Mutual Attraction: Why Russia Has Become So Attractive for Italian Business
Sputnik/ Vladimir AstapkovichBusiness17:36 20.11.2017(updated 18:05 20.11.2017) Get short URL281351
Speaking to Sputnik, Ernesto Ferlenghi, president of Confindustria Russia, a business association representing Italian and other foreign companies doing business in Russia, explained why despite the current sanctions environment, investing in the country has never been more profitable.
Late last week, Confindustria Russia held its ‘Think Tank on Russia: Economic Challenges’ round table in Moscow, summarizing the results of Russian-Italian economic cooperation for 2017, and outlining the prospects for partnership projects expected to be implemented next year.
In an interview with Sputnik Italy, Ernesto Ferlenghi, president of Confindustria Russia and former vice president for developing markets in Russia and Central Asia at Italian energy company Eni, explained why there is no better time than the present to invest in Russia, adding that many Italian companies already know it.
“In the first half of 2017, exports from Italy to Russia grew by 27%,” Ferlenghi explained. “The economic data for Russia speaks for itself: inflation is at 2.6%, GDP has grown by 1.7%. No one expected such indicators, and this speaks to a positive dynamic. To this one can add Russia’s political stability. Where else can you find a country that’s more stable than Russia? Today, Russia has the ideal conditions for investment.”
Photo: Confindustria Russia’Think Tank on Russia: Economic Challenges’ round table in Moscow, November 2017
According to Ferlenghi, Italian business also benefits from their country’s “strong political credit rating” among the Russian leadership, something which stems from officials’ consistent dialogue with their Russian counterparts at the highest levels — at the ministerial level and higher.
Dialogue is also held on the region-to-region level, Ferlenghi noted. For example, next month, leaders from the Italian region of Lombardy and the Russian region of Tatarstan will hold joint meetings to discuss investment. Earlier this fall, officials from over a dozen Italian companies visited Tatarstan, searching out local companies for business cooperation and investment opportunities.
These include opportunities in IT, pharmaceuticals, machine building, and oil and gas, Ferlenghi explained. “As for the companies, there are Codest, Saipem and Tesmec, three large Italian firms competing for important tenders in Russia. After all, we are talking about Tatarstan, which is the fastest growing Russian region after Moscow. And I don’t think that this region is an exception. Russia’s regions are competing with one another to realize their economic potential, and for the opportunity to bring home concrete projects with foreign firms.”
“It’s also worth keeping the Eurasian Economic Union in mind,” the senior consultant said. “Working with Russia today means receiving the opportunity to sell your products in five countries,” including Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
Asked if he had any advice to give Italian companies looking to enter the Russian market, Ferlenghi said that they must understand that the model for doing business in the country has changed. “In the new economic course taken by Russia, the concept of ‘strictly retail’ has become obsolete; we can no longer [just] bring our goods to Russia, but can bring our manufacturing capacity. At the same time, it makes no sense to come with large delegations just to say ‘we are your friends’. We are friends, yes, but we have competitors from other countries, so one needs to be specific. Rather than opening a thousand windows, it’s better to choose only one. Germany has about two thousand joint ventures with Russia, while we have only 200. To be competitive, we need to conduct a preliminary evaluation of the situation, to bring the banks to our side, to cooperate and move forward.”
Ultimately, the Confindustria Russia president emphasized that politics notwithstanding, opportunities for economic and business cooperation between Italy and Russia are always there. He recalled that even in the distant Soviet period, Italian firms such as Fiat did good business with Moscow.
“There has always been and remains a climate of mutual friendship at the center of our relationships. The keys to success are dialogue, comparison, and analysis of opportunities. And we have to move forward quickly, because our competitors move forward with great energy,” Ferlenghi concluded.