NOTHING VENTURED

Wirschaftsclub Russland:

The most important thing is to socialize, network, share experience

If the Russian Economic Club (Wirschaftsclub Russland) didn't already exist, it would definitely have to be created. The conversation between  Capital Ideas and both co-Presidents of this reputable German association, Dr. Karin von Bismarck and famous German businessman Uwe Leuschner, has definitely confirmed this to be the case.

Нow did you come up with the idea to establish the club? How long has it existed and what are the club’s objectives? There are a lot of German-Russian associations geared toward strengthening ties between these two countries. How is the Wirschaftsclub Russland different from the German-Russian Foreign Trade Chamber, for example? Do you have a lot of members and who are they? Are they primarily Germans or are there members from other countries, including Russians?

KARIN von BISMARCK:

The club was founded in 2010 as a private initiative by German-speaking specialists in Russia. Today, it serves as a link between German and Russian businessmen. Socializing and establishing contacts outside the scope of regular meetings are the focal point of the association.

Of course, there are different types of organizations that focus on Russian-German cooperation. There is the Russian-German Foreign Trade Chamber, but before us there were no German business clubs operating in Russia.

Right now our club has 179 members (German and Russian citizens), but our events are attended by a lot of other people: we’ve seen increased interest in this kind of cooperation format from both German businessmen and from the Russian side. When a person comes to work in a foreign country, they often don’t know the language or any of the nuances. Our club helps businessmen from Germany, Austria, and Switzerland who come to Russia for work meet with colleagues who have been working here for a long time, as well as with our club’s Russian guests. They can socialize and share their experience. The Club’s focal point is creating a business network.

UWE LEUSCHNER:

I want to point out the difference between the format of a business club and more official and large-scale organizations operating in the sphere of Russian-European cooperation. We knew from the beginning that people are the most important thing. The success of any company depends on the people who work there. The success of a foreign company in Russia depends on its employees who work in Russia. And our club’s members are not companies, but specific people. Thanks to our club, they can expand their business network, exchange experience, and do all of this in an informal atmosphere.

But we also deal with sports and culture, because events focused on these topics give members the opportunity to meet and cooperate with people and organizations outside of the business sector.

Our main goal is to set up opportunities for communication and making new contacts, which is called networking.

How is the club’s work organized, what exactly does it do? What kinds of events do you hold and where: in Russia, Germany, or elsewhere?

UWE LEUSCHNER:

We hold a lot of events, over 450 both in Russia and in Germany. There are set locations with monthly events and meetings in Berlin, Moscow, and Frankfurt am Main. There are also events we hold in cooperation with other business clubs, associations, or organizations. If you take a look at our calendar (www.wirtschaftsclubrussland.org), you’ll see that we have a diverse range of speakers who participate in these events.

Unfortunately, relations between Russia and Germany are currently far from perfect. Has this had an impact on the activities of Wirschaftsclub Russland or has it continued to operate as usual?

KARIN von BISMARCK:

Everybody knows that a lot of companies left the Russian market due to the crisis. This includes major German companies as well. This affected the number of participants at our events in Moscow. But over the past year the situation has changed for the better. We are putting in a lot of effort to make sure our events cover not only the latest trends, but also focus on something positive with specific examples. This is also a difference between our club and other organizations.

UWE LEUSCHNER:

I’ve been working in Russia for over 20 years, so for the majority of my professional life. I like it and I find it interesting to be here. Society has changed a lot over the past 20 years. It’s interesting to watch. The most important thing in Russia is people. They’re not the same as westerners. This has always been so, and it will continue to be the case. And this is something we have to understand as Europeans, as representatives of western culture. Western people need to understand Russian history better, the feelings of Russian people, the structure of Russian society. Russians need to understand the freedoms and opportunities that they currently have. At Wirschaftsclub Russland, we act as translators between Europe and Russia.

How much did the economic sanctions, the economic crisis, and the ruble devaluation affect German business in Russia?

KARIN von BISMARCK:

The situation on the Russian market today is a lot more stable than it was in the 1990s, and more European companies want to do business here. But, undoubtedly, a lot of them have reservations. That’s the goal of our club, to dispel myths and explain what’s actually happening.

In spite of the current challenges, German businessmen are in no hurry to leave the Russian market. According to different sources, there are about 5-6,500 German companies operating in Russia. It’s a big range. Could you clarify exactly how many German enterprises exist in Russia and where most of them are located?

Please give some examples of a successful German enterprise operating in Russia. A company that has opened an office here, or increased sales figures, built a new factory...

UWE LEUSCHNER:

At the end of 2016, there were 5,237 companies with German capital operating on the Russian market. This number has dropped for the third year in a row. In my opinion, a crisis always provides new opportunities to develop, new investments.

There are a lot of examples of successful German projects. The biggest German investment in 2016 was a WILO pump manufacturing plant in the Noginsky District of Moscow Oblast. Henkel expanded its manufacturing capacities in Perm, Daimler plans to manufacture cars in Moscow Oblast. In total, investment by German companies amount to about a billion euros. German companies continue to successfully manufacture their products in Kaluga, Naberezhnye Chelny, Krasnodar, Nizhny Novgorod, Yekaterinburg, Kazan, etc.

Is it fair to say that one of the sources of foreign business development in Russia is manufacturing localization and the establishment of joint enterprises?

KARIN von BISMARCK:

Yes, of course. Russia is a big country with a huge population. There are sectors that are especially important for German business: energy, auto manufacturing, healthcare, infrastructure, logistics. There is also the alternative energy market. Yes, there is oil and gas. But nonetheless, there is still interest in alternative energy.

In general, for almost all European business, Russia is an interesting market with a lot of potential. Take e-commerce. Everybody knows that Russian social networks are bigger and more successful in Russia than Facebook. And there a lot of sectors where there is plenty of room for development.

UWE LEUSCHNER:

Russia has development opportunities outside of the manufacturing sector as well. This includes energy conservation technologies, where Germans have a lot to contribute due to our experience in the sector. Logistics and the service sector also have room for development. Education, for example. European companies can educate experts in Russia, specialists for modern enterprises.

Experts often talk about the wide range of business opportunities in Russia, bringing up low taxes and different kinds of benefits. What are the biggest advantages of doing business in Russia?

UWE LEUSCHNER:

We came to Russia not because of low taxes, but because we resolved to build a successful business here. What attracted us? The potential of a huge market and educated staff who are often interested in working with western companies and being accepted by their European colleagues. And, of course, we see Russia as a bridge between Asia and Europe. We want to be a part of this.

KARIN von BISMARCK:

By the way, Wirschaftsclub Russland has been open for cooperation with the Eurasian Economic Union since 2015. For example, we came up with the New Silk Road Partnership and have the annual Zukunftspreis Neue Seidenstraße award for representatives of small and medium size businesses implementing projects on the Silk Road between Europe and Asia.

Russian officials say that the investment climate in Russia is improvement. Is this really the case?

KARIN von BISMARCK:

A lot of European companies think that the Russian market has a lot of potential and is very appealing. Of course, every investor does their research before doing business here (opening a branch). Nobody is going to simply believe everything that is said in the media. Unfortunately, this applies to both sides… when it comes to the investment climate in Russia, unfortunately we have to take regional differences into account. But our club members can confirm that all of them have been successfully operating in Russia.

UWE LEUSCHNER:

It would be odd for officials to be saying anything else. A lot of things have changed for the better in terms of investment conditions, but it’s also important to talk about how corruption, strict administrative bodies, and in some spheres a lack of equal access to the market continue to limit and impair the influx of more investment into Russia. A lot more can be done here: introducing proposals and offering constructive criticism, which is also one of our tasks at Wirschaftsclub Russland.

A question for both directors of the club: how often do you come to Russia, or do you live here permanently? How do you like the Russian capital?

KARIN von BISMARCK:

I worked in Moscow and lived here with my family for 5 years in the early 2000s. Now I come on a regular basis, travelling to Moscow every month and sometimes more often. I’m a partner at Stanton Chase in the executive search sphere and I can say that there are new orders every month, which says a lot about Moscow and Russia.

UWE LEUSCHNER:

I’ve been living and working in this city for over 20 years. In the past few years I’ve been travelling back and forth a lot, but I still have an apartment in Moscow. Moscow is a global metropolis. I am fascinated by the diversity of people and interesting places, but I hate the traffic jams in this city. I’d rather spend time with my Russian friends instead of wasting all that time in traffic.

 

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