For sad as a pandemic can be to many, Covid-19 has generated a variety of opportunities in Russia for international businesses. Many of them may be seized remotely.
To start with, here are a few remarks about the current trends in Russia’s digital sphere:
- According to Boston Consulting Group, Russia is among the four world leaders in the transition speed to non-cash payments following the UK, Canada, and Australia. According to Bank of Russia, non-cash payments increased to some 70% of all consumer payments in 2020. Usually, such a transition takes some 10 years or so.
- E-commerce sales in 2020 nearly doubled from the year before.
- A massive decrease in disposable income over the lockdown period fuelled a boom in discounter retail. This niche retailing proved to benefit from all market cycles, both when it turns up and when it turns down.
- Remote working turned to be another clear consequence of the pandemic.
- Many small and medium enterprises shut down or are close to do so. While business assets are generally not affected, many companies change their ownership structure as we speak.
Here are my suggestions to turn these challenging times into business opportunities:
- There is huge gap to address booming demand in e-commerce. Primary demand is in food supply, pet food, home essentials, hobbies, pharmacy and drugs, stationaries and books, and many others. Due to the newly adopted consumer habit to stay home most of the time, the list of goods categories for e-stores is steadily growing. In general, Russians are more advanced e-shoppers than average Europeans and prefer online shopping to brick and mortar outlets. You might consider a domestic approach or a cross-border e-shop; Russians are rather open to both options. Just make sure your online store is Russian-language enabled.
- Outsourcing highly qualified English-speaking professionals expertise in a wide variety of industries. Before the pandemic, most of Russian professionals working remotely were IT geeks and programmers. These days, the options are much wider and include teachers, consultants, researchers, AI product developers, experts in many industries, etc. Russian labor costs are often highly competitive on the international market.
- Online education services are in huge demand across the country and vary dramatically by subject, consumer group and price. That could be English, French, Spanish, German or Chinese lessons to school children and adults as well as academic modules provided to universities and colleges. According to Renub Research report, the Russian online education market will reach the two billion dollars mark by 2026. In these times of pandemic, teaching moved online in 80% of all universities and higher education establishments. All this has created plenty of business opportunity for both individual teachers and educational institutions from around the globe. (My wife and myself spent over two months struggling to find a proper Chinese language teacher with Zoom lessons for our oldest son. The teacher we finally found was a Russian national with fluent Chinese, but we were not fully satisfied.)
- Russian ruble denominated stocks and sovereign debt (bonds). It appears that the Russian ruble is among the best performing currencies in the world in 2020.
- Quick and cheap acquisitions of healthy small and medium sized businesses affected by lockdown. Quite a number of successful businesses were unable to timely perform their bank loan commitments due to lockdown restrictions. Many of their owners prefer to sell their companies than spend years in litigations with their creditors and banks. There are plenty of real deals on a massive scale these days that were mission impossible a year ago.
- Industrial supply to manufacturing sectors. According to the Russian Customs statistics, imported stuff counts to 50 to 90 per cent of all new equipment, machineries, technologies, tools and disposables depending on industry in question.
- Finally, sourcing and importing from Russia is growing fast these days due to lower local manpower and manufacturing costs. Everyone knows about Russian oil, gas, metals, woods, other mineral resources. But not many outsiders are aware of gems, gold, other precious metals, plastics, wheat, fertilizers, chemicals, agro products, pork, seafoods, special vehicles, mining equipment and machineries, semi manufactured goods for many industries, and much more. And the list is growing.
We have designed a “Pandemic Resistant Package” for international players to seize such opportunities, running transactions with Russian contractors and entire in-Russia businesses fully remotely.
The views and opinion expressed in this article do not necessarily reflect those of East-West Digital News. You may reach Mr. Grafski through his website Grafski.com
Topics:
Analysis, International
