishment of the Russky
Technopark, which aims to support
Russian technology startups in the
Asia-Pacific region, will be a criticalstep in meeting the challenges oftechnological leadership. Our goal is
to make state support tools available
to startups and to facilitate contact
with leading Russian and foreigntechnology companies through theannual Eastern Economic Forum.

Change in the number of Internet users in China (million people)
800
700
600
500
400
300
200
100
0

1997

2007

2011

2014

2015

2016

March.17

Source: FEFU

49

EconomyРубрика pубрика

54

62

CITIES OF THE FUTURE. Development strategies
AHML GENERAL DIRECTOR ALEXANDER PLUTNIK, NIKKEN SEKKEI EXECUTIVE OFFICER
FADI JABRI, AND STRELKA kB PARTNER ALEXEI MURATOV TALK ABOUT THE CONCEPTOF "SMART" MEGA-CITIES AND VLADIVOSTOK'S ROLE AS A REGIONAL CENTRE IN EDUCATION,INNOVATIVE ECONOMY, AND TOURISM“This is the status quo,­the investor should take into
account”
EY RUSSIA MANAGING PARTNER ALEXANDER IVLEV
dwells on the pros and cons of the Russian
Far East from the point of view of investors“The REC’s
global objective
is to shape a favourable
framework for further
growth of Russian exports”
HEAD OF THE RUSSIAN EXPORT CENTRE (REC )GROUP еOF COMPANIES PETR FRADKOV TALKSABOUT THE IMPLEMENTATION OF STATEPROGRAMMES TO SUPPORT NON-ENERGYEXPORTS

64

58“RussiaJapan
relationslikelyto gravitate
towardsa perfect
tandem”

Head of the Japan Association for Tradewith Russia & the NIS (ROTOBO) representative
office Saito Daisuke on the appeal criteria
for Russian regional projects hoping
to raise foreign investment

52 Turning
to the East

ANALYTICAL CREDIT RATINGAGENCY GENERAL DIRECTOR
EKATERINA TROFIMOVA TALKSABOUT GROWTH IN FOREIGN TRADE
WITH ASIAN COUNTRIES AND THE
LONG-TERM NATURE OF THIS TREND

economy52

T

he shock caused byfalling energy prices andthe devaluation of therouble in 2014–2015 led
to the Russian economy becoming
increasingly closed and a reduction
in foreign trade. The ratio of thevalue of exports and imports to
Russia’s GDP dropped from 38%
in 2013 to 35% in 2016. Yet, against
the backdrop of this overall decline,
economic ties with Asian countries
proved the most resilient. As a result,
their share in the structure of Russia’sforeign trade over the same period
grew significantly – from 30% to 35%.
This positive trend was observed
both in imports (which rose from 34%
to 38%) and in exports of domestic
goods to Asia (increasing from 28%
to 33%).
China has been and remains
Russia’s biggest partner in this region.
In 2013, it accounted for 11.3% ofexports; by 2016, this had risen to
15.4%. Imports of Chinese goods also
increased – from 16.8% to 20.9%.
In 2017, according to ACRA
forecasts, Russia’s foreign trade with
Asian countries will grow by 7.2% toreach USD 175 billion. Largely as aconsequence of this, by the end of
the year, the volume of foreign tradeoperations might not exceed the precrisis level but will at least almost
match it, amounting to nearly 37% of
the country’s GDP.
What is behind such growth? Firstof all, the fast-paced trend in Asian
economies, which need Russian
resources. The main contribution
to the development of eastboundexports has been made by the mining
and metals industries. Their share in
Asian exports increased in monetary
terms from 8.8% in 2013 to 10% in
2016. In the medium term, this trend
will continue. The Russian metallurgy
sector is interested in the Asianmarket owing to the prospect of highmargins. Asian investors, in turn, arereadily increasing their stakes in the

Asia accounts for 33% of exports of Russian metallurgical products
The share of the value of the categories of goods
exported to Asia in the total exports of this category

After all the convulsions
that hit the Russian
economy two to three years
ago, foreign trade with
Asian countries is showing
confident growth. Howlong will this trend last?

General Director,
Analytical Credit Rating Agency(ACRA)

capital of Russian companies. In thefirst half of 2017, for instance, Chinesecompany Fosun acquired 10% of
Polyus, Russia’s biggest gold mining
company, for USD 887 million, while
Beijing Enterprises acquired 20% ofVerkhnechonskneftegaz (a Rosneft
subsidiary) for USD 1.1 billion.
Hydrocarbons are anotherexport driver. By 2016, Russia wasalready outstripping Saudi Arabia in
oil exports to China and is unlikely
to retreat from its leading positionin the context of rapid growth indemand for ‘black gold’ among Asian
consumers.
Nearly all export projects under
way in the gas sector are now also
focused on the Asian market. For
example, Yamal LNG’s shareholders
include, besides Russia’s NOVATEK
and France’s Total, China National
Petroleum Corporation (CNPC)
and the Silk Road Fund. In addition,
the major Power of Siberia gas
pipeline is currently being built by
Gazprom, also with CNPC. Yet, given
the amount of work involved andthe complexity of these projects,
eastbound gas exports are notexpected to begin until the 2020s.
By that time, the situation on
the market might change, but notnecessarily for the better. The main
brake on further growth of Russian
exports to Asia will be a slowdown in
China’s economy. The ACRA predicts
that in 2017, our eastern partner’s
GDP will increase by 5.6%, but thatby 2021, this growth rate will drop
to 4%, compared with an average of
6.8% in 2014–2016. The reasons forthis slowdown are a reduction in thesize of the workforce and structuralreforms in the economy aimed at
stimulating domestic consumption.
Yet, even after correcting for this
scenario, the Chinese economy
will develop faster than the global

35%
33%
31%

MetalsAll Groups
Goods

29%
27%

NaturalFossils25%
23%

Chemical Production
2013

2014

2015

2016

Machines and equipment account for almost half of imports from Asia
The share of the cost of categories of goods of Asian
imports in total imports of this category

Turning
to the East

Ekaterina Trofimova,

50%
44%
38%

Cars
and equipment
All groups
Goods

32%
27%

Chemical
Production

21%
15%

Food
2013

2014

2015

2016

Source: FCS, ACRA calculations

economy and Asia will remain themost dynamic region in the world.
As for imports, demand forgoods from Asia is generated by
Russian consumers transferring tocheaper products following thedevaluation of the rouble. The
fastest growing categories havebeen cars and equipment, which,in 2016, accounted for almost half(49%) of all imports from Asia.
For reference, in 2013, this figure
was 39%. The supply of consumer
goods, primarily food products,
has also increased. The share of
Asian clothing manufacturers in the
structure of Russian imports has, on

The share of goods from Asian
countries in Russian imports willcontinue to grow, albeit at a slower
rate than currently, mainly owing
to the strengthening of the rouble

the other hand, fallen from 67.2%
in 2013 to 61% in 2016, owing to theconsolidation of the rouble exchange
rate and continued stabilization of
the Russian economy.
According to our forecast, theshare of goods from Asian countries
in Russian imports will continue
to grow, albeit at a slower rate
than currently, mainly owing to thestrengthening of the rouble. Thus,in our base scenario, it could reacharound 39–40% by the beginning of
2021. The biggest increase in Asian
imports will occur given a negative
scenario, if oil prices and Russia’s
nominal GDP drop significantly. In
this situation, goods from Asia willsupersede similar products fromother regions owing to their lower
prices. Demand for such products
has proved more elastic, meaningthat it is more sensitive to pricefluctuations. Yet there is good
news, too: domestic producers
would also benefit from sucha scenario, alongside their Asian
counterparts.

53

economy“This is thestatus quo,­the investor
should take
into account”

Unique geographicallocation – and no
infrastructure. Advanced
special economic zones –and lack of carefully
prepared projects.
Alexander Ivlev,
EY Russia Managing Partner,
dwells on the pros
and cons of the Russian
Far East from the pointof view of investors.

Which specifics of the Russian Far
East should be taken into accountwhen establishing and developing
ASEZs?
For three years running, the Far East
has held one of the top places in
Russia as a magnet for foreign direct
investment (FDI). The figures speak forthemselves. For instance, according
to the Central Bank, in 2014, FDI net
inflow into the Far Eastern regions was
5 billion USD (23% of Russia’s total);in 2015, this indicator was 7 billion
USD, and in 2016, 10.4 billion USD,
or 31% of Russia’s total. Curiously, in
2011, when Russia attracted a record
55 billion USD, the Far East accounted
only for 950 million USD, or less than2%. We can see that the order ofmagnitude has changed, which means
the efforts to create a favourable
climate are bearing fruit. Probably,
this year, we may count on evenmore impressive dynamics of foreign
investments.
The appeal of the Far Eastern
Federal District is primarily due to its
unique geographical location, whichallows for direct work with a large
number of rapidly developing markets
in Asia Pacific. On the other hand, thehuge distances and frequent lack of
direct communication lines between
the principal development centres
often impede the process. This is why
ASEZs are the perfect way to develop
the region. Today, these zones alreadyhave a major potential and it is their
growth, establishment of attractive
socioeconomic sites, that could be

54

used as the development driver forthe entire region.
The key thing for ASEZ
development is the possibility ofquickly building the infrastructure.
The majority of the currently
established ASEZ are “greenfields,”
i.e., undeveloped land plots without
utilities and infrastructure. Most
regions of the Russian Far East arecharacterized by a low density of
power grids, roadways and railways.
The second characteristic is a natural
population decline and a dearth ofqualified manpower.
How efficient are Far Eastern
ASEZs compared with similar
projects in other Russian regions?
The efficiency of an ASEZ is best
assessed by looking at the private
investments to budgetary spending
ratio. According to the Ministry for
the Development of the Russian Far
East, today’s efficiency of budgetary
spending on ASEZs infrastructureis 1:20, i.e. 20 roubles of private
investments per 1 rouble of budgetary
spending. Absolute figures arealso impressive: the volume ofinvestments by ASEZ residents
has reached 1.4 trillion roubles,and residents of the Free Port of
Vladivostok have invested 376 billion
roubles and created 94,000 jobs. As
Alexander Galushka noted, “75% of
those investments are non-resource
based.”
ASEZs may be compared to
special economic zones (SEZs).
Their starting conditions are greatly
different, since most SEZs are locatedin European Russia with different
population density and infrastructureaccessibility. However, the Audit
Chamber’s 2013 audit demonstrated
that only 11 out of 27 SEZs that
operated at the moment could betermed “provisionally effective.”
Budgetary monies there often//	
The port infrastructure of the region is one of the most interesting objects for investing

went unused, and the building of
infrastructure fell significantly behindschedule.
On the whole, I think it’s still too
early for assessments: we need togive it three to five years before theeconomic effect becomes visible.
Is Russia capable of creating
attractive conditions for foreign
investors?
Certainly. The Far East Development
Fund, ASEZs, the Free Port of
Vladivostok, the Ministry for theDevelopment of the Russian Far East,
i.e. a special executive body in chargeof the entire region’s development.
These are all signs of the state’s
comprehensive approach to resolving
the regional issues. Besides, thestatistics of attracting investments
and of the investment projects I
mentioned already demonstrates
results.
Could we single out special groups
of investors interested in the
Russian Far East?

The efficiency of an ASEZ
is best assessed by looking
at the private investments to budgetary
spending ratio

The range of potential investors andof their interests is very broad; it ishard to name a group of investors
with no interest in the Russian Far
East at all. We communicate withboth Russian and foreign companies,
and not only from Asia Pacific, on
investing in the region. There areboth strategic and financial investors.
Local actors also exhibit significant
interest.
On the whole, the appeal the
Russian Far East holds for investors
is many-faceted, but, if we need tosingle out three main factors, I would
name the huge natural resource
stocks (exploitable minerals, fishand seafood, timber, etc.); the state’s
special attention and support at leastin the mid-term prospect; location in
the Asia Pacific macro-region.
Based on their own vision of the
combination of these factors andbased on their individual preferences,
investors determine those growth
points they are prepared to invest in.
Producing and processing exploitableminerals, mariculture, aviationindustry, tourism, logistics – these are
but a few examples.
Naturally, many Asian companies
come to the Russian Far East.
Primarily, we see interested investors
from Japan, China, and South Korea.
In the Primorye Territory alone, wehave now over 20 enterprises with
South Korean capital of over 2 billion
roubles in investments. The Korean

55

economy//	
In Primorye there will be capacities for the production of Chinese trucks FAW

business sees promise in developing
Primorye’s port infrastructure and infish processing.
We can also see the interest shift
toward major infrastructural projects.
Despite the long time it takes torecoup investments, infrastructuredevelopment may become an
important economic growth driverin the regions of the Russian Far
East. For instance, talks are now
underway for Chinese investors toenter the construction of Primorye-1
and Primorye-2 internationaltransportation corridors (ITCs).
The project’s concept entails theconstruction of wharves, maritime
terminals, power grid, transportation,and roadway infrastructure facilities.
As Vladimir Miklushevsky, Governorof the Primorye Territory says, theChinese exhibit a significant interest
since “these transportation corridors
are intended primarily for cargo transit
from and to China. It is well known
that China’s northwestern provinces
are landlocked.”
In June 2018, Nizhneleninskoye–
Tongjiang (China) railway bridge will
be put into service, said Alexander

56

Levintal, Governor of the Jewish
Autonomous Region. China began
constructing its part of the bridge(about 1.8 km long) back in February
2014 and has essentially completed
it. Russia still has to build 310
meters. The preliminary cost of
construction for Russia is 9 billion
roubles; however, the cost may
increase due to the construction of alogistics park.

foreign goods are brought to an
ASEZ and used there without paying
customs dues.
As for problems: the overall
investment appeal could be
improved, as could be regulation andadministration, same as in any Russian
region. However, I would not say thatthe sea recons, this is the status quo
investor should take into account.

What are the pros and cons forinvesting in the Russian Far East?

In this case, what should theauthorities and business do tochange the status quo?

Pros are primarily the strategic
aspects: proximity to the world’s
largest consumer markets in China
and Japan, Indonesia and Korea;
key trade routes; accessible natural
resources, including biological ones:
fish, Kamchatka crab, sea cucumber,which allows for unique sea-farming
projects.
There are financial pros as well:for the first five years, ASEZ residents
do not pay profit, property, and landtaxes; payments to non-budgetaryfunds are cut from 30 to 7.6%; ASEZs
offer free customs zone regime when

I would separate areas that needworking on. Attracting investments
means not only improving regulatory
climate and legislation or instituting
incentives. At the basic level,
investors lack investments projects
that are properly structured to fit
their requirements. This is the major
obstacle for investments. Professional
investors have their requirements
for the contents and presentationof information required to make adecision. It applies to a project’s
financing and economics, taxation andlegal aspects, personnel requirements,

and independent confirmation of theinformation provided by a company
with appropriate reputation. Projects
with independently compiled, slapdash marketing, with mistakes in thefinancial model, with unsettled legal
issues (for instance, documents forthe land plot), with unconfirmed
promises instead of documentation
on utilities infrastructure, etc. force
investors either to spend time andmoney on re-working the projector
to pass up on such opportunities
altogether. In addition, businesses
should take a comprehensive view ofprojects, they should participate indeveloping social infrastructure in thevicinity of their sites.
In addition, the very system of
attracting and servicing investors is
not yet completed. There are glitches,particularly at those points where thepurviews of various administrations,ministries, and agencies overlap.
Decisions made at the federal level orat the level of a head of region should
enjoy full support down the line,from regional and municipal officials.
Administrative barriers are still there:
power grid connection, property
registration, obtaining construction
permits.
For the last few years, the Far
Eastern region did not make theTop-20 of the National Rating ofInvestment Climate in the RussianFederation compiled by the
Agency for Strategic Initiatives.
This rating takes into account thequality of public services offeredto businesses, the effectivenessof development institutions,infrastructure accessibility, and othercriteria. Improvements introducedin these areas may make it easier forbusinesses to work and to serve as
the foundation for a future increase ininvestments.
Finally, there should be clear thatdeveloping any new investment area,
particularly such relatively unusualand vast as the Russian Far East,
requires time. If the projects launched
today demonstrate good results andif the state exhibits a capacity forsteadily creating comprehensible andfavorable working conditions, theinflux of investments may increasesignificantly.

Where foreign investors
invest• Automotive industry
Sumotori Company Group (Russia) and First
Automotive Works (FAW) (China) are starting to
produce the Chinese brand’s trucks in Primorye. In
December 2016, their joint venture Yubo-Sumotori
concluded a residency agreement with the Free Port of
Vladivostok.
Sumotori also registered Prometheus with Arai
Shoji Co., Ltd. (Japan). Insummer2018, they will start
constructing an electric car manufacturing plant in
Primorye.
• Agriculture
Taiyuan Company, resident of the Free Port of
Vladivostok, is building a 6 billion rouble agro industrial
cluster in the Shkotovsky District in the Primorye
Territory.
Hokkaido Corporation from Japan’s most northern
island has built the first stage of a greenhouse complex
in Yakutia and intends to transition to the second stage.
When establishing a vegetable-producing center, thecompany used cutting-edge technologies for growing
vegetables in a cold climate.
Evergreen, Russia-Japan venture, also built thefirst stage of a greenhouse complex in Khabarovsk
and decided to construct stages two and three. Uponcompletion, the complex will have the over all areaof 10 hectares. Evergreen, with manufacturing sited in
Avangard Industrial Park, is the first foreign resident of
Khabarovsk ASEZ.
• Wood-processing industry
Iida Group Holdings became a co-investor in the woodprocessing plant in Komsomolsk ASEZ in the Primorye
Territory. Its products will be mainly geared toward theJapanese market.
•	Infrastructure projects
A Japanese consortium headed by Sojitz started
preparing legal paperwork to join the project for
constructing and operating an airport terminal in
Khabarovsk Airport. It is going to be a new domestic
terminal with the area of about 26,000 sq.m. andthe capacity of 3 million people annually. Investors
and Khabarovsk Airport will manage jointly both the
new terminal and the existing international terminal.
Theconstructionwillstartin2017, with investments
estimated at 6.5 billion roubles.
Hebei Port Group (China) intends to invest
in Primorye’s port infrastructure, in particular, indeveloping Vostochny Port and Commercial Port of
Vladivostok. The company’s assets include the ports
of Qingdao, Caofeidian, Huangge, and about 40 small
ports in Bohai Gulf.

57

economy“The REC’s
global objective
is to shape a favourable
framework for further
growth of Russian exports”
In the last few months, nonoil and gas exports have been
showing positive momentum.
Exports have grown interms of both volume andvalue, with their structure
more diversified. Head of theRussian Export Center (REC)Group, Petr Fradkov speaks
about the progress made andthe outlook for promoting
exports.
Mr. Fradkov, global experience
shows that export-orientatedeconomies are the most successful,especially when it comes to supplies
of high-added-value products. Whatefforts is our state making in orderto form a new, export-orientatedeconomy?
In recent years, Russia has indeed
applied every effort to break awayfrom the “oil and gas” model and forma framework for developing exportorientated production facilities.
The Russian Export Center is thecoordinating HQ for this work. REC
specialists are ready to provide data
about the general procedure forexport operations and about foreign
markets; to facilitate the search forpartners, structure an export project;
to offer support in negotiations with
the involvement, where necessary,of insurance and financial tools by
EXIAR and Eximbank of Russia,

58

which are parts of our Group. We
also organize foreign businessmissions, provide support inhandling certification, licensing andintellectual property protection
issues, give advice on customs
processing, taxation, etc.
Our numerous clients include
representatives of various industries:
mechanical engineering, agribusiness,IT, chemical and pharmaceuticalindustries, and many more. Our
customers work with consumers inAsia, the CIS, Africa, South America
and Europe. Importantly, the REC
works with big business and exporting
SMEs. Naturally, the objectives
and capacities of such companies
differ. Smaller exporters are mostlyinterested in non-financial support
in seeking partners, analyzing foreign
markets, exporting educational
services. Bigger players, on the other
hand, mostly look for financial andinsurance support.
In 2016, the REC Group provided
support for almost USD 9 billion
worth of exports. What targets areyou pursuing in 2017?
In late 2016, our work to support
non-oil and gas exports reached
a new level, as the Project Officeof the Government of the RussianFederation identified international
cooperation and exports as priority
activities. The REC performs thecoordinating function in this project,which, on the one hand, has enabled
us to expand its potential. On theother hand, we need to achieve
ambitious performance targets. This
year, we are supposed to involve 6,500
new companies in export activities
and support export supplies worth atleast USD 20 billion.
Notably, the REC’s global
objective is to shape a favourable
framework for further growth of
Russian exports. This work is based on// Among REC clients are representatives of a wide range of industries, including agricultural
machinery

two priorities: first, we facilitate theremoval of bottlenecks and, second,
we form a healthy business climate
and work with exporters. Our mission
is gradually to modify the way Russian
entrepreneurs think, as they often
refuse to believe that they are capableof entering foreign markets. The worldof today is globalized, and businesscannot grow without being included
in world trade processes.
Mr. Fradkov, in recent years,
Russian exports had dropped
but, starting in late 2016, export
volume has resumed its growth.
How can you account for this? Can
we rely on further growth of nonoil and gas exports?
Prior to the second half of 2016, thefall in the volume of Russian exports
was mostly due to the general global

This year, we are supposed
to involve 6,500 new companies
in export activities and support export
supplies worth at least USD 20 billion

situation, the deceleration of the
key economies, and the lowering ofprices of core products. The process
has reversed, though, as trade on the
key markets has recovered and prices
have been showing gradual growth.
Russian exports too have shown
positive momentum. Supplies of nonoil and gas non-energy products havebeen growing in terms of both value
and volume. In the first six monthsof 2017, non-oil and gas non-energy
exports amounted to USD 57.2 billion,
according to our estimates, which
represents a 19% growth over thesame period in 2016.
In the first half of the year, exportsof metal products went up by 32%
year-on-year, of precious metals andstones by 28%, of glass, ceramics
and articles made of stone by 26%.
Food exports increased by morethan 20%, and those of wood andpaper products, by 16%. According
to our estimates, positive trends willcontinue and we can expect goodresults at the end of the year.
One of Russia’s current priorities
is cooperation with Asian buyers.
What projects is the REC pursuingwith the Asia-Pacific Region?

59

eco n o m y//	One of the REC projects is related to the promotion of Russian food products to the Chinese market

Naturally, we are actively cooperatingwith China. For instance, we haveprojects to promote electronic
trade – specifically, we are workwith the Alibaba Group. We are also
promoting supplies of Russian foodto the Chinese market. To this end,
we organize Russian Gastro Week
tasting sessions in Chinese cities ona regular basis and, in the autumn, weplan to open permanent pavilions with
Russian products. Furthermore, wehave projects to promote new logistics
solutions for Russian exporters. A new
railway route to China was opened in
April 2017. The first export container
train left for China in early June and,prior to that, separate containers had
been shipped using transit trains.
We are aware that it is important
to approach markets not covered by
Russian export supplies. For instance,

we can work more actively withIndonesia: this year, we are planningto open a foreign representative officeof the REC there. Japan is anotherimportant export destination. We are
currently working out ways to join theJapanese Rakuten electronic trading
platform and cooperate with theJapanese organization for promoting
foreign trade in order to search forpotential buyers of Russian-madeproducts.
As part of the Eastern Economic
Forum, we emphasize thedevelopment of the Russian Far
East. What is your opinion about
the export potential of the Far
Eastern Federal District?
The Russian Far East is becoming
a key center of socioeconomic

The Russian Far East is becoming
a key centre of socioeconomic
development of the entire country

60

development of the entire country
and we must do our best to ensure its
successful integration into the rapidly
developing Asia-Pacific Region. Fastgrowing economies, innovation-based
production and major commodity
flows are close to it. Moreover, we see
the interest of our Asian partners in
Russian goods.
The region is doing a lot topromote exports. New growth
points are being created: priority
development areas, the Free Port of
Vladivostok, investment projects, theFar East Development Fund. These
are not mere plans anymore – this is
our reality.
This year, we signed a cooperationagreement with the Far East
Investment and Export Agency on thesidelines of SPIEF 2017, and we hope
this work will enable us to organize
support for export-orientated entities
in the Russian Far East.
The REC also operates a regional
office in Vladivostok, wherebusinesses can enjoy support
for any aspect of their export
activities.

61

Economy

CITIES OF THE FUTURE.
development strategies

D

eveloping the urban environment and improving
quality of life are the priority objectives for all Russiancities today. The Urban Environment
Quality Index developed by the AHML
and Strelka KB makes it possible to assess the level of comfort found in acity and provide an understanding ofwhat it lacks in order to make a qualitative leap forward. At the Eastern Economic Forum, the AHML will present a
concept for the development of Vladivostok, seeking to make the city a regional centre in terms of education, innovative economy, and tourism.

have long taken different approaches
to this. We need to design solutions
which will enable a variety of attractive
and comfortable residential areas to bebuilt, rather than a series of identicalareas. The rules will take into accountthe historical and cultural features ofeach city, as well as the local climate.
This will enable the local authorities tosystematically and sensibly improve theurban environment.
In December 2016, the Unified
Housing Sector Development
Institute (established by AHML)
and the Japanese company Nikken
Sekkei signed an agreement
to develop a master plan for
Vladivostok with the aim of altering
the structure of the city to make it‘smart’ and compact.

cities, a great place to live and somewhere which appeals to tourists.
The comprehensive development of
Russky Island is one of the focusesof the joint programme between the
Unified Housing Sector Development
Institute (established by AHML) andStrelka KB. Strelka KB is drawing up amaster plan for a residential area on
the island that takes into account all
aspects of an ‘ideal area’.

Russian fleet specialized
for carriage of heavy, outraged and floating cargoes
Gudzon Shipping Company was foundedin 2003.
All of the company’s vessels operate
under the Russian flag and specialize in thetransportation of heavy, oversized cargo,
medium-tonnage vessels, and floating
facilities. The company’s vessels areunmatched in Russia, unique in terms of
their functionality, fitted with equipment
required to transport dangerous goods of allclasses, including explosive and radioactive
substances, and have all the necessary
documents to meet the requirements
of international and Russian legislation
concerning merchant shipping.

Alexei Muratov,
Partner, Strelka KB
Alexander Plutnik,
General Director, Agency for Housing
Mortgage Lending
Why has the idea of a comfortableurban environment become so
relevant in different cities today?
The urban environment must meet therequirements of the new economy andcreate the infrastructure needed torealize human potential. At a meeting of the State Council in May 2016,
Russian President Vladimir Putin gave
instructions to draft standards for thedevelopment of a comfortable urban
environment. Today, the Ministry ofConstruction, the AHML, and Strelka
KB are working on standards which will
be based on individuals and their social
needs – decent living conditions andopportunities for work and recreation.
What will these standards look like?
What we are talking about is flexible
rules for urban planning regulationand leading cities around the world

62

Fadi Jabri,
Executive Officer, NIKKEN SEKKEI:
What global urban development
practices can be applied in Russia,
and specifically in Vladivostok?
Modern urban planning practices combine the experience of many countries,
including Japan, the United States, theUnited Kingdom, and Germany. We
studied all the pros and cons of theterritory of Vladivostok at great length,and based on this analysis we appliedcomprehensive methodologies andtechnologies. Vladivostok’s geopolitical position, at the crossroads of airand sea routes, its beautiful coastline,
and its historical and cultural values
offer enormous potential for making
it one of the world’s most developed

What should a ‘city of the future’
look like?
The structure of a ‘City of the Future’ isquite traditional. Experts have reacheda consensus on this issue that has
been confirmed by the decisions anddocuments of international organizations, in particular UN-Habitat and theOECD. Everyone agrees that the mostsustainable and viable model is a midrise, compact building in a fairly small
cluster with a reasonable dense road
network – a building where residentialfunctions are combined with services
and business. The AHML together with
Strelka KB and with the support of
the Russian Ministry of Construction,is currently developing a standard for
integrated regional development – amethodological guide that contains afull range of urban, architectural, andmanagement solutions to increase
the compactness and diversity of ourcities. This standard will form the basis
for the Strategy for Urban Development in Russia.

The company’s shipping area is not limited
to the Asia-Pacific region. Gudzon ships
goods from the European part of Russia both
via the Northern Sea Route and through theIndian Ocean to ports and sea terminals in the
Russian Far East, Kamchatka, and Chukotka
Autonomous District.
The vessels have their own cargo equipmentthat can handle loads weighing up to 500
tonnes. This enables the company to deliver
and unload heavy cargoes in all ports and sea
terminals in the Russian Far Eastern region
that do not have capacity for transhipment ofheavy cargo.
The relatively low draught of vessels allows
for harbour unloading in hard-to-reach andshallow-water sea terminals and river mouths.
The ice class of our vessels, assigned inaccordance with the Rules of the Russian
Maritime Register of Shipping, means thatthey can travel to Arctic latitudes and deliver
goods to various points in the Russian Arctic.

In January 2017, the cranes ofthe specialized vessel Bogatyr
loaded heavy pontoons
weighing up to 400 tonnes
each for the first time in thehistory of the Vladivostok port.
The vessel’s capabilities enable
it to handle freight weighing up
to 500 tonnes.

Gudzon Group owns
a unique semisubmersible vessel,
the Neptune.
The vessel has
tonnage of 4,700
tonnes and is capableof taking on mediumtonnage vessels,
submarines, and otherfloating facilities
from the water through submersion andsubsequent surfacing. This loading method
is performed by taking on ballast in thevessel’s tanks, after which the floating
facility or vessel enters the cargo space
above the submerged cargo deck and thevessel then rolls back the ballast and floats
up, securing the cargo in the hold. The ship
is then ready for its voyage. Since the vessel
can carry cargo with an open stern ramp andwith the hold covers retracted, the lengthand height of the objects placed on thedeck are not limited by the vessel’s length
or the height of its hold.
In order to load heavy onshore objects, thevessel is equipped with a ramp that has anallowable maximum load of up to 3,000
tonnes. To perform this operation, thevessel moors with its stern to the berth, theramp is lowered, and the object is placed
aboard the ship on special mobile platforms
or on its own.

and even to navigate the channels ofnavigable rivers. Neptune is the first and so
far the only vessel in the Russian fleet withsuch capabilities.
In 2016, Gudzon Shipping Company carriedout a truly unique operation. The company
was tasked with delivering a transformer
weighing 135 tonnes from the European
part of Russia to Magadan for a power
station under construction. In solving
this unconventional logistical problem,
Gudzon developed an optimal route fortransportation by road, rail, and sea, whichfacilitated the process of modernizing port
facilities in Vladivostok and Magadan since
the unloading plan required reinforcing
berths and preparing sites at berths for theplacement of cargo no closer than 14 metresfrom the edge of the berthing line. The
necessary building materials for this werealso delivered to the port of Magadan in
addition to the transformer.
As well as shipping, Gudzon also offers its
clients brokerage, chartering, logistics, andstorage services for various types of cargo,
along with a full range of maintenanceservices.

One of the advantages of such a vessel is its
low draught, which even when fully loaded
is only 4.5 metres, thus allowing the vessel
to deliver freight to virtually all inaccessible
shallow sea and river terminals in Russia,

Gudzon Shipping Company
20A, Ulitsa Tigrovaya, Vladivostok, Russia, 690091
Tel: +7 (423) 241 3327, +7 (423) 241 3328

Website: sk-gudzon.ru
Email: operator@sk-gudzon.ru

economy

Russia–Japan
relationslikely to gravitate towards
a “perfect tandem”
HEAD OF THE JAPAN ASSOCIATION FOR TRADE
WITH RUSSIA & THE NIS (ROTOBO) representative office
SAITO DAISUKE ON THE HOPES JAPANESE BUSINESS SETS
ON RUSSIA AND APPEAL CRITERIA FOR RUSSIAN REGIONALPROJECTS HOPING TO RAISE FOREIGN INVESTMENT.
//	Japanese cars assembling at the Mazda Sollers Manufaсturing Rus plant in Vladivostok

Saito Daisuke,
Head of the representative officeof the Japan Association for
Trade with Russia and the Newly
Independent States (ROTOBO)

What is your assessment of thecurrent relations between Russia
and Japan? Have you seen any
changes?
There is an evident positive trend:
ever since Japan’s Prime Minister
Shinzo Abe proposed an eight-point
cooperation plan to President Vladimir
Putin in May 2016, Russia and Japan
had signed some 1000 agreements by
the time of Abe’s visit to Russia in April
2017. The next step is to translate the64agreements into real business deals.
Additional targets also include creating
business contacts in healthcare and IT.
Looking back, we can say that
the Russia–Japan relations have beendeveloping in a cyclical manner,alternating between growing closer,
declining and being renewed again.
In truth, Russians are very friendly,
while the Japanese are often guarded
and circumspect. Today, we see anapprehensive view of Russia being
replaced by hope and we need as
many positive examples as possible
to propel the trend forward. I mean
the 1000 agreements I mentioned andother projects. In this case, the numberof Japanese businesses considering
expansion on to the Russian market
will increase.
Is the Russian economy out of thewoods yet, or can you still see signsof a continuing crisis?
I believe Russia has already come outof the recession, this being confirmed,
among other things, by this trend
towards recovering the mutual tradeturnover. According to statistics fromJapan’s Finance Ministry, in 2016,
Japan’s exports to Russia totalled amodest USD 5.1 billion, while imports
from Russia were at USD 11.3 billion,
putting the aggregate trade turnover at
USD 16.4 billion, which is only half the2013 level. Yet, from January to June
2017, trade already reached USD 10.24
billion, up 35.7% from the same period
last year.
The trend towards more Japanesecompanies pulling out of Russia has
also slowed down. At this point, some
350 Japanese businesses operate in
Russia, with 195 of them running a
representative office in Moscow (theyare all part of the Japan Business Club)– seven companies more than in 2016.
Some 60 Japanese companies operate
in the Far East, and their number is also
set to grow.
Do you think investing in Russia,
specifically – in Russia’s Far East, ispromising?
Japanese companies were never ofthe opinion that Russia offers “toughterms” or that the Far East is “unfit forbusiness”: they were always looking forbusiness opportunities. It is importantto understand, however, that you willbe the one bearing all the risks, without
any expectations of the governmentor public organizations pitching in withsupport measures.
On the other hand, if the questionis whether it is easy to do businessin Russia, there is no clear answer.
Although, in the past ten years, thebusiness environment has improved
greatly, convoluted administrative

procedures and real estate operations
are still an obstacle. We are hopingthat Russia will continue its efforts toimprove its investment and businessclimate.
What latest Russian-Japanese
projects come to your mind?
Apart from the already traditionalenergy and automotive industries,
Japanese companies have, of late,been showing increasing interestin new investment areas, including
healthcare, agriculture and town
planning. The general idea behind
it is “to invest in those spheres in
Russia that need injections”, or, more
specifically, “if Russia has difficulties
in certain spheres, let us look forsolutions together.” For instance,
Arkrayhas expanded the capacity of
its plant based in the Moscow Region
by adding medical laboratory reagents
to its production line. The Hokkaido
Corporation operating in Yakutia has
set up greenhouse equipment andstarted growing vegetables. Another
Hokkaido-based company has
opened a chain of izakayas, Japanese
gastropubs, across Vladivostok.
Needless to say, they all had viablebusiness plans and expect a profit.
What should we do to make Russia’s
investment climate more attractive?
At this point, we can see Russian
regional governments striving
increasingly to attract Japanesecompanies to build plants in theirregions. They are taking proactive steps
to do so. Yet investment potential
presentations vary very little fromregion to region, and their contents fallshort of actually drawing in potential
investors. It is vital to stress those
aspects that make region stand out
from the other regions.
Such aspects might include
improved personnel training andinformation support systems (thepossibility of communicating indifferent languages, “one-stop-shop”

Japanese companies were neverof the opinion that Russia offers“tough terms” or that the Far East is“unfit for business”

and non-stop services, support forforeign workers in their everyday life);
infrastructure development (airports,
ports, roads, improving utility services);
price competitiveness (labour, utility,
rental costs); convenient logistics(improving logistics and warehousing
systems, opportunities to offer
simplified customs procedures), etc.
What can Russian business learn
from the Japanese, and vice versa?
We all know that Russia is rich inresources that we don’t have in Japan.
On the other hand, we often forgetthat Russia is Japan’s neighbour,
it is very close. It is natural forneighbouring states to complement
and enrich each other in what theother is lacking. The process ismutually beneficial. I believe that
Russians and Japanese need to get toknow each other better. I am positive
that, if Russians understood how theJapanese mind and mentality work, andif the Japanese had more contacts with
Russians, the mutually complementary
relations with Russia could evolve intoa “perfect tandem.” I strongly believethat it is quite possible to establish
strong economic ties between our two
countries, along the lines of what Japanhas with the USA and South Korea,
or what Russia has with China andGermany.

65

BusinessРубрика pубрика

80

THREE MAIN THINGS:
how entrepreneurs
from Vladivostok set up
a national chain

ABOVE THE MARKET:
how the Vladivostok
airport will develop82

A RUSSIAN-SINGAPOREAN CONSORTIUM
THAT TOOK OVER THE PRIMORYE AIRPORTPLANS TO TRIPLE PASSENGER TURNOVER
in the next few years

BUSINESSMEN FROM THE PRIMORYE
CAPITAL SHARE THEIR EXPERIENCE
BUILDING A COMPANY WITH TURNOVER
OF RUB 135 BLN PER YEAR

“EXPANDING
SALES MARKETS
offers enormous
potential forbusiness growth”

72

68

Major
bidding
ST. PETERSBURG
INTERNATIONALMERCANTILE EXCHANGEPRESIDENT ALEXEy
RYBNIKOV on
NEW COMMODITY
instruments

DEPUTY HEAD OF
PROMSVYAZBANK’SCORPORATE UNIT ALEXANDERMESHCHERYAKOV SPEAKS ABOUTTOOLS TO SUPPORT EXPORTOPPORTUNITIES AND RUSSIANCOMPANIES

70

76

74
SPACE
starts here
INSYSTEMS CEO EVGENY VIRTSER
SPEAKS ABOUT THE COMPANY'SPARTICIPATION IN MAJOR
ENGINEERING PROJECTS IN
THE FAR EAST

A big
catch
THE DOBROFLOT GROUPREVIVES THE LEGENDARYSOVIET BRAND IVASI HERRING

Russiais among
the most
significant
marketsfor Hyundai

HYUNDAI MOTOR CISMANAGING DIRECTOR
ALEXEy KALITSEV SPEAKS ABOUT the IMPORTANCE
of Russia FOR THE BUSINESS OF HYUNDAI MOTOR,
THE FUTURE OF THE AUTOMOTIVE MARKET, AND THE
ADVANTAGES OF BUYING CARS under a governmentsponsored incentive programmebusiness

A big catch
Fishermen in the Russian Far East are reviving ‘ivasi herring’ –a legendary Soviet-era brand that was considered to be thehealthiest and most delicious of the cheaper kinds of fish.
All that remains is to make it the most accessible, too.

Vyacheslav Pereverzev,
JournalistC

anned pilchards, popularly
known as ‘ivasi herring’, used
to be one of the best-known
Soviet food brands, alongwith Alyonka chocolate, ‘Doctor’s’sausage, and Buratino soda. “A fishthat can prevent heart attacks” went
the conventional wisdom. Rich in
Omega 3, ivasi herring is a special kindof fish indeed. Over the centuries thatit has been harvested, it has appearedin huge quantities only to completely
and inexplicably vanish for decades.
The catch last peaked in the 1980s,

68when the maximum annual catch
globally reached 4.5 million tonnes.
To put this into perspective, thepollock catch at that time was just 3
million tonnes. The next wave of rapid
population growth started in 2015 andis expected to last until the 2030s.
Among other special objectives
on a national scale, the Federal
Agency for Fishery (Rosrybolovstvo)
has tasked fishermen in the Russian
Far East with developing productionof new and promising catches – ivasi
herring and mackerel. So far, only one
enterprise – Dobroflot Group – has
answered the call. The reason is quite
simple: developing such production
requires fisheries to invest heavily andexpend substantial organizational
efforts. More importantly,

embarking on the harvesting of newbioresources, building new vessels,
or manufacturing and marketing new,highly processed products all entail
significant risks.
Headquartered in Vladivostok,
Dobroflot Group spent three years
carefully studying the migration ofivasi herring schools and preparing
to launch fishing operations. It took
the company’s specialists 18 months
just to manufacture a purse seine. The
result was a net which was more thana kilometre long and 200 metres high,with a dry weight of around 40 tonnes.
The Vsevolod Sibirtsev floating base
was also upgraded. The vessel is oneof the world’s two biggest surviving
floating factories and its dimensions
are nothing short of stunning: 179.3

metres in length, 45 metres high fromthe keel to the tip of the mast, anddisplacement of around 26,000 tonnes.
It accommodates equipment capable ofmanufacturing canned and preserved
ivasi herring products according torecipes that consumers know and lovefrom back in Soviet times. The Vsevolod
Sibirtsev can process 650 tonnes offish a day. Apart from its formidable
production capacity, the floating baseboasts comfortable living quarters for
600 crew, featuring everything from WiFi to a gym, a seawater swimming pool,a medical centre, and even a cinema.
After scheduled spring repairs, a real
Orthodox church was opened on board.
In May 2017, the residents ofVladivostok were treated to theimpressive sight of the Vsevolod
Sibirtsev setting sail to spend anotherten months at sea. Primorsky Territory
Deputy Governor Denis Bochkarev
was on hand to say farewell to thefishermen in person, noting that
Dobroflot’s operations “have broughtnothing but good things to the
Primorsky Territory economy andhave created jobs.” He added: “I wish
you a successful fishing season. May
the sea be good to you.”
Today, the Vsevolod Sibirtsev’s
fleet is actively fishing for ivasi herringin the Pacific near the South Kuril
Islands. During the first week and ahalf, more than 1,000 tonnes were
harvested and processed. “Ivasi
herring make for a very affordable
product. If our production capacity
recovers, the price of fish products
for Russian consumers will drop
considerably. It will be the mostdelicious kind of fish produced in
Russia, and the cheapest”, Dobroflot
CEO Alexander Yefremov said.
What is more, by operating in a
new and promising open fishing areaof the World Ocean, on mass fish
migration routes, Dobroflot is working

to establish a historic precedent for
securing national fishing quotas for
Russia. Interestingly, ivasi herring are
followed to Far Eastern waters byother kinds of fish normally foundin southern seas. Nets constantly
bring in tuna, marlin, and other exotic
species of marine fauna, which inand of themselves could become apromising target for industrial andamateur fishing alike.
The development of the Northern
Sea Route is yet another project ofnational importance that will help toreduce the cost of fish products andthus make them more affordable for
consumers. This project is all the more
important in light of the recent ban on
imports of Norwegian salmon, which
has caused retail prices of salmon to
skyrocket. Meanwhile, according to
Dobroflot’s estimates, shipping fish via
the shorter, albeit more dangerous,
Northern Sea Route would cut
logistics costs and delivery times
by as much as 20%. “Russian market
prices could be quite reasonable
today if the exorbitant transport andlogistics costs were reduced”, believes
Alexander Yefremov.

Dobroflot Group has created acomplete life-cycle product chain,enabling it to accumulate value-added
at each step of the process and producing
a synergy effect

In the summer of 2015, afteran almost ten-year hiatus, thecompany restarted delivery of fishfrom the Far East to central Russia,
from the Sea of Okhotsk to the
Barents Sea. Specialized ice-classfreight vessels with poetic names
like Garmoniya, Simfoniya, andProgress were purchased for thatproject. Demand for salmon frominternational buyers is invariably
strong, yet Dobroflot has decided
to sell all of its catch domestically,
becoming an active participant in
the import substitution programme.
Since early August 2017, anothercargo ship carrying Kamchatka fish
has been making its way through theice towards the port of Arkhangelsk,
meaning that wild Far Easternsalmon will soon become moreaccessible for consumers in central
Russia.
Dobroflot Group has created acomplete life-cycle product chain,enabling it to accumulate valueadded at each step of the process
and producing a synergy effect byeliminating the ‘grey zone’ in fishpricing that has for so long eluded
the authorities who study pricing
policy on Russia’s domestic market.
Russia’s largest onshore and offshore
fish processing facilities, proprietaryonshore fish transshipment
infrastructure, a logistics hub,refrigeration facilities, a tin canfactory, and a ship repair yard help thecompany to cut costs so that it canoffer stable and attractive prices for
its finished products.

69

Spacestarts here
Business in the Far East, whichfor INSYSTEMS started with
regional projects for major
corporate customers, has
gradually become one of
the company’s key areas ofactivity. Today, INSYSTEMS is
implementing highly complex
engineering projects in thefields of energy, shipbuilding,oil and gas, and spacetechnology in the region.

70

Maxim Sokolov,
JournalistT

he first successful launchof Soyuz-2.1a, a carrier
rocket which placed
three satellites into orbit,
took place on 28 April 2016 from
Vostochny Cosmodrome. Thishistoric event was made possibleby the efforts of numerous
participants, including INSYSTEMS,
an engineering company that is partof LANIT Group, which designed andconstructed 37 engineering and IT
systems for the Cosmodrome. The
enormous infrastructure responsible
for supplying the Cosmodrome’s
key facilities – the carrier rocket
assembly and testing complex,
the power generation plant, therefrigeration plant with a capacity of
8.5 megawatts, and the fuelling andneutralization station – includes 443
ventilation plants, about 700 powercabinets and automation cabinets,
1,400 kilometres of cable lines,
and more than 130 kilometres ofpipelines.
“The Russian Far East is a key
development area for us today”, says
Evgeny Virtser, CEO at INSYSTEMS.
“The projects implemented in the
Far East account for about one thirdof our business and this share willcertainly grow in the future.”
INSYSTEMS entered the Far
Eastern market almost as soon as it
was established, about 20 years ago.
At first, the company was involved indesigning and creating engineeringsystems for regional projects operated
by its major corporate customers– the Central Bank of the RussianFederation, Sberbank, the Federal
Treasury, Gazprom, Rosneft, and AlfaBank.
Today, INSYSTEMS participatesin the construction of large-scale
integrated facilities with highly
complex engineering infrastructure.
Besides the Vostochny Cosmodrome,
the company’s Far Eastern portfolio
includes such facilities as Yakutsk
State District Power Plant 2, Amur
Gas Processing Plant, and Zvezda

Shipyard. For certain projects,
including Rusagro agricultural
facilities in Primorsky Territory, sitefacilities for the Chayandinskoye field,
the Power of Siberia gas pipeline,
and the Primorye Wholesale andDistribution Centre, the company acts
as general contractor on a turnkey
basis.
It goes without saying that
construction in the Far East presents
its own specific challenges. These
include remoteness from the central
part of Russia, which influencescomponent delivery time, as well as
the low population density, making it
impossible to find all the necessary
specialist staff locally. Yet these
difficulties are not insurmountable if acomprehensive approach is adopted.
And, although INSYSTEMS still bringsin specialists ‘from the mainland’, thesituation is gradually changing. This
process is facilitated by cooperation
with the Far Eastern Federal
University and other universities
and specialized secondary colleges.
To provide customers with evenmore flexible technical solutions,
INSYSTEMS, jointly with the LegrandGroup, opened an industrial facility in

Photo by Dmitry Dubinsky

b u s i n e ss// Evgeny Virtser,
CEO at INSYSTEMS

the product to be used in a project,
it is necessary to work with design
institutes, with construction workers,
and with customers. A domestic
company can, evidently, do this betterand more easily than a foreign one”, heexplains.
“When the project was stillin the planning stages, we held
negotiations with several Western
manufacturers”, he recalls. “We were
trying to figure out which of them it
would be better to cooperate withand with which specific products

In the engineering industry, wincompanies that either have uniqueexpertise or, all other things being equal,
are close to the end customer, thatare pushing ahead in the engineering
industry
Vladivostok in spring 2017. The facility
currently produces uninterruptible
power supplies.
According to Evgeny Virtser, it is
the companies that either have uniqueexpertise or, all other things being
equal, are close to the end customer,that are pushing ahead in theengineering industry. In this context,
it is not just physical proximity, butalso the flexibility of solutions offeredthat matters. “Customers do not buy
equipment or materials blindly. For

we should start manufacturing.
After all, the range of engineering
equipment used is very wide and it
was critical not to make a mistakeat the very beginning.” The LegrandGroup is a long-standing partnerof INSYSTEMS, with whom wehave implemented several dozen
major projects in Russia. Legrandalready has experience of setting up
production of uninterruptible power
supplies at the company’s plant inUlyanovsk. In turn, INSYSTEMS

has knowledge of the Far Easternregion’s specific features and market
demand. These factors, supportedby the mutual interest of thepartners, were key to implementing
the project successfully in record
time. It took just 14 months from thefirst meeting and discussion of theplans to the launch of production.
The enterprise is a resident ofVladivostok Free Port, which opens
up huge opportunities for increasing
production capacity and expanding
the product range. However, Evgeny
Virtser admits that the project
would have been implemented
anyway – so attractive is the Far
Eastern region for the company:“We are watching the Svobodny
advanced special economic zone
with great interest. At the moment,
having a presence in this district of
the Amur Region is very important
to us. The Cosmodrome, the Amur
Gas Processing Plant, the Amur Gas
Chemical Complex, and related
infrastructure facilities are locatedthere. Incidentally, we've been
operating a ventilation systemcomponent manufacturing facility
in Svobodny for three years now.
At first, its purpose was to meet
our own needs during work at the
Cosmodrome, but it is still operating.
We stand ready to develop this site
to embrace other areas of activity.”
INSYSTEMS production facilities
are intended to satisfy not only thecompany’s internal needs, but also
those of other market participants.
At the launch stage of the joint
project with Legrand, a condition
that the enterprise’s products be soldthrough all sales channels available
to the partners was a key one.
“Today, there’s a 99% chance thatany consumer from Siberia or the
Far East who wants to buy a Legranduninterruptible power supply will
get a product made at our facility.
This opens up great opportunities
for our customers to implement
their own projects of varying levelsof complexity”, Evgeny Virtser says.
“Our key position is this: we areserious about the Russian Far Eastand we are here for the long haul. We
are interested in expanding our own
company, and in helping to develop
this harsh but beautiful land!”71

business“Expanding sales
markets offer
enormous potential
for business growth”
Promsvyazbank is one of the leading players
on the Russian market for supporting foreign
economic transactions. We talked to Deputy Headof Promsvyazbank’s Corporate Unit Alexander
Meshcheryakov about the real tools available
to support exporters and the competitivenessof domestic companies on global markets.

Alexander, exports amounted to
USD 109.9 billion in January–
April 2017 compared with USD
84.2 billion in the same periodof last year (according to Federal
Customs Service data). How doyou explain such an impressivechange given that Russian
exports have declined in value
terms over the last two years?
Several key factors are worth
noting here. First, the dramatic dropin prices for key Russian export
commodities – copper, aluminium,
steel, and oil – on global markets
has come to a halt. Second, more
and more companies from thenon-commodity sector are entering
the international market. This isclearly visible from the example ofour client base. Another important
point is that numerous effective
state support programmes to help
businesses enter foreign markets
have emerged.
What export support programmes
are being created at the statelevel? Can they be described as
effective?
Today, the Russian model for
supporting exports is working just72

as well as the Western European
model. In recent years, the RussianExport Center (REC) has proposed
numerous interesting programmesthat are reducing the cost ofentering new markets. These aren’t
just financial tools. For example,
the REC helps Russian exportersof technology products to obtaincertification of their equipment
abroad. There is also which
reimburses logistics costs for themachine-building industry.
Tell us about your clients in
the Russian Far East. Whatindustries do they represent andwhat are their interests in termsof entering foreign markets?
The Russian Far East’s geographicalproximity to countries in the
Asia-Pacific region offers broadprospects in terms of businessdevelopment and export potential.
As a rule, all companies areinterested in diversifying theirsales markets, given the current
macroeconomic environment,
as this provides greater businessstability and a higher degree ofcomfort in terms of planning
financial flows. Clients in this region
are no exception. The bank’s Far
Eastern clients represent suchsectors as fishing and agriculture.
A substantial proportion of clientsengage in foreign trade activities
due to the consistently highconsumer demand from Asia-Pacificcountries, and the well-developed
business environment andinfrastructure.
Far Eastern businesses are
currently focused on setting
up manufacturing with export
potential. What financial tools
do banks have that are capable ofsupporting this trend?
Products for exporters can bedivided into two parts. The first is

pre-export financing. This can beprovided both in the form of a loan
to enable the manufacture anddelivery of products abroad andas a guarantee limit – guarantees
for the return of an advance or the
execution of a contract, among
others. The second is the financing
of sales for enterprises that initiallymanufacture products and workwith deferred payment.
Here, exporters face two
nuances: the risk of non-payment
by customers and the diversionof working capital. In some cases,
partners should take advantage ofinternational factoring – financing
based on the assignment ofreceivables. We usually offer thistool for fairly small exports thatare measured in the hundreds ofthousands up to several million
dollars. In this case, the factoringbank takes over the foreign
buyer’s debt after the products
are delivered to the buyer. Having
purchased this debt, the banksubsequently undertakes all
interaction with the buyer (except
for product quality issues), and theexporter can continue operations
without diverting current assets.
In the case of a large andcomplex contract, then it makes
more sense to use a loan for thebuyer provided by a bank in the
country where the goods are
manufactured.
Is this advantageous for foreign
buyers given the high cost of
liabilities held with Russianbanks?
Prior to early 2017, this was a verysignificant restriction. But, as I
said above, the government has
taken several steps to improve
the situation for exporters. This
year, the Ministry of Economic
Development launched a
programme to subsidize interest
rates on loans from commercial

In my view, the biggest mistakeis not utilizing the opportunities
for growth that exporting provides

banks to foreign companies buying
products from our exporters. Under
this programme, an interest rateof up to 3% per annum in foreign
currency can be subsidized fora period of up to three years.
The main result is that financing
in European and Russian banks
has become almost the same forthese terms. This tool enhances
the competitiveness of Russian
products on global markets. The
programme has been launched forthree years, but if it proves to begenuinely successful, we hope that
it will be extended.
How do companies benefit
from starting to export? Whatmistakes do Russian companies
make when taking their firststeps onto the international
market?
In my view, the biggest mistake is not
utilizing the opportunities for growththat exporting provides. Above
all, exporting reduces a business’s
dependence on the domestic
market. When the domestic market
is growing steadily, nobody has any
problems. Recent events in theeconomy, however, have shownthat domestic demand is extremely
unstable. We have seen thatcompanies with excellent products
have rapidly lost revenue due todiminished demand on the domestic
market. We have a client for whomsales on other markets represented
about 20% of their business at thetime problems appeared in the
Russian economy. This company felt
itself to be in a very comfortable
position, even during the deepest
recession in 2014–2015.
On the other hand, many small
producers of agricultural products
have proven in recent years that
expanding sales markets offer
enormous potential for growth,
primarily due to the difference inprices on our market and on othermarkets. And this is not even for
an average business. Among ourclients in the agro-industrial sector,
there are exporters with revenue of
one billion or even several hundred
million roubles per year. But they
are already beginning to export.

73

business

Russia is among
the most
significant markets
for Hyundai
We spoke to Hyundai Motor CIS Managing Director
Alexey Kalitsev about the importance of Russia for
Hyundai Motor’s business, the future of the automotive
market, and the advantages of buying a car undera government-sponsored incentive programme.

How could South Korea’s
experience be applied in the
Russian Far East to improve
the investment climate andboost economic growth? What isholding back Korean investmentin the region?
Based on our company’s experience,
it’s clear that business is boomingin the Far East, which is considered
to be a region offering genuine
prospects. We were among thefirst to set up official dealerships
in Vladivostok, Blagoveshchensk,
and Yakutsk, and we are planningto maintain our growth. What’smore, we have special programmes
tailored specifically to the Russian
Far East. For instance, in July welaunched a special car recycling

74

programme in Vladivostok, Yakutsk,
Blagoveshchensk, and YuzhnoSakhalinsk. Any car owner can bring
their vehicle to an official Hyundai
dealership in the participating
cities in exchange for an additional
discount on one of our models.
Under the programme, dealers in theparticipating cities will offer RUB
100,000 towards a new Hyundai
Solaris, Hyundai Creta, or Hyundai
Elantra; RUB 120,000 towards a
Tucson; and RUB 150,000 towards a
Santa Fe or Grand Santa Fe.
Our total investment in Russia
as a whole, taking into account our
suppliers and a new factory, hasamounted to around USD 1.5 billion,
which makes us the biggest Korean
investor in the country.
How important is the Russian
market for Hyundai? How big ashare of your company’s businessdoes it represent?
Clearly, Russia is among the mostsignificant markets for Hyundai
Motor, ranking fifth globally by sales
volume. We have our own factoryin Russia and all of the necessary
infrastructure. This also illustrates
the unique character of this market.
Russia’s automotive market
has embarked on a gradual

recovery following several yearsof contraction. According to
AEB data, sales rose 6% in thefirst half of 2017, before surging
15% in June and July. Why are
Russians buying cars again? Is
this a temporary blip or a longterm trend?
The government incentive
programme has had an importantrole to play. The key factors
include declining interest rates
and an increase in the maximum
value of cars eligible for purchaseat a subsidized rate under thegovernment programme. This has
expanded the range of qualifying
models.
According to our estimates, up to
55% of retail car sales were financedin the second quarter of 2017, with
91% of loans being issued under thegovernment incentive programme.
We are expecting further growthin car financing under the new
government incentive programmes‘My First Car’ and ‘Our Family Car’, ascertain categories of customer now
have an excellent opportunity tofinance a car purchase on attractive
terms: they enjoy a subsidized
interest rate and the government
adds 10% to the down payment.
Speaking of trends, wehave noted a shift in customer

preferences towards products witha guaranteed residual value, whichmakes it possible to considerably
reduce monthly payments. Morethan 60% of all of Hyundai’s
financed sales are made under the
START programme.
In the middle of 2016, when theoutlook for Russia’s automotive
market was far from clear, youlaunched production of therelatively inexpensive Hyundai
Creta, on the one hand, and of
the Genesis premium saloon,on the other. What were yourexpectations in both cases?
Before launching the Hyundai
Creta, we had set ourselves thetask of expanding our SUV range.
We believe that this segment has
huge potential in Russia, a countryof crossovers and all-wheel drive
vehicles. I can say with confidence
that our calculations were right on
the mark here. SUVs account foralmost 50% of Hyundai’s sales in
Russia, while the Hyundai Creta
has now been the best-sellingcrossover on the Russian market formonths. For our part, we will strive
to keep this success story goingby constantly expanding the rangeof trims and options available forour best seller. The fully upgraded2018 Hyundai Creta has just hit
our showrooms. Even entry-levelversions now offer power steering,
the vehicle stability management
system, and powered and heatedwing mirrors as standard.
As far as the Genesis launch isconcerned, the premium segment
was struggling back then, as it isnow. You’d think it would makesense to stick with what we alreadyhave. Yet we see this as a challenge,
pure and simple. Among otherthings, our confidence stems fromthe fact that the Genesis brandoffers extremely competitive value
for money, in addition to superb
quality and a wide range of options.
What about Hyundai’s futureplans for Russia?
In terms of new models, theHyundai Sonata executive saloon
will return to the Russian market
this September, while it’s the end of
the line for the Hyundai i40, which
has been all but sold out by ourdealerships.
The Genesis brand is also
expecting an addition to its rangeof models: the G70 mid-size saloon
will be launched before the end of
the year. Like other Genesis models
on the Russian market, the G70 willfeature all-wheel drive. We believe

We are expecting further
growth in car financing
under the new government
incentive programmes ‘My First Car’and ‘Our Family Car’this is a very important feature anda sizeable advantage for us in thefight for a top spot in the premium
segment, which is known for its
conservative consumer tastes.
Since, as I mentioned earlier,
car loan products are largely driving
sales right now, we will be moving
towards improving and refreshing
our financing programmes. We
expect to increase the share of sales
financed through Hyundai Financefrom the current 40% to 60% by theend of this year.
We are also actively developing
the channels through which wecommunicate with our customers,
both existing and prospective.
We try to make sure that thesecommunications are useful tothem. That’s why, in July 2017, we
officially launched a unique loyalty
programme called Hyundai World,which makes car ownership moreenjoyable, significantly simplifies
car operation and maintenance, andallows customers to earn bonus
points for membership in the
programme, which can be exchanged
for valuable gifts. What’s more, you
don’t even have to own a car toqualify for membership. Just sign up
on the mir.hyundai.ru website andfill out a personal profile.

75

businessMajor
bidding
ALEXEy RYBNIKOV, President of
St. Petersburg International
Mercantile Exchange, talksof new commodity trading
instruments and how
to turn Russian Urals
into a benchmark oil.

76

Joint Stock Company
St. Petersburg International
Mercantile Exchange
was founded in 2008 as a
specialized platform for Russiancommodities trading, so it willcelebrate its tenth anniversary next
year. SPIMEX approaches this date
not only as the biggest Russiancommodity exchange, but also as themost dynamically developing one.
Today, its annual turnover exceeds
600 billion RUB in commodity
sections alone, with nearly 2 thousandcompanies taking part in the trading.
SPIMEX intends to maintain thegrowth dynamics it has demonstrated
throughout these years. To make thishappen, it continues to set the mostambitious goals for itself. They include
turning Russian export oil Urals intoa price standard, launching exchange
trades on new markets, developing
the Institute of Commodity Delivery
Operator, and more.
Today’s most developed andactive stock market is the petroleum
products market. In 2016, SPIMEX
sold 17.2 million tonnes of fuel. This is7.8% more than a year earlier. Amongthe traders are the biggest oil andtrading companies and end-users.
The Exchange sells up to 20% of
petroleum products supplied to thedomestic market, so one in five cars in
Russia is apparently fills up with fuelsold on SPIMEX.
The growth in liquidity of exchange
trades in petroleum products
has enabled both formation ofrepresentative exchange indices andlaunch of derivative instrument trades– deliverable futures for petrol anddiesel fuel – on their basis. Last year’s
most popular deal was the futurescontract for Petrol Regular 92 index.
SPIMEX is simultaneously
implementing two ambitious projects
on the small wholesale market for
petroleum products. One of them isdevelopment of petroleum productexchange trade from bulk plants ofRosneft and Nenets Oil Company,
located in different regions. 18 tradecompanies of Rosneft and 4 tradecompanies of Nenets Oil Company
are taking part in the project. As
a result, the volume of exchange
sales on small wholesale bases has
increased seven-fold.

// E very fifth car refueling in Russia is carried out by fuel sold at the St. Petersburg International Mercantile Exchange

In addition, a project for exchange
trades in small wholesale fuel lots
from the linear operating dispatcher
station of Transneft is in progress.
Transneft will act as the Commodity
Delivery Operator (CDO), keepcommodity accounts, and accountfor the transfer of proprietary
rights for the fuel in its storage.
Trading from the linear operating
dispatcher station enables quick saleand purchase of the fuel stored by
the CDO and its pumping via thepetroleum product main pipeline
system owned by Transneft. In thelong term, traders will be able toleverage great new opportunities forbusiness optimization processes bothin the field of logistics (through swap
transactions) and in use of various
financial instruments, e.g., REPO
transactions for short-term loans
secured by fuel stored by the CDO.
An even bigger project is being
implemented by SPIMEX on the oilmarket. In November 2016, trading

was launched in deliverable futures
for Russian export oil Urals on an
FOB Primorsk basis. The project is
intended to lay the foundations fora new pricing mechanism for theRussian export oil through direct
market pricing, and it was supported
both by regulators – the Ministry ofEnergy, the Federal Antimonopoly
Service, the Bank of Russia – and byoil companies. Major international
traders also demonstrated theirinterest in the project. In the firsthalf of 2017, 3.2 thousand exchange
agreements amounting to 3.2 million
barrels of oil to a sum of 160.8
million USD were concluded on thedeliverable futures contract tradesfor Urals. Today, the Urals price istied to the cost of the North Sea oil
Brent. The launch of Urals futures
trading with the growth of tradeliquidity in the coming years will
make Urals a benchmark oil, with theprice formed on the Russian stock
exchange.

Our ambition is to turn the
Russian export oil brand Urals intoa price standard

SPIMEX demonstrates notableachievements on the crude oil market
as well. Over the year, more than 2.5
million tonnes of this commodity
category have been sold on the
Exchange’s trading platforms. Most of
the trades took place during tender
procedures on the Torg-i electronic
trading platform.
SPIMEX is proceeding with active
development of the gas market, notonly by increasing sales volumes, butalso by offering its customers newcontracts and services. Over the past
year, the volume of the Exchange’s
trades in gas exceeded 16 billion
cubic metres. Most of it was sold withdelivery “for next month”. With thetrade liquidity growth, the Exchange
launched a contract with delivery “fora day ahead”. Additionally, customers
got an opportunity to purchase fuelwith delivery on a specific day. By
the end of 2017, it is also planned tolaunch exchange trading in gas fordelivery on the second to seventhmonth, actually offering market
participants an exchange alternative
to long-term contracts.
In accordance with instructions
from Russian President Vladimir Putin,
SPIMEX is successfully developing
exchange trade in timber, which is77

business// T he volume of timber sales in the section "Timber and building materials", as well as on the trading platform "Torg-i", over the past year grewby 7.5 times

especially important for developmentof the Far Eastern region, famous
for its rich wood resources. Overthe past year, the volume of woodtrade in the section “Timber andConstruction Materials” and on the
Torg-i trading platform has grownby 7.5-fold, reaching 638 thousand
cubic metres. The trading volume oftimber in the exchange and over-thecounter segment in RUB in the firsthalf of 2017 thus reached around 270
million RUB and in physical terms –368.6 thousand cubic metres, whichis 31% more compared year-on-year.
By the end of July 2017, the Exchange
had already sold 438 thousand cubic
metres, and by the end of the current
year the total volume of trade intimber is expected to exceed 1 million
cubic metres.
SPIMEX is continuing its work to
introduce new products to exchange
trades. By the end of this year, it isplanned to start exchange trade inmineral fertilizers. Test trades will beheld this December, while the market
will begin its full-scale operation in
2018. The Exchange plans to launch
trading in cement and the possibilityof starting exchange trades in powerstation coal is under consideration.
One of the areas of SPIMEX
activity is organization of
procurement procedures inaccordance with Federal Law
223‑FS “On Procurement of Goods,
Works and Services by Certain

An exchange is not only
an infrastructure,
it is also a tool providing transparent
market pricing

78

Legal Entities”. Last year, TEK-Torg,a subsidiary structure of SPIMEX,
increased trading volume from 637
billion to 1.1 trillion RUB, ranking firstamong electronic trading platforms in
trading volume.
Besides infrastructure andtrades organizing services, SPIMEX
offers market participants othercommercial products, like pricing
information. An exchange is not only
an infrastructure, it is also a tool
providing transparent market pricing
and forming representative indicatorsof the market price. Information
about the market prices of goods
on a certain basis is a commodity initself in demand. So far, SPIMEX is theleader in providing pricing informationon the Russian oil and petroleum
products market. SPIMEX partners
in distributing pricing information
are such agencies as Bloomberg,
Reuters, and Argus. SPIMEX pricing
information, in accordance with thecurrent legislation, is also used by theregulators for antimonopoly and tax
control.

79

b u s i n e ss

H

Three main things:
how entrepreneurs
from Vladivostok
set up a national chain

Kirill Sleptsov,
Journalist

80

Business in Russia traditionallydevelops from west to east:
national companies from theEuropean part of the country
open representative offices
beyond the Urals and then expand
to the Far East. The company
DNS, which is headquartered in
Vladivostok, is bucking this trend,
and is now the leading home
appliance and electronics retailchain in the country.

ow did a small computer
store that opened 20
years ago in Vladivostok
transform into a vastnational chain stretching all theway to Kaliningrad? Analytics firm
Infoline estimated the revenue of
DNS at RUB 135 billion in 2016.
In the non-food retail sector, only
M.Video saw higher earnings, with
RUB 161.7 billion.
“The secret to our success is that
we worked”, one of the founders of
DNS, Konstantin Bogdanenko, says
with a smile. “It's a joke, but not ajoke”, he explains. “DNS is not an
investment business. We do nothave a single person whose onlyinterest in the business is money.
All of our shareholders work within
the company. And for them, the goal
was to make DNS the largest in the
country.”
The company has ten founders,and all but one of them have beenworking together for almost aquarter of a century, since the early
1990s. They started out designingcomputer networks and assembling
computers for companies in
Vladivostok.
Oddly enough, it was the crisisof 1998 that compelled them toopen their first store, when all
their corporate clients suddenly
disappeared. Ordinary people, on
the other hand, still wanted tobuy cheap computers. The groupof friends, all programmers, thendecided to go back to school tolearn about retail, rented premises,
and opened a small store underthe banner DNS, the abbreviation
for the English ‘digital network
systems’.
They assembled computers andcomputer components – which,incidentally, they purchased notfrom China, but from Russian
distributors in Moscow – right there
in their store. That proved to be
more profitable until the company
reached such a scale that it was able
to independently purchase large
quantities of goods abroad. But DNS
did not grow quickly. The market
was huge and undeveloped, so thisgroup of friends soon turned theirthoughts to opening new stores
outside their native Vladivostok.

Smart retailing is based on threemain things: having storesin convenient locations, a sufficientquantity of goods available in stores,
and good prices
As they entered new cities, DNS
employed colourful, unconventional
promotional campaigns. For
example, a bright orange armoured
reconnaissance vehicle bearing theinscription ‘cybertank’ appearedon the streets of Siberian cities in
2009–2010. The armoured vehicle
was part of a show called ‘Kill yourdamn monitor’: to the public’s
delight, it crushed old computer
monitors, and their owners received
a discount on new ones at DNS.
There were also night-time sales
offering eye-poppingly low prices,which resulted in actual stormingof stores and immediately caught
the attention of the local press andtelevision channels.
Such marketing activities ended
in 2012, when the DNS chain spreadthroughout the country, including
Moscow, where the other national
retailers, M.Video and Eldorado,were traditionally strong. “At thestage when we were expanding
and introducing the brand to themarket, we used viral marketing withactive communities disseminating
information about us. Now themain objective is to make a device’s
journey from the conveyor belt
to the consumer’s apartment as
short as possible”, says Konstantin
Bogdanenko. He believes that smart
retailing is based on three mainthings: having stores in convenient
locations, a sufficient quantity ofgoods available in stores, and goodprices.
This is accomplished byincreasing the chain’s density andimproving its efficiency. Today,
DNS has around 1,300 stores
stretching from Vladivostok to
Kaliningrad, with a range of goods
exceeding 100,000 items. They are
all managed from ten independent
regional offices, each of which has

its own distribution centre. Regional
managers have extensive authority.
This allows DNS, despite its national
scale, to remain a dynamic company
able to react very quickly to market
changes. At the same time, given
the size of the chain, vendors areprepared to offer competitive prices
in order to get their products on its
shelves.
DNS is also a manufacturer itself,
producing hardware under the DEXP
brand. The company’s assembly
facilities are located in Novosibirsk
and the town of Staraya Kupavna
near Moscow. Some products arecustom made at factories in China.
DEXP-label equipment is soldonly in DNS stores and currently
accounts for about 20% of thecompany’s revenue.
Another significant line ofbusiness is online sales. Several
years ago, the company evenbegan developing a parallel chainof electronic discounters called
TechnoPoint. These are large
warehouse stores, where you canpick up orders previously placed
online or via electronic terminals.
After testing out the format, thecompany’s executives later decided
to merge the businesses, andTechnoPoint outlets are now being
opened under the DNS umbrella
brand.
Meanwhile, the contributionof online sales to the retailer’s
revenue is estimated at tens ofpercent, and this share continues
to grow. “It’s a convenient way toorder goods. People can choose
from a wide range of productsthat they are interested in and be
sure that they will be available inthe store”, explains Bogdanenko.
“This is why DNS exists – tomake hardware accessible andaffordable.”81

business

ABOVE THE MARKET:
how the Vladivostok
airport will develop
Vladivostok International Airport ranked as oneof the fastest growing in Siberia and the Russian Far
East during the first half of this year. Its new owners,
a consortium of Basic Element, the Russian Direct
Investment Fund, and Singapore-based operator Changi,
are planning to triple passenger traffic overthe next few years.

T

he Vladivostok International
Airport acquisition deal
was announced in February
2017. A consortium ofinvestors comprising Oleg Deripaska’s
Basic Element, the Russian Direct
Investment Fund (RDIF), and leading
global airport operator Changi
Airports International (CAI) acquired
52.16% of Vladivostok International
Airport and 100% of Terminal

82

Vladivostok from its previous owner,
Sheremetyevo.
The consortium has secured
a very attractive asset, at least
compared to, say, Khabarovsk, wherea modern terminal is yet to be built(construction is scheduled for 2017–2025). At Vladivostok, on the other
hand, a new 47,500-square-metre air
terminal complex has already been
completed, with an annual capacitymonths of the year, an 18% increaseover the same period in 2016. In themedium term, the air gateway to
Vladivostok expects to handle a totalof 5 million passengers annually. To
achieve that, growth in internationaltraffic will need to reach double digits.
“We are planning to build up the
airport’s traffic by expanding its route
network and increasing tourist flows,
including from the Asia-Pacific region”,
Managing Director for Aviation at Basic
Element Alexey Vasilchenko said. “We
are counting on Changi’s expertise andcapabilities in Asia and on our own
experience of operating airports in
Krasnodar Territory.”
Changi is the operator of the
airport known under the same name in
Singapore, one of Asia’s largest airline
hubs. A poll of tourists carried out by
UK consultancy Skytrax ranked it as
the world’s best airport for the fourth
time in 2016 according to a poll of
tourists. Experience with Krasnodar
Territory airports has been acquired
through the Russian–Singapore joint
venture BasEl Aero, established in2012 by Basic Element, Changi, andSberbank to manage airports in region.
These airports saw increases inpassenger traffic of 14% in 2015–2016, an order of magnitude higher
than average performance in theindustry. According to the Federal
Air Transport Agency, the increase in
the number of passengers served by
Russian airports between 2014 and2016 was just 1.4%, taking the total
to 160 million people. Sochi Airport,
however, delivered growth of almost
30%, buoyed by a favourable politicaland economic climate. It exceeded
the psychological barrier of 5 million
passengers a year for the first time

In the medium term,
the air gateway to Vladivostok
expects to handle a total of 5 million
passengers annuallyin its history, thus becoming one of
Russia’s top five airports.
Besides sharing the same owners,
the airports in Vladivostok and Sochi
also both operate under the ‘open
skies’ regime, meaning that there areno limitations on international travelin terms of the number of authorized
airlines or flights. In other words, they
are open to any international airline
no matter what intergovernmental airtransportation agreements its homecountry may have with Russia.
State-sponsored Far Eastdevelopment programmes, such as
giving Vladivostok the status of a freeport, could also give a boost to theRussian–Singaporean consortium.
For instance, international visitors
planning to spend up to eight daysin the city now only need an e-visa,
which is much easier to obtain thana regular one – all you need to do isapply through a dedicated website.
Besides, tax, customs, and investment
incentives are turning Vladivostok
into an attractive place to do business.
More than 300 companies are now
residents of Vladivostok Free Port.
All of this is naturally encouraging
air travel. Yet achieving the goal of 5
million passengers will require serious
effort from the airport’s owners andits management.
“The infrastructure at Vladivostok
Airport will be streamlined overthe next couple of years”, Alexey
Vasilchenko promised. “We willconsiderably expand the technology
and retail opportunities available
to our customers: retail spaces will
expand, and new shops and service
points will be added. The airport will
join the Airports Council International(ACI) and will be using international
standards to assess passenger service
quality.”
Vladivostok Airport served
almost 250,000 travellers in July
2017, 15% more than in July last year.
International flights posted thestrongest growth, rising 34% yearon-year to 82,000 passengers. Many
more people have been flying from
Vladivostok to Seoul, Harbin, Tokyo,
Busan, Sanya, Cam Ranh, Changchun,and Osaka. In late July 2017, China
Southern Airlines inaugurated
flights to a new destination, China’s
Shenyang, while Tianjin Airlines
resumed twice weekly flights between
Vladivostok and Tianjin. Thus,
compared with last year, passenger
traffic to Japan rose by more than
90%, to South-East Asia by 66%, toSouth Korea by 51%, and to China
by 9%. Intraregional flights within
Primorsky Territory also increased,with passenger traffic more thandoubling in July 2017. If sustained, thispace of growth will bring the 5 million
mark within reach.

of up to 3.5 million passengers. To
put this into perspective, the airport
served just 1.8 million passengers
in 2016. That’s why the first thing
the new owners did was to focus on
increasing passenger traffic.
Projections suggest that traffic
will rise to 2 million passengers in
2017, a feasible target given that morethan 1.17 million had already used the
airport’s services during the first seven

83

The futureРубрика pубрика

86

THE
FOUNDATION
of an innovative
economy94

BLOCKCHAIN cuts costs
considerably
SBERBANK SENIOR VICE-PRESIDENT
AND HEAD OF SBERBANK CIB IGOR BULANTSEVANALYSES THE ADVANTAGES AND LIMITATIONSOF BREAKTHROUGH TECHNOLOGIESAND TOOLSFEDERAL SERVICE FORINTELLECTUAL PROPERTYDIRECTOR GRIGORY IVLIYEVSPEAKS ABOUT THE STEPSRUSSIA NEEDS TO TAKE
TO ACHIEVE TECHNOLOGICALLEADERSHIP90

QUANTUMprotection
NIELS BOHR INSTITUTE (DENMARK)PROFESSOR EUGENE POLZIK SPEAKSABOUT WHICH TECHNOLOGIESWILL HELP ENSURE RELIABLE DATAPROTECTION IN THE COMING ERA
OF QUANTUM COMPUTERS'98

DIGITALIZATION
as an opportunity
HEAD OF THE ASI PROJECT CENTRE
FOR THE INTEGRATION
OF THE NTI AND DIGITALECONOMY PROGRAMME RUSLAN
KARMANNY TALKS ABOUT HOWDIGITALIZATION IS BECOMINGA SYNONYM FOR AN EFFECTIVEECONOMY“Blockchain 96
offers businesses
and governments
a convenientenvironment
for communication
by cutting out
intermediaries”
UNIVERSA PLATFORM FOUNDERAND TECHNOLOGY INVESTORALEXANDER BORODICH SPEAKSABOUT WHAT POTENTIAL BLOCKCHAINTECHNOLOGY offers TODAYFutureThe foundationof an innovative
economyThe explosive growthof Asian economies
is a result of theirattention to the issuesof intellectual property
and commercializing
scientific inventions.
What measures should
Russia take to achieve
technological leadership?

86

Grigory Ivliyev,
Head of the Federal Service
for Intellectual Property(Rospatent)R

ussia’s focus on innovative
development is anabsolutely justified step inthe context of the global
trend towards the expansion of theknowledge economy. Industrial
capacity and access to raw materials
are no longer the key factors; rather, it
is intangible assets which are the main
sources of profit. This primarily means
technologies, trademarks, softwaredevelopments, and services. Each ofthese types of asset needs competent
legal protection, which not only allows
companies to protect their designs
and stay ahead of the competition, butalso enables the country as a whole tobecome a technology leader. This is
the task that has been set by President
Vladimir Putin.
Most of the world’s advanced
economies are implementing theirown programmes and strategies in thefield of intellectual property. Suchexperience exists in China, Germany,
the United States, and a number ofother countries. When China adopted
this kind of strategy, it achieved tangible
and visible results within the first year
– a boost in the patent activity of the
population which continues today.
China literally broke into the elite ranks
of innovator countries. According to
the Xinhua News Agency, based on
information from the State Intellectual
Property Office of the People’s
Republic of China, in the first half of2017 alone, China received 565,000
invention patent applications, a 6.1%
increase compared with the same
period last year. The country issued
209,000 patents, with 160,000 granted
to Chinese inventors. Japan updates its
intellectual property strategy annually,
and the country’s Prime Minister isactively involved.
The World Intellectual Property
Organization (WIPO) explicitly
recommends adopting similar
programmes to encourage invention
which, in turn, leads to positivechanges in the economy.

//	
According to WIPO data for 2015, Russia held the 6th place in the world in terms of the number of patents
in the field of 3D printing

Despite respectable indicatorsin this area, patent activity in Russia
has been stagnant for a number ofyears. For example, according to
WIPO data for 2015, the country
was sixth in the world in termsof the number of patents in thefield of 3D printing, thirteenth innanotechnologies, and fourteenth in
the field of robotics. At the same time,
the number of applications and thenumber of patents issued remain at
approximately the same level: in 2014,
41,600 applications were submitted
and 33,950 patents were granted; in2015, these figures were 45,517 and
34,706, respectively, and in 2016 –
41,587 and 33,536, respectively.
Trademarks are treated quite
differently by Russian entrepreneurs,
as they understand that they are
critical for business development: lastyear, the number of such applications
increased by 21%. But none of thesefigures can be considered exactly
impressive, either at the Russianor international levels. This wasnoted even by Choi Donggyou,

then Commissioner of the KoreanIntellectual Property Office (KIPO),
an honorary guest at Rospatent’s
international conference. He believes
that Russia’s place in the global
innovation rankings and the country’s
statistical indicators, with which
foreign colleagues are familiar, do
not reflect the enormous scientific,
research, and technological potentialof the nation. This means that, indevising, inventing, and exploring,Russia does not convert the resultsof its intellectual activity into patents
or technologies, which are the basisof an innovative economy. Russia
is depriving itself not only of legal
protection for the products of its
intellectual activity, but also of
the opportunity to earn money bylicensing certain technologies on
domestic and foreign markets.
In May this year, Reuters publisheda ranking of the world’s top 100 mostinnovative universities, and there
was not a single Russian university
or research centre on the list. At thesame time, Russia, again according

In devising, inventing,and exploring, Russia does notconvert the results of its intellectual
activity into patents or technologies

to Reuters, is one of the top fiveeconomies in Europe. That is, had
Russian universities used the potentialof the domestic market alone, itwould have secured them a placein the world ranking of innovative
universities. This is a demonstrative
indicator of the fact that, when
it engages in research, science inRussia limits itself exclusively to
publication or formal reporting.
The results obtained are not passed
on to business for subsequentcommercialization. Yet this could
significantly increase opportunities
for funding science itself. A person’s
intellectual capital is not transferred
into the capital of an organization.
Russia itself creates the risk ofscientists becoming interested inmoving abroad, where the results of
their research will be used in a waythat takes account of the researcher’s
financial interests. This makes
technology transfer from Russia‘cheaper’.
At the St. Petersburg International
Economic Forum section organizedby the National Association forTechnology Transfer, one of the
speakers said that “there wereno patents” in the USSR. Yet, in
the Soviet Union, great attention
was paid to patenting, licensingof technologies, and trainingof specialists in the field ofintellectual property. According87F u t ure

to the Russian State Academy ofIntellectual Property (RGAIS),
which is subordinate to Rospatent,
during the greatest boom in scienceand the technology industry inthe country (1960–1980), about
15,000 professionals completed
their qualifications or underwent
advanced training in the field ofintellectual property each year. In
2016, only 198 specialists and 28
postgraduate students graduatedfrom the Academy. Additional
education, advanced training, andprofessional re-training programmes
were taken by 1,586 people, which issignificantly less than in Soviet times.
This is very alarming considering
the cardinal change in the structureof the world economy and fiercer
global competition in high-techindustries from bioengineering tonanotechnology.
China, with the outstanding
indicators noted above, in many
respects copied the experience of theSoviet Central Institute for Advanced
Training of Executives and Specialists
in the Field of Patent Work (CPIK).
Annually, this CPIK analogue provides
education to about 30,000 people,
half of them civil servants and theother half – members of the business
community.
When visiting Russia,
representatives of China’s patentoffices note that basic knowledgeof patent law, legal protection for
intellectual products, and intellectual
property management are acquired
while still at school. This is not justat specialized scientific and technical//	
According to Reuters, the best innovation university in Europe is the Universityof Leuven (Belgium). Russia in the top 100 this year did not hit

88

lyceums, but in general education
schools too. In Russia, the fact thata fourteen-year-old schoolgirl from
Yakutia obtained a patent was a real
sensation. So intellectual property
education should be a fundamental
part of a strategy aimed at achieving
future results.
Another challenging point isthat, in Russia today, competencein the field of intellectual property
is spread across different ministries
and departments, and, with the
exception of Rospatent, none of theminclude intellectual property issues
among their priorities. This prevents
the authorities from developing a
coherent policy, so they cannot
react promptly to needs arising in
the field of intellectual property.
The authorities and expert andprofessional community have not yet
managed to find common ground in
defining the purposes and guidelines
for the sector’s development on
which efforts might be focused. Thevery process of discussing the strategy
will enable Russia to overcome thesegaps by presenting the various views
that could serve as the basis for a
unified approach to the framework ofthis necessary document.
The outcome of the intellectual
property strategy should be thecreation of a system of local acts andservices in scientific or educationalorganizations that will encourage thecommercialization of intellectual
property. This process should betransparent and beneficial for the
researcher, allowing the inventor to
engage more actively in science. As aresult, high-tech domestic productswith high value-added will emerge on
the markets.
At the Rospatent international
conference mentioned above,
Viacheslav Pershukov, Deputy
Director General for Innovation
Management at ROSATOM, statedthat no negotiations with foreign
governments and no foreign tenders
were conducted today without
discussion of intellectual property
issues. During the 60-year life cycleof one unit, ROSATOM will receive
significant royalties for use of
intellectual property – benefits they
did not even think of as a monopoly
holder on the domestic market.

//	
Kudankulam NPP in India, built by Rosatom. During the life cycle, which is 60 years, the company will receive
royalties for the use of intellectual property

That is why the Russian Export
Center, working with Rospatent, hasdeveloped programmes to support
foreign patenting, which provide
full compensation of patenting
expenses and reimburse 70% of thecosts of preparing documents forthe appropriate procedure. These
are important but still very specificmeasures. Systemic, large-scale,planned transformations withina framework to be defined in thestrategy are needed to achieve
cardinal change.
Along with supporting
technological entrepreneurship,
Russia should not ignore such areas
as copyright and neighbouring rights,
as well as means of individualization,such as trademarks, appellations oforigin, and geographical indications.
The use of items protected bycopyright and neighbouring rights
makes a significant contribution
to gross national product, whilemeans of individualization are an
important tool in market relations,a major component of the valueadded of any product or service. In
this respect, it is worth recalling theregularly published rankings of theworld’s largest brands. Yet even ona small scale, the value of one’s own
trademark, the basis for the company’s

reputation, the emotional component,
and consumers’ perception ofquality, can be a business’s main
intangible asset, more important than
production lines, storage facilities, or
raw material reserves.
When balancing existing patents,
the overwhelming majority ofpatent holders that are legal entities
assess them in terms of fees paid toregister an invention, utility model,
or industrial design. They do notconsider the costs incurred during
the invention’s development, thecost of the resources necessary for
R&D, or other means directly or
indirectly invested in the process that
results in a patent being obtained.
Owners are simply not aware thatthe development process can also
be included in the value, so they
underestimate the value of assets.
This has a negative effect on thecompany’s valuation by banks andmakes it an underdog in terms ofcapitalization. This is especially
noticeable in comparison with
Western companies.
The intellectual property strategy
should be a document that sets out
priority measures to launch active
use of financial instruments in thefield of intellectual property. Thesemight include development of lending

where intangible assets are used as
security, consideration of intangible
assets in the capitalization ofcompanies, and an insurance market
for intellectual property.
The strategy should provide
for the development of advanced
tools for deep patent analysis andevaluation of R&D performance.
Today, only the Project Office of
the Federal Institute of Industrial
Property (FIPS) can offer such a vital
toolkit. And this is another huge gap
to be bridged, since, otherwise, a large
number of decisions concerning the
choice of research areas are taken
blindly. Such projects often require
multi-million-dollar investments. As
a result, domestic developers haveto be content with playing catch-up
or concentrate resources in areas
with extremely low productivity andnarrow prospects.
In view of all this, it should be
noted that the task set by the Russian
President of shifting the country’s
economy from the production and
raw materials model onto the pathof innovative development is notunattainable. But the solution is
directly related to development in
the field of intellectual property –the foundation of any innovative
economy.

89

futureT

Quantum protection
The quantum computer, which is projected to emerge
in three to five years, is expected to make current
traditional information encryption methods vulnerable.
Future technologies will be required to ensure absolutedata reliability and these solutions are being developed
now, including quantum cryptography and quantum
teleportation.

90

he impact of technologicaladvancement on theeconomy is becoming
increasingly profound by
the year. Quantum technologies
are one of the most promisingareas, especially for the promotionof medicine and information
technologies.
What is the main difference
between quantum technologies
and traditional conventional
technologies? It lies in the ability to
manage intricate quantum systems
at the level of separate atoms,
ions or photons. It appears thatdevelopment of a new generationof computing devices, information
protection products and highaccuracy sensors calls for solutions
to control microscopic objects.
The operation of conventional
computers is based on quantummechanical principles that do
not require control of individual
quantum systems. Further progressof computing technologies
is associated primarily withminiaturization of elementary
structural elements of computers– transistors. If classical computers
keep developing according to
Moore’s law, the dimensions ofa transistor will be comparable
to those of an atom. In such a
computer, elementary elements will
have to be described using quantum
mechanics, rather than classicalphysics. It turns out that, owing toquantum physics phenomena, such a
computer is extremely effective, forinstance, in addressing prime factor
decomposition problems.
The interest in this mathematicalproblem can be attributed to thefact that a huge proportion ofconfidential information transmitted
via open channels is encrypted using
the so-called encryption algorithmwith a public key. For example, thisis the way data is encrypted when
you buy something online using
your credit card or use a popularmessenger. The reliability of thisencryption method is based on
the assumption that prime factor
decomposition of very big numbers
is a problem beyond the capacityof contemporary computers. Yet aquantum processor will deal with

Quantum
cryptography
There are two approaches tocreating attack-proof information
protection products with the helpof quantum computers: quantum
cryptography and post-quantum
cryptography. The former enables
two communicating parties to geta private key for encryption, its
security guaranteed by physicallaws. This technology has alreadybeen commercialized.
Post-quantum cryptographyenvisages transfer to cryptographic
algorithms, in which neitherclassical, nor quantum effective
algorithms are known to address theinverse problem. Contenders forpost-quantum schemes include suchmethods as hash function-basedor error correction code-based
cryptography, etc. Even so, as oftoday, there are no post-quantum
cryptography standards and indepth mathematical investigationof existing solutions is required,along with implementation. The only
way to ensure long-term security
in the future is, therefore, quantum
cryptography, because its reliability
is based on fundamental naturallaws, rather than the complexityof some mathematical problem.

Alexei Fedorov,

Russian Quantum Centre

Ruslan Yunusov,
Russian Quantum Centre// According to Moore's law, by 2020, the size of transistors will equal the atomic ones91

f utu r eComprehensive development of
this technology combining appliedresearch and fundamental studies isof strategic importance for ensuring
protection of the interests ofbusiness, society and the state.
A fundamental differenceof quantum cryptography fromconventional communications isthat information is transmitted
via elementary light particles –photons. Its protection is ensured
by the fact that even the mostsensitive tool will inevitably change
the state of a photon. Consequently,
if someone tries to “eavesdrop”
on a data flow transmitted via
a quantum channel, they will
inevitably distort the message andthus be compromised. Multiple
repetitions of the photon creation
procedure and measurement of
their quantum states will enable
parties involved in communications
to have a private key for encryption.
In practice, encryption can take theform of aone-time pad (OTP) andexchange of keys will be a lot more
frequent than in existing systems,//	The launch of the Chinese satellite QUESS

92

so maximum protection will beensured.
Various research teams inleading universities, specialized
scientific centres and commercial
companies are currently working on
developing quantum cryptography
solutions. Foreign companies –including ID Quantique(Switzerland), SeQureNet(France), and Austrian Instituteof Technology (Austria) – arebusy seeking to commercialize
quantum cryptography. Use ofquantum cryptography gainedwide popularity during the federal
elections in Switzerland and2010 FIFA World Cup in South
Africa.
In Russia, quantum cryptography
research is conducted by the
Russian Quantum Centre, ITMO
University and Moscow State
University. Instrumental for thetransition by a technology froma laboratory to real life is use of
the existing infrastructure forquantum key distribution – fibreoptic communication lines in big

cities. A team of researchers fromthe Russian Quantum Centre
conducted such an experiment in
May 2016. In 2017, an experimental
quantum communications network
was developed to demonstrate
the operation of a quantumsecured blockchain – a new
blockchain architecture that is
resistant to attacks by quantum
computers.
Against the backdrop of thegeneral interest of the state andcommercial companies in quantum
technologies, quantum cryptography
should be emphasized, because it isa current technology. Its potential
can be exploited to the full increating quantum communications
networks. In some cities, such as
Geneva, Vienna, Tokyo, Calgary,
Boston, and Beijing, networks of thiskind have already been established.
In addition to intracity networks,
infrastructure (trunk) quantum
networks are being established,
for instance, between Beijing andShanghai in China.
As of today, quantum
cryptography is not a commonplacephenomenon. The main deterrents
are the rate of generation ofquantum keys and the distance. In
major cities, quantum cryptography
is being implemented using
fibre lines. A typical length of
a communication line is 10 to
80 kilometres.
Quantum cryptography canalso be implemented on an Earth–satellite basis in open space. This
scheme will make it possible forquantum cryptography to evolve
into a global information security
system. Chinese researchers are
conducting a series of quantum
cryptography experiments:
they have launched the QUESS
satellite and shared the first QKD
results. A Japanese research teamhas used a micro-satellite to study
QKD.
An alternative way to overcome
the limitation of quantum
cryptography is quantum repeaters.
The task is a scientific challenge
as the technology is based on
the phenomenon of quantum
teleportation.

it effortlessly. This fact is a serious
threat to information security.
There is no full-scale operational
quantum computer as of today
but the forecasts are increasingly
optimistic. Specialists believe aquantum computer will emerge
in three to five years, so it is time
we thought about the safety ofdata storage in the eraof quantum
devices.
Quantum teleportation
One of the best-known tricksof quantum physics is quantum
teleportation, which allows
information about a quantum
system to be transmitted without
recording it anywhere using classicalconventional means.
In order to implement quantum
teleportation, so-called “entangled”
quantum states are used. The
scenario is as follows: imagine we
need to teleport, say, one atom of a
substance. This atom has a certain
spin direction (intrinsic particle
momentum), which we do not know.
The objective is to transmit the spin
direction, say, to Mars. Two more
atoms are required for this: one isplaced next to the source atom, andthe other one is sent to Mars. The
two must be created in an entangledstate. This means that the directionof their respective spins, albeit
unknown to us, will be opposite,whatever the direction of the source
atom – this is the geometric senseof entangled states in an atom.
After that, special measurements
are conducted on one of theseentangled spins and the source spin,
and the result of the measurement
can be transmitted from Earthto Mars by phone or any otherclassic means of communication.
Depending on the measurement
result, the spin of the dispatchedatom is modified. Consequently, thequantum state of the source atom is
teleported to Mars.
Obviously, quantum
teleportation is not science
fiction but a real microcosm
process. Successful experiments
are being conducted in laboratories
using various physical systems,
such as photons and assemblies
of atoms.

The problem that remains
unresolved is that transmission
processes with the help of quantum
teleportation, which have been
conducted experimentally are,unfortunately, imperfect. They appear
to be more effective than any classicalmethod in the transmission of thespin direction, but what we refer to
as “transmission performance” is not
100% perfect. It remains between
80% and 90% in most experiments.
It seems a fine result, but imagine:
if you need to teleport the state of
ten atoms, and a 10% error is madein each, there will be nothing goodleft. Further research is needed topromote quantum teleportation.
In addition to improvementof transmission performance, anincrease in the distance over whichquantum states can be teleported
is another important task. From thisperspective, of major interest are
the recent experiments by a Chinese
team to distribute entangled lightparticles to a distance of more than
1,200 kilometres with the help of
the QUESS satellite project – anorder of magnitude longer thanin previous experiments. Suchexperiments uncover exciting
possibilities for implementing
quantum teleportation and quantum
cryptography on a global scale.
Why is China so keen on quantum
teleportation? Development of
this technology is required forsome advanced applications, suchas increasing the distance of key
generation in quantum cryptography,
which is its main limiting factor. To
this end, it is necessary to create
quantum repeaters based on
quantum teleportation. Transmissionof quantum keys to 1,000 kilometres
can thus be achieved by applying
100-kilometreintermediate links,
which will store transmitted quantum

Eugene Polzik,

Niels Bohr Institute, Universityof Copenhagen, Copenhagen,Denmarkstates and teleport them further.
Promotion of quantum teleportationand quantum repeater solutions will
create a scalable information security
system to neutralize the imminent
threat posed by the advent of thequantum computer.
Active quantum cryptography
research is underway in Russia andquantum teleportation experiments
are being conducted. Specifically, ateam of researchers from the Russian
Quantum Centre have recently
demonstrated hybrid teleportation ofquantum states that makes use of thetransfer of states with various degrees
of freedom. Experiments are also
underway to create basic technologies
of quantum repeaters. It is safe
to say that, in terms of protection
against quantum computers,
Russia is currently involved in
the quantum technology race.
Nevertheless, to ensure further
progress, the state and businessshould pay close attention toquantum technologies andcomprehensive support programmes
for the most advanced technologies
are called for.

The Russian Quantum Centre
have recently demonstrated hybrid
teleportation of quantum statesthat makes use of the transfer of stateswith various degrees of freedom
93

futureBlockchain
cuts costs
considerably
The world is being swept by acryptocurrency boom triggeredby blockchain technology. Yet
the blockchain potential is muchgreater. Igor Bulantsev, Sberbank
Senior Vice-President and headof Sberbank CIB, analyses theadvantages and limitations ofthese breakthrough technologies
and tools.

Blockchain
and the cryptoeconomy
Let us start by agreeing what the terms“blockchain” and “cryptoeconomy”
mean. A blockchain is a distributed ledge
technology that ensures the fulfilmentof obligations by various parties. The
blockchain technology potential
goes far beyond financial tools andcryptoeconomy. In turn, cryptoassets area new class of digital assets, values andproperty based on the blockchain.
The blockchain's advantage is thepossibility of transferring information orvalues without intermediaries, i.e., directly
between the parties. This is what makes
the technology revolutionary: it liberates
the world from intermediaries andconnects “digital economy” participants
directly with one another. Moreover,the principle of distributed information
storage and verification ensures trust
between the parties. At the same time,
blockchain greatly reduces the costs ofverifying operations, as well as the time
for their performance.
Cryptocurrencies and cryptoassets
are a new property class of the “digital
economy”. They form a certain niche
while complementing existing financial
instruments. This economic segment isbarely regulated today. Adoption of clear
rules of the game will attract institutional
investors into the sector, which will
stimulate market growth.
What the law says
As for blockchain application in Russia,
there are no legal obstacles to using itin this country. Yet improving certain
legislative documents, such as amending
the legislation on digital signatures,
would considerably increase the rate
at which the technology penetrates
the economy. All parties to deals must
share the same understanding of theterminology (such as “hash”, “smart
contract”, “token”, etc.).
To develop the technology
internationally, countries will need toharmonise their electronic document
management and digital signature
mechanisms.
As far as cryptocurrencies andcryptoassets are concerned, there aredifferent definitions and rules for theirregulation, recording and taxation indifferent countries of the world. This isholding back the development of thiseconomic sector.

94

Blockchain andcybercrime
Much has been written lately about
theft of large sums of money stored
using blockchain. This is not entirely
true and it is not the fault of thetechnology itself. The thefts took
place not because of blockchain
issues but because of programming
errors.
The root cause is thatdevelopers create and launch new
software very quickly, without
thoroughly checking the systems
for vulnerabilities. Cybersecurity
requires a systemic approach anda lot of time to identify, analyseand consider large numbers offactors.
Unfortunately, a lot ofblockchain solutions have so far
been “half-baked”. So, if there isno possibility to conduct a serious
audit of a solution, it is better tobe very cautious about trusting thesystem with large sums of money.
In searchof a standard
The first project of the RussianCentral Bank, which involves
Sberbank, is based on the Ethereum
platform. We are also interested inother platforms in terms of theirfunctions: for instance, Exonum,
Hyperledger Fabric, or Quorum, andwe are considering various options
for their application. We believethat the future lies not with a
specific platform, but with common
standards that will unify approaches
and help the technology develop
and spread.
That is why the bank isexperimenting with various
platforms and developing relations
with developers and consortia.
(AFT, Hyperledger, Enterprise
Ethereum Alliance).

Cryptoeconomics in numbers
2008 is considered to be the yearof birth of bitcoin, the most popular crypto

currency in the world. Then the programmer Satoshi
Nakamoto (to reveal his identity so far failed) publishedon the Internet a brief description of the algorithm
for the work of the blockade.

60 billion dollars reached the capitalizationof bitcoin in August 2017.

More than 200 crypto-currencies are in theworld today.

16 billion dollars earned miners (people

whose computers make payments in exchange forcrypto currency) for nine years due to calculations andcommissions from transactions.
About 70% of crypto-currency farms are in
China.

24 billion dollars is the capitalizationof the world's second crypto currency Ethereum,
created by a Canadian programmer of Russian origin,
Vitalik Buterin.

What ison the horizon?
We can see a big potential forthe technology's development
in various economic sectors
and are working actively withour bank's clients to introduce

We believe that the future lies
not with a specific platform,
but with common standards thatwill unify approaches and help
the technology develop and spread

blockchain-based solution.
Sberbank's portfolio includes
around 20 projects using theblockchain, such as factoringfor M.Video, trade financing
for Severstal, and document
management for the Federal
Antimonopoly Service.
Within a seven-year horizon,
blockchain use will do muchto harmonize and accelerate
financial market transactions
and make them cheaper. New
financial services will arise aspart of the digital economy andfinancial instruments based on theblockchain will establish their own
niche.

95

future“Blockchain offers
businesses
and governments
a convenient environment
for communication by
cutting out intermediaries”
The digital transformation era has taken the interaction between
business and government to a whole new level. To achieve
substantial progress in development of the national economy,
modern communications technology and tools are needed.
Alexander Borodich, a tech investor and founder of the Universa
Blockchain Platform for the real economic sector, speaks about
the promise the blockchain technology offers in that area.

Alexander, please describe briefly
what the blockchain technology is
all about and what its advantages
are.
The idea behind blockchain is
simple and easy to understand – it’san enormous distributed databaseconsisting of a multitude of peersthat operate the same forgery-proof
data. No data placed in a blockchain
can be deleted or modified, whichmakes it ideally suited to maintaining
all kinds of ledgers.
Blockchain offers businesses andgovernment agencies a convenientenvironment for communication
by cutting out intermediaries (suchas document exchange operators /banks / clearing houses), resulting
in substantially lower costs. Useof participants’ network hubs
helps avoid reserving equipment
and speeds up document
exchange, which also becomes
more transparent. What’s more,
service development costs can be
minimized by using open standards
and interfaces, with no need for
additional equipment purchases
or designing new custom software
solutions.
In what areas can governments
use blockchain?
Clearly, the financial sector is themain beneficiary of blockchain,
as its stakeholders require realtime payment protection and asecure environment for negotiating
contracts. Yet the technology holds
great promise for the government
services sector as well. A numberof projects can be implemented ona national scale using blockchain
technology. These mainly include allkinds of register of property rights,
contracts or transactions between
individuals or companies.
Blockchain may be useful forholding all sorts of votes, elections
or censuses, managing a unified
e-passport database, establishinga secure inter-agency document
exchange or managing pension
savings. The technology guarantees
that any input data remains
unchanged, so it a perfect fit forvarious tenders, contests or auctions.
Not only that, it makes a large
number of processes transparent,
as participants can see any changes
in the status of smart contracts.
The government can, therefore,

The financial sector is themain beneficiary of blockchain,
as its stakeholders require real-time
payment protection and a secureenvironment for negotiating
contracts

96

better control financial and dataflows across systems inside thecountry.
What other economic changes
might blockchain bring?
A big plus of blockchain technology
is that it can decentralize various
systems and remove a large numberof redundant institutions andentities from the world as we know
it. For instance, clearing houses
may become obsolete in finance,
while notaries may find themselves
useless in the realm of law.
Blockchain may bring radical
changes to the monetary policy
landscape. For example, thistechnology platform could serve asa basis for issuing a single “crypto
rouble” to ensure full government
control over any cash flows. In
other words, using blockchain could
take the fight against corruption
to a whole new level. Relations
between business and government
will become more efficient andtransparent too, making it possible
to fulfil any urgent real-economy
tasks swiftly.

97

FutureDigitization
as an opportunity
In the modern world, where mathematical models prove
more accurate than expert predictions and freelance
developers solve problems better than specialists,
digitization is becoming synonymous with an efficienteconomyRuslan Karmanny,
Head of the ASI Project Centre
for NTI Integrationand the Digital Economy
Programme
Models more accurate thanexperts
According to the Digital Economy
programme adopted by thegovernment, “data in digital format
are a key production factor in all
spheres of socioeconomic activity.
This improves the competitivenessof the country and the quality of lifeof its citizens, and ensures economic
growth and national sovereignty.”
So it would seem thatorganizations and companies should
transform their operations to makesure that data handling becomes a
key business process. What is data
handling? Making decisions based on
data? Let us try and examine theseprocesses, which seem boring at
first glance, using some fascinating
examples, and answer the questionof why data handling requires
special skills not often possessed bymanagers and executives.
People use the data collectedduring a process to describe the world
and the patterns that exist in thisworld, as seen by the observer. Even
the ancient Greeks understood thatcreating some sort of mathematicalmodel built on simple rules would bea perfect opportunity to comprehend
the world. They used such a method
to describe the movement of theplanets or celestial bodies, which– unlike the stars – were travellingthrough the sky. If the position of
the planet in the sky predicted by

98

Ptolemy had coincided with reality, we
would not have had Newton’s theory,
Einstein’s theory of relativity, or
quantum mechanics. Every new model
described the world more accurately
than the previous one, yet not
perfectly. A striving for perfection has
determined the progress of naturalsciences over the last 2,000 years.
In the digital economy, theopportunities for digital modelling areincreasing exponentially. For instance,
Prof. Erik Brynjolfsson from MIT
joined forces with Professor Lynn Wu
from the Wharton School of Businessto construct a model for predicting
property prices based on user
enquiries registered in Google Trends.
The academics made predictions
for all 50 US states and compared
their results with the forecasts of the
National Association of Realtors andclosed deals. The model predicted
prices 23.6% better than the experts,
on average.
Professor of Sociology Chris
Snijders questioned the practicalityof procuring IT equipment via the inhouse IT function. He gained accessto the procurement database of 5,200
Danish companies and constructeda mathematical model that predicts
the probability of meeting budgets,getting supplies on time, and being
satisfied with the results. In the end,

he offered his services to predict theoutcomes of various sizes of deal indifferent segments of the economy
and asked procurement managers toprovide their own projections. Even
highly ranking specialists were unable
to keep up with the sociologist’s
model in terms of prediction accuracy– in their own industries as well asother sectors.
A mathematical model also
turned out to be more successful in
predicting the quality and price ofwine from Bordeaux. The essential
variables were just four openly
available weather parameters.
Expert forecasts seemed like mere
background noise compared to themodel’s predictions.
In yet another study, a team ofteachers from MIT tried to predict
which students would be given
tenure at prestigious universities.
They used historical data on early
student publications, citing schemes,
and network theory approaches
to predict which students would
produce the most influential andsignificant theses. The results
were somewhat curious. The
prediction produced by the model
corresponded with nominating
committee decisions in 70% of cases.
In the remaining 30% of cases, themodel, as a rule, picked out students// V irtual reality, big data, 3D-printing and other elements of the digital
economy are actively penetrating into the most diverse spheresof society99

FutureUnless Russian companies andorganizations learn to workwith data, the digitization process
will remain superficial
who subsequently made moresignificant publications than thoseto whom the commission assigned
tenure. The model simply failed
to take into consideration all thepeculiarities of human relations.
It pains me a little to give
examples of successful foreignscientists only. But unless Russiancompanies and organizations learn
to work with data, the digitization
process will remain superficial. Abouta month ago, companies, universities,
and research organizations wereinvited to produce a list of end-toend technology competency centres
as part of the Digital Economy
programme. Across the currently
popular areas of big data, artificial
intelligence, and distributed registers,
there were no less than 30, 20, and15 companies, respectively. But only
one company – Boeing Russia – wasworking with mathematical modelling
technology. Meanwhile, it is obvious
to any practising data science
specialist that it is impossible tocreate value in big data or AI projects
without relevant models.
Self-sustaining platforms
Digital platforms are the mostsuitable structures for data collection.
Platforms are extremely sophisticatedsystems, although we, as users, usuallyperceive them merely as well-written
smartphone applications. Every
platform has its own network of
producers and customers. A platform’s
basic technology should be userfriendly enough to establish a loyal
customer base, while complicateddata processing systems with AI
elements ensure the most efficientmatch between buyer and seller.
Developing the Russian digital
economy is impossible without the
emergence of national platforms. It
usually takes at least 5–7 years for aplatform to mature, yet all successful
examples share the same importantfeature – the system can functionunassisted. In view of the accelerating
technological revolution, it is quite//	The theme of the digital economy is being discussed today at a variety of venues

100

difficult to predict what devices wewill be using to communicate with one
another and get information in five
years’ time. Most likely, it will not be
the smartphone and mobile apps weare used to.
If the Digital Economy programme
had been launched five years ago,
when messengers were the mostinnovative vehicles, it would havebeen advisable to develop a platform
for new business on that basis.
Nowadays, messengers, for instancein China, can perform almost all
smartphone functions, including
money transfers and shopping. So,
when designing a platform for the
future today, it would probably bea good idea to focus on the cryptoeconomy and distributed registers. As
for the interface, it would be best to
wait for new trends on the VR/AR andIoT markets.
The state can give theprogramme a significant boost byconsidering the ‘government as aplatform’ approach. An engaging
design, reducing barriers toexperimentation and optimization
within established standards, open
API, data accessibility as a motivator
to attract new participants – theseare just the obvious benefits of suchan approach that has the potential
to set a positive example for public
corporations and large business.

//	Automation of production, Norilsk Nickel

Where can we get the expertiseand competencies to implement
these ideas from? Russia has
professional teams that haveautomated major holdings, such as
SUEK, Rosatom, and Norilsk Nickel.
Usually, their first objective was toset up a project office and make surethe team members started using
electronic communication between
themselves in the environment they
were developing. The next task was
to set up electronic interaction
between other company employees.
In the case of digitization (not tobe confused with automation), it
is practical to start the process ofdeveloping a platform by formalizing
business processes and analysing
operating model efficiency.
There are companies in Russia thathave enjoyed great success in realizing
the potential of import substitution
in business process automation.
I am primarily, of course, talking
about Boris Nuraliev’s 1C. Given theinterest from major customers andthe modifications made to cloudservices, this platform could serve as a
powerful driver for the digitization ofcompetency centres, project offices,and other management bodies oforganizations involved in the Digital
Economy programme. It would beamazing if a firm operating in thedigital economy could create some
sort of Russian version of Salesforce –a CRM market leader that has digitized
the marketing function for B2C
companies.
The wisdom of the crowd
I would like to conclude by describing
one more phenomenon of the digital
economy that Russia needs to masteras soon as possible: the wisdom of thecrowd. Several years ago, the Israeli
Medical Health Centre studied avery important issue – the formationof the body’s immune response bywhite blood cells to fight antigens
that are continuously produced by
the organism and constantly evolving.
Mathematically, this problem wasnarrowed down to the search for
efficient combinations of 100 or
more white blood cell DNA portions
that form the immune response, a
set of 1030 options. That’s a pretty
big number. The popular MegaBlast
algorithm created by the American
Health Institute produced 1 million
segments in 4.5 hours with 72%
accuracy. The Israeli institute idAb
model provided 77% accuracy in 48
minutes.
The researchers decided to turnto Topcoder – a well-known online

computational problem-solving
platform. Its ecosystem includes
approximately 400,000 softwaredevelopers. According to thecompetition terms, the combinationof speed and quality of generated
DNA portions was assessed. The
competition lasted for two weeks and
122 people took part, submitting a
total of 654 solutions. Around half theparticipants were students; none werescientists or computational biologists.
Only five contestants said they hadprior experience in the field of biology
or anything related to it. About 30
solutions were better than MegaBlast,
16 were better than idAb. Eightapplications achieved 80% accuracy,
which the applicants considered to be
the theoretical maximum for the dataarray provided.
The opening of the NASA libraryis yet another impressive example of
the work of collective intelligence.
We could spend a long time analysing
why the external developers
processing the data turned out tobe in the top quartile, better than
the specialized researchers who had
dedicated their lives to this work. Thisand many other ‘wisdom of the crowd’
use cases have opened a new chapter
in research which employs digitalinteraction on the Internet.
Just think how much time andresources this process would need
if it were to be conducted offline:
announcing a contest (2–3 months),
ensuring compliance with the rules
for taking part (organizing committeeof 15–20 people), reviewing andassessing applications (2–3 months),
the budget…The prize paid to thewinners of the contest to identify
the best white blood cell immune
response was USD 6,000. Everyone
was happy; judging by the comments,
all the participants felt that they were
winners.
Given the widespread interestin the Digital Economy programmethat has been announced and its highstatus, it is important to ensure that
new approaches are applied. Apartfrom the significant economic impact,
it is also an opportunity to involve
10,000–20,000 talented individuals,
whose skills are not currently being
used by similar firms in the ‘old’
economy.

101

PeopleРубрика pубрика104

A HECTARE
to help
PARTICIPANTS
IN THE 'FAR EASTERNHECTARE' PROGRAMMETALK ABOUT WHAT IT'S
LIKE TO LIVEOFF THE LAND
AND RISK CHANGINGYOUR LIFE

110

Far,
yet hospitable
FEDERAL AGENCY FOR TOURISM DIRECTOR
OLEG SAFONOV SPEAKS ABOUT THE PROSPECTS
FOR REGIONAL TOURISM AND STATE MEASURESTO DEVELOP IT

Goals of using "Far Eastern hectares"

39%

Constructionof individual
houses15%

Horticulture

9%

Entrepreneurship

23%

Agriculture

14%

Recreational projects
Source: Minskostokrazvitiya

114 RIA RATING:
labour market index
in the Russian regions –2016 results

PeopleA hectare to help

How is the 'Far Eastern hectare'
PROGRAMME implemented

98.9 thousand

A serial entrepreneur, a father of eight,
a farmer of 30 years – all were given a chance
to realize their dreams and do what they love
thanks to the ‘Far Eastern Hectare’ programme
launched by the Ministry for the Developmentof the Russian Far East in 2016.

Applications filed under the programme

26.4 thousand
Land plots given for use

13%

Applications for the provisionof free land plots (12.5 thousand)come from groups of citizens
Source: Ministry for the Development of
the Russian Far East

Semyon Kudryavtsev,
Journalist

Children, grants, and milk
Alexander Pushkarenko, 32, fromthe village of Bochkarevka in the
Seryshevsky District of Amur Region,
has a modest home and a big family:
his wife Anastasia, five sons, and three104

adopted daughters. When they were
expecting their fifth child, they were
hoping for a daughter, but were alreadythinking of adopting a girl, Alexandersays. When they started looking to
adopt, they decided to take two sisters
at once, since one girl might find it too
hard to be the only one among fiveboys. Eventually, the Pushkarenkos
became adoptive parents to three girls.
In autumn 2016, the big family
was among the first to claim their

free hectare in the Russian Far
East. At the same time, the novice
farmers completed their businessplan and received a grant under the
programme launched in the Amur
River basin in 2012 and jointly financed
by federal and regional budgets.
The Pushkarenkos used the money
to expand their holding to 19 cows,
including 13 milkers. Yet the couple
have far more ambitious plans: over the
next five years, they want to increase

the total number of dairy cows to 100,with half of them producing milk, andeven begin producing dairy products.
“Ideally, we would like to go beyond
just selling milk; we would like to set
up our own processing line producing
packaged milk, yoghurts, and butter”,
Alexander explains.
To make these plans a reality,
they will need more land, becausea dairy farm needs pasture. So far,Pushkarenko has only applied fortwo hectares – for himself and for hisson, both next to their home. In the
future, he would like to acquire 10
hectares, one for each family member.
Milk is now in high demand, he says,
since there are only three large farms
supplying dairy products to the entire
region and most people do not keep
cows.
Apart from the government, thefarmers have received strong support
from family and, of course, from theirchildren. The eldest, aged 11 and 10, area great help around the place and lookafter their younger siblings.
“I think it would be stupid not
to take what’s being freely given.
Even if you eventually decide against
going big, you have nothing to lose”,
Alexander believes. “The programme
is a huge help. You can build a house,
set up an apiary, some want to breed
geese – so here’s the land, take it!” The
only regret this father of eight has isthat he didn’t claim the land sooner.
He always thought he could get into
farming.

// Alexander Pushkarenko

A village reborn
It is said that, in its heyday, the village
of Tatakan, first founded by displacedold believers who resettled in the
Arkhara District of Amur Region, had up
to a hundred households. However, it
gradually fell into decline. By the 1970s,

105P e op l e// Vadim Ostroverkh

only five or six abandoned houses fromthe previous century remained, and thevillage disappeared from geographicalmaps. Now, almost fifty years later,
there is new hope for Tatakan.
Farmer Vadim Ostroverkh says heenjoys an outdoor lifestyle, and loves
exploring beautiful landscapes with his
friends, by boat or in off-road vehicles.
As it happens, his trips often take him
through Tatakan. Its woods are richin Korean pine, referred to as cedarin the Far East, and the name of thevillage itself derives from the Evenk
word taktakan meaning ‘cedar’ or ‘cedar
river’.
“I’ve always wanted to build aholiday home here, with an apiary next
to it”, Vadim says. “It is a truly amazing
fishing and hunting spot.” So, when heheard on the news that the Arkhara
District was listed as one of the pilot
regions for the ‘Far Eastern Hectare’programme, Vadim wasted no time andfiled his application. A month later he106became one of the first owners of afree hectare.
A solid foundation he found on theplot was a nice bonus, and Ostroverkh
used it to build a house. Further plansinclude an apiary or a small farm in
addition to his main household some
80 kilometres from Tatakan. “I’m still
thinking, there’s time, I am still young –43”, the farmer smiles.
All in all, 12 hectares have alreadybeen allocated in Tatakan. People
are planning to farm the land, restore
the old houses or build new ones,
and take up bee keeping. This area isrich in unique wild plants, so someplan to start harvesting medicinal
herbs. According to Ostroverkh, his
neighbours who have claimed hectares
include people from villages 25–30
kilometres from Tatakan. They bring
their cattle to pasture here for thesummer season before returning homein the autumn.
At the moment, Tatakan would
make a challenging permanent
residence: there is no electricity,
no communications, no Internet
connection. If the number of local
participants in the free hectare
programme reaches 20, however, thegovernment promises to help with
the necessary infrastructure. Vadim
Ostroverkh takes a philosophicalattitude. He did not come to Tatakan
to enjoy the comforts of civilization.
For him, the village that is now
experiencing a revival is a place to rest
and recharge his batteries.
Five Hunters’ Hotel
Bogdan Durkalets applied for his freehectare the day after the programme
was launched. The procedure wassimple and only took 40 minutes,
Bogdan recollects. He is a naturalborn entrepreneur, selling special
machinery, running a café and a beautysalon. Another childhood dream of
his was to build a holiday resort tocelebrate the pristine natural beauty of
the Russian Far East. He can now makehis dream come true with the help of
the ‘Far Eastern Hectare’ programme.
Boris Durkalets was allocateda hectare on the shores of Pyat
Okhotnikov (Five Hunters’) Bay in
the Shkotovsky District of Primorsky
Territory, where he already had aplot. He was born in Artem, a city 80// Bogdan Durkalets

39%

Goals of using "Far Eastern hectares"

Constructionof individual
houses15%

Horticulture

9%

Entrepreneurship

14%

23%

Recreational projects

Agriculture
Source: Ministry for the Developmentof the Russian Far East

kilometres away, and he first set eyeson the bay when he came to meet his
future parents-in-law. He fell in lovewith the place, so much so that hedecided to stay. He bought a plot of
land and started to build a house. His
only issue was that the locals did notseem to care about preserving thenatural beauty of the place. The shore
soon became a dumping ground. For
two years, Bogdan tried to reason with
his irresponsible neighbours, but it wasin vain.
When he acquired his hectare, helevelled the plot, set up a fence, andcleaned the beach. To do that, he had
to remove a layer of soil, so deep was
the waste. “We hauled away two fulltruckloads of waste. Unfortunately,such an attitude is quite common onderelict land, or plots that don’t belong
to anyone. In the future, we will bringback sand and pebbles and restore
the beach to its natural beauty”, theentrepreneur says.

The first facility to be built for the
resort – a small two-storey hotel with
six rooms – will open as early as thisseason. It will be a perfect place to takea break from the city hustle and bustle
and enjoy some fishing. The aspiring
hotelier is intending to focus primarily
on domestic tourists, although thesurrounding area is also likely to attract
foreign visitors from China and Korea.
Further plans include building 15
more cottages out of natural wood,
so Bogdan has already bought timber
processing equipment and drying
chambers. He estimates that hewill have covered the cost once theseventh cottage is complete. Later, thebusinessman aims to process timber
for external customers. “If it works out– great, if not – I’ve not lost anything”,
he reckons. Yet it seems that there is
likely to be demand for construction
materials. Bogdan’s example alone has
inspired a lot of his acquaintances toclaim their own hectares.
“The ‘Far Eastern Hectare’programme is a great help forbusinesses”, Bogdan says withconfidence. “Land prices are very
high in Primorsky Territory and there
are only so many things you cando without land. If I get a permit, I
will build a pier for smaller boats,a childhood dream of mine. I love
travelling by water. So far, this typeof activity has not been included on

the list of permitted activities for theland plots, but it’s a very relevant
issue for Primorsky Territory with its
1,500-kilometre coastline, which could
be used wisely to great benefit.”
Rightful owner
By the time he acquired his Far
Eastern hectare, farmer Boris Rudakov
from Amur Region had already beenrunning a large smallholding: a herdof 120 cows and 50 horses. His cows
produce seven tonnes of milk every
month, with the bulk of it bought
up by the Khladokombinat dairy inBlagoveshchensk. Horses, however, area hobby dating back many years, when
the farmer’s son, then three, asked his
father for a horse, and Boris’s friends
brought him one.
Rudakov is a driver by profession
but has been farming for over 30 years.
He started with a couple of beehives
he liked to tend to after work. He
then moved on to breeding various
domestic animals – poultry, goats,
sheep, but not for sale – for his own
use. He also had a cow – a wedding giftfrom the collective farm. Boris and hiswife Nina got married when they wereboth 18. In the late 1990s, according to
the farmer, he got his ‘chance’.
It was a difficult time: many farms
went bankrupt. One such failing farmposted an ad announcing that it was
selling its pedigree cattle stock. This// Boris Rudakov

is how Boris Rudakov came to buy his
first Hereford cow at a price ten times
below market value – at the time,
heifers cost RUB 180,000 each. Aftera month, he took the money he had
made from selling milk and, adding tothis sum his modest savings, he wentout and bought more Hereford cows.
He spent a huge amount – more thanthe value of his truck – but he got hismoney’s worth.
Of course, it was not just luck; it
was also hard work beginning every
day before dawn. According to Boris
Rudakov, he and his wife have only been
on holiday once since then: in 2016,107

P eople

Hectares foundtheir owners
The ‘Far Eastern Hectare’ programme
launched on 1 June 2016, initially forresidents of the Far Eastern Federal
District and subsequently for all Russian
citizens, has received a huge response
from the population. According to the
Ministry for the Development of theRussian Far East, nearly 100,000 people
have so far expressed their interest andsubmitted an application to take part in
the programme. This is not surprising.
According to the statistics, morethan half of hectare recipients plan
to use their plots to build their own
homes and grow vegetables. There arealso those with more ambitious goals,
however. About a quarter of programmeparticipants intend to engage in real
farming on their plots. Nearly one in six
applicants plans to develop recreational
projects, on the assumption that thenatural beauty of the Far East will attract
tourists. One in ten wants to use the plot
for other business projects.
To make it easier for the hectare
recipients to decide on their future
course of action, the Agency for theDevelopment of Human Capital in the Far
East has drawn up some model businessplans. The choice of projects is vast,depending on an individual’s interests
and available funds: from RUB 600,000
to start a berry growing operation to RUB
33.5 million for building a children’s camp.
The authorities are particularlyinterested in people registering collective
applications. The law states that if people
register at least 20 hectares in one place,the state will provide the necessary
infrastructure. On the one hand, this entails
a cost. On the other hand, it is a guaranteethat the land will be used, which means thatthe programme will achieve its goal. In early
2017, collective petitions accounted for
only 7% of all applications, but their share
has now almost doubled, to 13%.
“The ‘Far Eastern Hectare’programme has been under way
for more than a year and is showing
impressive results”, says Valentin Timakov,
General Director of the Agency for theDevelopment of Human Capital in the Far
East. “Tens of thousands of hectares in
the Far East have found owners. Citizens
are already making their dreams cometrue in the Far East; they are coming
together and creating new settlements.”

108

DISTRIBUTION OF THE NUMBER OF APPLICATIONSBY REGIONS OF THE FAR EASTERN FEDERAL DISTRICT
Republic of Sakha(Yakutia)

Primorsky
District
JewishAutonomous
Region

18.4%

24.5%

0.1 %
Chukotka
Autonomous
District

2.9%

Amur
Region

4.9%

13.8%

3.4%
12.3%

Sakhalin
Region19.7%

Kamchatka
Territory
MagadanRegionKhabarovsk
Territory

Source: Ministry for the Developmentof the Russian Far East

they treated themselves to a 10-day
trip, leaving their children in charge, butwere worried the whole time.
Until recently, the Rudakovs had
another serious concern: when theirfarm began to thrive, they, without
any fraudulent intent, had to keep
their cows and horses on municipal
land. The village was almost deserted
back then and no one cared about
farmland. However, what if thesituation changed and they wereforced from the land?
As soon as they heard about the‘Far Eastern Hectare’ programme on
television, the Rudakovs decided toclaim the land lawfully. In February 2017,
Boris became the legal owner of theland he had farmed for almost 30 years.
Later, his son obtained another hectare,
where they built a winter cattle barn.
“It is so good that they gave thehectares to us. We are now confident
about our future”, Boris says. Until
recently, he always used his own
money to expand, and never took out
a single loan. Now, he plans to apply
for a subsidized loan for ‘Far Eastern
Hectare’ programme participants todevelop his business further.

109

P e op l e

Far,
yet hospitable
Tourism could
become a major
driver of socialand economic
development in
the Russian Far
East. The region’s
potential in this
sector is huge
but as yet
undiscovered.
The state andbusiness mustjoin forces
to realize it.

Oleg Safonov,
Head of the Federal Agency
for Tourism

110

Aiming higher
The Russian Far East is a diverse
and exciting region which is ofstrategic importance to the country.
The Far Eastern Federal District
occupies more than a third of thenation’s territory. The natural andeconomic potential of those vast
areas is supported by their uniqueecosystems, including some sites
included on the UNESCO World
Heritage List, such as the volcanoesof Kamchatka, Central SikhoteAlin in Primorsky Territory, theLena Pillars in the Republic of
Sakha (Yakutia), Wrangel Islandin the Chukotka Autonomous
District, rare and non-ferrous metal
deposits, coal, oil, timber, marinebioresources, and vast tracts ofusable land. The Russian Far Eastis home to well-known plants andfactories, mining companies, R&D

institutions, space research facilities,
such as the Vostochny Cosmodrome,
agricultural enterprises, fisheries,
and much more.
Even so, making effective use of
the region’s recreational resources
remains a critical task if sustainablesocial and economic development
is to be achieved. The richness anddiversity of the Russian Far East
present extensive opportunities
for developing all sorts of tourism,
including cultural, educational,
active, and extreme options, ruraland food-based trips, cruises, skiing,
environmentally friendly holidays,
opportunities to engage with local
people, etc.
For instance, the climate in
the south of Primorsky Territory
puts the region on a par withresorts in Crimea or the Caucasus.
Healing springs and large depositsof therapeutic mud are found inabundance there. The bathing
season on the coast lasts fourmonths, from July until late
September, while the season for
sailing and rowing is even longer.
Kamchatka and the Kuril Islands
are unique for their landscapes andhealing thermal springs.
Many residents of European
Russia and even parts of Siberia
dream of visiting the Russian Far
East, making it a very promising areafor domestic tourism. What is more,

its geographical position favours
it as an international destination,
too. Its neighbours include somefast growing economies, including
China, Japan, the Republic of Korea,
Singapore, and Malaysia. Visitors
also come from farther afield:
the Middle East, Europe, and theAmericas.
The figures offer evidence ofthe growing interest expressed by
tourists. In 2015, 2.7 million tourists,
including 2.1 million Russians, visitedthe Far Eastern Federal District, 25%
more than in 2014. In 2016, the total
tourist influx to the Russian Far East
reached 3.6 million, a further 35%
increase over 2015.
Currently, some 70% of all
visitors travel to Primorsky Territory.
More than 3 million people visitedthe territory last year, including
approximately 2.5 million Russians
and 568,000 foreigners – altogether
50% more than in 2015.
Most foreign visitors to
Primorsky Territory havetraditionally come from Asia. Yet lastyear saw some shifts in the structureof inbound tourism, as the numberof tourists from Germany, as well asAustralia and Oceania, surged 150%.
Increased demand for travel
to Primorsky Territory in 2017 wasparticularly noticeable in Japan andSouth Korea. The latter sent 35,700
visitors in the first half of the year,
up 80% on the same period last year,
while 7,200 came from the former –an increase of nearly 150%.
That said, other regions of the
Far Eastern Federal District arealso capable of attracting tourists.
For example, Khabarovsk Territory
welcomed 582,000 tourists in
2016, including 40,000 foreigners.
Sakhalin Region reported a
substantial rise in tourist numbers
in 2016 – up 60% to 165,000.
Amur Region was visited by
142,000 travellers, 16% more than

In 2016, the total tourist influx
to the Russian Far East reached
2.6 million, a further 25% increaseover 2015

the year before, while 536,000
visited Khabarovsk Territory (+13%compared with the year before last).
Despite the positive trend,
however, it must be acknowledgedthat the tourism potential of theRussian Far East has not yet been
fully realized. Take Iceland, forexample: with a population of justover 300,000, it welcomes 6.5
million tourists annually. Kamchatka,
with a comparable population, gets
some 200,000 visitors a year.
Tourism accounts for around
1–2% of the Far Eastern regions’gross regional product, comparedwith a national average of 3.4%.
There is ample room for the Far Eastto grow.
Bridges and harbours
Improving accessibility anddeveloping the transport
infrastructure in the Russian Far
East is the focus of the state’s
attention. The macroregion’stransport system has beenfeeling increasing pressure. For
example, passenger traffic throughVladivostok Airport rose 18% in
the first half of 2017 to 937,000;
international travel increased 40%
to 337,000. Khabarovsk Airport
served 887,500 passengers,
including 168,000 oninternational flights. Total passenger
volume increased 8.9% year-onyear, rising by as much as 45%
for international destinations.
Petropavlovsk-Kamchatsky
Airport saw its passenger traffic
grow 7% to more than 263,000,
with international travel almost
doubling.
Upgrading airport infrastructurein the Russian Far East has
become an increasingly urgent
task. Immediate plans call for
modernization of the airports inYuzhno-Sakhalinsk, PetropavlovskKamchatsky, and Khabarovsk.
Expanding the network ofinternational flights will be ofsignificant importance. Currently,
only the airports in Vladivostok,
Khabarovsk, Yakutsk, and YuzhnoSakhalinsk have regular links toforeign countries.
Opportunities for foreign
tourists to enter Russia’s Far East111

PeopleHotel rooms in the Far East
need not only to be increased in
number, but upgraded as well.
Hotels and boarding houses mustmeet the demands of today’s
tourists and be competitive with theaccommodation options available inother tourist destinations.

// A cruise liner in the port of Vladivostok

by land will expand markedly once
construction of the cross-borderroad bridge linking Blagoveshchensk
on the Russian side with Heihe in
China’s Heilongjiang province iscompleted. It is scheduled to open
in 2019. Russian and Chinese citizens
will be able to cross the border intheir own cars. The project also
envisages a cross-border cable car,something that has never been
seen at the Russian border before.
A railway bridge under construction
between Nizhneleninskoye, a town
in the Jewish Autonomous Region,
and China’s Tongjiang will provide
yet another international overland
gateway to the Russian Far East.
Visa policy is crucial to
improving tourist access to theRussian Far East. Unprecedented
efforts to ease visa restrictions are
currently under way in the region.
From 1 August this year, citizens of anumber of countries have been able
to obtain e-visas valid for up to eightdays. All it takes to get an e-visa is
to fill out an application form on
a dedicated website. International
travellers can enter Russia on e-visas
across a maritime border point in
Vladivostok and via Vladivostok
International Airport. More e-visa
border crossings are scheduled
to open in Primorsky Territory112

on 1 January 2018, as well as in
Kamchatka and Sakhalin. A numberof new vehicle and marine crossingsare being contemplated.
Foreigners can also takeadvantage of a simplified visa
regime by arriving in Vladivostok
as part of an organized tour groupon a cruise ship. More than 3
million holidaymakers bound for
Alaska cruise along the Far Eastern
coast every year. If infrastructure
limitations on handling cruise ships
could be overcome, they would be
able to call at Russia’s Far Eastern
ports, increasing the macroregion’s
tourism revenue.
Open to all cultures
Tourists expect a reasonablelevel of services and a wide range
of opportunities for travel andrecreation. This is the second mostimportant task for developing
Far East tourism. In this respect,
active inclusion of the Far Easternregions in the Russian Hospitality
comprehensive loyalty programme
would seem to be especially
important. The components of thisprogramme include China Friendly,
a well-established project to create
welcoming conditions for Chinese
visitors to Russia, HalalFriendly
for visitors from Muslim countries,

KosherFriendly for practising
Jewish visitors, and some otherprojects geared to various culturalor religious groups. Once fully
implemented, the programmeshould ensure that Russia offersa welcoming environment for
tourists of all cultural and religious
backgrounds.
Developing interregional tourist
routes that allow visitors to take inseveral Far Eastern regions as part ofa single trip will also help. Russia’s
Eastern Ring, a project which
combines the Far Eastern and Baikal
regions into a single route, is one
measure aimed at achieving this.
In this respect, the introductionof sales of charter flight-based
package tours to the Russian Far Eastis very important. Many meetings andnegotiations with industry players
have been held. On a positive note,
tour operators see a future in this,and specific plans have already been
made to release such tour packages
onto the market for sale.
The hotel situation varies greatly
among the regions of the Far Eastern
Federal District. While Primorsky
Territory offers 25,000 beds inshared accommodation facilities,
Magadan Region and Chukotka
Autonomous District have just a few
hundred.

Role of the stateState support for the tourism
and travel industry must play asubstantial role in resolving theabove issues and, accordingly, indeveloping tourism in the Russian
Far East. A law was recently passed
establishing a zero-rate corporate
tax between 1 January 2018 and 31
December 2022 for organizations
involved in tourism and recreational
activities in the Far Eastern Federal
District, provided they generate atleast 90% of their profits from thisactivity.
The advanced special economic
zone (ASEZ) system offers anothermechanism for supporting the
tourism and travel industry in the

For organizations involved in tourism
and recreational activities in the
Russian Far East a zero-rate corporate
tax will be introduced
macroregion. Two of the 17 ASEZs
already established in the Russian
Far East specialize in tourism andrecreation: Gorny Vozdukh on
Sakhalin and Kamchatka in the
territory of the same name.
These incentives encourage theconstruction of new hotels and theupgrading of existing ones, as well as
the establishment of tourist bases,
leading in turn to a reduction in thecost of services.
If the goals of infrastructuredevelopment, improving transportavailability in the macroregion,
establishing a competitive Far
Eastern regional tourism product,and effectively promoting it on
the domestic and international

travel markets can be achieved,
the Russian Far East could betransformed into a popular tourist
destination offering visitors a wide
range of attractive and affordable
recreation options and a highstandard of tourism services.
Realizing this scenario is very
important for the sustainable socialand economic development of
the Far Eastern regions: tourism
gives a boost to 53 other sectorsof the economy that contribute tocreating tourist products. It also
helps small and medium-sizedbusinesses to grow, improves
local living standards, and smooths
out imbalances in regional
development.

113

Genius lociРубрика pубрика

126“The East
shall begoverned fromhere!”

134

BRIDGE as a symbol
THE BRIDGE TO RUSSKY ISLAND ERECTEDIN VLADIVOSTOK FOR THE 2012 APECSUMMIT HAS BECOME A SYMBOLOF THE PRIMORSKY CAPITAL OVER 5 YEARS.
IT'S NO COINCIDENCE THAT THE BRIDGEWILL APPEAR ON NEW 2,000 ROUBLERUSSIAN BANKNOTES

Vladivostok
as described by eminent
travellers, statesmen andliterary figures

Joy amid
failure122

140

HOW THE FAR EAST EXPERIENCED
THE CRIMEAN WAR UNDER
THE RUSSIAN FLAG. HISTORY
OF THE FAMOUS DEFENCE
OF PETROPAVLOVSK118

The Richesof the Golden
EmpireTHE MOHE, KINGDOMOF BALHAE, AND JIN EMPIRE.
DISTANT PAGESIN THE HISTORYOF PRIMORSKY LANDS

130

A Far Eastern
cocktail
CABBAGE SOUP FROM SEAWEED,DUMPLINGS WITH RED DEER
MEAT, PILAF WITH MUSSELS, CRAB
OLIVIER AND KAMCHATBURGER –THE CUISINE OF VLADIVOSTOK.
A REAL FUSION OF
GASTRONOMIC CULTURES FROMPRODUCTS CAUGHT
AT SEA AND IN THE TAIGAThe Great
Forest of Primorye
RUSSIA HAS MORE THAN 100 NATURE RESERVESAND EACH OF THEM IS INTERESTING IN ITS OWN
WAY. PRIMORYE'S SIKHOTE-ALIN IS A REAL PEARL
IN THIS NECKLACE. PLANTS THAT EXISTED MILLIONSOF YEARS BEFORE HUMANS ARE PRESERVED HERE

GENIUS LOCIThe Richesof the Golden Empire
Primorye is a place with unique history and culture.
It has preserved for us traces of ancient Oriental
civilizations. Warriors and poets, craftsmen
and inventors – those were the people who inhabitedthese lands.

Olga Mikhailova,
journalistW

hen Primorye’sancient peoples are
mentioned, the firstthat come to mind
are the Jurchen, ancestors of today’s
Udege, the indigenous inhabitants of
the lands. The Jurchen founded an
Empire that they bluntly called theGolden Empire, without being toomodest about it. They were skilled
warriors, they invented their own
writing system, they were interested
in arts, and they built cities. Yet, in
fairness, it should be mentioned that
the Jurchen absorbed the culture andcustoms of people who had inhabited
the Far East before them.
They came from the Amur
Among their ancestors were theMohe, a people who arrived fromSouth Manchuria. Historians believethat the name of these tribes stems
from the word “muke” meaning water.
This hypothesis is borne out by thefact that the Mohe lived mostly close
to rivers, on the banks of the Amurand its tributaries.
The Mohe were born hunters
and warriors. One Chinese dynastic
chronicle says they made short bows
(up to one metre long) and smeared
their arrows with snake venom theycollected in the autumn, the best
time for such work. “When poisonsare brewed, vapours of the poisonous
potion alone may kill a man”, thechronicler wrote. The Mohe werealso excellent farmers, herdsmen andcraftsmen. They knew pottery andweaving, they did bone carving andmetalwork.
Russia’s largest Mohe landmark
was found accidentally in 1966, whenschoolchildren from the village of
Mikhailovka stumbled across a Mohesettlement on the River Zavitaya. The
fortress is fairly large as it occupies
about a hectare; it is round in planand protected with a rampart anda moat. In the settlement’s houses(these dwellings were similar to
dugouts), archaeologists foundvarious tools, iron arrowheads andknives, ironclad plates, goat horns
and deer antlers bearing signs ofcarving and ceramics. Historians date
this settlement to 1stcentury c.e. In
Europe, this was the time when the
Romans founded London on the
British Isles.
Chinese chronicles state that theMohe had seven tribal unions that
could put for war a big army of up to
150,000, although both the numbersof the Mohe and the area they
inhabited are not known precisely.
Scholars are continuing their work
and, just a few years ago, a Mohesettlement dated 4th–6thcenturies
c.e. was found on the banks of theRiver Partizanskaya. Scholars believe
it could have been a fortress, a small
settlement protected with threerows of fortifications.

// The monument of the Jurchen era in Ussuriysk

118

119

GENIUS LOCIThe decline of the Golden Empire
started in the 12th century, when it
attracted the attention of the Mongol state
Poet wars
The Mohe played an important rolein the history of Asia. They lived
along the borders of the ancient
Korean state Goguryeo, which, since
the late 6th century, engaged infierce wars with China, united under
the Sui dynasty after a long period
of internecine warfare. It was alengthy struggle. China made several
attempts to conquer Goguryeo, butfailed. The inglorious war led topopular riots, and the Sui dynasty
fell. Only the new Tang Empire,
united by the Li dynasty, conquered
Goguryeo. However, that bloody
history ended only in 668, when the
Chinese captured and plundered
Korea’s capital Pyongyang.
Those Koreans who did not wish
to submit to their conquerors fled
north, to the Mohe lands, and several
decades later the alliance of several
peoples gave rise to the Balhae
Kingdom. In its heyday in the 8th–9th
centuries, it spanned the lands ofPrimorye, Manchuria, and the north of
the Korean Peninsula. De jure, Balhae
was China’s vassal; de facto, it was
an independent state. For instance,
it never responded to its suzerain’s
demands for aid in China's wars with
its neighbours. Moreover, Balhae wasactively developing its foreign ties andgradually became a recognized centreof trade, culture and learning. Balhaesent envoys to Japan and, at thereceptions held for the Balhae envoys,
the parties not only engaged inbusiness negotiations, as we would say
today, but held poetry tournaments.
Another interesting fact: Balhae
considered education so importantthat members of the nobility wereforbidden to marry before completing
their education.
Balhae had a very interesting
structure: it had five capitals, and theentire territory was divided into 15
regions. Their exact locations are still
debated but it is currently believedthat the Suifen region, so named
after the ancient name of the River
Razdolnaya, spanned the south of
Primorye. Today, Ussuriisk stands
where Suifen’s administrative centre
used to be, and archaeologists havediscovered a large number of ancientartifacts there.
Even so, Russia’s most famous
Balhae monument is off to the south,
a short distance from the Kraskino
hamlet in the Khasansky District ofPrimorye. Pallady Kafarov, one of
the founders of Russian sinology,
believed this was the location of the//	
In 1234, Aizong, the last emperor of Jin, committed suicide in order to escapecapture by the Mongols

120

port from which envoys sailed toJapan. The settlement is shaped likea pentagon, effectively protected bya moat and walls. A broad street runs
from its southern gates. It used tohave palaces and temples, the remainsof which were found, although thebuildings themselves had been
destroyed over the centuries, partly
because local peasants used theancient stones to build their houses.
A Golden Empire in every
sense
The Balhae Kingdom flourished forabout two centuries; it was Primorye’s
first fully-fledged state. However, inthe early 10thcentury, the Khitan, anomadic people who lived on lands
that are today part of Mongolia
conquered Balhae and made it part of
the Liao Empire.
Approximately at the same time,
the Jurchen, descendants of theMohe and other peoples from theAmur region, appeared on the worldstage. Initially, there were many tribes
but, subsequently, the tribes began
to form alliances; that development
concerned the Khitan, who declared
war on their disobedient vassals.
Surprising, they suffered defeat at
the hands of the Jurchen. Historians
believe it happened mostly due toarrogant Emperor Liao’s mistakes,
since his soldiers were poorly trained
and lightly armed.
In 1115, Aguda, the chief of theJurchen, announced the foundationof his own state named Jin, literally,gold. The Jurchen conquered boththe lands of the Khitan and theentire north of China. In its heyday,
the Golden State spanned hugeterritories from the Korean Peninsula
to Manchuria. Like Balhae, the Jin
Empire had five capitals. The Jurchen
inherited other traditions from theirpredecessors, too.
The Jin Empire had excellent
metal craftsmen working with nonferrous metals, potters, woodworkers,
and tanners. Jurchen armourers weretrue innovators: the first mentions offire weapons come from the historyof the Golden Empire. In the 1970s,
in the Nadezhdinskoye District ofPrimorye, archaeologists discovered asettlement they named Ananyevskoye
after the nearby river. They found//	The battle of the Mongols and Jurchens in miniature "Jami at-tavarih" – a historicalchronicle compiled by the heirs of Genghis Khan

remains of over a hundred buildings,
items made of various metals (gold,
silver, bronze, iron, lead), stone,
wood, clay and glass. Yet the main
sensation was the earliest metal
gunpowder shell: a five-kilo castiron ellipsis from which metal spikes
with triangular heads protruded. Thisamazing find is currently exhibited in
Vladivostok, in the Museum of theInstitute of History, Archaeology andEthnography of the Peoples of the Far
East.
The culture of the people of
the Golden State deserves a special
mention. People of Balhae used
Chinese characters, but the Jurchen
created their own syllabic writing
system. Hela, the third emperor of
the Jin Dynasty, is credited with thisinvention. Archaeological finds showthat not only rich people, but also
average craftsmen were literate: theirstamps bore their names. Jurchenbronze mirrors prove that the Jin
Empire had well-developed appliedarts; Primorye museums hold abouta hundred such mirrors. They arerichly decorated with various narrative
pictures and are exquisitely beautifulbut, unfortunately, they fascinate not
only archaeologists, but illegal diggers
as well.
Artifacts made by the Jurchen
can be found across all Primorye.
Sometimes discoveries are accidental.
For instance, in 2010, archaeologists
found a mediaeval burial in thePartizansky District when a powerline was being constructed. There
are many monuments in Ussuriisk,
since it had been the site of one of
the administrative centres of theGolden Empire, and the Jurchen
often settled where old Balhae
cities used to be. One of the main
monuments is Krasny Yar settlement,with its ramparts that stretched formany kilometres; archaeologists also
found artifacts that allowed them toreconstruct the armour of a Jurchen
warrior.

The decline of the Golden
Empire started in the 13th century,
when it attracted the attention of
the Mongol state. Genghis Khan’s
first major military campaign was
to defeat the Jin Empire, and it
launched the succession of his great
victories. The war was preceded bylong preparations; its significanceis evidenced by the fact that theGreat Khan personally led his army
into the decisive battle. The Golden
Empire could not withstand theMongols’ onslaught. At first, it split
into several states and the Eastern
Xia state emerged in Primorye.
Initially, it even succeeded inpreserving its independence. Yet, in
two decades, everything was over:
the Mongols conquered the Jurchen
Empire entirely. Jurchen cities thatabsorbed the legacy of the Moheand Balhae could not regain theirformer glory and, today, historians are
painstakingly restoring the relics ofthat amazing era.

121

GENIUS LOCI

Joy amid failure

Anton Sobchenko,
journalistT

he Crimean War of
1853–1856 was a harsh trial
for the Russian Empire
and the most shamefuldefeat suffered by the Romanovdynasty. It is remembered not
only for its consequences which
undermined Russia’s international
status – primarily the prohibitionon the presence of its naval fleet
in the Black Sea, in effect for a
decade and a half – but also forthe unprecedented number ofcasualties, and for the scale ofthe coalition that opposed Russia,
comprising Britain, France, theOttoman Empire, and the Kingdomof Sardinia.
Although it became known tohistorians as the Crimean War after
the place where the main battles
were fought, war was waged along
almost the entire length of Russia’sborders, affecting even the Far East.
As strange as it may sound, the war
actually had a positive effect in the
Russian Far East. It served as thefirst test of how tightly bound thisregion was to Russia and became acatalyst for further development of
the Far East.

The Aurora’s act of bravery
The Russian Empire expanded tothe shores of the Pacific Ocean
back in the seventeenth century
but for a long time, the Far East‘enjoyed’ the position of an outpostof a huge country and attention was
not exactly lavished on it. Regularcommunication with the Empire’s
centre was difficult; the region
lived its own life isolated fromthe hustle and bustle of the capitaland the intricate web of global
politics.

“You have fully justified our trustin you”, was the praise Emperor
Alexander II offered to Nikolay
Muravyov, Governor of Eastern
Siberia, upon conclusion ofagreements with China that opened
up a new chapter in the historyof the Russian Far East. Thesedevelopments were preceded by bothcareful diplomatic work and the
difficult Crimean military campaignthat brought Russia losses in Europe
and victories in Asia.
// Frigate "Aurora"

122// So today looks Avachinskaya Bay – the main battle site

The situation began to change
in the nineteenth century. Asia –China, diminishing under the Qing
dynasty, Korea, and Japan in its selfimposed isolation – was attracting
increasingly intensive colonial andcommercial interest on the part of
the European powers. St. Petersburgclosely followed the activities ofBritain and France, attempting toassess the dangers Russia’s Far East
might face in the event of largescale hostilities.
As part of the Emperor’s Asianpolicy, in 1852 Russia sent ViceAdmiral Evfimy Putyatin on a
mission to Japan on the illustrious
frigate Pallada, celebrated by thewriter Ivan Goncharov. The mission
resulted in the signature of thefirst ever Russia–Japan friendship

The Crimean War after the place
where the main battles werefought, war was waged along almost
the entire length of Russia’s borders

treaty. In August 1853, the frigate
Aurora left Kronstadt. Her captain,
Ivan Izylmetyev, was ordered to join
Putyatin’s mission; separately, he
was informed that he might haveto go into battle against British or
French vessels.
The international situation was
heating up. War was about to breakout. A lone Russian ship could
become easy prey. Having travelled
an incredible distance across the
Atlantic, with a port of call in Riode Janeiro, and then rounded CapeHorn, the frigate was blocked in the
Peruvian port of El Callao by British
and French ships. While AdmiralDavid Price and Admiral AugusteFebvrier-Despointes of thus far‘friendly’ ships held receptions inhonour of the Russian captain, thelatter was seeking ways to escapetheir intrusive attentions.
He succeeded on 14 April 1854,
when, under cover of fog, theAurora broke through the blockade.
After 66 days and 9,000 nautical
miles (a record non-stop voyage
for that time), the Aurora docked at
Petropavlovsk-Kamchatsky. There,

123

GENIUS LOCI

Vasily Zavoyko, military governorof Kamchatka, informed Izylmetyev
that Russia had declared war on
Britain and France and that theenemy had decided to blockade
Russia’s ports on the Pacific,
news graciously passed to Russia
by the American Consul and by
Kamehameha III, King of Hawaii,
who sent it via American whalers.
Nikolay Muravyov, Governorof Eastern Siberia, had become
concerned with reinforcing thedefence capabilities of Petropavlovsk
back in 1849. Yet the work had notbeen completed and the port faceda serious threat from the enemy, whoenjoyed superiority in the region. The
Aurora’s arrival was very timely; partof her crew went ashore to bolster the
garrison; her starboard cannon wereused to hastily assemble seven artillery
batteries that covered the city from thesea. The Aurora herself and the Dvina
brigantine, which arrived later, turned
their port sides to the haven’s mouth.
A ray of light
The Crimean War was lost but it
remained forever in the national
memory as a treasure trove of
examples of Russian soldiers’
heroic endurance. The defenceof Petropavlovsk was one such
example. Historian Yevgeny Tarlecalled it “a ray of light” in thedarkness of defeat.
The forces were not evenly
matched. To repel an attack, the city
had just under 1,000 soldiers and67 cannon. On 29 August 1854, theadmirals whom the Aurora had given
the slip in El Callao arrived on the
Far Eastern shores with their ships.
The united British–French fleet
comprised six vessels (including a
manoeuvrable steamer, a novelty
at the time), 216 cannon and 2,700
crewmen, 500 of them troopers.
On 30 August, having agreed
a plan, the allies began preparing
to storm the city and putting
their ships in position but their
preparations were overshadowedby the death of British Rear Admiral
Price. One version claims he shot
himself accidentally, another thathe committed suicide. Historians
believe that the Aurora’s escapefrom El Callao was the trigger for
Price’s death, since her arrival
in Petropavlovsk significantly
strengthened the city’s defences.
Distressed by his failure to carry out
his orders, Price did what he did.
Whatever the true story,
command passed to his Frenchcounterpart, Admiral FebvrierDespointes. On 1 September, theallies made their first assault on the// Ship cannonsat the artillery batteries of Petropavlovsk//	Подпись фото124

city. A fierce bombardment from thesea destroyed some of the coastal
artillery batteries and allowed thetroopers to land; even so, they failed
to capitalize on their advantage.
Another, more intense assault was
launched on 5 September. The
battle at Nikolaeva Hill lasted over
two hours, yet the enemy once again
failed to breach the Russian defence.
Having suffered losses of up to
400 men, the troopers retreated
ignominiously. The fleet weighedanchor and withdrew from Avacha
Bay. Petropavlovsk had withstood
the assault.
Only in November 1854 did
St. Petersburg learn of thesedevelopments. Emperor Nicolas I
was very moved by the news. Prince
Dmitry Maksutov, who had fought
at Petropavlovsk and brought theEmperor the good tidings, received
a promotion and was awarded theOrder of St George (Maksutovwould go on to serve as the lastRussian governor of Alaska). Russian
newspapers triumphantly reported
the victory. The foreign press
ridiculed the joint British–French
fleet in cartoons and mocked its
commanders. On the way to its
new station, the enemy fleet lost
Rear Admiral Febvrier-Despointes,

who died off the coast of Peru. It is
generally believed that the Admiraldied of nervous strain caused by thedefeat, which the allies’ supremacy
in numbers and technology madeparticularly bitter.
The road East
Despite the successful outcome of
the battle, the Siberian Governorate
decided to evacuate Petropavlovsk
and its entire population in order
to avoid another siege. This proved
to be a wise decision: less than ayear later, a huge fleet sailed tothe shores of Kamchatka but had
to confine itself to a pointed, butmeaningless bombardment of anempty city.
Chasing the residents ofPetropavlovsk was also useless. The
British and French did not know
the coastal lie of the land; they
did not even know that Sakhalin
was an island and that the Amurwas navigable. That afforded theevacuees a chance to hide at themouth of the river, where they built
the city of Nikolayevsk, the future
capital of Primorye Region (today
it is an administrative centre in
Khabarovsk Territory).
Against the background of the
failures suffered in the Crimean
campaign in Europe, whichconcluded with the humiliating
Treaty of Paris, Russia defended
its claims to an active role in Asia.
The Russian Empire was rapidly
building its presence in the Far East.
In order to create international
legal foundations for developing its
holdings and securing advantages
in cross-border trade, an agreementwith China was required.
The status of the two empires
had changed significantly since 1689,
when the first ever Russia–China
treaty was concluded in Nerchinsk.
Russia was gaining strength, whereas// Monument to Muravyov-Amursky in Khabarovsk on the face of a 5,000-rouble banknote

China, weakened by the Taiping
Rebellion and the Opium Wars, waswaning. The most painful and, at thesame time, most pressing issue wasto delimit the two countries’ borderalong the Amur and the Ussuri.
Having ascended to the throne
in 1855, Alexander II confirmed
Nikolay Muravyov’s authority to
conduct negotiations with China;
the Emperor disregarded theconcern loudly voiced by Chancellor
Count Karl Nesselrode that China
was hardly likely to agree to cede
any lands without a war. In 1858,
taking advantage of the failures of
Qing’s China, Nikolay Muravyov
signed the Treaty of Aigun, gaining
the entire right bank of the Amurfor Russia. For that treaty, Muravyov
was granted the title of Count
Amursky and the rank of General of
the Infantry. The other lands (theAmur’s left bank and the lands fromits confluence with the Ussuri) were
granted to Russia in perpetuity in

The logic of the Eastern expansion
demanded that the state maintainits tangible and ubiquitous presencealong its distant borders

the Treaty of Tianjin (confirmed by
the 1860 Convention of Peking).
The Russian Far East wasdeveloping rapidly. Back in 1856,
Blagoveshchensk was founded,becoming Russia’s main strongholdon the Amur. In 1858, construction
began on Khabarovsk, the informal
capital of the entire region. A longtime was spent seeking a convenient
harbour on the Pacific that would
allow year-round deployment of thenaval fleet and would be close to themain Pacific trade routes. Zolotoy
Rog Bay was chosen and Vladivostok
was founded there in 1860. In
1871, the main base of the Siberian
Military Fleet and the headquartersof Primorye’s Governor were moved
there from Nikolayevsk-on-Amur.
Vladivostok also rapidly developed
into a major trade centre; almost
immediately, it gained the statusof a free port, thereby attracting
entrepreneurs from Russia and fromother countries.
The logic of the Eastern
expansion demanded that the state
maintain its tangible and ubiquitouspresence along its distant borders.
The victory in Petropavlovsk
facilitated this, remaining one of theglorious pages in the history of theRussian military, a source of joy amid
the failures of the Crimean War.

125

GENIUS LOCI“The East shall begoverned from here!”V

Anton Chekhov visited Vladivostok in 1890
when returning from Sakhalin. Fourteen years
later, in a letter to the writer Boris Lazarevsky,
he shared his pleasant memories of that visit,“When I was in Vladivostok, the weather was
wonderful and warm, even though it was
October. A real live whale was swimming in thebay and splashed the water with its huge tail. In
short, my impression was a terrific one… Life in
Vladivostok, at least in peacetime, is European
in style, and far from dull… If you are a hunter,all the talk is about hunting tigers! And suchdelicious fish! Along the entire coast, there arelarge, delicious oysters.”

126“The idea of bolstering
the defences of the fortressis guided by the motto:‘the Russians are here
to stay'."

Vladivostok as describedby eminent travellers, statesmen
and literary figuresladivostok was foundedin 1860 in the harbour the
Chinese called Haishenwai(“sea-cucumber bay”) andthe British called Port May. It firstserved as the Russian Empire’s military
outpost in the East. Soon, Vladivostok
was granted the status of a free port
(porto franco). Russian settlers andWestern traders were drawn to thecity, as were people from China,
Korea and Japan… The cultural codeof Vladivostok (“Russia’s wondrous
impasse”, as the poet Ivan Elagincalled it) was influenced by both
geography and history. This is a citythat lives at a crossroads of governing
forces: it is a city of the north and of
the south, a city that is both Asianand European, a city both military (itis home to the main base of Russia’s
Pacific Fleet) and peaceful. During thehundred and fifty years of its history, it
has been visited by numerous famous
people. Needless to say, the charm of
this amazing city made an impression
on each and every one of them.

Major General Alexey
Shoshin, who built thedefences of Vladivostok’s
fortress, said:

The explorer Nikolay Przhevalsky, who had
explored Primorye in 1867–1869, noted:“Vladivostok stretches for over a versta[approximately a kilometre] along the northerncoast of Zolotoy Rog Bay, which is deep, wideand surrounded by mountains on all sides, so
it is extremely convenient for docking ships. In
addition to the army barracks… it has about 50
government-owned and private buildings andabout twenty Chinese fangzis [traditional homes].
The number of residents, including the military
and aside from the Chinese, is up to 500 people.”

From the memoirs of the statesman:
Sergey Witte:“When I became Transport Ministerin February 1892, during one of myreports, Emperor Alexander III told
me about his desire – his dream – tohave a railway built from European
Russia to Vladivostok… It was as if theEmperor complained to me that… he wasconstantly encountering resistance to thequick realization of this idea from theministers on the ministerial committee
and the State Council. It was as if I gave
him my word I would put his idea into
practice.”
The work had been mostly completed
by 1905 and, with the opening of
the Khabarovsk Bridge across the Amurin 1916, the Trans-Siberian Railway wascompleted. To this day, it is the world’s
longest railway.

Count Nikolay Muravyov-­Amursky, Governor General of
Eastern Siberia, who surveyed thecoasts of Zolotoy Rog Bay from theAmerica steam corvette in 1859,
decided to found a military post
there and came up with a name for
it: Vladivostok (meaning “to govern the East”), based on the name
“Vladikavkaz” (“to govern the Caucasus”),“A splendid port! The East shall begoverned from here!”

The writer Alexander Fadeyev described
Vladivostok at the time of the Civil War in his
novel The Last of the Udege:

Another world-famous explorer, the Norwegian Polar
explorer Fridtjof Nansen, visited Vladivostok in 1913:“The view of the city from the sea is magnificent; it would
be difficult to imagine Vladivostok being noticeably
inferior to any other city in this regard. It is a terraced
city, and is greatly reminiscent of Naples. There is no
Vesuvius in the background, but there is a wonderful
harbour and beautiful islands … On every island,on every cape, wherever you look, you see fortresses,
strongholds and cannons.”“The bay was packed full of merchant andmilitary vessels, sailing ships, and steamers.
Rowing boats, Chinese sampans, and small
barges shuttled between them… In themountains, in the so-called Rotten Corner andon Cape Churkin, fires thawing out the groundwere burning day and night: new houses,
barracks and living quarters for the military,
hospitals, and prisoners were being built. Day
and night, icebreakers rasped through the ice on
the bay; clouds of black, orange, and pink smokehung over the bay. Wharves and train stations
thundered with military equipment being loaded
and unloaded. Powerful foreign vessels sailed
away loaded with Siberian ore, timber, fish; adry, piercing, freezing wind from Verkhoyansk
sent in their wake rusty thunderclouds of sandand gritstone from the mountains.”

127

GENIUS LOCI

From Alexander Tvardovsky’s
poem Distance after
Distance:

The poet Pavel Vasilyev described Vladivostok in
1929 thus:“So different – and yet
Like a younger brotherTo an elder brother,
Sharing appearance and blood
Vladivostok and Leningrad.”On 20 November 1922, soon after Vladivostok was seized by the army of the Far
Eastern Republic and then joined theRussian Soviet Federative Socialist Republic,
Vladimir Lenin, Chairman of the Council of
People’s Commissars, said at the plenary
assembly of the Moscow Soviet of People’s
Deputies:“You know how long the Civil War has lasted,
how much it has taken. And now, the captureof Vladivostok has shown us all (Vladivostok is
far away, yet is our city still) that there exists
an overall momentum in our direction, in the
direction of our conquests. Both there andhere we have the RSFSR. This momentum has
rid us of our civil enemies and of our foreign
enemies.”

The writer Sergey Dovlatov had never been to Vladivostok
but, in the collection of stories Ours: A Russian Family Album,
he described the city where his grandfather and father lived
in the first half of the 20th century:“Vladivostok was a city of theatre, it was like Odessa. Foreign
sailors made trouble in the port’s restaurants. African music
was playing in the city gardens. Fops in acid-green trousers
sauntered down Svetlanka, the city’s main street. Patrons incoffee houses discussed the latest suicide committed due tounrequited love.”“The sweet, wine-like smell of weeds decaying on
the shore mix with the smell of smoke and wet
swollen trees. The trees clamber up the slopes, up,
up, following the houses that climb ever higher. The
sunset, heavy and plump, like a huge red jellyfish,
is rocking gently above Amur Bay. The street isracing up one of the hills; at its end, you can see awide strip of sea. … Vladivostok is reminiscent… ofa huge dying fire, a heap of blue and red lights.”

Since 1958, Vladivostok has been hometo the main base of the Pacific Fleet
and the city was off-limits for foreign
citizens, although Soviet citizens could
obtain a special pass to visit it. The
singer and poet Vladimir Vysotsky
visited Vladivostok in 1971, although,back in 1967, he sang:“They opened the country’s farthest nook,
Where even awards fail to entice visitors,
Vladivostok’s port is open to visits,
And Paris, too, but I need not go there!”In fact, it would be another 25 years before
Vladivostok became open to visitors, after
President of the RSFSR Boris Yeltsin issued adecree entitled

Nikita Khrushchev,
General Secretary of theCentral Committee of
the Communist Party of
the Soviet Union, was thefirst leader of the country to visit Vladivostok. His
1959 visit was memorable
for city residents becauseof the slogan:“This will
be ourSoviet San
Francisco!”

128“On opening the city of Vladivostok to visits byforeign citizens”(signed on 20 September 1991, entered into
force on 1 January 1992).

From the book My East by Ilya
Lagutenko, frontman of legendary
Russian rock group Mumiy Troll andhonorary citizenof Vladivostok:

Curiously, Ilya Ehrenburg
made the same
comparison back in 1923
in his novel Trust D.E.
The Story of Europe’s
Demise:“…As for Vladivostok,
in about 20 years,
it will rival San
Francisco…”“When I was a child in Vladivostok, there
was a silly joke that the closest nightclub was in Tokyo. Japanese long-wave
radio broadcasts were my guides in
the world of popular music… Leaving
Vladivostok is also apparently a purely
Vladivostok thing. Each person here isa ship. Sometimes the ship comes back,sometimes the ship leaves flying a new
flag. Sometimes, the ship is sold for
scrap.” Lagutenko wrote several songs
about Vladivostok, in particular, the city’s
unofficial anthem “Vladivostok 2000”
released on the 1997 album Morskaya.

The explorer and scout Vladimir Arsenyev
arrived in Vladivostok in 1900. He wrote about
city:“Vladivostok is on a similar latitude to Naples,
yet has an average annual temperature of 5°С,
the same as on the Lofoten Islands off the coastof Norway… The flora in the Amur basin isparticularly interesting, particularly as three
types converge here: Manchuria’s from the south,
Dauria’s from the west, and the Okhota’s fromthe north. The first is sub-tropical, the second iscontinental, and the third is sub-arctic.”

Alexander Mikhailov, People’s
Artist of Russia, who played
Vasily in the famous film Love
and Pigeons was a sailor in the
Pacific in the 1960s; later, he
studied in Vladivostok at theInstitute of Arts:“My first memories of Vladivostok
are always reverent. This wasa delight unlike anything else.
The first thing I will remember
forever is the smell of the sea andthe seaweed…”

129

GENIUS LOCIThe Great
Forest of Primorye
Russia has more than 100 NATURE RESERVES,
each interesting in its own way. Sikhote-Alinin the PRIMORSKY TERRITORY is a real gem. It still has plantsthat existed millions of years before man, and scientists
keep finding ever new types of animal.

//	
View from Mount Gluhomanka

130

S

ikhote-Alin means‘the land of mountainridges, rapid and cleanrivers‘ in Manchu. And,
indeed, anyone lucky enoughto visit this place gets a senseof pristine natural beauty.
Vladimir Arsenyev, author of
the famous story Dersu Uzala ,described these ‘velvety‘
mountains as The Great Forest.
Arsenyev was one of thepioneers who discovered thebeauty of the Russian Far East:
he went on several expeditions
there and used his travel notes
as the basis for his books,
which won him popularity bothin his own country and abroad.
The best season when
Sikhote-Alin attracts
the largest number oftourists is now – from Julythrough November. The mostdifficult ramble on foot is
the 56-kilometre Arsenyev
Path. It literally follows in
the footsteps of part of the
explorer’s path and takes
five days. The longest routeis 95 kilometres and leads to
Kabany Klyuch (Wild Hog’s
Spring) area. It is the only
place in mainland Russia where
you can find white Forirhododendron flowers,
a tropical relict bush, a survivalof the flora of millions of years
ago. There are also some lesschallenging routes for children
and elderly people.
In planning your trip, study
all the opportunities and pickthe most interesting. A good
way to start your acquaintancewith Sikhote-Alin is to lookat the photographs made by
Evgeny Tabalykin, himself anative of Sakhalin. Initially, hebecame interested in naturein his own neck of the woods.
However, after visiting the
Sikhote-Alin preserve, hedecided to move to Primorye.
“The magnificence and austerebeauty of the Sikhote-Alintaiga leaves no-one cold. I
became imbued with the spiritof local nature”, he says.

// Cormorants at Cape Northern// Amur tiger, the master of the coastal taiga131// Kekur ‘Gate’, the shore of the Sea of ​​Japan

GENIUS LOCI

Evgeny Tabalykin has beenworking in the preserve forthree years now. During thistime, many people have beenable to look at Sikhote-Alinthrough his camera lens: heoften exhibits his works in the
Far East and in other Russian
regions, for example, in the
Moscow Darwin Museum
project. His works have beenshown on the Japanese TBS
channel and on the European
Viasat Nature programmes
devoted to Sikhote-Alin.
The hallmark of thepreserve is the Amur tiger,
one of the most eagerly
photographed species. The
Prymorye Preserve is thelargest habitat of the species
in our country. Initially, it was
created for a very different
purpose, to restore the sable
fox population, which was
all but exterminated in thefirst half of the 20 th century.
This is one of a vast number
of Red Book animals. It isa truly pristine land: since
1979, Sikhote-Alin has beenpart of the World Biosphere
Reserve network and, in
2001, it was included on the
UNESCO list of World Natural
Heritage.
Photo
Evgeny Tabalykin// Water and ice create incredible beauty cosmic images// The white-tailed eagle is a rare species included in the Red Book of Russia//	Rhododendron Fori Relict tropical shrub//	
Seashore fog

133

GENIUS LOCI

Bridge as a Symbol
The bridge built to Russky Island in Vladivostok
for the APEC 2012 summit has become a symbol of
the Primorye capital in just five years. No wonder
it is going to appear on the new RussianRUB 2,000 banknotes.

Pavel USOV,
journalist

The Crown of BridgeBuilding Art
The magnificent architectural
structure connecting the capitalof Primorye with Russky Island issimply striking in its combinationof power and grace. This is a real
gem of Vladivostok. It is particularly
impressive in the dark, when floodlit,
and all the structures sparkle andshimmer with different colours. The
bridge is almost 1.9 km long, and 3.1
km including trestles. Its pylons arehigher than the Eiffel Tower, and thelength of all the cable stays is 54
km. The distance between the span
structure and the water surface is atleast 70 metres, which enables evenocean vessels to pass unobstructedunder the bridge.
According to specialists, during
the design phase, the best world
experience was taken into accountand the latest scientific developments
were applied and, during theconstruction phase, the latest
technologies in bridge-construction
were used. So there can be no doubt
about the structure’s reliability anddurability.
Leading design bureaux submitted
ten architectural and engineering

projects for the tender. The winner
was an original design of a cablestayed bridge. The French scientists
who developed the cable-stayedsystem offered a special steel
composition capable of withstanding
temperatures from minus 40 to plus
40 degrees. In addition, the need forincreased aerodynamic stability andlocal features of navigation, complex
seismic, geological, and climaticconditions were also taken into
account.
SK MOST and NPO Mostovik
performed the construction works.
Some of the infrastructure, e.g., thepower supply and illumination, wasdone by specialists from MT Elektro.
Construction was launched in August
2008 and, in under four years, in April
2012, the 1,104 metre central spanconnected the bridge crossing.
Many things were new for Russian
bridge builders during this project’s
implementation. “Before this, inRussia there had been no experienceof building pylons with a height ofover 300 metres, no experience ofdrilling wells with a diameter of morethan two metres in the open sea,
installing a panel weighing up to 380
tonnes and a 580-metre-long cable”,
recalls Alexei Baranov, who at thattime was head of the Vladivostok
branch of SK MOST. For everyone,according to Alexei, from ordinary
workers to department managers,
erection of the bridge was a real test.

43.5 months
taken to build the bridge

265.5 thousand

cubic metresof high-quality concrete mixture used in
the construction

23.000 tonnes
weights the main metal beamof the central span

134

135

G ENI U S LOCI

Symbolic
banknote
The bridge to Russky
Island appeals not only
to residents of Primorye.
The unique bridge crossing
won the nation-wide vote,beating more than 5,000
other sights in our country.
Banknotes with the facevalue of RUB 2,000 bearing
its image are expected toappear before the endof the year.

For high riggers and welders – workat a height of up to 324 metres; forcrane operators – the need to workwith literally surgical precision; forthose who delivered machinery andcargo in the tough icy conditions – aninvaluable experience unlikely to beobtained elsewhere. Although thebridge was erected in an extremely
short time, special attention was paid
to the safety of its operation. Morethan 1,300 sensors integrated into
a complex automated monitoring
system perform real-time control of
all the parameters of the cable stays
and the state of the span structurestate (taking the direction and speedof the wind, precipitation, humidity,
traffic density, etc. into consideration).
In a severe storm, vehicles are notpermitted to use the bridge.
The Island: Yesterday
and Today
Thanks to the opening of the bridge,change has also come to Russky
Island. Since the early 20th century,
its main purpose has been defenceof Vladivostok. It housed primarily
naval military units. In the 1990s,
most of them were closed down.
As a result, the infrastructure began
to deteriorate, as did transport
connections between the island andthe city. Ferry passenger ships grew

In Russia there had beenno experience of building pylons
with a height of over 200 metres

136

1.885 mlengthof the bridge

3.100 mlengthof the bridgewith trestles

29.5 mtotal widthof the bridge

21 m

width
of the roadway

320.9 mheightof the pylons

137

GENIUS LOCI// "Primorsky Oceanarium" – another visiting card of the Russky Island

Summary
Modern day Russky Island ismostly associated with the Far
Eastern Federal University,
located near Maly Ajax Bay. A
total of 30 thousand students
from 76 regions of Russia anda number of countries of the
Asia-Pacific region study at
the FEFU. Almost half of theforeign students are from
China: they study languages,
economics and engineering.
The Primorsky Oceanarium
Scientific and Educational
Complex is another attractionof the island. The building,with an area equal to five
football pitches, resembles
a slightly opened whiteshellfish. The main tank, witha 70-metre underwater tunnel,
is located in the left wing. The
right wing is occupied by adolphinarium with a swimming
pool arena and stands for 800
seats.
In addition, it has 135
aquaria with representativesof all the world oceans.

138

Now discussions are being held
regarding the possibility of erecting
another bridge – from Russky Island
to the neighbouring island of Elena
old, their frequency being greatly
dependent on the weather.
Everything changed with the startof preparations for the APEC summit.
It was then that further prospects
for the island’s development wereannounced, and it should become agrowth point for the entire Far Easternregion.
Today, it hosts large-scale Russianand international events in various
spheres, from sports to investment
activities. For example, in September
2015, the 1st Eastern Economic Forumon Russky Island gathered more than
2,500 participants from 32 countries.
Within the scope of the Forum,
Primorye Territory signed 22 businessagreements envisaging investmentsof up to RUB 100 billion. The next
summit was even more respectablein terms of its participants: 3,500
guests from 56 countries. Primorye
concluded 59 agreements, with thevalue of contracts rising to nearly RUB
200 billion.
Some weight is given to certain
investment projects by the Russky
bridge itself. For example, on the
Nazimov peninsula, located close
to the bridge, it is planned to open
a fish processing and sale complex,
as well as a market, cafés andrestaurants. According to Vladimir
Miklushevsky, Head of Primorye,
the Nazimov peninsula is a goodplace to attract investors. All thenecessary infrastructure is already inplace here.
The Russky bridge might not be
the end of bridge construction in
Vladivostok. Now discussions arebeing held regarding the possibility oferecting another bridge– from Russky
Island to the neighbouring islandof Elena. Who knows, this building
may become a landmark for future
generations as well.

GENIUS LOCI

freshly caught and restaurant menuschange with the season.
In Vladivostok, seafood, wild
plants from the taiga and meat arecooked and served in a wide variety
of ways: raw and boiled, grilled until
crisp or simmered in a wok, sun-dried,
pickled, smoked… But there is an
unspoken rule in Far Eastern cuisine:
seafood should be cooked as little
as possible in order to preserve thetrue flavour. This is how, for example,‘five-minute’ sea cucumber and sea
cucumber skoblyanka is prepared.
Indeed, seafood is often eaten raw
with various sauces or simply somelemon juice. Order oysters or sea
urchin caviar, and you can be sure they
were caught or harvested earlier thatvery same day.
And if you’d like to take someseafood home, choose vacuum
packed and flash frozen products. Red
caviar is best in the second half ofthe year: harvesting begins in July, so
it will be free from preservatives andnot too salty. Locals haven’t bought
seafood from fish markets for sometime. Every inhabitant of the Far Eastis sure to have the phone number of
their own supplier, which they will
gladly share with guests.

A Far Eastern
cocktailShchi made with seaweed rather than cabbage, pelmeni
stuffed with Manchurian deer, mussel pilaf, Russian saladwith crab, Kamchatburgers... These are all dishes which
represent Vladivostok cuisine, a true melting pot of foodcultures – and all based on the produce to be foundin the sea and local forest.

Margarita Romanova,
journalistVisiting Vladivostok forthe first time, people
often find it difficult tohide their surprise. It isa three-dimensional, one-of-a kindcity, sandwiched between hills andextending up their slopes, an intricate
mix of various styles and epochs.
Here, traditional Orthodox churches
stand side by side with stone houses
resembling mediaeval castles, andSoviet-era buildings jostle for position

140

with stylish European architecture.
Forget about leisurely strolls – you’ll
have to conquer the steep climbs andbattle the winds, which seem to blowin all directions at the same time.
However, restaurants to suit any taste
and budget await weary travellers at
every turn. Almost every one of themoffers a sea view “with compliments ofthe chef”.
Everything at once
Vladivostok was founded as
Russia’s outpost on the Pacific
Ocean, but it quickly transformed
from a military foothold into amajor commercial centre. As themoney poured into these maritime

lands, so too did migrants fromright across the Empire: Russians,
Ukrainians, Belarusians, Balts,
Moldovans, Finns, Poles… Koreans,
who had already lived in the southof Primorye for hundreds of years,
also settled in Vladivostok, as wellas Japanese and Chinese migrants,
who had previously appeared only
sporadically during the seafood
harvest.
European and Asian peoples met
on the edge of this vast country andlearned to live side by side. Theircultures and traditions mingled, andgrew into the Primorye land. This is
how Vladivostok’s truly distinctive
cuisine was born.

Needless to say, it is based on local
produce. And the locality is reallyunique! The taiga, or forest, boasts
an abundance of native Far Easternwild plants, including magnolia vine,
actinidia, pine nuts, ferns, wild garlic,mushrooms, and berries. During thehunting season, deer, Manchurian deer,
and bear meat are all available.

The Sea of Japan is also home
to numerous delicacies – bivalves(scallops, mussels, oysters, ark clams,
Asian clams, surf clams and whelks),
echinoderms (sea urchins and sea
cucumbers), crustaceans (crabs,
shrimp, uneven sculptured shrimp),
cephalopods (squid, octopus), andseaweed (kelp). All of these riches are

In Far Eastern cuisine: seafood
should be cooked as little
as possible in order to preserve
the true flavour

Multinational cuisine
It’s hard to say which cuisine has
been used as the basis for local foodtraditions. Finding a restaurant which
focuses on a single concept is difficult
in Vladivostok, as chefs ingeniously
juggle various cuisines. One thing iscertain: you are likely to encounter acompletely unexpected ingredient ineven the most familiar dish.
The traditions of Ukrainian andRussian cooking are very strongin Primorye. All of the items on
the menu sound familiar, but pay
attention to the details. You mightcome across okroshka cold soup madewith king crab, taiga borshch withdeer meat, mushrooms and fern, or
shchi with seaweed and mussels. Be
bold and ask for Russian salad withcrab meat, a seafood pot roast, orpelmeni stuffed with delicacies of thesea – whelks, scallops, or squid. As formussel pilaf, various fish soups, fernwith pork and vegetables – they havealready become classics of Far Easterncuisine.

141

GENIUS LOCI

Local wines made fromtart Amur grapes, healing
magnolia vine, actinidia,
and fantastic port wine distilledfrom wild plants
Traditional European dishes are
popular, too: numerous restaurants
offer duck confit, pizza, or pasta,
for instance. But ask the chef to
add a pinch of Far Eastern flavour
to the dish and you’ll get pasta withcrab, black ravioli with red caviar
and halibut, pizza topped withall kinds of seafood or king crab
croquets in cheese sauce. Even
fast food has its own distinct touch
here – a tender crab patty topping

anything you wish – from craft beer
to exclusive spirits?
You should also investigate thetaiga infusions made from local
wild plants: viburnum, red bilberry,
cranberry, sea buckthorn, or cedar
cones. There are also local wines
made from tart Amur grapes,
healing magnolia vine, actinidia, andfantastic port wine distilled fromwild plants.
After a varied and heartylunch, you’ll certainly be offeredteas brewed from herbs and vines
gathered in the taiga. Tea is usually
drunk with Far Eastern sweet
treats – chocolate with sea salt andseaweed, actinidia jam, and pinecone marmalade. Locals will argue
that Ptichye Moloko sweets made at
the local confectionery factory are
the most delicious in the world. You
should definitely try them, as they are
made using natural agar-agar and therecipe has been kept secret for many
years.
There’s no chance that
Vladivostok will leave you indifferent.
With its light blue sky, deep blue sea,rich air, the wind ruffling your hair, andpeople from all over the world, thisbustling story is going to grab you andnever let you go. And you simply must
taste it too, or else your impression
will be incomplete.

might be stuffed into a common
burger.
The Asian imprint is evident
as well: first and foremost in spicy
starters whose variety impresses
even Korean tourists. For instance,
there’s kimchi, a dish made fromcabbage that is sometimes hot
enough to bring tears to the eyes ofan unprepared eater. Or how about
hoe – fish pickled in spices? Ferns,
seafood, meat, spicy carrot – any

The last of the Udegheis
Many centuries before the migrants came to Primorye,
it was inhabited by the Udegheis, “the forest people”, asfamous traveller Vladimir Arsenyev called them. Today,
the Udeghei settlements with their national traditions,religion, and cuisine remain only in the north of theterritory. But you can still try the food of the indigenous
peoples at cooking workshops held in Vladivostok by
native Udegheis. They’ll treat you to lyantsai salad withal dente potatoes shredded into small flakes, meat, andonions. Or some fungutsai – Manchurian deer meat withbeans, cucumbers, and onions. Another indigenous dish istala, or talakhon – fresh fish (lenok, grayling, pike, taimen)
cut into pieces and covered with salt and pepper. Before
serving, tala is usually frozen for about half an hour,
resulting in a great chaser for taiga infusions.

142

vegetables really – or even bean
sprouts are all mixed with sauce
and spices in various proportions
according to a Korean recipe. You end
up with a hundred dishes for every
occasion as a result. On the streets,
you might find another Korean
specialty and a genuine symbol of
Far Eastern fast food – the pyeonsu,
a steamed pie filled with cabbage,
meat, and pepper.
The proximity of the Celestial
Empire shows as well: Chinese
restaurants are scattered all over
Vladivostok, from so-called chifanki(small, low-budget cafés) to smart
restaurants with dining halls
decorated with gilded dragons. Manyof them are located in old buildingsin Millionka, a former Chinese districtin the centre of the city, where prerevolutionary buildings still stand.

Last but not least, no guide could
fail to mention Japanese restaurants.
The most popular, however, offer a
Pan-Asian menu with a classic choiceof Thai, Vietnamese, Indonesian, andother Asian dishes.
Not by bread alone
Vladivostok has always been
primarily a port city. Japanese spirits
have been present here since Soviet
times, when the sailors broughtthem as contraband from foreign
trips. Some restaurants still haveseveral brands of Japanese whisky
or wine on their bar menus. These
are also sold by sailors and at thebiggest car market in the Russian Far
East, Zeleny Ugol (Green Corner),
at a very low price. But are they
worth trying, when any restaurant
worthy of the name will serve you

143RoscongressРубрика pубрика

146'MADE IN RUSSIA' BRAND
for promoting
the Far East
HEAD OF THE 'MADE IN RUSSIA' NATIONAL BRAND PROJECT(ROSCONGRESS FOUNDATION) MIKHAIL SADCHENKOVSPEAKS ABOUT WHETHER THE FAR EAST NEEDS A SEPARATE
BRAND OR WHETHER THE REGION'S POSITIONING SUCCESSFULLY
FITS INTO THE CONCEPT FOR THE NATIONAL BRAND
AGGREGATORRUSSIAN ENERGYWEEK:taking discussion
to a new level

148

IN BUSINESSMODE

THE ROSCONGRESSFOUNDATIONORGANIZES KEY FORUMSIN RUSSIA AND ABROAD.
WE INVITE YOU TOATTEND OUR UNIQUE
EVENTSINVESTMENTS in the future
Head of Volunteers for the Roscongress
Foundation EKATERINA SAGADIEVA SPEAKS ABOUT THE
VOLUNTEER MOVEMENT AND ITS IMPORTANCE FOR YOUNGPEOPLE FROM DOZENS OF RUSSIAN CITIES162

SPORTING
aspirations

150

DEPUTY DIRECTOR OF THE
ROSCONGRESS FOUNDATION
AND HEAD OF THE SPORTS,
ENTERTAINMENT AND
SPECIAL PROGRAMMESDIRECTORATE GEORGY
BRYUSOV TALKS ABOUT THE
KEY SPORTING EVENTS AT
THE EASTERN ECONOMIC
FORUM

THE 'RUSSIAN ENERGY WEEK'ENERGY EFFICIENCY AND ENERGYDEVELOPMENT INTERNATIONALFORUM – THE MAIN EVENT
IN THE ENERGY EFFICIENCY SECTOR
IN RUSSIA – WILL TAKE PLACEIN MOSCOW
ON 3–7 OCTOBER 2017

156
152 FROMSOCHI –and into
2030
RUSSIA HOSTS
THE 19TH WORLDFESTIVAL OF YOUTH
AND STUDENTS

160

Premium
service
Deputy EEF Director
Maxim Yakovenko
on how the Forumaffects the services
industry

ROSCONGRESS‘Madein Russia’
brand
for promoting
the Far East

Does the Far East
need a separate
brand or does theregion fit neatly
into the conceptof the aggregate
national brand?
Mikhail Sadchenkov,
head of the Made in
Russia national brandproject, reflects
below on the issue.

Discussions on what theFar East brand shouldbe, whether there is aneed for it at all andwhat benefits would accrue fromcreating it have been going on foryears. There is no consensus on
the issue, with some advocating
use of the single Russian brandfor all the regions, and othersarguing that, because of theirunique culture and history, every
region deserves a brand of its own,
urging use of territory branding
to bring out their strengths andensure sustained growth of their
human and investment potential.
Both views are familiar reflectionsof the traditional argument as towhat is more important in shaping
a brand, general meanings or
specific figures and instruments ofdevelopment.
There should be no haste inanswering the question, consideringthat today branding, like any othersphere of activity, is rapidly being
developed and reappraised.
The changing culture of
consumption and production
calls for new ideas and approaches.
One not only has to be mindfulof the features of present-day
society, but also be flexible
enough to react promptly to newchallenges, helping businessdevelop on the domestic andexternal markets.
Creation of national hold-all
brands, such as Made in Russia,
is meant to harmonize all thedifferent views, striking a balance
between the practical (national
Made in Russia aggregate brand)
and semantic parts (national,
territorial, export, tourist, culturaland other brands) and ensure,through a national communications
strategy, the choice of the right
vector in government spending onmarketing.

This approach takes on
added importance in light of thefrequent changes in the world
geopolitical situation, as well
as recurring periods of global
economic turbulence resulting ina dramatic rise in the competition
between countries and between
regions within countries. Today,
competition between state support
and protectionism of certain
countries goes hand-in-hand with
soft power in the world, which
are sets of meanings promotedin the process of interculturalcommunication.
The sanctions imposed on
Russia merely made more evident
and unavoidable the economictransformation processes thatwill be compressed in time andheld back by financial constraints.
Regional policy will, therefore,
be confronted with the needto develop absolutely all the
instruments that can be used on
the external market and to builda system and a toolkit for internal
competition.
Development ofcommunications and regional
brands specifically for the Far
East can be likened to creationof a transport infrastructure forpromoting its own production,
export, cultural, and tourist
potential and human capital.
Communications issues may
pose a serious obstacle on this
path: according to the EF EPI*
rating for 2016, for instance, theRussian working population’slevel of proficiency in English isin the yellow (low) zone. Although
Internet access and modern IT
solutions can tackle complicatedIT problems, they too call for
adaptation and creation of anindividual infrastructure foreach region, where brands andcompanies become not just a link

Today branding, like any othersphere of activity,
is rapidly being developed
and reappraised

146

in shaping an image, but a fullyfledged marketing tool as part of asingle platform.
So it is impossible for asingle region to implement sucha project and creation of a Far
East brand will not solve thenational tasks of developing the
economy of the whole country
and, as a separate instrument, it
may even increase discrepancies
between regions, with resourcerich regions having an edge overothers.
The only reasonable
solution at this stage seems to
be to build the right structure ofnational brands and sub-brands
within the framework of thesingle concept of the Made in
Russia aggregate brand. Russia
needs out-of-the-box approaches
for developing the culture ofcommunications, branding anddesign.
If this single concept is tobe implemented, it is extremely
important that each region,
ministry, government-owned
company and other stakeholders
be involved to the maximum. It is
important to abandon the scramble
to meet KPI** requirements at
all costs in favour of a policyof collective interaction and ofcreating an environment for thegrowth of a new generation ofinteresting companies. Yes, ittakes more time and effort, but
the long-term benefits for theregion and the country fromsuch an approach would be muchgreater.
In that sense, the Far Eastis lucky: the export potential to
Asia-Pacific countries and the wide
range of available state support
measures already makes a major
contribution to creating a strong
national brand and potential for its
development within the frameworkof the Made in Russia aggregate
brand.
* English Proficiency Index (EF EPI)
assesses the English language skills ofglobal labour resources** KPI means Key Performance
Indicators.

147

ROSCONGRESSIN BUSINESSMODE
THE ROSCONGRESS FOUNDATIONORGANIZES KEY FORUMS IN RUSSIA
AND ABROAD. WE INVITE YOU TOATTEND OUR UNIQUE EVENTSRUSSIAN ENERGYWEEK 2017
INTERNATIONALFORUM“The ‘Russian Energy
Week’ Energy Efficiency
and Energy Development
International Forum (hereinafter
the Forum) will take placein Moscow at the Central
Exhibition Hall ‘Manege’
from 4–7 October, 2017 inaccordance with Decree No.
2026-r of the Governmentof the Russian Federation
dated 27 September, 2016.
The technical operator of theForum is the Roscongress
Foundation. The goal of theevent is to demonstrate theprospects of the Russian fueland energy industry and realize
the potential of international
cooperation.

X EURASIANECONOMIC FORUM IN
VERONA
19–20 October 2017,
Verona, Italy. Forum
participants: ministers fromthe Eurasian Economic Union,
representatives of the European
Commission, regional governors,
government officials andpoliticians, ambassadors, andleaders of major corporations
from participating nations.
Passes under the auspices ofthe municipal administration ofVerona. Organizers: Association
Conoscere Eurasia, theRoscongress Foundation.

ST. PETERSBURG
INTERNATIONALECONOMIC FORUM
2018
The 22nd St. Petersburg
International Economic Forum
will take place from 24–26 May,
2018 in accordance with thedecision of the President of theRussian Federation. Adviser tothe President of the RussianFederation, Deputy Chairmanof the Organizing Committee –Executive Secretary Anton
Kobyakov said: “In 2018, theSt. Petersburg International
Economic Forum will once again
demonstrate Russia’s readinessto hold a mutually beneficial
dialogue with the international
community on the key issues of
the global agenda concerning
the economy and finances”.

FINOPOLIS 2017
5–6 October 2017,
Sochi. The largest fintech
event in Russia. Its mission
is to support the introductionof innovative technologies into
Russia's financial sector.

RUSSIA HOUSE IN
DAVOSTHE RUSSIANINVESTMENT FORUM
2018
The Russian Investment
Forum is a traditional platform
for presenting Russia’s
investment and economic
potential. The Forum is heldwith the participation of thePrime Minister of the RussianFederation Dmitry Medvedev.

The XIX World
Festival of Youthand Students
On 19 January, Russian
President Vladimir Putin signed
the decree “On the preparation
and running of 19th World
Festival of Youth and Students”.
The festival will take place on
14–22 October, 2017, with themain events taking place at
the Sochi Olympic Park. Over
20,000 young people from150 countries will participate.

22–26 January 2018,
Davos, Switzerland. Aspart of the upcoming
World Economic Forum, theRoscongress Foundation willcontinue its Russia House
project. For the third year in arow, Russia House will serve as
the official Russian residence
at the event, a platform forpromoting Russian initiatives
among key representativesof the international business
community and high-ranking
officials who will come together,as per tradition, in Davos(Switzerland) this coming
January.

ROSCONGRESSof energy companies and regional
administrations.
An important part of the
programme will be Russian Energy
Week Youth Day, dedicated to theRussian Energy Saving Festival#TogetherBrighter. More than
1,500 students and young industry
specialists will take part in theYouth Day events.
The status of Russia’s biggest
international energy industry event
is evident in the choice of venue.
The main events of the Forum will
be held at the Manege Central
Exhibition Hall (1, Manezhnaya
Ploshchad, Moscow), the largest
exhibition venue in central
Moscow, located in a historicbuilding just a few minutes’ walkfrom the Moscow Kremlin, Red
Square, Alexander Garden, and theState Historical Museum.
The REW programme will also
cover St. Petersburg, where theSt. Petersburg International Gas
Forum will be taking place from
3 to 6 October at the ExpoForum
Convention and Exhibition Centre.
The Forum is the country’s leading
platform for discussing topicalissues affecting the industry. The
decisions made by industry leaders
following the discussions directly
influence developments on the
global gas market.

Russian Energy Week:
taking discussion
to a new level
On 3–7 October 2017, Moscow will host the 'Russian
Energy Week' Energy Efficiency and Energy Development
International Forum.

Dmitriy Krukov,
Headof the Information Serviceof the Roscongress
FoundationR

ussian Energy Week
(REW) offers a broad
range of topics fordiscussion. Along withaspects of the power industry,
Forum participants will consider
the opportunities and challenges
facing other basic sectors of theeconomy – oil, gas, coal, andthe petrochemical industry. The
focus will be on new solutions
and innovations. In particular, theissues of cybersecurity in the fuel150

and energy complex, new methods
for exploring hydrocarbon deposits,
the modernization of oil refining
in Russia, best practices andinnovations in the coal industry,
the development of transportcharging infrastructure, and manyother topics will be discussed.
Russian Energy Week will thus
provide a single international
business communications platform

covering the whole of the energy
industry in Russia. This year, theForum’s theme will be ‘Energy for
global growth’.
The aim of the event is todemonstrate the prospects for theRussian fuel and energy industry
and to realize the potential forinternational cooperation.
More than 8,000
representatives of federal andRussian Energy Week will thus
provide a major international
business communications platform
covering the whole of the energy
industry in Russia

regional government bodies,
national and foreign energy
companies, the scientific andexpert community, and young
people, along with about 1,000
journalists, will take part in
the Forum. Participants from
more than 70 countries of Europe,Asia, Australia, North America,and Latin America have been
invited.
A number of significant events
will also take place within theframework of Russian Energy
Week, including a meeting of
Global Energy prize laureates, areview of the fourth All-RussianCompetition for Energy Saving andEnergy Efficiency Projects (ENES
2017), and MediaTek 2017, a Russian
national competition for media
organizations and the press offices

151

ROSCONGRESSFROM SOCHI and into 2030

W

Russia will host the 19th World Festival of Youth andStudents. Its participants, from over 180 countries, willassemble to develop the image of the world of the future.

hat will our planet
be like in the next
10–15 years? The
participants in the
19th World Festival of Youthand Students in Sochi on 14–22
October 2017 will answer thisquestion. They will be asked tocreate the concept of the Earth’s
development up to 2030 because152

the future of countries, regions andthe entire world depends on theworld’s most active and energetic
young people.
The joint work on creating animage of the future and the attempt
to find solutions to the mostpressing challenges the younger
generation faces will undoubtedly
consolidate the world’s

youth community and bolster
international ties and interculturalinteraction. WFYS 2017 will be thegreatest youth event of the year!
The 2017 Festival will be
unique in that its key events will
be held in the Sochi Olympic
Park. Consequently, for the firsttime in the Festival ’s histor y,it will not be held in its hostcountr y’s capital, yet the entire
countr y will be involved in the
grand celebration. WFYS 2017 will
be launched by the International
Student Parade on 14 October in
Moscow and some international
participants will visit several
Russian regions from Vladivostok
to Kaliningrad.
20,000 students and young
professionals who have successfully
passed the competitive selection
process will attend the event. The
application campaign concluded
on 10 June with over 120,000

applications to participate
submitted by Russian and foreign
young people. Aged 18–35, they
are already established leadersin various areas. Half of theparticipants are expected to comefrom Russia and half from over
180 countries from all parts of
the world. Not be chance are theFestival’s working languages theUN’s official languages: Arabic,
Chinese, English, French, Russianand Spanish.
A volunteer corps will assist in
preparing the world’s biggest youth
event. 5,000 people from Russia
and other countries, 18 and older,
including silver volunteers, will be#volunteersofpeace.
Over 200 public ambassadorsfrom Russia and other countries,
including famous artists andathletes, eminent scientists,
politicians, public figures andjournalists will participate inpreparing the festival.
The WFYS 2017 agenda includes
discussions and educational
events dedicated to the most
topical global problems chosenbearing in mind the 17 sustainable
development goals formulated by
the United Nations Organization.
Each day of the Festival will be
dedicated to one of the planet’s
macroregions: America, Asia andOceania, Europe, Middle East, andRussia as the Festival’s host. The
discussion programme includes
such topics as “Designing the
Future: Architecture and Design,”“Global Politics and International
Security,” “Environmentalism andEntrepreneurship,” “Industries
2035,” “Civic Development
Platform,” “Peace Culture 2030,”
and many others.
Young filmmakers, artists,and designers will present theirwork. Participants from across theworld will also be able to receive
their “Ready for Labour andDefence” merit badges, take partin the Eco Race, and assemble ateam on the football field or thehockey rink.
WFYS 2017 starts soon!

20,000 students and young
professionals who havesuccessfully passed the competitive
selection process will attend the event.
153

ROSCONGRESS“We speak the same language,
the language of youth!”

Irina Slutskaya,

Russian figure skater, Deputy of the
Moscow Regional Duma
“What significance does thestatus of an ambassador to the19th World Festival of Youth andStudents hold for you?”“In 2014, I was an ambassador to theSochi Winter Olympics. It was anincredible experience. Back then, I
found myself at the world’s biggest
international competition but withan unfamiliar status: not an athlete
the entire Russia watches and roots
for, but a person representing all thewinter sports in my own country.
Now, several years later, once
again I represent an event in Sochi,
this time the 19th World Festivalof Youth and Students. What doesit mean for me? Of course, these
are all entirely new experiences
but, once again, it is the feelings ofboth responsibility and pride forbecoming part of the celebration
held by young and progressive
people from around the world. I
am glad we will all come together,people with different appearances,different religions and different
worldviews. We come from different
countries but we speak the samelanguage, the language of youth.
“What subjects from the festival’s
agenda are of particular interest to
you and why?”154“I am very much interested in“Ecology and Health.” This issomething today’s technologicalspace sorely lacks: to stop for a
moment and think about the world
around us. This is the time when wemust understand that the issues ofthe environment, ecology and healthmust be our priority. Our future
depends on the young people’s
stance on those subjects. I am
particularly interested because thesubject of ecology at the festival
will be closely intertwined withsports. People will be able to takepart in an Eco Race: anyone cantry an innovative exercise bike that
produces energy. You are exercising
and, at the same time, you arecharging your phone.
As a figure skater, I am particularlyinterested in the Festival’s sporting
programme. Young people from allover the world will be able to take partin a mass race on the Formula One
track, get the “Ready for Labour andDefence” merit badge, learn to skate
and do many other things.
“What idea would you like toconvey to the young people?”“I would like young people never
to betray their ideas and to sharethose ideas with the entire world.
They may be thinking they are goingto the Youth Festival to showcase
themselves and their achievementsbut, in fact, when they communicate

they consolidate this world and push
it toward development. They showthat they are all one planet, the planetof youth.”“Young people means super energy.”
anyone would like to look into but
super energy, too. Re-charging, fillingwith energy is important for a director.
It is young people and their ideas that
help us look at reality from various
perspectives. The meeting of people
from all continents in our country isimportant for me personally, too. It
happened before, in 1957 and in 1985.
The USSR hosted youth festivals, but
it was a completely different country.
It is all the more interesting to see
what awaits us this year.”been released. I would very much liketo see them. Not even many major film
festivals offer such a chance to see thewhole world on the cinema screen.”

Egor Konchalovsky,“What subjects from the festival’s
agenda are of particular interest to
you and why?”‘Have you been to Sochi before?
What significance does the city
hold for you?”“What significance does the statusof ambassador to the 19th World
Festival of Youth and Students holdfor you?”“The programme is very diverse and,naturally, I am particularly drawn to thecultural component. I know that young
film directors will come to Sochi. It
will be a festival within a festival. A
block in the cultural programme iscalled just that, “Youth Film Festival.”
Just imagine, directors under 35 fromaround the world will show theirfeature-length films that have already“I have certainly been to Sochi. I
vacationed there and I went to the
Kinotavr Film Festival held in Sochi.
After the 2014 Olympics, Sochi became
more than a place for those who liketo lounge on the beach; it became a
progressive city that is attractive to
foreign tourists. In October, it will also
host the 20,000 participants in the 19th
World Festival of Youth and Students.”“What significance does Sochi holdfor you personally?”“This city hosted our Olympics, so it
is especially precious for me. Sochi isan example that the world’s key wintersports event may be held in a citythat has palm trees. In October thisyear, Sochi will prove once again that,in our difficult times, people from allcontinents may be united.”

film director“When it was suggested to me that
I become an ambassador to theFestival of Youth and Students, I was
surprised but I agreed like a shot.
Young people are not only the future“What idea would you like toconvey to the young people?”“I am convinced that no ideas need
to be conveyed to the young people.
They know what they want and what
they live for. They dictate today’s
trends. That’s what young people do.”155

ROSCONGRESSSporting
aspirations

The EEF sporting programme has significantly expanded
in 2017. What competitions are going to be held as partof the Forum and what issues are to be discussed?

Georgy Bryusov,
Deputy Director of the Roscongress
Foundation and Head of theSports, Entertainment and Special
Programmes// R ussian President Vladimir Putin congratulates thechampion of the 2012 Olympics Tagir Khaibulaev

156

Tatami, jogging
and sailing
The global status of EEF is reinforced
by its sports component. The first
Jigoro Kano international junior judo
tournament will take place under the
auspices of the Forum, supported by
Russian President Vladimir Putin andJapanese Prime Minister Shinzo Abe.
Russian, Japanese and Mongolian
national teams will take part in thetournament.
The above countries are
regarded as the global judo leaders.
Considering that the generation of
judoists under 21 years of age will
come to the forefront by the 2020
Olympic Games, this tournament canbe seen as a parade of potential Tokyo
2020 champions.
“The Vladivostok tournament
will foster the relations between
the countries”, President of theInternational Judo Federation (IJF)
Marius Vizer pointed out. And this is
no less significant than the substantial
sports component. By the way, thiscompetition has been included on the
IJF calendar and will become a tradition.
Judoists will reside and train
on the FEFU campus and will geta chance to familiarize themselveswith the traditions and culture of
the local people in the Far East. The
tournament itself will be hosted by
the Fetisov Arena – a major concert
and sports complex in the Far East.
In view of the significance of thisevent, its Organizing Committee isheaded by the Deputy Prime Minister
and Presidential Plenipotentiary
Envoy to the Far Eastern Federal
District Yury Trutnev, while the former
Prime Minister of Japan YoshiroMori is its honourary chairman.
Other members of the Organizing

The first Jigoro Kano international
junior judo tournament will takeplace under the auspices of the Forum,
supported by Russian President
Vladimir Putin and Japanese Prime
Minister Shinzo Abe
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Committee include Russian Ministerof Sports Pavel Kolobkov, Governorof Primorye Territory Vladimir
Miklushevsky, President of theRussian Judo Federation Vasily
Anisimov and representatives of
the Roscongress Foundation. VicePresident of the National Union of
Judo Veterans Arkady Pinchevsky is
the Organizing Committee executive
secretary.
EEF 2017 participants will have achance to take part in competitions
as well. The range of sports events
organized as part of Roscongresseconomic forums already has regularparticipants and partners – theRossiysky Capital and Vostochny
banks.
Like to last year, the first day of
EEF, 6 September, will start early inthe morning with a race in supportof the Russian natural symbols – theUssurian tiger and the Far Eastern

The first day of EEF, will start witha race in support of the symbols of
Russian nature – the Ussurian tiger andthe Far Eastern leopard
leopard. 1 km and 5 km courses havebeen laid on Russky Island. Last year,
more than 700 EEF participants andPrimorye Territory locals took part in
the race. The participants registeredthat the run invigorated them forthe entire course of the businessprogramme. We expect an evengreater interest in the race this year.
Gala basketball and hockey
matches between the EEF team and
the Primorye Territory Administration
team, as well as a tennis tournament,
have also become sports traditions at
the Forum.

And the sailing regatta, in which
professional crews of the Seven Feet
Vladivostok Yacht Club will compete,
is expected to be the most spectacular
EEF event. One specific of the regattais the musical names of the yachts. For
example, last year Brigade S (name ofa Russian rock band) outran Pink Floyd
and Depeche Mode. Throughout theForum, EEF participants will have achance to observe an intriguing rivalry
between fourteen Platu 25 yachts on
Ajax Bay. The dramatic show will bevisible from almost every point of the
FEFU campus. Vladivostok is a major// The race on the Russky island will unite the participants of the VEF and the inhabitants of Primorye

port of the Asian Pacific Region andthis regatta is intended, among otherthings, to highlight its significance.

// A good tradition of the Forum is the gala match between hockey teams of the WEF and the administration of Primorsky Krai

158

The future of the three
Olympic games
The next three Olympic Games will
be held in APR countries – wintergames in South Korea and China(Pyongyang 2018 and Beijing 2022),
summer games in Japan (Tokyo 2020).
Sports facilities of the Sakhalin
Region, Khabarovsk, Kamchatka
and Primorye Territories and theRepublic of Sakha (Yakutia) will be
used during the Russian national
teams’ preparation for the 2018 wintergames. That is why a session entitled‘Sport. What will be done?’ has been
included in the Forum businessprogramme. How can the Olympics
be used to drive development of the
Far Eastern sports infrastructure andfoster international cooperation? How
can the sports centre concept be
expanded into the setup of sports andtouristic clusters, and how can theirinvestor appeal be boosted? How can

we use sports to drive developmentof tourism in the Far East? These are
the main topics the Minister of Sports
Pavel Kolobkov, heads of Russian
regions, investors, Russian sportsmen
and foreign experts will discuss.
A leader of Russian swimming –three-times Olympic Games medal
winner and five-times world champion
Yulia Yefimova – will be present at
the session. In addition, she is goingto give a master class for young
swimmers of the Primorye Territory.
At the Jigoro Kano International
Tournament, 2012 Olympics winners
Tagir Khaybulaev, Arsen Galstyan and
Mansur Isaev will demonstrate theirtechnique to young judoists and give
sports lessons in Vladivostok schools
under the auspices of the Olympic
Patrol Projects of the Russian Olympic
Committee. The Russian Acrobatic
Rock-and-Roll Federation is also
preparing an extensive programme
to present its sport. While Yakutia isgoing to present its national sport –mass-wrestling – at the ‘Street of the
Far East’ exhibition.

The local population of the
Primorye Territory will take anactive part in the Forum as well. On
2 September, the teams of publicand commercial organizations of
Primorye Territory most active insports will participate in the Eastern
Corporate Games. The competitions
are part of the Unified Calendarof the Russian Ministry of Sports
and have been primarily supportedby the Primorye Territory PhysicalCulture and Sports Department.
Corporate games have set a trendof engaging the economically active
population in sports, which is one of
the key goals of the sports industry.
The games foster strengtheningof team spirit and establishmentof business and personal contacts
through sport. Besides, far fromall the inhabitants of the Primorye
Territory have an opportunity toparticipate in the panel discussions,so the sporting programme will
give them a chance to join sucha significant event as the Eastern
Economic Forum.

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Premium
service:
How theEEF affects
the services
industry

The success of any majorinternational event
largely depends on thepeople who work on
the ground to make it
happen. Service staff,
including hotel maids
and restaurant or café
waiters, have a special roleto play. The Roscongress
Foundation has gone one
step further in launching
Primorye Territory-wide
programme to train staff
for the Third Eastern
Economic Forum. Goingforward, the programme
will help improve local
employment opportunities
and alleviate the shortageof quality service
personnel.

160

Maxim Yakovenko,
Deputy EEF Director, Headof Roscongress Foundation
Vladivostok BranchW

hen preparing for
the Second Eastern
Economic Forum in
2016, the Roscongress
Foundation discovered that it was
not able to recruit enough staff
in Vladivostok to fill all positions
and that some of the drivers andhospitality workers lacked thenecessary qualifications.
Vladivostok is far from Moscow
or St. Petersburg, whose vast labourpools have no problem supplying
300 or 400 waiters and 100 cooks toserve forum guests at every eatery.
Over in the capital of the Maritime
Territory, though, that’s a challenge
for the organizers. And yet the foodservices operator has been able tosource additional staff. They had
to work social media and ask local
restauranteurs to lend their staff for
the three days of the Forum. To makesure the EEF operations run smoothly,
they even had to fly in 50 cooks andmore than 100 waiters from Moscow
and St. Petersburg – nothing short ofan airlift operation.
Roscongress built on thatexperience as it geared up for theThird Eastern Economic Forum in2017 by paying serious attention to
training service staff. The task was set
not only to hire temporary staff for
the Forum but also to train them inservice standards so that they would
be able to work afterwards in theservice industries all across Russia’s
Far East.
First of all, the relevant divisionsof the Roscongress Foundation
worked with contractors to determine
staffing needs and requirements. The
Third Forum requires more than 200
waiters, 100 cooks and 250 drivers,in addition to loaders and assorted
manual workers, making up a total of
850 staff. This does not include the
500 volunteers that the Foundation
has recruited and trained under aseparate programme.

To make sure the EEF operations
run smoothly, they even had to fly
in 50 cooks and more than 100 waitersfrom Moscow and St. Petersburg
Forum Organizing Committee
Chairman Yuri Trutnev approved
a proposal to design a specialized
service staff training programme. The
Maritime Territory Administration
then got onboard by developinga systematic plan for EEF staff
recruitment and training.
The regional authorities
approached the task at handin a comprehensive manner.
Candidates were recruited not
only in Vladivostok but also fromacross the region. They were taught
service standards and awarded aqualification certificate on passing
an exam. To attract applicants, theMaritime Territory Education andScience Department, the projectco-manager from the region’s side,
ran an impressive campaign in social
media and specialized colleges
and placed ads on municipal busesin Vladivostok and other cities. A
certification centre was set up at oneof the local colleges where selectedcandidates were trained. The work
was conducted in close cooperation
with the Roscongress Foundation,
which took part in designing thecurriculum and training materials.
The joint effort has resulted
in around a thousand trained andcertified staff being ready to start
weeks ahead of the Forum. What ismore, after the EEF, the waiters, cooks
and drivers will be able to continue
working at service establishments
in Vladivostok and elsewhere in the
Maritime Territory with a valuable
track record of serving a majorinternational event on their CVs.
Given this success, the service staff
recruitment and training programmemight continue next year for a wider
range of occupations.

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Ekaterina Sagadieva,
Head of Volunteers for
the Roscongress FoundationWorking with volunteers
is a mutuallyadvantageous threeway process involving
beginners taking the first steps intheir professions, the Roscongress
Foundation and, naturally, event
guests and participants.
Volunteers gain invaluable
experience of working at Russia’s
largest forums, which are watchedby the entire world. For them, it is achance to communicate with peopleof various nationalities and cultures,
demonstrate hospitality, practise
foreign languages, learn new things,
develop their leadership skills,
make useful contacts and, finally,
experience what it means to be partof a large team of professionals.
Working at international events isoften highly relevant to their future
careers. The most driven volunteers
who have proven their mettle receive
interesting job offers and make theirfirst forays into the professional
world.

In turn, event participants, as arule, highly value the volunteers’
work and highlight the importanceof their contribution to creating awelcoming and friendly atmosphere at
Roscongress events.
For the volunteers to be able todemonstrate their potential, they need
to be properly trained. The process
takes place in several stages: general
theory, lectures on business etiquette,and coaching in functional areas.
These lessons give them an idea of
how work is structured at the biggest
forums and congresses attended
by heads of state and government
and top executives from leading
companies. In addition to practicalexperience, volunteering allows
students to assess their own interestin a particular area of work, helping
them to focus their job search. In 2017,
the Roscongress Foundation launched
an internship programme for its best
volunteers, enabling them to expand
their knowledge and skills significantly.
Volunteers frequently return to theFoundation’s events with a new, higher
status of team leader or administrator.
Students from event host cities
form the core of the volunteer
staff, but Roscongress traditionallyalso recruits the most enterprising
volunteers from other cities and paysOver

20,000young people

have taken partin the Roscongress
Foundation’s volunteer
programme
for their travel and accommodation.
For instance, students from St.
Petersburg and Arkhangelsk will be
involved in organizing and hosting
the Eastern Economic Forum 2017.
This practice provides students from
Russia’s Northwest with a unique
opportunity to enjoy the natural
beauty of the Far East, to find out
what it is like to work in anotherregion on a team with students
from the other side of the country,

Futureleaders

Without talented and ambitious young people,
a country has no future. The Roscongress
Foundation subscribes to this view and regularly
involves engaged young people in its events,
recruiting volunteers throughout Russia,
from Kaliningrad to Vladivostok

162

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ROSCONGRESSand to share their experience ofworking at other events. The young
people of Primorsky Territory arealso involved in this great event:in addition to students from
Vladivostok universities, the EEF
2017 corps includes volunteers from
Blagoveshchensk and Sakhalin.
Recently, in addition to Russia’s
leading universities, major businesses
have also been lending theirsupport to the development of the
Roscongress Foundation’s volunteer
programme. Since 2017, BTC Grouphas been providing the volunteers’
uniforms; as a gesture of appreciation,

the volunteers are allowed to keep
their uniforms after the events. At
the St. Petersburg International
Economic Forum 2017, Mars becamea partner of the volunteer corps
for the first time. Volunteers were
presented with gift sets and attended
master classes given by leading
executives from the world-famousfood company. The best volunteers
were offered internships with the firm.
The positive experience of working
with Mars will continue at the Eastern
Economic Forum 2017. It is nice toknow that leading Russian and global
companies share the Roscongress

Volunteers gain invaluable
experience of working
at Russia’s largest forums,
which are watched by the entire
world

164

5,000

Russianand foreign volunteers

will be working
at the 19th World Festivalof Youth and Students
to be held in Sochi
in OctoberFoundation’s mission to develop thevolunteer movement and our desire
to invest in raising a new generationof leaders. Together, we are creating
the future!

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