Market Intelligence for Russia and CIS

www.globalintelligence.com

Market Intelligence for Russia & CIS

Webinar presentation March 31, 2010


Webinar Content Outline

1.  Introduction and background 2.  Economic overview of the region 3.  Russian Federation 4.  Overview of other countries 5.  Business opportunities in Russia & CIS 6.  MI challenges and solutions 7.  Business cases (not included here)

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This document contains excerpts from GIA’s “Market Intelligence for Russia & CIS” White Paper. For the free white paper, please visit www.globalintelligence.com or email [email protected].


Introduction to the region


Introduction to the region

•  CIS – Commonwealth of Independent States, created 1991

•  12 former Soviet Republics: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine.

•  The most practical way to think of CIS is to consider these 12 countries as a region, formed by countries with very close historical and political ties.


Basic figures

•  300 million population

•  22 million km2

•  12 countries

•  $ 3000 bln. GDP by PPP

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What unifies CIS countries?

•  A part or Russian Empire not only in 20th, but in 18-19th centuries and earlier

•  70 years of Soviet Era

•  Russian language

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What differentiates them?

•  Orthodox VS Islam

•  Very poor VS very rich

•  Industrial VS agricultural

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Countries overview

•  Russia ~80% of regional GDP

•  Ukraine and Kazakhstan - two other Majors

•  3 country groups:

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European

Caucasian

Middle Asian


Some statistics

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Countries overview


Overview of the key countries


Russian Federation – basic facts

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•  Largest country in the world, 11 time zones, 7th economy in the world

•  Moscow and Saint-Petersburg + 12 big cities


Russia and BRIC

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But, different: •  Relatively wealthy •  More developed

and educated •  Europeans

Similar: •  Big market •  Growing •  Unstructured and

non-transparent


Key characteristics of Russian market and economy

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1.  Vast regional disparities in development and income distribution

2.  Rich with natural resources, but highly dependant commodities markets

3.  Poor logistics 4.  High role of government 5.  “chaebols” 6.  Specific mentality


Ukraine

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1.  Second economy with 40 mill. people

2.  Deep historical roots with Russia

3.  Volatile democracy 4.  Poor economic situation due

to the crisis 5.  Hostess of the Euro-2012


Kazakhstan

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•  Vast country, 2,2 mill. km2 •  Rich with mineral resources •  Eastern traditions •  State corporation, Samruk,

owns 400 companies, which count for 40% of GDP

•  Stable autocracy, President Nazarbaev

•  New capital – Astana, like new Dubai


European group: other countries

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•  Small, relatively poor country in South-East Europe

•  Agriculture, famous with its wines •  Around 25% of labor force works abroad

Belarus

Moldova

•  Deep roots with Russia •  Autocracy, Mr. Lukashenko •  Developed machinery, agriculture,

fertilizers


Caucasian group of countries

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•  Largest Caucasian country, 8 mill. •  More than 50% of GDP comes from oil •  Oriented for the Muslim world

Georgia

Armenia

•  Mountain country with 5 mill. population •  Famous with its wine, resorts and agriculture •  Tense relations with Russia

•  3 mill. orthodox country, rich culture and history •  Famous cognac, monasteries; •  Growing IT (more than 2% of GDP)

Azerbaijan


Middle-Asian group of countries

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•  5 mill., least transparent and most totalitarian country

•  Gas & oil – key industries •  Totalitarian regime

Uzbekistan

Tajikistan

•  30 mill. poor Muslim country •  Cotton, Grain, gold

•  7 mill., one of the poorest in CIS

•  Nearly 50% of GDP – transfers from outside workers

Turkmenistan

•  5 mill. country of breeders and riders

•  Gold mining and breeding

Kyrgyzstan


Business opportunities in Russia & CIS


Probably, now it is the best time to enter CIS countries

•  Interesting niches and segments due to the crisis and turmoil period

•  Relatively low costs for starting business (salaries, real estate, advertising etc.)

•  Low P/E ratios within potential partners

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Some international brands entering Russian market in 2009-2010


Business opportunities in B2C

•  Consumer market: luxury or value-for-money

•  Established retail and distribution channels – chance for niche players

•  Service sector – enormous potential

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Some international brands entering Russian market in 2009-2010


Business opportunities in B2B

•  Logistics and infrastructure –not only a problem, but opportunity

•  Advanced processing technologies

•  Energy-saving technologies

•  Components, parts and supplies

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Not only market, but intellectual and creative partner

•  High rate of higher education

•  Inventive nation, culture of breakthrough creative teams and ideas

•  Innovative capital: government and private investors

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For the last 10 years Russia has won 6 times in the International IT Championship The ‘Fields Medal’ (‘Nobel Prize’ in maths) ceremony takes place every 4 years and Russian specialists have been awarded in the last 5 ceremonies.

Companies which have opened R&D centers in Russia


Challenges and solutions in conducting MI in Russia and CIS

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Challenges of conducting MI in Russia & CIS

•  Poor secondary information structure

•  Regional diversity requires several regions to be studied separately

•  Relations and contacts important to get expert interviews and opinions

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•  Existence of specific industry structures and business models requires deeper analytics

•  Role of government to be studied separately

•  Tough competition calls for sophisticated strategies

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Challenges of conducting MI in Russia & CIS


These slides are excerpts from the GIA White Paper: “Market Intelligence for Russia & CIS”.

Download the entire White Paper for Free

The report has been published under the GIA White Paper series and is available for free download at www.globalintelligence.com.

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