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HAND AND POWER TOOLS IN RUSSIA
by Aleksander Kansky        

Demand for hand and power tools is growing in Russia, in both the construction
and do-it-yourself markets, offering important new opportunities for U.S. exporters
of these products.  The revival of the construction industry in particular is leading
many Russian firms to replace old, obsolete, and ineffective tools.  Also, many
home-owners who cannot afford professional contractors for home repairs and
improvements need tools to do the work themselves.  Interested U.S. companies
should start now to become established in these markets. 

Currently, the major end-users of imported tools are small, and medium-size private
construction companies.  Large construction firms also are also end-users for some
types of tools.  Construction firms primarily import grinding machines, electric
impact drills, cordless electric screwdrivers, and attachments for use in the
construction and repair of residential and other buildings.  Other large groups of
commercial end-users are found in manufacturing and service industries, such as 
furniture and auto service stations.  

Hand and power tools are widely manufactured in Russia, but quality is low and
prices are rising.  Motors, electric and electronic parts, and design of Russian tools
are particularly weak.  Many types of power tools, such as cordless drills and
screwdrivers, angle drills, rotary hammers, and screwguns are not produced in
Russia at all.  Domestic power tools are also far less likely to have the multi-
functional features and attachments found on imported tools. 

Imports

Germany, Sweden, Austria, the United Kingdom, and Bulgaria are the leading
exporters of tools to Russia.  Bosch (Germany) is the one of the strongest foreign
suppliers of power tools.  Bosch has relationships with local end-users and
distributors, and market aggressively.  As a result, Bosch enjoys a strong position
in the markets for both professional and non-professional electric tools.  The
German company is creating its own network of distributors and dealers across the
country, and is establishing a service and training center in Moscow.  Bosch is also
making plans to manufacture electric tools in Russia.

American exports hold only a small share of the Russian power tool market. 
Generally, local end-users have little information about American products and are
satisfied with the quality of European products, not surprisingly, since European
manufacturers are very active in the market.  Research also shows that local end-
users consider American tools less adaptable to Russian conditions.  Finally, many
end-users are confused by American non-metric standards, which make U.S. parts
incompatible with Russian products.

U.S. firms can overcome these weaknesses with more active marketing and market
development.  One U.S. company that has done this is Black & Decker, which has
established a strong position and good reputation in the Russian market, with
dealers across the country.  Black & Decker s St. Petersburg dealer reports that
sales increased three to four times in 1994 over the year before, and that they
expect similar growth in 1995.

Competition

There are no companies, domestic or foreign, in a position to monopolize the
Russian tool market.  Pricing strategy, consumer/end-user credit, and after-sales
parts, service, and training are key competitive factors in the this market.  Import
duty for hand tools is only 5 percent, although duties on power tools range from
15 to 20 percent.

Russian law also requires certification for imported products, including tools.  Any
shipment of goods to Russia must be accompanied by documents certifying that
the contents meet Russian standards.  Products without this documentation must
be certified by the Russian Standards Committee (Gosstandart).  This article is
based on a recent  Industry Sub-sector Analysis  prepared by the Commercial
Service of the United States on the market for hand and power tools in St.
Petersburg.  Copies of the ISA can be obtained from the BISNIS Home Page at
http://www.itaiep.doc.gov, or from the National Trade Data Bank (NTDB). For
more information about NTDB, call (202) 482-1986.

Aleksander Kansky is with the Commercial Service of the United States in St.
Petersburg.
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