NOTHING VENTURED

Hiroshi Furuta:

Deeper into Russian market with high tech

“A crisis is a temporary phenomenon: as the economy starts to recover, business will adapt to new market conditions, launch new mechanisms for growth and will continue to develop,” said the General Director of Mitsubishi Electric (Russia) LLC in an interview with Capital Ideas.

A quick background search on Mitsubishi Electric reveals that your company was the first in the world to release the widescreen LED monitor for stadiums as well as the largest CRT television, developed the first spiral escalator in the world along with the world’s fastest elevator...can we find any of Mitsubishi Electric’s big accomplishments in Moscow?

It’s true that Mitsubishi Electric owns a number of unique state-of-art technologies and some of them have already been implemented in Russia. To go with something you’ve already mentioned, a good example is screens for stadiums. In Moscow, there are two 17.92m X 9.6m Mitsubishi Diamond Vision screens at Otkrytiye Arena (Spartak stadium). Fans have already had a chance to appreciate the image quality.

It’s also worth pointing out that our equipment is widely and successfully used by the Government of Moscow. For example, the conference hall has a video wall that is made up of Mitsubishi Electric projection cubes. Moreover, Moi Dokumenti multi-purpose service centers are also equipped with our displays.

We are proud of projects that have made the lives of the capital’s guests and residents more comfortable. One such project is the installation of new air conditioning systems at residential and leased buildings of the Skolkovo Park RC. The solutions we used for this project are extremely reliable and easy to install.

I’ll also point to the modern management systems in the halls of the Gerasimov Institute of Cinematography. Mitsubishi Electric frequency inverters were installed in multi-purpose, rehearsal and cinema halls as part of the comprehensive modernization program. The inverters are practically noiseless, which is especially important for rehearsals and performances.

For a long time, your company’s office in Moscow was managed by the European division with headquarters in London. Why wasn’t it managed directly? After all, Russia is closer to Japan than to Europe.

In 1997, when we had just entered the Russian market and were completely new here, we made the decision that the corporation here would adhere to the European marketing strategy. Of course, Russian business culture and environment were was drastically different from European, but in terms of cultural nuances and communication, Europe was easier for our Russian clients and partners to understand. Mitsubishi Electric is a global company corporation. On the one hand, we apply common philosophy and corporate culture across all markets. But, on the other hand, we try to think locally and take into account the specifics and risks associated with each region we operate in. The fact that we opened a representative office of the European company allowed the corporation to successfully enter the Russian market, investigate it and offer the necessary products and technologies.

So then you decided to expand your presence in Russia and opened Mitsubishi Electric (Russia) LLC, but soon the Russian economy fell on hard times. Does company management think the decision may have been a mistake? What areas does your company in Russia presently focus on? Is there a particular focus when it comes to the Moscow market?

When we registered as a legal entity in 2014, Mitsubishi Electric had already been operating in Russia for 17 years. In that time, we managed to successfully develop several areas of business activity, from air conditioning systems and visual information systems to factory automation and power semiconductors. The number of employees has also increased significantly. This decision was made by Mitsubishi Electric Corporation Board of Directors because our business in Russia has successfully grown and developed over the past 10 years.

Establishing an independent legal entity in Russia was an important step in the corporation history that we had been planning for a long time, so we were confident about the success. Even the onset of the crisis, which happened shortly after we registered the company, did not have an impact on our belief that there is a lot of long-term potential for Mitsubishi Electric here. The Russian market is one of the most promising markets in the world and we want to develop here.

The main objective of establishing Mitsubishi Electric (Russia) LLC is to give the corporation direct access to Russian and CIS markets and give Mitsubishi Electric the opportunity to realize its potential.

Currently, our main areas of activity are heating, air conditioning and ventilation systems, as well as factory automation equipment. We also have high expectations for the infrastructure market, including equipment and technologies for the power industry, public transportation, public utilities and so on.

The jump in exchange rates for foreign currencies, including the yen, dealt a blow to the competitiveness of many imported goods. There are also import substitution programs...how do you plan on holding on to, and even expanding, your market share?

Undoubtedly, the devaluation of the ruble had a negative impact on all spheres of business not only due to prices increase, but also because of decline in investment volumes, postponed project deadlines and so on. In spite of this, however, our company continues to bet on high quality and products reliability, as well as unique technologies. A crisis is a temporary phenomenon: as the economy starts to recover, business will adapt to new market conditions, launch new mechanisms for growth and will continue to develop. For now our objective is to not give up, to keep the market and analyze current opportunities to prepare for future growth.

The import substitution programs are opening up new opportunities for us, in particular for factory automation business, since our equipment enables Russian industrial companies to operate efficiently. Moreover, current state policy may be a good incentive for joint projects between Mitsubishi Electric and local manufacturers in such areas as power and public trasportation.

Speaking of import substitution, I remember the Italian ambassador’s reaction when he heard the words “Russian parmesan”: he laughed and said that it’s better to buy your parmesan in Italy. Do you also think that it’s better to purchase equipment such as ventilation and air conditioning units directly from Japan, as opposed to localizing production?

Indeed, the question of localization of production to foreign manufacturers today is very acute. In this respect, Mitsubishi Electric highlights two main factors – preserving top product quality and ensuring high level of demand. At present, there is not enough demand for Mitsubishi Electric products in Russia and the CIS to establish local factories from greenfield, so we have no relevant plans. We stick to a different market strategy, which is based on close cooperation with local partners on development of their industrial and technical potential. There are many ways to cooperate with local business that currently make more sense for us than localization. For example, the technology transfers, supply of components and OEM. We are confident that this approach might be beneficial to both sides.

Mitsubishi Electric is a sponsor of the State Museum of Oriental Art in Moscow. You’re probably not indifferent to art yourself and could talk to us about your preferences in Russian art, music, theatre. But I wanted to ask you the following: could Japanese business representatives help in the establishment of cultural ties between Moscow and Tokyo in order to give residents of the Russian capital the chance to become more familiar with Japanese art?

You’re absolutely right. I am very interested in Russian culture, particularly in the fine arts. The Pushkin Museum and Tretyakov Gallery are some of my favorite places in Moscow. It is worth noting that, the majority of Japanese people are big fans of Russian literature and ballet. I am happy to see that in Russia, in turn, there is an increasing interest in the arts and culture of Japan. Undoubtedly, strengthening cultural ties is important for business, as it allows us to understand our partners mentality better. Mitsubishi Electric has defined support of cultural relations as a priority area of ​​corporate social responsibility long time ago. We are cooperating with the State Museum of Oriental Art since 2007 and regularly provide support to it. We also support various events connected to traditional and contemporary Japanese culture in Moscow and other cities, including festivals, exhibitions and concerts. We try to attract our employees and partners to these events so that they have an opportunity to immerse themselves in the world of Japanese culture and remove understand the nature of Japanese people, and therefore the foundations of our business culture better.

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