Russia: Foreign presence is appreciated

In spite of the oil price plunge, high credit interest rates, and the tense political situation, potential is still strong. Doing business in Russia, however has become more difficult.

Upakovka/Upak Italia: happy with results despite challenging situation. (Photo: Messe Düsseldorf)
Upakovka/Upak Italia: happy with results despite challenging situation. (Photo: Messe Düsseldorf)

There is an acute need for investments in the Russian Federation and its neighbouring countries. Interest in modern machines, production plants, and high-tech materials continues to be strong. This applies to demand for packaging technology and equipment for plastics processing as well. Messe Düsseldorf was recently active in both of these segments: At the end of January it simultaneously organised the Upakovka/Upak Italia and Interplastica shows at the Expocentre in Moscow.

The presence of numerous foreign exhibitors was proof of the continuing great trust in the Russian market. “They demonstrated this with their participation in Upakovka/Upak Italia and in Interplastica,” says Werner Matthias Dornscheidt, drawing a positive conclusion in retrospect. “We are very satisfied in light of the current difficult conditions,” says the CEO of Messe Düsseldorf, commenting on the exhibitions held at Expocentre. Numerous visitors said they appreciated the presence of internationally active firms very much.

Werner Matthias Dornscheidt (l.) and Expocentre General Director Sergey Bednov (c.) have faith in their long-standing partnership. (Photo: Messe Düsseldorf / Expocentre)
Werner Matthias Dornscheidt (l.) and Expocentre General Director Sergey Bednov (c.) have faith in their long-standing partnership. (Photo: Messe Düsseldorf / Expocentre)

The financing of projects, however, has become extremely difficult. This makes it difficult for small and mid-sized companies. “Russian firms have serious problems due to the Rouble’s weakness and to the high interest on credits of 30 percent or more,” knows Vera Fritsche from the trade association Food Machines and Packaging Machines in the German Engineering Association (VDMA). “Some German manufacturers are therefore offering long-term clients their own financing plans.” According to a survey conducted in October among VDMA members, 70 percent admitted that the Russian crisis was having a serious effect in part on their business: less enquiries and contracts, postponed projects.

Vera Fritsche from VDMA evaluates the current situation with more nuances. “Even now there are many projects in the Russian market that promise many opportunities for German machine manufacturers.” The opinions of exhibitors participating at the two exhibitions organised by Messe Düsseldorf correspondingly differed, as two German companies reported. Supplier Hubert Gaisbauer felt the crisis noticeably: “Whoever does not have to absolutely invest now will wait to see how things develop,” observes the head of Gaisbauer Technical Solutions from Menden. “For us it was important to participate, nevertheless, in order to maintain contact with our clients and to demonstrate that we believe in the market.” Theo Aldenhövel from Langguth in Senden-Bösensell sees things more positively. “We had strong demand for our labelling machines at the exhibition,” reports the sales engineer during the Upakovka.

 
 
 
 

What role the current sanctions play is difficult to judge. They have not fundamentally affected exports to the Russian Federation. But what the final buyers do with the products is more closely monitored – doing business in Russia has become more sluggish. This could have an effect on future exhibitions. For example Metalloobrabotka: The German joint stand at the metal processing exhibition in May 2015 will not reach the number of 135 exhibitors it had the previous year (www.messe-duesseldorf.de).

 
 

Author: Peter Borstel

This article was published in TFI issue 2/2015

 
 

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