Canada - Russia: Exploring the options in St. Petersburg
The northwestern region's geographic position, with its close proximity to Europe and European seaports, makes it one of the most strategically important federal regions of Russia.
Jul 02, 2002
The northwestern region's geographic position, with its close proximity to Europe and European seaports, makes it one of the most strategically important federal regions of Russia. St. Petersburg, in particular, is gaining a reputation for its technically skilled workforce.
Canadian interest in doing business in Russia, and in northwestern Russia in particular, seems to be on the rise as recent Canadian trade missions and official visits have demonstrated.
"Every day, we hear of more and more Canadian companies entering the market and exploring options for doing business or expanding their presence here," said Anna Boilik, the Canadian consul general to St. Petersburg.
The third major Canadian delegation to St. Petersburg this year was a two-day Canadian business mission with the St. Petersburg Chamber of Commerce on June 4 -5. This event showed that the city and the surrounding region are attracting significant interest from Canadian businesses, and that Canadian state agencies and interest groups have been active in their efforts to build closer links.
The consulate and the Canadian Business Association in Russia coordinated the mission. Association president Nathan Hunt said its members are interested in "what northwestern Russia can buy from Canada, what we can export to northwestern Russia and in investigating new opportunities for investment."
Canadian direct investment in Russia in 2001 was $179 million, significantly lower than its peak at $405 million in 1996, according to figures from the Canadian Ministry of Foreign Affairs and International Trade. Patrick Boulanger, of the Canadian embassy in Moscow, said the main reasons for the decline have been "poor corporate governance, uncertain property rights, complexity and uncertainty concerning domestic legislation and a lack of effective recourse through the judicial system in order to resolve investment disputes."
Canadian investors in the natural resources industry, in particular, have faced difficult conditions, so much so that according to Boulanger, "there are no longer any major Canadian investors in the oil and gas sector, and there are very few left in the mining sector."
Kathryn Szymczyk, head of the Moscow representative office of Gowlings International Inc., an intellectual property firm that played a key role in Russian law reform, says there remain legislative obstacles to developing active businesses in Russia - even though Gowlings has managed to do successful business here for almost a decade.
"Canadian companies must be careful that they understand the law and take steps to comply with the rules even when they seem impossibly complicated," she said. "This is the best way to ensure that Canadian companies are properly protected in any deal that they put together in Russia."
A number of Canadian investors lost money in Russia in the 1990s, so one goal of trade missions now is to revive confidence, to educate delegates about new legislative, regulatory and tax reforms, and to give them information, contacts and tactics to deal with the difficulties associated with doing business in Russia.
Of Canadian investors' interest, mission organizers said that the region's geographic position, with its close proximity to Europe and European seaports, makes it one of the most strategically important federal regions of Russia. "Its transport infrastructure, the high level of development and industry and the availability of qualified personnel also make the region an attractive business and investment location," said Alla Vennik, director of Dun & Bradstreet Nord, at the conference.
St. Petersburg, in particular, is gaining a reputation for its technically skilled workforce.
Andrew Konev, from local software company Digital Design, which was represented at the mission, said St. Petersburg had become the preferred Russian software development location for a lot of Western companies, and that it overshadows Moscow both in the number of software companies and in the number of employed software engineers.
So it's hardly surprising that Biolik sees industry sectors like software, R&D, corporate services and manufacturing as the main areas in which Canada and northwestern Russia are likely to become real business partners.
The Team Canada visit in February this year, led by Canadian Prime Minister Jean Chretien, may be the strongest proof that the Canadian government is encouraging companies already doing business here. Over 250 Canadian businesspeople visited Russia as part of the delegation, many taking a first look at what is a challenging market. And the visit, according to a Canadian government Web site, produced 77 new business deals between Canadian and Russian organizations, worth more than $218 million: 25 contracts, worth $96 million, and 52 memoranda of understanding and letters of intent, valued at around $122 million. The visit included a one-day mission to St. Petersburg, in which delegates from Ontario met with more than 150 companies from the northwestern region.
"To have the Prime Minister of Canada and the premiers of the various provinces actively supporting Canadian business in Russia as they did during the Team Canada Trade Mission is extremely important," said Kathryn Szymczyk of Gowlings. "And that speaks well for the long term relationship between Canada and Russia."
Canadian interest in doing business in Russia, and in northwestern Russia in particular, seems to be on the rise as recent Canadian trade missions and official visits have demonstrated.
"Every day, we hear of more and more Canadian companies entering the market and exploring options for doing business or expanding their presence here," said Anna Boilik, the Canadian consul general to St. Petersburg.
The third major Canadian delegation to St. Petersburg this year was a two-day Canadian business mission with the St. Petersburg Chamber of Commerce on June 4 -5. This event showed that the city and the surrounding region are attracting significant interest from Canadian businesses, and that Canadian state agencies and interest groups have been active in their efforts to build closer links.
The consulate and the Canadian Business Association in Russia coordinated the mission. Association president Nathan Hunt said its members are interested in "what northwestern Russia can buy from Canada, what we can export to northwestern Russia and in investigating new opportunities for investment."
Canadian direct investment in Russia in 2001 was $179 million, significantly lower than its peak at $405 million in 1996, according to figures from the Canadian Ministry of Foreign Affairs and International Trade. Patrick Boulanger, of the Canadian embassy in Moscow, said the main reasons for the decline have been "poor corporate governance, uncertain property rights, complexity and uncertainty concerning domestic legislation and a lack of effective recourse through the judicial system in order to resolve investment disputes."
Canadian investors in the natural resources industry, in particular, have faced difficult conditions, so much so that according to Boulanger, "there are no longer any major Canadian investors in the oil and gas sector, and there are very few left in the mining sector."
Kathryn Szymczyk, head of the Moscow representative office of Gowlings International Inc., an intellectual property firm that played a key role in Russian law reform, says there remain legislative obstacles to developing active businesses in Russia - even though Gowlings has managed to do successful business here for almost a decade.
"Canadian companies must be careful that they understand the law and take steps to comply with the rules even when they seem impossibly complicated," she said. "This is the best way to ensure that Canadian companies are properly protected in any deal that they put together in Russia."
A number of Canadian investors lost money in Russia in the 1990s, so one goal of trade missions now is to revive confidence, to educate delegates about new legislative, regulatory and tax reforms, and to give them information, contacts and tactics to deal with the difficulties associated with doing business in Russia.
Of Canadian investors' interest, mission organizers said that the region's geographic position, with its close proximity to Europe and European seaports, makes it one of the most strategically important federal regions of Russia. "Its transport infrastructure, the high level of development and industry and the availability of qualified personnel also make the region an attractive business and investment location," said Alla Vennik, director of Dun & Bradstreet Nord, at the conference.
St. Petersburg, in particular, is gaining a reputation for its technically skilled workforce.
Andrew Konev, from local software company Digital Design, which was represented at the mission, said St. Petersburg had become the preferred Russian software development location for a lot of Western companies, and that it overshadows Moscow both in the number of software companies and in the number of employed software engineers.
So it's hardly surprising that Biolik sees industry sectors like software, R&D, corporate services and manufacturing as the main areas in which Canada and northwestern Russia are likely to become real business partners.
The Team Canada visit in February this year, led by Canadian Prime Minister Jean Chretien, may be the strongest proof that the Canadian government is encouraging companies already doing business here. Over 250 Canadian businesspeople visited Russia as part of the delegation, many taking a first look at what is a challenging market. And the visit, according to a Canadian government Web site, produced 77 new business deals between Canadian and Russian organizations, worth more than $218 million: 25 contracts, worth $96 million, and 52 memoranda of understanding and letters of intent, valued at around $122 million. The visit included a one-day mission to St. Petersburg, in which delegates from Ontario met with more than 150 companies from the northwestern region.
"To have the Prime Minister of Canada and the premiers of the various provinces actively supporting Canadian business in Russia as they did during the Team Canada Trade Mission is extremely important," said Kathryn Szymczyk of Gowlings. "And that speaks well for the long term relationship between Canada and Russia."