Among a deep analysis of BRICS Countries I chosed to evalute the Import-Export business relation between Italy and Russia. The research was conducted considering many factors: - political and country risks - macroeconomics data - rules concerning import-export between those Countries - main productive sectors - SWOT analysis

1. RUSSIA
Author:
Simone Tremonte
Market
research:

2. POLITICAL AND PHYSICAL
GEOGRAPHY
• Surface: 17.075.400 km2
• Population: 141.945.966 (till 2010)
• Density: 8.3 inh/km2
• Ethnic groups: Russians (79.8%), Tatars (3.8%), Ukrainians (2%),
Bashkirs (1.2%), Chuvashes (1.1%), Chechens (0.9%), Armenians
(0.8%), other (10.4%)
• Official Language: Russian
• Religion: Mainly Christian (mostly Orthodox), with Muslim minorities,
Buddhist and Jewish
• Capital: Moscow (popul.:10.535.100 till 2009)
• Other major cities: St. Petersburg, Novosibirsk, Kazan
• Institutional form: Federal semi-presidential Republic
• Currency: Rouble

3. SHORT HISTORICAL BACKGROUND
• Early periods: VIII century
 Novgorod Republic
• 882 – 1054: Kievan Rus‘
• 1054 – 1245: Setting-up of further Principalties (Basis of the
modern Russia)
• Grand Duchy of Moscow:
 1245 – 1380: Mongol supremacy
 1380 – 1478: Moscow dominion under Ivan III (The Great)
 1478: Indipendence under the Moscow supremacy

4. • Tsardom of Russia (Ivan IV “The Terrible”):
 First Russian feudal representative body (Zemsky Sobor)
 Introduction of local self-management in the rural regions
• Imperial Russia:
 from Peter I “The Great” (Russia proclaimed as an Empire in 1721 and
recognized as aworld power)
 to Lenin (Russian Revolution of 1917 and the first Socialist State)
• Soviet Russia:
 from Stalin election (1924), throughout the World Wars
 to the end of Socialism (URSS divided into 15 post-Soviet states, 1991)
• Russian Federation:
 first Presidential election of Russian history: Boris Yeltsin in June 1991
 1998: Russian financial crisis due to high budget deficit
 Putin election (2000): suppression of Chechen insurgency and growing
up of economy for nine years
 election of today’s President Dmitry Medvedev (2008)

5. GOVERNMENT AND POLITICS
• Government: Federal semi-presidential republic
• President: Dmitry Medvedev
• Prime Minister: Vladimir Putin (Independent, but leader of
UR)
• Chairman of the Federation Council: Sergey Mironov (FR)
• Chairman of the State Duma: Boris Gryzlov (UR)
• Legislature: Federal Assembly
• Upper House: Federation Council
• Lower House: State Duma

6. Main information till April 2010
• Russia is in a phase of slow rising in updating military and economic
power , inside the country and all over the world
this requires:
stability in political and economic relations with Europe
• April 2010: strategic nuclear arms treaty START 2
normalization of relations between the USA and Russia
IMPORTANT:
Relations with China: opportunities for energy trade and
already become the biggest market for Russian imports
Consolidation of trade power in world strategic sector
(production and sale of gold, uranium, and export of arms)
Source: PROMEC

7. MACROECONOMICS DATA
Source: CISSTAT

8. General economic sight
• 2003 – 2008: Russia has been the third (after China and India)
among the world emerging economies
• In the second half of 2008 a slowdown due to Internationsal
crisis was registered, but the economy is growth anyway,
although if it was slow
• The effects of the crisis has been relevant for the country's
economy causing:
- capital losses more than expected
- a slight increasing of poverty
- GDP felt down of over 10 percentage points

9. • 2010 should be the year of recovery with GDP growth of 3.2%
and thanks to:
- a careful fiscal policy
- increasing funding
• The stabilization of oil prices, the increased currency reserves
and the strengthening of the ruble against the Euro and the
Dollar contained inflation
• Corruption in Russia: It’s a cultural and social factor that
could obstruct the economic development and its
Internationale trade

10. Main productive sectors
Mining and extraction of oil (-3.6%), production and distribution of
electricity, gas and water (-6%), manufacturing (-21.1%), construction
(-20.7%), retail and wholesale (-6.2%), financial services (-2.5%),
agriculture (-2.1%), food industry (-2%), carbon-coke production and
petrochemicals (-1.3%), leather goods and footwear (-5.5%), chemical
industry (-13%), plastics (-14.6%), textiles and clothing (-20.7%), metal
industry (-23.1%), wood industry (-23.1%). Despite the declines seen
during the 2009, all sectors show, now in recovery. The crisis remains,
however, for sectors such as transport, in particularly automotive,
mechanical and electrotechnical industry (-31.7%), optical (-36.1%)
Source: ASSOCAMERESTERO
Data are referred to the first nine months of 2009

11. IMPORT-EXPORT
• According to data released by the Federal Customs Service in 2009, the
interchange trade with the rest of the world total has decreased in
36.2% compared to 2008 (source: ICE)
Total imports: mld / e 143.2
Total exports: mld / e 215.1
Main imported products: transport equipment, machinery and
plants(50%)
Main exports: oil, gas, raw materials
Main trading partners
Customers countries: Netherlands (12.2%), Italy (9%), Germany (6.9%),
Turkey (5.9%), Ukraine (5%), China (4.5%), Poland (4.3%)
Related countries: China (12.9%), Germany (12.6%), Japan (6.9%),
Ukraine (6%), USA (5.1%), Italy (4.1%)
Source: The World factbook, CIA;
partial data till 2009

12. Regulation of trade
• Customs clearance and import documents: system
certification and standardization of customs rules and issuance
Licensing is expensive and not very transparent. A step forward
seems to be the formation of the new customs union of EURASES
for the free trafic of goods between the three countries
(Kazakhstan,Russia and Belarus): it concern of unified rules for
customs and fees
• Customs classification of goods: fees Russian nomenclature
customs is organized according to international criteria HTS,
which makes it identical to the EU structure Harmonised System
of tariff nomenclature

13. • Restrictions on imports: the government significantly raised the
level of customs duties on imports of new cars (25-30%) and
used from 12.01.2009, in order protect local producers. The new
customs duties have a pre-planned nine months. Russia
announced any reduction of duties as soon as the Country will be
part of WTO
• Temporary imports: the system allows a total or partial
exemption from taxes and customs duties, providing
that the goods are re-exported within the prescribed period
by the customs authorities, not to exceeding two years
Fonte: Russian Customs Tariff; Dogana Russa; Rupto (www.rupto.ru); fisconelmondo.it
In order to operate
Country Risk: 4/7 (Source: OCSE)
Terms of SACE Insurance: unrestricted access

14. ITALY-RUSSIA BUSINESSES
Relations in recent years between Italy and the Russian Federation
have achieved a high level of excellence
Source: ISTAT data till March 2010

15. MAIN ITALIAN EXPORTS AND IMPORTS (2009)
EXPORTS IMPORTS
1. machinery and equipment (31.1%) 1. Energy products (86.3%)
2. furniture (11.2%) 2. wrought iron, iron and steel (7.1%)
3. apparel, including knitwear (9.7%) 3. copper and copper products (1.,0%)
4. pharmaceutical products (4.3%) 4. leather and hides (0.6%)
5. plastics (3.0%) 5. lumber and coal (0.5%)
6. wrought iron, iron and steel (2.9%)
6. animal and vegetable fats and oils
(0.4%)
Source: Istat (as of November 2009)
According to Istat, the ratio of sales value in Russia Italian exports
was 2.3%, the incidence of imports from Russia by 4.1%. Italy is the
second country customer with Bn/€ 7.7 and the sixth supplier with
Bn/€2.4 with --Balance of Trade: Bn/and 5.3

16. Agreements with Italy
• In 2007 ENI and Gazprom signed an agreement aiming to launch the
study of the gas pipeline project South Stream which would link the
southern regions of Russia to Europe across the Black Sea
• ENI also entered as an intermediary in the Russian gas market, by signing,
in 2008, with the TGK-9, electricity generating Company, a contract to
supply 350 million cubic meters of gas by 2010
• In May 2009, Eni and Gazprom have also finalized an agreement, in order
to increase the capacity transport of South Stream (by 31 to 63 billion
cubic meters)
• The Finmeccanica Group is strengthening its cooperation with Russian
companies in the aerospace, defense and telecommunications

17. CONCLUSIONS: SWOT ANALYSIS
Strenghts: Weaknesses:
- Italy is the main supplier country for Russia,
in machinery and equipment sectors and the
second customer country
- High quality of italian goods, perceived by
Russia
- Political relations and the improving import-
export between Italy and Russia above all in
the last 5 years is an important growth factor
for the future trade
- Italy is only the sixth supplier of Russia
- Low exports of energy and other strategic
sectors as gold, uranium on which Russia
focuses its own economy
- Italy's GDP has felt down more than Russia
and others few country of the world due to
the crisis of 2008
- Euro/Ruble could be a problem on a long term
if the Euro will continue its falling down in
value compared to Dollar too
Opportunities: Threats:
- Consolidation of import-export in the most
productive italian sectors
- Growing economic stability of Russia
- Excellence of Made in Italy above all in food
market, leather goods, footwear, texils and
clothing
- Improve the partnership also with other
countries (i.e. Cina and Netherlands ) which
are already strong trading partner of Russia
- Very different culture in order to let them
perceive the particular and specific quality of
Italian goods
- New emerging economy too competitive in
price compared to Italan market
- Corruption
- Country Risk: middl-high level
- Customs duties and some restrictions for
imports

18. Thanks for your attention