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Bric Chicago Ivanenko
1. Al i I k CEOAlexei Ivanenko, CEO
Comline Group, RUSSIA & CIS
International Day Conference
Exploring New Business Opportunities in the BRIC Markets»«Exploring New Business Opportunities in the BRIC Markets»
Chicago
October 28, 2008
COMLINE®
Russia
2. Who are we? Why am I here?
1 I have 15 years of successful experience in running
Who are we? Why am I here?
1. I have 15 years of successful experience in running
international businesses in Russia and ex-USSR countries:
Distributor to the Graphic Arts Industry
Offset printing shop
Digital printing shop
2. Russian economy growth rate is about 8%
Our business in 2007 grew for 2.7 times
3. There are still a lot of myths about Russia …
Last time I saw a bear in Moscow 25 years ago in the ZooLast time I saw a bear in Moscow 25 years ago… in the Zoo
Last economic crisis I experienced was not so long time ago
in 1998…
COMLINE®
Russia
3. Agenda
1 Russia is becoming an economic powerhouse
Agenda
1. Russia is becoming an economic powerhouse
2. What does it mean for the Russian printing industry?
3. Russian printing industry overview. Unexplored opportunities?
4 R i i k d l b i4. «Russian risk» and real barriers
5. What can be a right strategy to create sustainable business in
Russia?
6. How can Comline help you to enter and develop your business inp y p y
Russia and CIS?
7 Q & A7. Q & A
COMLINE®
Russia
4. Russia is becoming an economic
powerhouse
1. Economic growth – one of the highest GDP CAGR forecast 9.8%
2. Growth of the consumer market
G i di bl i i i itGrowing disposable income – increasing prosperity
Declining unemployment and increasing consumer spending (CAGR 21%)
Retail potential – a market of 142m people
99%+ literacy rate99%+ literacy rate
3. Energy giant – strong economy support for the next 7-10 years
Russia is a key oil gas and coal exporter in the worldRussia is a key oil, gas and coal exporter in the world
This is safeguarding the economy and makes Russia less
susceptible to slowing global growth
4. Huge investment needs
Largest emerging market recipient of FDI after China
US$1 trillion planned Government infrastructure investmentUS$1 trillion planned Government infrastructure investment
COMLINE®
Russia
5. Factors for Market Growth
Growing disposable
income –
Increasing prosperity –
Increasing demand –g
Increasing sales –
It means more print!It means more print!
COMLINE®
Russia
6. Factors for Market Growth
Inward FDI to non-financial sectors rose to nearly
$31 billion in H1 2008 ($25 billion in H1 2007)
COMLINE®
Russia
$31 billion in H1 2008 ($25 billion in H1 2007)
It means more print!
7. Factors for Market Growth
Strong balance of payments
Import of goods and services was $260B in 2007. About 50% of import is
machinery, equipment, Hi-tech technologies – new production facilities!
COMLINE®
Russia
It means more print!
8. Factors for Market Growth
Budget surplus
(5.9% in 2007)
Expenditure increase
(39% in 2007)
Russia move away from
«oil & gas budget»
increasing spending:g p g
to boost all other
industries
in infrastructure
investments
social spending
It means more print!
COMLINE®
Russia
9. What does it all mean for the
Printing Industry
1. THERE IS A BIG UNSATURATED PRINTING MARKET IN RUSSIA
2 DEMAND DOESN’T MEET SUPPLY IN PRINTING INDUSTRY2. DEMAND DOESN’T MEET SUPPLY IN PRINTING INDUSTRY
Printers cannot follow demand growth
Quality of Service
Product typesProduct types
3. RUSSIAN PRINTING INDUSTRY GROWS MUCH FASTER THAN
RUSSIAN ECONOMYRUSSIAN ECONOMY
For example, luxury, education, food, government, service sectors in
Russia grows much faster than ever.Russia grows much faster than ever.
4. THERE ARE A LOT OF MARKET NICHES WHICH APPEAR
CONSTANTLY
COMLINE®
Russia
10. What does it all mean for the
Printing Industry
5. Printing Industry one of the first feels if
the economy tends to growth or decline.
In the most cases Russian printing
industry can benefit from both!y
COMLINE®
Russia
11. Printing Market OverviewPrinting Market Overview
Official statistics
7,000 print shops in Russia
Printing sales volume is about $2b (2005)
and $4b (2007) (?)
growth rate is around 7 – 8 % and it just
follows economy growthfollows economy growth
COMLINE®
Russia
12. Unexplored opportunities?Unexplored opportunities?
Comline facts
11 000 companies in Comline database11,000 companies in Comline database
Comline equipment and consumables sales
profit growth in 2007 was 2 7 timesprofit growth in 2007 was 2,7 times
Comline printed products sales profit growth
30%was 30%
d it ti t… and it continues to grow now…
COMLINE®
Russia
14. «Russian Risk» and real barriers
Any transition economy creates some risks
84%Administrative barriers
(li it d t )
Russian Risk by foreign investor eyes
78%
(licenses, permits, red tape)
Corruption
67%
71%Inadequate and
inconsistent legislation
Selective interpretation
d li i f l
39%
and application of laws
Inadequate protections against
unethical business tactics
All these issues are really important, BUT …
Source: questioning of foreign investors «Russia as an object of investments», polled in 2005 г. by FIAC
COMLINE®
Russia
15. «Russian Risk» and real barriers
But the most important thing is:
Understanding & Doing Local RightUnderstanding & Doing Local Right
COMLINE®
Russia
16. «Russian Risk» and real barriers
LOCAL
«Russian Risk» and real barriers
LOCAL means:
Cross-cultural differences
Huge & multinational country - many different mentalities
Different decision making models
Different business culture (partnershipDifferent business culture (partnership,
management systems, employees, clients, history)
Weak business traditionsWeak business traditions
Knowledge of business environment
COMLINE®
Russia
17. What can be a right strategy to create
sustainable business in Russia?
1. Do not rely too much on experience of sales people from western
companies which used to work with Russia
2. Do not rely too much on experience of Russians which used to work on they p
western companies too long
3. Look for the right native partner you can build trusting relationships with
4. Develop management system to control everything deeply
5. Study local environment carefully to avoid «surprises»
6. Develop LOCAL
business model
marketing strategy
sales strategiessales strategies
sales skills
operations strategy
COMLINE®
Russia
What appears to be good in the US …
may not really be so in Russia
18. How can Comline help you to enter and
develop your business in Russia and CIS?
We provide the following services
S ppo t to ente the R ssian and CIS ma ketSupport to enter the Russian and CIS market
Development of sustainable business in Russia and CIS
Distribution of your products
Our partners
Xante, Presstek, Oce, InfoPrint Solutions (Ricoh/IBM
Company), Morgana, Plockmatic, C.P.Bourg …
COMLINE®
Russia
19. Q & AQ & A
Thank you!
Pls, contact: ai@comline.ru
COMLINE®
Russia
