**COMMERCIAL UPDATE—NW RUSSIA (JANUARY2000)**

 

AUTHOR: ALEXEIKIM, BISNIS REPRESENTATIVE

APPROVINGOFFICER: MICHAEL RICHARDSON, PRINCIPAL COMMERCIAL OFFICER, US CONSULATE ST.PETESRBURG. 

 

International Copyright, U.S. & Foreign Commercial Service andU.S. Department Of State, 2000. All rights reserved outside of the United States.

 

Summary: Thisreport summarizes business developments in NW Russia for January 2000.  Topic text continues in paragraph 3.End Summary.

 

1.GOLD KEY SERVICE: U.S. companies interested in gaining access to prospectivebusiness partners in St. Petersburg and NW Russia are encouraged to utilize ourvery effective “Gold Key Service.” Experienced Commercial Specialists identify opportunities, arrangebusiness appointments with pre-qualified Russian agents and distributors, andaccompany you to the meetings. The current charge for our Gold Key Service is$500 for 4-6 meetings (1-2 days of appointments), and $150 per additional dayof appointments (maximum 4 appointments per day).  Major credit cards accepted. Driver and professionalinterpreter services can be arranged for an additional fee. We requiresufficient company literature at least three weeks prior to the desiredappointment dates.

 

2. WEBSITES& OTHER SERVICES:  The Department of Commerce’s US&FCS office in St.Petersburg offers a range of services to U.S. companies interested in doingbusiness in NW Russia. In addition to traditional FCS services (such as theAgent Distributor Search), in our offices at Nevsky Prospect 25 we provide a conferenceroom for up to 20, free computer and local telephone line use, and we canprovide fee-based translation, business card and color printing services uponrequest.  For more information,visit us at: “www.usconsulate.spb.ru/fcs.” American exporters and investors may wishto visit the Commerce Department’s BISNIS website site at:  “www.bisnis.doc.gov”

 

3. IT  MAY BE TOUGH TO BE A RUSSIAN EXPORTER

The RussianGovernment supports the proposal of the Central Bank of Russia to force allRussian exporters to sell 100 percent of hard currency profits.  Currently, Russian exporters have tosell only 75 percent of their hard currency profits.  According to Expert magazine, the final decision will not bemade until summer 2000.  Thedecision should be approved by the Russian Duma as an amendment to the HardCurrency Law.

 

4.  CHAIN OF CONSUMER ELECTRONIC STORESFORMED IN ST PETERSBURG

As a result ofthe merger of two local companies, Tekhnoshock and Simteks, a new chain ofconsumer electronics stores was formed in St Petersburg.  The name of the brand will remainTechnoshock, but the number of stores will continue to grow.  Tekhnoshock spent about USD 2 millionfor brand promotion and is a leading consumer electronics chain in NW Russia.

 

5.  GUBERNATORIAL ELECTIONS IN STPETERSBURG

St Petersburg'sLegislative Assembly did not support the idea of combining the presidential andgubernatorial elections on March 26, 2000.  Thus, the gubernatorial elections will take place in lateMay 2000, as planned.  GovenrorYakovlev will have served a full 4-year term by that time.

 

6.  LUCENT TECHNOLOGIES EXPANDS ITSOPERATIONS IN RUSSIA

St Petersburgfactory of Lucent Technologies  hascompleted the certification process to meet ISO 9002 internationalstandard.  Lucent Technologiesopened its factory in St Petersburg, Russia in 1998 and is assembling varioustelecommunication blocks for the local market.  Obtaining a new international standard will enable LucentTechnologies to market its locally-assembled products internationally.

 

7.  CELL PHONES BECOME MORE"AFFORDABLE" IN ST PETERSBURG

According to theSt Petersburg Times, the number of cellular phone users in St. Petersburgcontinues to grow.  Almost 5percent of local residents now use cell phones, once considered to be an eliteaccessory.  Two out of three StPetersburg cellular phone operators announced ambitious expansion plans for2000.  

 

8.  VAT RATES CHANGE

Acting RussianPresident Putin signed a law in early January 2000 reducing the import VAT onmany items to 10 percent.  Amongthe items included in the law  aremeat and fish products, eggs, sugar, grain, and children's goods.

 

9.  LIGHT AT THE END OF A TUNNEL- U.S.INVESTORS MAY GET THE LOMONOSOV PORCELAIN FACTORY BACK

 

Two U.S.investors, Kohlberg Kravis Roberts and the U.S.-Russia Investment Fund, majorshareholders of the Lomonosov Porcelain Factory, filed a law suit when theylearned that the St Petersburg Arbitration Court declared the initialprivatization of the factory illegal. On January 24, 2000, the NW Russia Regional Arbitration Courttemporarily suspended the St Peterburg court decision, pending the results ofthe Federal Court appeal scheduled for February 17, 2000.  As a result, the U.S. investors wereable to access the factory's premises for the first time since October 1999,when the factory was renationalized by the local government.

 

10.     LENINGRAD OBLASTBUDGET APPROVED

The LegislativeAssembly of the Leningrad Oblast has passed its budget for the year 2000.  The budget is viewed by many analystsas realistic.  The budget allowsfor a five percent deficit, which is lower than all of the previous budgets.

 

FCS wouldappreciate your feedback on this report. Please share your comments and suggestions with us:

BusinessInformation Service for the Newly Independent States (BISNIS)

U.S. &Foreign Commercial Service St. Petersburg

25 NevskyProspect

St. Petersburg,191186 Russia

Tel:7-812-326-2560

Fax:7-812-326-2561/62

Email:[email protected], [email protected]