Sanctions were not the main problem of business in the past year. In the first place the representatives of foreign companies raise the weakening of the ruble and collapse in oil prices.
MOSCOW, Dec 15. The outgoing year was not easy for Western companies in Russia are: the decline in oil prices, the weakening of the ruble, the maintenance of sanctions has complicated their work in the country. However, even difficulties have forced them to leave the Russian market, they continue to work and are optimistic about the next year.
RIA Novosti asked the heads of missions of business of the three largest economies of the West in Russia, the USA, Germany and France to talk about the results of the year and hopes for 2016.
Western sanctions imposed against Russia in 2014, this year has been extended. In response, Russia decided not to cancel food embargo. Interviewed heads of chambers of Commerce agree that the restrictions adversely affect the business in Russia and hope for their speedy removal. However, not all agree that the sanctions were the only key negative factor in the past year.
The heads of the chambers of Commerce of the U.S. and Germany shared the view that sanctions were not the main reason, which put pressure on the business this year.
“When we talk to German companies by 2015, they, of course, noted the sanctions. However, they do not put them in the first place,” says the President of the Russian — German chamber of Commerce Rainer Seele.
He notes that in the first place are the weakening of the ruble and collapse in oil prices. “These are the first themes for businesses operating in the Russian Federation. Of course, they talk about a sharp decline in the profitability of enterprises in Russia in 2015,” continues green.
“The subject of sanctions rather refers to the future, to what we expect from the development of the situation in the country. In this area there have been a sobering, because the sanctions were extended. In 2016, we can see that fewer companies show an improvement in the business. The majority of companies, believes that next year the price of oil will remain at a low level,” he said.
The President of the American chamber of Commerce in Russia Alexis Rodzianko noted the stabilization of conditions in Russia from the point of view of sanctions and a deterioration in ties with the devaluation of the ruble. He notes that the company at the end of 2014 was looking to the future with great apprehension and was expecting a difficult 2015.
“But compared with what we expected, actual conditions were not worse, but better. Most of the shocks occurred in 2014, and the year 2015th become a sort of year of stabilization,” he said.
“The rouble has strongly fallen in price at the end of last and beginning of this year, and this, of course, influenced the monetary expression of the results of work in Russia. To say that conditions have deteriorated … in this respect, Yes, somewhat deteriorated. But in terms of sanctions there have been no major changes. And stability and resistance are what the business likes,” says the head of the US chamber of Commerce.
It would be better without sanctions
At the same time, the head of the Franco-Russian chamber of Commerce Emmanuel the Kid associates the complexity of companies mainly with the pressure of sanctions. “The difficulties to a much greater extent were associated with reciprocal sanctions than with the situation in the economy. Financial sanctions have brought real problems, it became impossible to Finance the projects,” he says.
“Of course, 2015 was hard. Difficult for companies depended on the sectors in which they worked. If the company has worked in construction, the automotive industry was very difficult. Retailers had a much easier. Manufacturers of luxury goods felt pretty good,” notes Kidd.
“If in January the sanctions will be extended, the first half of the year will be lost to us. Even if they can be lifted in summer, 2016 will be another lost year for the German economy in Russia. I say this with the mourning soul, because I know that many businesses want another. The majority of the companies hopes that the situation returns to normal in 2017,” says Seele.
Agree, and the President of the American chamber of Commerce: “of Course, it would be better without the sanctions, and we wait, when will they be removed, and will be easy to work with. But we see that you can work even under sanctions. The income of some of our companies in 2015 has increased – in most cases, in rouble terms, but even in the dollar. It is a rare successful examples, but they are there!”
The weakening of the ruble ambiguous impact on Western companies: it even had some on hand. Furthermore, not justified fears about a full-scale reversal of the Russian Federation to the East and competition from Asian companies. A positive moment was the policy of the government of Russia localization: companies from the West could benefit from this strategy.
The Chairman of the Board of the Russian-German foreign trade chamber Michael harms noted that the position of companies in the current environment depends largely on the industry. “In some areas things are good. … Russian chemical products are well exported due to the weakening of the ruble. German chemical company (having a “daughter” in Russia – ed.) under these conditions show an increase, including in Euro, we did not expect,” he asks.
“The second positive thing is that competition from China was not as strong as we expected. We thought that now the orientation will unfold in China, and they will overtake us, but that didn’t happen. Focus on Germany and Europe is saved”, — said harms.
The third point, he continues, is that the policy of import substitution and the weak ruble led to the fact that many medium-sized enterprises have begun to invest in their production in the Russian Federation. “Yes, the market is so important to many companies! They have no other choice but to explore opportunities in the domestic market,” he says.
Rodzianko noted that in the past year further shocks followed, the environment was relatively stable and cheap, the ruble has enabled companies to export from Russia. “Many of our companies used this as an opportunity,” he says.
According to Kidd, the positive point is that French companies still believe in the future of Russia. “If you look at the economy, the year 2015 was more difficult due to the sanctions and the devaluation of the ruble, than even 2014. The French company would be afraid of. Sometimes in the West say that Russia’s economy is dead. We with it categorically do not agree”, — he said.
“I would like to stress once again that Russia is an important market for us, and we will continue to invest,” says Kidd.
A look into the future
Western companies in the coming year expect the return of the Russian economy increases slightly, while retaining confidence in the market Outlook. Rather, they hope for stability from the point of view of investaccount and prospects for small and medium businesses.
“I don’t think in 2016 the Russian Federation waits for strong growth. It would, of course, to get it started, but I don’t think it will happen. I think the growth could be 1%. We understand that next year is more likely (in terms of investment) will be at the level of the current year – that is, the line goes straight, horizontally, and in 2017 the growth will be resumed,” believes the head of the Franco-Russian chamber of Commerce and industry.
“Russia next year, of course, will remain attractive for French companies from the point of view of investment. But apart from being present in Russia remain, first come to the Russian market and the new French companies,” says Kidd. According to him, these are companies consisting mainly of small and medium businesses that follow large.
Rodzianko also hopes for a more positive year: “We believe that next year should be somewhat better than these. In all likelihood, the bottom of the recession has been achieved. … We also see that when there is stability and some improvement in the geopolitics, the situation may allow companies to look through slightly different eyes at Russia, namely: all prices dropped, the situation is stable, and, hence, we can think about to invest here,” he says.
“The external situation though risky, but compared to the one that caused the sanctions, it has stabilized and emerges some hope of resolving the situation through diplomatic means. That is, the investment climate in the country is gradually improving — as time passes and remains stable,” — said the head of the U.S. chamber.
Zele less optimistic in their forecasts: “I would say that the growth will be 0%. I assume that improvement will not happen. I believe that we will not see strengthening of the ruble…. Indicators that largely determine economic development of Russia cannot be called positive. I hope that if the numbers go up, the situation will change.”
“I’ll tell you what we need is investment in trust rather than investing in mutual distrust. The situation has reached the point that we have entered a crisis of confidence, the partners have lost confidence in each other. Joint work in other regions of our planet leads to the fact that it is restored,” — said green.