Market Intelligence for Russia and CIS

Market Intelligence for
Russia & CIS
Webinar presentation
March 31, 2010

www.globalintelligence.com

Webinar Content Outline
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 info@globalintelligence.com.

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)

www.globalintelligence.com - page 2

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


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


What differentiates them?

•  Orthodox VS Islam

•  Very poor VS very rich

•  Industrial VS agricultural


Countries overview

•  Russia ~ 80% of
regional GDP
•  Ukraine and
Kazakhstan -
two other
Majors
•  3 country
groups:
European

Caucasian

Middle Asian

Some statistics


Countries overview


Overview of the key countries


Russian Federation – basic facts
•  Largest country in the world, 11 time zones,
7th economy in the world
•  Moscow and Saint-Petersburg + 12 big cities


Russia and BRIC
Similar: But, different:
•  Big market •  Relatively wealthy
•  Growing •  More developed
•  Unstructured and and educated
non-transparent •  Europeans


Key characteristics of Russian
market and economy
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

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

Moldova
•  Small, relatively poor country in South-
East Europe
•  Agriculture, famous with its wines
•  Around 25% of labor force works abroad


Caucasian group of countries
Georgia
•  Mountain country with 5 mill. population
•  Famous with its wine, resorts and agriculture
•  Tense relations with Russia

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

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

Middle-Asian group of countries
Uzbekistan
•  30 mill. poor Muslim country
•  Cotton, Grain, gold

Tajikistan Kyrgyzstan
•  7 mill., one of the •  5 mill. country of
poorest in CIS breeders and
•  Nearly 50% of GDP – riders
transfers from outside •  Gold mining and
workers breeding
Turkmenistan
•  5 mill., least transparent and most totalitarian
country
•  Gas & oil – key industries
•  Totalitarian regime www.globalintelligence.com - page 19

Business opportunities in Russia &
CIS


Probably, now it is the best time to enter
CIS countries
Some international brands entering
•  Interesting niches and Russian market in 2009-2010
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


Business opportunities in B2C

Some international brands entering
•  Consumer market: luxury Russian market in 2009-2010
or value-for-money

•  Established retail and
distribution channels –
chance for niche players

•  Service sector – enormous
potential


Business opportunities in B2B

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

•  Advanced processing
technologies

•  Energy-saving technologies

•  Components, parts and supplies


Not only market, but intellectual and
creative partner
For the last 10 years Russia has won 6 times
in the International IT Championship
The ‘Fields Medal’ (‘Nobel Prize’ in maths)
•  High rate of higher ceremony takes place every 4 years and
education Russian specialists have been awarded in the
last 5 ceremonies.

Companies which have opened R&D
•  Inventive nation, culture of centers in Russia
breakthrough creative teams
and ideas

•  Innovative capital:
government and private
investors

Challenges and solutions in
conducting MI in Russia and CIS


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


Challenges of conducting MI in Russia & CIS

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

•  Role of government to be studied
separately

•  Tough competition calls
for sophisticated strategies


Thank You for Your
Attention

These slides are excerpts from Contact Us
the GIA White Paper: “Market
Intelligence for Russia & CIS”. For additional information about the
Global Intelligence Alliance and our
services, please send email to
Download the entire White Paper info@globalintelligence.com or log on
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The report has been published under the
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