http://community.sk.ru/opus/megatrends/b/weblog/archive/2012/06/27/russia-mega-trends-macro-to-micro-implications-for-2020.aspx

1. Russia Mega Trends:
Macro to Micro Implications for 2020
May 2012
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2. Introduction to Mega Trends
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3. Definition of a Mega Trend
What is a Mega Trend? Impact of Mega Trends on Key
Organizational Functions
Mega Trends are global, sustained
and macro economic forces of
development that impact business,
economy, society, cultures and
personal lives thereby defining our
future world and its increasing pace of
change
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4. Mega Trends in Russia
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5. Economy: Russia Beyond Moscow – The Next Game
Changers
5

6. Moscow – Emerging Mega City
Fast Forward Moscow City Facts: Did You
Know?..
25-30% of Russia’s GDP will be produced in
Moscow (2025)
20% of Russian population will live in Moscow
agglomeration
The city will grow 2.5 times (Big Moscow)
150km of new tracks and 70 stations will be
opened in Moscow Metro
What Are The Implications?
Global economic force on its own
Hub and spoke business model
Diverse and dynamic socio-economic mix
Tech-savvy citizens connected 24/7
Mega-corridors: Moscow – St. Petersburg,
Moscow – Nizhniy Novgorod
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7. Russia Beyond Moscow – The Next Game Changers
5 to 7 cities will emerge as alternative growth centres by 2020,
bridging the welfare gap between Moscow and the regions
Saint
Petersburg
Moscow 1/3 of the population will live in the
Eastern part of Russia in 2025
Krasnodar
Yekaterinburg
Novosibirsk Krasnoyarsk Khabarovsk
South: Sochi,
Krasnodar, Rostov
Development of tourism
and agricultural business
Vladivostok
Ural: Yekaterinburg, Siberia: Krasnoyarsk, Far East: Vladivostok,
Perm Novosibirsk, Tomsk Nakhodka, Khabarovsk
Logistics, finance, machine Oil and gas, healthcare, Modern infrastructure and
building energy, innovation logistics facilities
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8. The New Locomotives of Growth
Vladivostok – “San-Francisco” in the Far East
“Open sky” status – transit between China and US
Modernization of Vladivostok Marine Trade Port
Educational, scientific, travel and business centre linking
Europe, Asia and America
“Tomsk 3.0 – Cognitive City of the Future
Post-industrial, innovative economic development
Strong scientific and educational complex
Comfortable living environment and social
infrastructure
Yekaterinburg – “The City” of Ural
Economic and financial centre
Important transportation hub – multi-modal logistics,
the fastest growing airport
Solid industrial base attracting investments
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9. Social Trends: Prosperity, Education and Social
Mobility
9

10. The Middle Bulge
Middle Class
•Boom in consumer expenditure, stimulating
the overall economy growth Annual Disposable Income* (Russia), USD per capita
•The largest consumer markets in Europe
•Higher demand for intangible products –
services, leisure and entertainment, etc.
Wellness and wellbeing
•Healthy nutrition
•Healthier lifestyle – sport and fitness
Social mobility
•She-economy
•Small and medium businesses
•Reverse brain-drain
2005 2010 2015 2020
Education
•RUB 140.5 billion investment * Current prices, year-on-year exchange rates
•From quantity to quality
•Corporate and federal universities, national
Source: Frost and Sullivan, Euromonitor International, Rosstat
research centres
10

11. Small and Medium Business – Engine for Innovative
Growth
Positive trends Restraints
1.7 m SMEs, 4 m individual entrepreneurs Only 5% have international contacts
17 m employed, 22% of working-age Only 2% - innovative SME
population
US – 40% of GDP, Europe – 60% of GDP
21% of GDP
Barriers – tax system, lack of available
2000-2005 growth – 7%, 2005-2009 – 40% financing, corruption, red tape
What kind of support measures for SMES would be most effective?
% of responses
Source: Chamber of Commerce of Russia and the
Ministry of Economy – “Monitoring of SME
sector”(June 2011), Opora.
11

12. Healthcare as a National Security Doctrine
12

13. Facing Demographic Crisis
Life expectancy among the lowest in the developed world
Fast Forward Facts: Unhealthy lifestyle and inefficient healthcare system
Demographics Number of population decreased by 7 million in 1991-2009.
2025 forecast: optimistic/pessimistic scenarios ~139/131 million
Source: WHO, UN, Rosstat, Frost and Sullivan
Nation’s healthcare becomes THE most urgent problem in Russia
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14. Pharmerging Economy
Today
Low per capita consumption of drugs
High dependency on imports
Pharma Tomorrow
One of the fastest and most attractive pharmaceutical markets
Locally-produced drugs, including innovative and biopharmaceuticals
Manufacturing of pharmaceuticals in Russia
2010 2020
Source: IMS Health, Frost and Sullivan
Pharma
2020
CAGR 2011-
2016:
11-14%
Foreign Russian
14

15. Equipping the Healthcare System
Today
Installed base – 4 MRI and 9 CT scanners per 1 million population
Estimate in order to meet the diagnostic needs – 14 and 25
Medical Lack of qualified personnel (e.g. radiologists)
Equipment Dependency on imports
Tomorrow
Steady market growth
Localization of production and technology transfer
CAGR: 7-8%
MRI – magnetic resonance
imaging
CT – computer tomography
Source: Frost and Sullivan
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16. Infrastructure Development
16

17. The most ambitious infrastructure development programme in the world
New and improved business opportunities
Population mobility
Economic development of the Eastern part of Russia
17

18. Up in the Air
Today:
63% of the Russia’s territory has no alternative to air transport.
80% of airport infrastructure is outdated and requires modernization
Investment 2012-2019:
RUB 107 ($ 3.55) 70% of runways were built over 20 years ago.
billion Tomorrow:
Tourism in the North Caucasus– 4 new and modernization of 6 existing
airports
Vladivostok – air hub in the Far East
Source: Rosstat, IATA, Frost and Sullivan
18

19. Fools and Roads
Today:
29% of federal roads are overloaded, in Moscow – 60%
46,000 settlements (2.7 m citizens) do not have access to hard-surfaced
Investment 2012-2019 roads
RUB 1.71 trillion 23.5 deaths per 100,000 people caused by road accidents (Europe – 9.5)
($ 57 billion) Tomorrow:
Construction/modernization of ~20,000 km of roads, including toll highways
Trans-Siberian route development and emergence of multi-modal hubs
The Silk Road of Modern Age: Europe to China highway via Kazakhstan
Automotive Industry
Over 4 mln new car sales in
Russia by 2020
Logistics Industry
To reach over $100 bn by 2020
Source: Ministry of Transportation, Frost and Sullivan
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20. Back on Track
Today:
Low railway network density
Low cargo delivery reliability – 88-90%
Investment 2012-2019 Tomorrow:
RUB 407 ($ 13.5) 20,000 km of new railway links by 2030, +24% in railway network density
billion
The dawn of high-speed railway era – 1,500 km with speeds up to 350 km/h
(St-Petersburg – Moscow – Yekaterinburg)
Modernization of rolling-stock (passenger and cargo)
Siemens
Desiro trains to be
manufactured in Russia
Talgo
Railway modernization Spanish manufacturer to supply
in Russia attracts variable gauge trains for Moscow-
foreign players Berlin and Moscow-Kiev routes
Alstom
Supplier of Allegro train on
St.Petersburg-Helsinki direction, is
eyeing further expansion in Russia
Source: Ministry of Transportation, Frost and Sullivan
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21. e-Russia
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22. Modern Russia
Implications for Government,
Business and Society:
Accountable and transparent
government
Transparency for stakeholders in
G2G and G2B transactions, bidding
process
Improved city planning process
Cut red tape and save time: on-line
G2C services (taxes, utility bills)
Reduce operational costs for
businesses
Efficient delivery of a long range of
public services 24/7 – education
and healthcare
New business models
22

23. E-Government
UN e-Government index 2012
www.government.ru – solid and
representative, rich technical features
www.gosuslugi.ru portal – One Stop
Shop for e-services, ~500,000
monthly visitors
27th spot in the world +32 positions in
global ranking in
The leader in Eastern Europe, only 2 years (!)
behind Japan and US among the
largest populated countries
RUR 80 ($2.7) billion investment for
government informatization
60% of the population to use e-
government services in 2020, up from
~11% presently
Note: * - with a population over 100 million people
Source: United Nations
23

24. e-Society
Legal status of e-learning approved by the new
Law on Education (2012)
e-Learning
20-25% growth of e-learning services in the
coming years
RUR 24 ($ 0.8) billion investment
Electronic health records system roll-out in pilot
e-Healthcare regions
Telemedicine and m-healthcare – remote
patient diagnosis, monitoring and treatment
~ 40% annual growth
Overcoming general distrust, expansion in the
regions and all age-groups
e-Commerce
Solving logistics and payment issues
New business models (private shopping clubs,
group purchasing, penny auctions)
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25. Made in Russia
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26. Made in Russia 2.0
Innovative production in Russia, % of GDP
Before After
“REBRANDING”
Innovative products in Russian exports, %
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27. From Raw Materials Supplier to Innovative Exporter
Strong Before After
Export of
dependence
innovative
on
goods and
hydrocarbon
services
exports
Localization of R&D funding
foreign
manufacturers
Technology
transfer
Localization of manufacturing in Russia will trigger its innovative growth
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28. Back to Russia
Energy Healthcare ICT Automotive
Energy efficient power CT scanners – Philips Mobile base stations for Localization of
generation turbines – Healthcare and Elektron, LTE networks – NSN, automotive plants
General Electric and GE Healthcare and Rosnano and Mikran
Railway cars – Alstom
Rostekhnologii Rostekhnologii IPTV set-top boxes – and Siemens AG
High performance gas Big Pharma Cisco Systems
(manufactured by Jabil) Automotive components
turbines – Siemens AG
– Valeo, Robert Bosch
and Silovye Mashiny
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29. Technology Leapfrogging
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30. Space Jam
Automotive & Other:
Logistics: •Tracking (personnel,
•Navigation assistance children, criminals)
•Traffic management •Remote patient monitoring
•Usage-based insurance •Improvement in weather
prediction
•In-vehicle infotainment
•Mobile satellite services
•Asset tracking
•Increase in broadband
•Real-time stock speed
management
•Air-traffic control
•Automated guidance of
machines
ERA GLONASS is to become fully operational by 2014-2016 and create multiple innovative
applications
30

31. Wireless World
4G Mobile Technology
•High rates of data transmission
•Enabling integration into any wireless Broadband Internet Access, % of Households
platform
•Russia at the forefront of LTE
deployments globally
RFID / NFC
•Potential economic benefits to outweigh
implementation costs
•Multiple applications – retail, logistics,
toll collection, fare payment
Security
•Transportation and critical infrastructure
protection
2010 2015 2020
•CCTV surveillance integrated into the
wireless platform
•Market growth of IP-based solutions
Wireless intelligence – IT infrastructure to be around 80% wireless
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32. Biopharmaceuticals and Beyond
Today
0.1% of the global biotechnology market
80% import dependence
Biotechnology-2020 Focus on pharmaceutical biotechnology
RUB 1,163 ($38.6) Tomorrow
billion 5% market share in the global biotech market
Two-fold reduction of imports
Red, White and Green biotech
Red Biotech - Pharma White Biotech – Industry Green Biotech - Agriculture
Fast-growing, attractive for
Virtually non-existent Legal uncertainty – barrier
investment
for growth
Large-scale projects – “Third wave of biotech”
Opportunities – increase
Generium, Bioprocess, Chemrar, Opportunities – biofuels
yields of agricultural crops,
Biocad (agricultural and forestry
reduce their vulnerability
Opportunities – import waste), chemical industry
to diseases, improve
substitution of generics, (biopolymers), food and feed
nutritional quality of food
innovative drugs (ingredients, supplements)
(amino acids)
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33. Nano-Russia
NANOMATERIALS Global Scanning Probe Microscopes Market,
$ million
Large scale production of silicate
nanocomposites (Bryansk, February
2012) – Rosnano
Large number of innovative SMEs,
e.g. Novosibirsk Nanomaterials – metal
R 15 %
nanopowders. G
CA
NANOINSTRUMENTATION
Worldwide spending on
nanotechnology will lead to sustained
growth in demand
NT-MDT (Zelenograd) –
manufacturer of world-class scanning 2009 2012 2015 2018
probe microscopes (SPM) since 1989
Advanced Technologies Centre –
manufacturing of SPMs (Moscow,
December 2011) – Rosnano.
Source: Frost and Sullivan, NT-MDT, Rosnano
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34. Smart is the New Green
34

35. “Smart” is the New Green
Smart Cities Smart Smart
Smart Energy
Technology Infrastructure
Smart Smart
Smart Grids Smart Clouds
Mobility Buildings
Smart Smart
Smart Phones Smart Meters
Materials Bandages
35

36. The Lighting Revolution
Today
LED – 3-5% of the market due to high cost
Tomorrow
LED prices are to decrease 30% by 2015
Smart Lighting Russia is to phase-out inefficient light bulbs: 2011 – 100W, 2013 – 75W
LED vs. Incandescent bulbs – potential energy saving of 80%
Intelligent lighting systems – wireless networks to remotely monitor and
control street lighting, motion controls, dimming sensors, on/off scheduling.
LED Lighting – Market Revenue, World
%
20
R
C AG LED-pioneers in
Russia
Source: Frost & Sullivan
Russia is to leapfrog from incandescent light bulbs to intelligent LED lighting systems
36

37. Saving the Energy
Today
13-15%energy loss during electricity transmission
70% of installed equipment – import
Smart Meters
Tomorrow
and Grids 40% energy efficiency increase by 2020 (Federal Law #261)
Incentives for localization of production – to reduce share of imports to 40%
Beyond electricity – pilot installations of water smart meters (Mosvodokanal)
Source: Federal Grid Company, Frost & Sullivan
European Smart Meters Market Smart Grid projects in Tomsk,
Sochi, Perm, Belgorod
Installed Base, million units Price Projection, $
Intelligent grid implementation could result in RUB 50 million annual savings
37

38. From Concept to Reality
Today
Citizens demanding a modern living environment
Energy efficiency and environmental concerns
SMART CITY Rapid growth and penetration of ICT
Tomorrow
Smart city projects in Belgorod and Skolkovo – a model for
modernisation of smaller Russian cities
• E-government • Traffic management Belgorod
• E-healthcare • Public transport Maiden smart city project in
Russia
Smart Smart Smart lighting system
governance mobility 59,000 smart meters
Smart grid.
Smart
Smart living
environment
• Entertainment • Smart buildings
• Culture and sport • Smart grid
Smart City – interconnected urban environment where citizens lead a fully digitalized lifestyles
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39. Mega Events
39

40. Mega Events
Sochi 2014 Winter
APEC Summit 2012 F1 Grand Prix FIFA World Cup 2018
Olympics
$ 9 billion $ 10 billion ~ $ 22 billion
investment $ 200 million
investment investment
Development of investment
Modernization of Infrastructure,
tourism in the Recurring annual
Vladivostok – hub tourism, global
Caucasus revenue
in the Far East marketing campaign
A string of large-scale events that will open up Russia to the world
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41. Macro to Micro Analysis
41

42. Key Strategic Conclusions
1. Mega Trends are connected and intertwined which suggests “synergetic” opportunities
between them
2. It is important to understand the eco-system of the Mega Trend and the elements of the
value chain which have most profitability
3. All these trends have global ramifications thereby offering scalable opportunities
4. These forces are changing rapidly and bringing new competencies into play at half the
life-cycle speed of the past decade
5. Organisations’ need “Mega Trend” champions and teams within their organisation
structure to best exploit the opportunities
6. It is important to build a healthy eco-system around your opportunity related to a mega
trend as it can be a source of competitive advantage and raise barriers to entry
42

43. From Macro to Micro: Taking Mega Trends from Information to
Strategy Implementation
Macro Micro
Analysis of
Mega Trend
Selected trends that Opportunities
impact your business and Unmet
and markets
Needs
Impact on
Sub Trend Future Product/
A sub-layer of trends that
has a wide ranging impact
Technology
Impact to Your
Industry
Visualising the roadmap of
these critical forces through
scenario-building and macro
economic forecasts
43