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.

GDF Suez SA Intends To Acquire 9% Stake In Nord Stream

French energy company GDF Suez SA has expressed a desire to acquire 9% stake in the project pipeline Nord Stream. The Nord Stream pipeline will link Russia and Germany, reports Reuters.

 Gerard Mestrallet, CEO of GDF Suez SA, confirmed the negotiation process between the parties adding that hey get no political obstacles to getting his company into the project from the Russian party.  

In April, Russia's Gazprom announced that GDF Suez began talks on joining the project of gas pipeline Nord Stream, which will run under the Baltic Sea from Russia to Germany. Controlling stake - 51 percent - in this project belongs to Gazprom, 20% to Wintershall Holding and E. ON Ruhrgas and 9% to the Dutch Nederlandse Gasunie. 

The deputy head of Gazprom, Alexander Medvedev said in June that GDF Suez may get stake in the project, equal to the share of Gasunie, E. ON and did not rule that would give 4.5 per cent in favor of the French company.