By Ivan Tselichtchev, Professor,
Following successful Global China Business Meetings and Global India Business Meetings the first Global Russia Business Meeting was organized by Horasis in Ljubljana, Slovenia over 16-18 May 2010, at the stateof- the art Brdo Conference Center.The Government of the Republic of Slovenia was the co-host, and the local organizers were the Association of European Businesses, Delovaya Rossia, Moscow International Business Association, Moscow Investment and Export Promotion Agency, Russian Managers Association, Association of Orthodox Business Leaders and the Young Presidents Organization.
The President of the Republic of Slovenia Danilo Türk, Prime Minister Borut Pahor, Foreign Minister Samuel ˇZbogar, Minister of Transport Patrick Vlaˇciˇc, and Russian Ambassador Doku Zavgaev addressed the Meeting on different occasions.
One of the major messages of the meeting was that the Russian economy is now going through a major paradigm shift. This is a shift from an economy dominated by natural resources to one with a more diversified structure, climbing the value chain and ultimately able to promote an innovationled growth driven by high-tech industries capitalizing on the country’s enormous human resource potential.The meeting heard the necessary political will to undertake such a shift is there and noticeable developments have already taken place.
Of note was the emergence of strong companies operating in the high-tech sectors, such as RosNano and Russia Venture Company. Although both are government-owned they actively interact with and co-support high-tech privately owned businesses. Both companies were represented at this Global Russia Business Meeting at the CEO-level, and naturally found themselves the focus of attention.
The major themes for plenary and boardroom dialogue sessions were Innovation and High-Tech.The session on Innovating in Russia was chaired by United Russia Party’s Deputy Leader at the State Duma Victor Zubarev - he led a discussion on ‘Creating a New Economic Reality’. Herein he articulated the new contours of the innovation economy - Russian style - in which they attempt to absorb successful innovation-led economies, but not forgetting Russia’s specifics.We heard that the Party is now working on this broad concept; and in this regard, inputs provided by the participants look more than helpful.
Along with creating a breakthrough concept and clarifying a road map (see below), it is important to improve the basic conditions for innovative entrepreneurs in the short term. Some participants pointed out that that, paradoxically, a number of incentives for entrepreneurs have disappeared due to recent policy changes. Also, many new ideas seem to be generated without taking into account real demand, possibly due to a lack of grounded research. It was noted that Russian technology companies are not trying hard enough to enter the markets of the developed countries, but without market research, the links between different stages within the value chain (starting from fundamental research and ending with the entry into foreign markets) remain weak: many new ideas and research remains noncommercialized.
It was stressed that creating alliances between Russian researchers and innovators on the one hand and foreign companies know-how to produce and sell innovative products is a task of great importance. Of course the issue of Russian corporate culture was questioned sharply: does Russia really value successful people?
If yes, are they part of the central group working on the concept of the innovationled economy? Are business and technology innovators treated the way they deserve? Are these innovators allowed to incubate the next generation of innovators?
Other major themes included the creation and development of Russian brands; the strategies of large Russian companies as outward direct investors active in various parts of the world; visions for a sustainable future; the way Russian companies see their corporate social responsibility; and, of course, the success strategies of foreign businesses operating in Russia itself.
The need for drastic steps to improve the regulatory framework and transparency was emphasized: corruption it was noted is a huge impediment. For instance, to start a civil construction project in Russia you need around 700 permits, versus about 150 in Europe and 40 in the US: it is tempting therefore to initiate countervailing mechanisms, some of which may be unlawful. Russia’s legal environment seems arbitrary, and taxes often seem to be used as a tool to pressure foreign companies to comply with the local authorities. On the other hand, some participants mentioned that it is not unusual that some foreign companies come to Russia somehow unprepared, lacking basic knowledge of the Russian law and not knowing enough about how to use the support systems for foreign businessmen which are already in place.
Some participants pointed out that today it is possible to pursue well-proven entry strategies in Russia, similar to those used in other countries.
Non-Russian participants strongly urged Russia to do more to adopt internationally accepted standards and especially to speed up the process of joining the WTO. Some Russian participants reacted by saying that there are more important things than the WTO entry - Russia has to sort out its internal conflicts, and that resolving the WTO related issues may still take quite a long time.
Overall, it was emphasized that the Russian economy has overcome the global financial crisis by avoiding heavy blows, and is now accelerating.The official 3.1 percent growth target is likely to be exceeded and so Russia’s role as one of the BRICs, and as a major emerging market country will further increase. Furthermore, it was expected that Europe will need closer links with Russia in the future given the rise of new Asian economic superpowers.
At the closing plenary, in a brain-storming format, participants articulated an unofficial Ljubljana Declaration - a road-map, suggesting that Russia should do more to apply and adhere to international standards, ‘think big , have a smaller government with less regulation, and promote entrepreneurship, freedom, creativity and innovation.
It was a productive and thought-provoking meeting which contributed much to strengthening the links between Russian and foreign business communities. Hopefully, further Global Russia Business Meetings will follow in due course.