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05-06/2010
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Friendly interface of Vladimir region
Vera Shamota

The arrival of an investor to the region, specifically of a foreign one, is always a major event both for regional authorities and for the “overseas guest”. The path both parties have to traverse before the investor gets hold on the unknown territory demands considerable effort. Vladimir regional administration has a foreign economic relations department which helps investors adapt to Russian realities. Its Director Vera Shamota told the magazine about the activities of the department and described the real investment situation in the region.

CARGO HUB

The foreign economic relations department of Vladimir region literally trots investors round the region. We regularly hold regional presentations in various foreign embassies, which invite their national companies to the events. Ambassadors also arrive on business missions to Vladimir region. Together with businessmen we look for places where an agricultural or industrial facility can be launched. Russian investors are also present at the forums. Besides, representatives of municipalities attend to explain land availability. Some foreign companies arrive here bypassing the administration. They are mostly small businesses, as a rule, which do not need state support and our assistance. But if a major company comes with a new business it definitely contacts the administration as it understands it would be difficult to get a major project moving without state support. Together with investors we go to see potential construction sites, negotiate with monopolies – gas producers, power engineers, railwaymen, and resolve problems with local self-government related to water supply and discharge. Lawyers provide the necessary consultations. It is a normal process that helps foreign investors enter the Russian market with minimum stress. Companies are organically adapting to Vladimir environment. The Italian Ferrero immediately moved its logistics here, built major warehouses and a huge production facility with two lines making Kinder Chocolate and Raffaello candies. The world-known British Kraft Foods is also present. In 2002 we helped the company launch up-to-date chocolate production in the town of Pokrov and make such popular brands in Russia, as Alpen Gold, Vozdushny, and Pokrov, which gave it the second place on the national chocolate market. Pokrov has a statue of a chocolate fairy and a chocolate museum has recently opened.

Our region has capacities capable of producing over 100 thousand tons of confectionary products. It is impossible to consume all the sweets in the region. For global companies the market is the whole of Russia and near-abroad countries. Food industry is constantly expanding. The Homes Foods Company from the Czech Republic has been active since 2004. We are negotiating with other major companies engaged in food processing and the production of ecologically pure food.

The German Paul Hartmann Company is building a major facility to produce up to 20 thousand tons of medical products a year. The Russian Mortadel Company built a major pig farm in the Alexandrovsky district. Petushki district got a cattle breeding complex. The project was initiated by John Kapizki from England who has recently received Russian citizenship.

The new complexes are five times more efficient than traditional agricultural facilities by labor productivity and production volumes. The French Inergie Company built a facility to produce fuel tanks in the village of Stavrovo in Sobinsky district, which was the first investment project with French capital. The company bought out a production shop of the Stavrovo enterprise and re-equipped it for its own product line. The Wienerberger Company from Austria built a facility in Kirzhach in 2004 which is making high-quality construction bricks. The Icopal plant (Denmark) produces roofing and waterproofing. The Dow Isolan enterprise, which is a joint venture of the U.S. Dow Company and Russian Isolan was constructed in Vladimir to produce polyurethane components.

Vladimir regional market is small and has only 1.5 million consumers. Investors definitely come not because of the market scope, but due to convenient logistics as we are inside a major sales market. Kraft has expanded its distribution network up to Vladivostok. The company holds meetings with its numerous dealerships here in Vladimir.

The region is attractive for investors exactly from the logistic point of view: there is Moscow megalopolis in the west and the Volga region with Nizhni Novgorod in the east. The Moscow-Beijing route of the Trans-Siberian railway runs across the region. We are gradually developing into a cargo transportation hub. It is profitable to locate production dependent on railway and road transportation in the existing intermodal road and railway corridor specifically where the routes come close to each other.

STAKE ON LOCAL HUMAN RESOURCE

The share of foreign experts at new and upgraded enterprises is small. They mostly comprise top managers. But at some enterprises, for example Ferrero, only Russians are employed. A major boost in investment and foreign trade activities increased the demand for local foreign language-speaking staff. The shortage of international business professionals made the affiliate of Nizhni Novgorod State Linguistics University fully switch to training foreign trade experts.

TURKEY AND... IVAN THE TERRIBLE

Turkey offers a vivid example of systemic investments into Vladimir regional economy. The country is a leader in our investment cooperation. The first Turkish enterprise here was a glassworks. When the Turkish Anadolu Group was looking for a site in the region, it initially considered Gus-Khrustalny with old glasswork traditions. However, that did not happen as Gus-Khrustalny refused to welcome the Turks on its territory. It often happens that a foreign investor receives a cool welcome from Russian locals. Firstly, it is a different country, secondly, it is different legislation, norms and rules, and thirdly, there is a hostile business environment. None of existing Russian enterprises are happy to get a foreign investor nearby. The glasswork situation was the same. Gus-Khrustalny residents were radically against the Turks claiming foreign competition would kill their production. Turkish businessmen said “sorry, guys, we are no competitors” and went to another place.

As a result, the Turkish glassworks appeared in the town of Gorokhovets located in a more convenient place at an equal distance form Moscow and Nizhni Novgorod. It was the second biggest investment project in the region after the chocolate factory in Pokrov built with German investments. After a major glasswork company appeared in the region none of local glass-makers quit the market. Prudent managers ensured capital investments to upgrade and expand production. Today everyone feels comfortable, the market has been shared and nobody’s rights have been infringed.

Another Turkish company came in 2002 as news about proper conditions in Vladimir region spread quickly in Turkey. It was TV set and fridge manufacturer Vestel. It started up an enterprise in Alexandrovka in 2003 and produced 100 thousand TV sets in the first year. Vestel is a universal company as it concludes agreements with popular brand owners for the production of their equipment. Today Alexandrovka produces Whirlpool and Electrolux home appliances. The Turkish Beko Company followed Vestel to Alexandrovka and produces white appliances there.

In 2007 Turkish construction companies arrived. As it is costly to get plugged into communication and other networks in Vladimir region, Turkish builders asked us to provide a land plot for engineering their own infrastructure and then hosting other Turkish enterprises there. Thus, Alexandrovskaya Sloboda industrial zone originated. Alexandrovskaya Sloboda is a former name of Alexandrovka. From 1564 it was actually the capital of the Russian state from where Ivan the Terrible completed the unification of the country. Now there is major construction underway in Alexandrovksya Sloboda, technical terms are being worked out and negotiations held with other Turkish companies which want to come here. If they do, the place will be ready.

Summing up what Vladimir regional leaders said, I would like to make one personal but important conclusion. The idea of human resource omnipotence has discredited itself in Russia at a certain time. However the pain of recovery from a catastrophic collapse of the previous country confirmed the decisive role of human resource in the solution of social and economic tasks. Vladimir region fully meets modern personnel requirements. Firstly, it has a strong and well-trained blue and white collar force. Secondly, an active search for partners is backed by regional authorities and there is a creative approach to big and small deeds in urban and rural areas. The strategy creates conditions in the region for improved wellbeing of the population, for the arrival of investors, and as a result, for the march up success rating stairs.

By Yuri SHILOV

 
 
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