German Companies In The Russian Market

The classic way to develop the Russian market by German firms is as follows: first sales through representatives or through their own trading partners. If these transactions are successful, German firms establish their representative offices in Russia, in order to serve customers better. 


German companies usually take a decision to invest or establish manufacturing only in a few years in the Russian market. 


German medium-sized businesses today are represented in Russia mainly in the production of food and construction materials in the construction industry. 


Among the advantages of the Russian market are: first of all, it is every year increasing purchasing power of the Russian population, which is evident from the impressive data on the growth of retail turnover. Revenues are growing three times faster than the supply of goods and services. The Russian economy is still unable to meet this growing demand. 
Second, continued economic growth leads to an increasing demand for investment goods. Since the degree of deterioration of Russian machinery and equipment is high, it should be updated. Therefore, almost half of Russian imports are machinery and equipment, one third of which is German production.
And, last but not the least: political stability in Russia  is also an important argument for investment in Russian market. 

Among the most important and interesting projects can be called an assembly production of BMW Group in the Kaliningrad region, a joint venture with DaimlerChrysler to produce agricultural machinery, the project company Bayer for the production of rubber and construction of chemical factory in St. Petersburg , the construction of chemical plant for methanol production in Arkhangelsk with the participation of MAN Ferrostaal, as well as participation of BASF (through a subsidiary - the company Wintershall) in projects for exploration and production of oil and natural gas. Store network of wholesale and retail company Metro, the German retail branch Swedish company IKEA, as well as the company's AVA (Edeka), which begins building its own network of hypermarkets «Marktkauf". 

It is noteworthy that in recent years, the Germans began to invest actively in the information sphere, realizing that most effectively exploit the potential of Russian market of programming can not by inviting specialists to work in Germany, and the execution of orders directly to German companies in Russia and the creation of joint companies. Good examples of such cooperation could be joint projects in Zelenograd, St. Petersburg and Novosibirsk. Unfortunately, in absolute terms such investments remains slow. 

If we talk about regional cooperation German investors prefer regions with political stability, good economic potential, rich labor and natural resources, with a constructive attitude toward foreign investors and having access to transportation and other infrastructure. Therefore, the highest priority for the region of the Russian Center and the North-west. Considerable interest has been shown also to the Volga and Ural regions. 

In recent years, not only Moscow and St. Petersburg, but also other Russian regions are becoming more attractive for investments of German investors.  In other words, more than half the funds were sent to other Russian regions.

IKEA Publishes Its Financial Reports

Swedish retailer of home furnishing products IKEA Group for the first time in its history, has publicly reported its financial performance. Thus, the IKEA sales for the 2009-2010 fiscal year (September 1, 2009. August 31, 2010.) increased by 7,7% and amounted to 23.1 billion Euro, the company said. More information about the financial achievements  IKEA promised to publish later.
At the same time IKEA reported for the 2008-2009 fiscal year. It is reported that sales reached 21.8 billion Euro, up 1.4% more than in the 2007-2008 fiscal year. Net profit for the reporting period amounted to 2.5 billion Euro, up 11.3% surpassed the same period a year earlier.
In comments to the reported figures indicated that the majority of the company's profits have been reinvested in the existing stores of IKEA, and aim to develop new outlets and factories. According to the president and CEO of IKEA Group Mikael Olsson, positive financial indicators are needed for program growth, including expansion into new markets. In addition, M. Olsson said that part of the proceeds goes to the program of social initiatives IKEA (IKEA Social Initiative) for funding of projects with 100 million children around the world.
Today, the head of Inter IKEA Centre Group in Austria, Switzerland and South-Eastern Europe, Per Vendshlag was appointed CEO of IKEA in Russia and took up his duties. The former leaders of the Russian unit - CEO Per Kaufman and director of real estate Stephan Gross - were dismissed in February 2010 due to a corruption scandal.
The Swedish company IKEA was founded in 1943. Currently, it is the world's largest retail chain saling furniture and household items. The Company owns 281 stores in 24 countries, has 36 shops in 16 countries running by private franchisees.
Currently in Russia there are 12 such complexes: three - in the suburbs of Moscow, two - near St. Petersburg, as well as one - in Kazan, Yekaterinburg, Nizhny Novgorod, Novosibirsk, Rostov-na-Donu, the Republic of Adygea, Omsk. Total volume of IKEA's investments in Russia in October 1, 2010 amounts to about $ 4 billion. Group owner is the fund Stichting Ingka Foundation (Netherlands).