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JCC Newsletter December 2020/January 2021
JCC FLASH
Newsletter of the Joint Chamber of Commerce
Switzerland - Eastern Europe (non-EU), Central Asia and the South Caucasus (JCC)
Le#er from the President
Dear JCC Members & Partners,
In their book Why Nations Fail: The Origins of Power, Prosperity, and
Poverty, economists Daron Acemoglu and James A. Robinson explore the
idea of a “critical juncture” in social development. The critical juncture is a
major event that disrupts the existing political and economic balance in
one or many societies. The global pandemic that we are living through is
such an event. It has not only resulted in grave loss of life but represents
the largest economic shock the world has experienced in decades.
Society has been catapulted into a new reality and faces extraordinary
challenges.
But despite the hardships, we might also view this as society standing at the crossroads of opportunity.
The question is how we use this moment to develop in constructive new directions – be it by harnessing
the power of digitalization, investing heavily in renewable energy or reskilling people for a new cyber
century.
COVID hit us in March 2020 and upended the Joint Chamber of Commerce‘s (JCC) carefully planned
program of events. Things ground to a halt and we were confronted with the question of ‘what now?’. How
do we provide our members with the services they expect? How do we promote networking, disseminate
information, help to forge business partnerships if physical contact is highly risky or forbidden? This was
JCC’s critical juncture – a moment which tested the chamber’s sense of purpose, resilience and creativity
as we tried to figure out what next.
JCC Flash, Dec 20/Jan 21 1
JCC Newsletter December 2020/January 2021 Stay Connected When the first lockdown came in March 2020 everything stopped and a kind of silence descended as public spaces emptied out, people started to work from home and physical interactions were reduced to a minimum. In these early days we recognized the importance of keeping in touch with our members, breaking through the “silence” and reinforcing our connectedness as part of the JCC network. We immediately launched a series of weekly email updates on the Corona Virus in each of JCC’s thirteen target countries. While today there are copious amounts of data and information, in March it was still a very novel phenomenon. We could not only fill an information gap but reach out to our members and help them feel part of the JCC family. Go Digital This set the scene for JCC’s decision to go digital, to shift JCC’s entire program of events online for the duration of 2020. This year JCC organized 11 webinars showcasing specific markets and regions (New Silk Road Region, Russia, Ukraine, Kazakhstan, South Caucasus Uzbekistan and examining technical business-related topics (trade financing, nearshoring, taxation). We also cooperated on five additional webinars with Switzerland Global Enterprise (SGE), the Swiss Business Hub and other partner organizations. We realize that it is not possible to replace tangible, person-to-person contact for building trust-based partnerships. But we have also discovered the advantages of operating in the digital space. Webinars make it easier for members to participate no matter where they are. We can attract expert speakers as they don't have to leave home in order to be panelists at our conferences and roundtables. While webinar preparation involves a lot of work, it requires overall less time to organize and execute than physical events. Webinars are also relatively cost-effective for all involved. Expand in Western Switzerland, Ticino and Ukraine The general slowdown in travel and physical interaction freed up more time for the JCC board and management to concentrate on JCC strategy and development. Since its inception, JCC has been headquartered in Zurich with members throughout Switzerland. Due to increasing demand in recent years, the board decided that as of 2021 JCC will set up official representations in Geneva and Lugano to focus on Western Switzerland and Ticino, respectively. JCC Western Switzerland will be led by Jean-Paul Periat, Chairman, Herculis Partners and Honorary Consul of Kazakhstan in Switzerland. He will be supported by Xavier Cornut, Senior Advisor, Cabinet Privé de Conseils SA and Vincent Subilia, General Director, Geneva Chamber of Commerce, Industry and Services (CCIG).JCC Ticino will be headed by Filippo Lombardi, CEO and Senior Advisor, Swissconsult International AG supported by long-time JCC board member Luca Moretti, Partner, SMC Trust. As per the JCC Bylaws Mssrs. Cornut, Lombardi, Periat and Subilia will be proposed for election as board members at the 2021 AGM. We are confident that an operational presence in key regions of Switzerland will enhance the activities and services JCC offers its members and increase bilateral business between Switzerland and Eastern Europe, Central Asia and the South Caucasus. So despite the pandemic 2020 has turned out to be a good year for JCC and we look forward to the new year with enthusiasm. Although COVID-19 will continue to play a role we have learned to live with it and make the most of the situation. JCC’s 2021 program will be a hybrid of digital and physical events. We will showcase each country in the chamber‘s portfolio as usual. In 2021, Ukraine will be JCC’s country of special focus. There will be at least two business promotion events on Ukraine in Switzerland and we will launch a JCC Ukraine Chapter in Kyiv, Ukraine headed by Sven Henniger, Partner, Henniger Winkelmann Consulting, Ukraine. Pandemic-permitting this will take place in October 2021 on the occasion of a JCC mini business mission to Kyiv. JCC Flash, Dec 20/Jan 21 2
JCC Newsletter December 2020/January 2021 Our aim is to serve JCC members come rain or shine, to help you grow and succeed in your business while strengthening bilateral economic relations between Switzerland – Eastern Europe (non-EU), Central Asia and the South Caucasus. We thank you for not forgetting us, for your unflagging commitment and invaluable support. From all of us at JCC, I wish you a happy, healthy and successful 2021. Best Regards, Marcel Marcel Pawlicek President, Joint Chamber of Commerce (JCC) A 2020 Highlight On October 16, 2020, H.E. Mr. Bakhyt Sultanov, Minister of Trade and Integration of the Republic of Kazakhstan, H.E. Ambassador Alibek Bakayev and Marlen Ibrayev, Councillor, Embassy of Kazakhstan in Switzerland visited Burckhardt Compression, Winterthur. They were hosted by Marcel Pawlicek, CEO, Burckhardt Compression & JCC President; Jiri Rus, Vice President, Eastern Europe, Middle East, Africa, Burckhardt Compression; Mihnea Mircea, Regional Sales Director, EECIS & Middle East Systems Division, Burckhardt Compression and Dorit Sallis, Managing Director, JCC. After an exchange of information and ideas, Marcel Pawlicek gave the delegation a tour of the factory. L to R: Mihnea Mircea, Dorit Sallis, Marcel Pawlicek, Minister Bakhyt Sultanov, Ambassador Alibek Bakayev, Jiri Rus and Marlen Ibrayev. JCC Flash, Dec 20/Jan 21 3
JCC Newsletter December 2020/January 2021
JCC 2020 Program October 16, 2020
Visit of H.E. Mr. Bakhyt Sultanov, Minister of
January 20 to 24, 2020 Trade and Integration of the Republic of
Caspian Week at Davos Kazakhstan & a Delegation
JCC organized panel on Afghanistan. Burckhardt Compression, Winterthur
Switzerland
February 27, 2020
Russia Business Breakfast October 21, 2020
"How to build an efficient strategy of Business Lunch
cooperation with a distributor on the Russian "The Role of the Private Sector in Support of the
market?” 2030 Agenda for Sustainable Development“
In partnership with SGE & SBH Russia Keynote Speaker: Tatiana Valovaya, Director-
Zurich, Switzerland General of the UN Geneva
Geneva, Switzerland
May 27, 2020
Webinar: "COVID-19 Business Challenges and October 27, 2020
Support Measures in Eastern Europe (non-EU), Webinar: "Arbitration and the Belt and Road
Central Asia and the South Caucasus" Initiative" Organized by CCIG and RCAN in
partnership with JCC
May 29, 2020
Webinar: "Azerbaijan, Managing COVID-19 and
November 3, 2020
Business Outlook 2020-2021”
JCC Uzbekistan Chapter Webinar
June 18, 2020 “Update on Uzbekistan's Financial & Banking
Webinar: "Uzbekistan Business Update" Sector"
July 8, 2020 November 19, 2020
Webinar: JCC Annual General Meeting Pharmtech & Ingredients Expo 2020
Roundtable on Swiss Pharma: JCC Russia
September 15, 2020 Chapter & Swiss Business Hub Russia
Webinar: "Nearshoring from Ukraine and the Moscow, Russia
Impact of COVID-19"
November 23, 2020
September 28, 2020 Webinar: “Connecting Swiss Manufacturers
Webinar: JCC New Silk Road Forum V with Russian IT Companies”
"China’s ‘Belt and Road’ Initiative (BRI): Impact In partnership with the Trade Mission of the
of COVID-19 on the BRI and Linkages in Central Russian Federation
Asia and the South Caucasus"
In partnership with the Swiss-Chinese Chamber November 24, 2020
of Commerce (SCCC) Webinar: “Afghanistan – Investing in Peace,
Building Business“
October 5, 2020
Webinar: JCC Russia Regional Day 2020 December 14, 2020
"Russia From East to West: Business Webinar: "Europe in 2021: The Future is Now"
Opportunities for Swiss Companies in the In partnership with the Swiss Association of
Russian Far East, Central Siberia and Russian International Chambers of Commerce in
North West" Switzerland (AICC)
October 13, 2020 December 15, 2020
Webinar: "Trade Financing for Swiss & Webinar: "Export to Russia: Direct Export,
European Companies Doing Business in the Distribution Partner, Sales Team or Hybrid
Eurasia Region" Model?"
JCC Flash, Dec 20/Jan 21 4
JCC Newsletter December 2020/January 2021
2020 in Pictures
Marcel Pawlicek, President & Dorit Sallis, Managing Marcel Pawlicek, President & H.E. Mr. Bakhyt Sultanov,
Director at JCC’s virtual AGM, July 8, 2020. Minister of Trade and Integration of the Republic of
Kazakhstan, October 16, 2020.
JCC Webinar Scenes
L to R: JCC Russia Regional Day, October 5,
2020; JCC Uzbekistan Business Update,
June 18, 2020.
Below L to R: JCC Afghanistan Business
Webinar, November 24, 2020; Nearshoring
in Ukraine, September 15, 2020; Trade
Financing for Swiss Companies Doing
Business in Eurasia, October 13, 2020.
Pharmtech & Ingredients Trade Show, Moscow, November 10-13,
2020. Andreas Bitzi, Head, JCC Russia Chapter, JCC Board Member &
Managing Director, Quality Partners (left) & Lorenz Widmer, Head,
Swiss Business Hub Russia (right) participated in a panel discussion
on Swiss pharma at the exhibition.
JCC Flash, Dec 20/Jan 21 5
JCC Newsletter December 2020/January 2021
Update Ukraine: Economic Opportunities in 2021
By Sven Henniger, Partner, Henniger Winkelmann Consulting Ukraine www.hwc.com.ua;
Head, JCC Ukraine Chapter
U
kraine’s 2019 Presidential and Parliamentary Elections heralded the opening of a new chapter for
the country. Positive economic developments in the early months of President Volodymyr
Zelensky's term led to increased interest from foreign investors and trading partners. This was
somewhat undermined by government and National Bank restructuring as well as Constitutional Court
decisions. Intensive work is currently underway to correct the situation. Despite political challenges and
Covid-19, a number of economic sectors are evolving dynamically and generating global business
interest.
Agriculture
With an agricultural area of 415’150 square kilometres Ukraine’s farmland is ten times the total area of
Switzerland. Agriculture is one of Ukraine's main economic sectors and currently generates about 9% of
Ukraine's GDP. Ukraine is already among the top three exporters to the EU after the US and Brazil and is
the world's largest exporter of sunflower oil. The planned reform of agricultural land will lead to an
increase in purchasing of machinery and equipment through better financing possibilities for farmers.
Swiss companies can leverage the opportunity to supply machinery, equipment and services.
Infrastructure
In 2020, almost 4’000 km of roads were repaired or built within the framework of the government’s Big
Construction Infrastructure Project. In 2021, Ukraine’s State Highway Authority plans to repair or build
6’800 km of roads, almost 75% more than in 2020. Ports and regional airports are also being modernized
through government funding, private sector investment, loans and EU and World Bank Grants. (Open
access to public procurement tenders is available on ProZorro, an electronic open-source system
www.prozorro.gov.ua.) Swiss know-how could be of great value in this sector.
IT
Ukraine is globally recognized as a leading IT hub. Approximately 4’000 technology companies operate
in the country and over one hundred multinational corporations (including Samsung, Amazon, Oracle,
NEC, Boeing and Raiffeisen) have R&D operations here. The establishment of a dedicated Ministry for
Digital Transformation reflects the importance of digitalization and the IT sector for the overall economy.
The availability of well-qualified IT personnel and relatively low salaries compared to Western Europe
makes Ukraine an attractive nearshoring destination for Swiss companies. Other interesting economic
sectors in Ukraine include food processing and renewable energy.
Switzerland exports pharmaceutical products, machinery and agricultural products to Ukraine. Imports
from Ukraine consist mainly of precious stones and metals, textiles & clothing, machinery, agricultural
products and base metals. Switzerland is among the ten largest investors in Ukraine. Several Swiss
companies are among Ukraine’s largest taxpayers.
The aim of the JCC Ukraine Chapter (launching in 2021) is to give Swiss companies an insight into the
investment and trade opportunities that Ukraine offers, illuminate risks and support market entry. Events
in the form of webinars and physical events (post-pandemic) will offer information about target sectors
and enable participants to network with business counterparts.
As the JCC Ukraine Chapter, we are committed to an exchange of ideas and interactions with the
Embassy of Ukraine in Switzerland, the Embassy of Switzerland in Ukraine, Switzerland Global Enterprise
(SGE), industrial associations and chambers of commerce in Switzerland and Ukraine that can contribute
to bilateral economic development.
JCC Flash, Dec 20/Jan 21 6
JCC Newsletter December 2020/January 2021
Afghanistan 2021 - Open for Business
By Andreas Schweitzer, CEO, Arjan Capital Ltd. www.arjan.capital
A
t Arjan Capital we are no strangers to frontier and complex markets. These are the markets we
have thrived in over the past ten years, building up a successful track record of financial advisory,
corporate advisory and cross-border trade with Central Asia.
Arjan Capital has experience in Kazakstan,
Uzbekistan, Mongolia, Georgia and Iran. We
have been present in Kabul, Afghanistan since
2019, supporting European companies in their
bids for government tenders and similar
complex needs. As parts of the country are still
militarily insecure, doing business in Afghanistan
is for many SME's and corporates still a "nyet"
mainly for staff safety reasons
Looking beyond the scars of war, Afghanistan
has plenty to offer. It has an educated workforce
which is highly motivated to get a higher
education. The country is located in a
geographical sweet spot which has made it a a
trade, business and cultural hub for centuries.
Financing and Telecommunications
Afghanistan has strong ambitions to improve its grounding in Central Asia and the world. It already has
the support of a robust national banking system. However, without an internationally recognised country-
rating very few national banks enjoy international correspondent relationships. This is an obstacle to
procuring trade finance. Afghanistan is predominantly a cash-based bazaar; documentary collection is not
yet well-established.
The Afghan telecommunications network
with widespread 4G coverage and
broadband available in the urban centres
can effortlessly match international
standards. Such connectivity is
impressive, especially in areas
experiencing security challenges. With
banking and telecommunications in
place and improving by the day,
Afghanistan should be considered a
destination for SMEs and corporates
willing to book premium margins in an
upcoming frontier market that was
inaccessible for half a century.
Panjshir Valley, Afghanistan
JCC Flash, Dec 20/Jan 21 7
JCC Newsletter December 2020/January 2021
Construction
The country offers excellent opportunities in industrial and infrastructure sectors. For example, Arjan
Capital has been working on financing and structuring a local cement production project (since
December 2020). This includes analysis of national need, discussions with local and international
investors, and mediating with other relevant parties.
It is difficult to produce cement in Afghanistan because of the volatile electricity supply. A mill and
packaging line is preferable to a full-scale cement factory. Investment and risk associated with such an
operation is lower and serves the needs of the local cement market. The regional governor arranged local
public and private sector financing, which is an important factor in attracting international investors. There
are similar opportunities in various industrial sectors.
Construction material goes hand-in-hand with the need to improve the country's transportation network.
The network of roads that connect urban centers with rural settlements has been damaged in many
places by fighting. Providing materials and technical expertise can be lucrative for suppliers and
construction companies.
Precious & Semi-Precious Stones
Lapis Lazuli has been associated with Afghanistan since the 7th century BC. It continues to be mined in
north east Afghanistan and is one of a range of semi-precious and precious minerals found in Afghanistan
that are in demand on world markets. Once a more stable environment governed by rule of law is in
place, inventory financing of gemstones and other high-
value minerals could generate a substantial cash flow for
the state and private companies. Investors receive premium
returns for asset-backed financing with collateral safely
stored in a third-party jurisdiction.
A Major Trade Hub
Afghanistan's glory does not have to reside in the past; the
country has many of the ingredients to make it a thriving
business hub. It sits in the center of a network of trading
partners — Iran, Pakistan, India and China at the tip of its
north-eastern border. In the north it borders on Inaugural ceremony of the World Trade Center
(WTC) Kabul, October 21, 2020.
Turkmenistan, Uzbekistan and Tajikistan. Afghanistan has
the potential to re-establish itself as an international trade
and transport hub in Central Asia, reaching over 300 million consumers. Shipments already transit the
country successfully. The proximity of the southern
Iranian port of Chabahar will provide vital access for the
Afghan market. Once Chabahar is fully functioning,
Afghanistan's role as an international hub will grow.
Doing business in Afghanistan does not require starting
from scratch. Ongoing business activities make this an
interesting and promising market. Efforts to align the
public banking sector with international standards are
ongoing and the infrastructure is in place to tap the
country's resources and provide for its needs. A well-
entrenched and respected local partner such as Arjan
Capital can help global companies navigate local
challenges.
JCC Flash, Dec 20/Jan 21 8
JCC Newsletter December 2020/January 2021
“On the Belt, On the Road”: China’s Pivot to Eurasia
and the Impact of COVID-19
By Benno Zogg, Senior Researcher, Center for Security Studies (CSS), ETH Zürich
and Co-Head, Peace & Security Programme, Foraus Think Tank
T
o business people and political observers alike, China’s Belt and Road Initiative (BRI) has raised
considerable interest in recent years. And yet, capturing and conceptualising the initiative is a
challenge. The assumption is that the BRI will bring about big changes but there is no unified
understanding of what these might be. The inherent vagueness of the BRI contributes to a proliferation of
views that embrace economic, political, security and cultural dimensions, and cannot be separated from
Chinese foreign policy overall. The ways in which we conceptualise BRI determines our understanding of
how the pandemic has affected the initiative in Eurasia.
Eurasia is illustrative as a centrepiece of the BRI. Here Beijing seeks stability at its borders as well as better
access to resources and trade routes. To that end, states like Russia and Kazakhstan are of strategic
importance. The BRI exists in Eurasia in different forms — through the construction of pipelines, railways,
roads and in the power generation, agriculture and manufacturing sectors. Some aspects of the BRI, such
as technical standards and technology, are intangible developments. China is the actor that provides
most of the funding with the least political strings attached in the region. A large portion of projects are
financed by Chinese loans and implemented by Chinese companies. Other states and multilateral
development banks are active too, and some Eurasian states fund BRI projects themselves.
Eurasian states not only want to provide natural resources and operate as logistical transit points but to be
involved in downstream value chain activities. Two special economic zones at opposite ends of the BRI
serve as examples — Khorgos, a dry port on the Kazakh-Chinese border and flagship BRI project in
Kazakhstan and the Great Stone Industrial Park outside Minsk, Belarus. Both projects revolve around
logistics but also include manufacturing, particularly in the high-tech sector. While several companies
have set up facilities in these zones, host countries’ expectations have not been met so far.
Trade between Eurasian states
and China has increased
greatly in the past several
decades. China is the most
important trading partner for
many Eurasian states though
Russia and the EU still enjoy a
substantial share. Trade among
Eurasian countries has
increased too. This fact reflects
another dimension of Chinese
influence: promoting and
s t re n g t h e n i n g t ra d e . Th e
World Bank assessed that the
BRI has already had an effect
on facilitating regional trade.
Domestic perceptions of China in Eurasian countries sometimes contradict the official government
position on BRI. The presence of Chinese companies leasing large parcels of land causes apprehension
about land loss in the local population. Unemployment due to the influx of Chinese workers is another
JCC Flash, Dec 20/Jan 21 9
JCC Newsletter December 2020/January 2021 concern. China’s attitude towards its own Muslim population, including ethnic Kazakhs and Kyrgyz, is a source of unease. These factors create dissonance — Eurasian governments highlight the aspects of friendship and opportunity in relation to China while large parts of the population remain distrustful. Coronavirus has influenced all these dimensions of the BRI in Eurasia. In the short term, it has led to disruptions. The Chinese M i n i s t r y o f Fo re i g n A ff a i r s declared that 20% of BRI projects were “severely hit”, while half of the remainder were somewhat affected. The pandemic has also impacted Eurasian economies. Several have gone into recession and asked for debt relief. For example, China’s Exim Bank agreed to restructure Kyrgyz debt worth USD 1.7 billion. At the same time, the pandemic has also seen positive effects for BRI. Imports from Russia and Kazakhstan to China rose in 2020. Train connections across Eurasia have increased and proven a reliable alternative to maritime a n d a i r t ra n s p o rt . C h i n e s e telecom and e-commerce giants are likely to make further inroads into Eurasia. This will result in the proliferation of Chinese standards in that arena, a factor to continue observing. China seems to be recovering ahead of most other nations and its economic footprint in Eurasia will grow. In light of global tensions, it might become more challenging for Eurasian states to balance big global players and diversify their partners, which is what they would ideally like to do. The BRI will have a smaller budget in the medium-term as the Chinese government prioritises spending domestically over investment abroad. Projects may not materialise because economic realities have changed. China’s approach in Eurasia will certainly continue to inform us about its behaviour and priorities more globally as it figures out how to assert economic and political influence in the next decade. JCC Flash, Dec 20/Jan 21 10
JCC Newsletter December 2020/January 2021
Uzbekistan Banking Sector Reforms
Open Up Privatization Opportunities
By Nicola Contessi, Contessi Advisory
U
zbekistan is a fast-growing emerging market with a sizeable population and fairly diversified
economy on the path to high middle-income status by 2050, according to The World Bank. A
well-functioning banking sector is key to achieving the economic and social goals that the Uzbek
Government has set itself.
Today, the Uzbek banking sector is still highly concentrated with thirteen out of thirty one banks (85% of
total assets) in state hands. The top three state-owned banks (SOBs) — National Bank of Uzbekistan, Asaka
Bank and Industrial and Construction Bank — hold 27.4, 14.1 and 13.4% of assets, respectively.
As a society where informal cash transactions prevail, Uzbekistan has much room for growth. With over
10’000 customers per ATM in most regions the low presence of banks outside major cities offers
opportunities for new entrants. The government’s goals is to see a fivefold increase in the number of
regional branches over the next few years.
The National Bank of Uzbekistan (NBU), Tashkent.
On the downside, despite better showings than regional peers stress tests have revealed potential
problems with quality of loans. A legacy of co-dependence between state and banks means that the
government still plays a key role in directing and backstopping the industry. The value of credit lines
issued with state-backing has stood at around USD 600 million for the past two years. The absence of
nationwide 4G coverage will delay the development of mobile banking. Work also needs to be done on
governance issues.
The Uzbek Government began overhauling the banking sector in 2017. Strict currency controls were
removed and the som was allowed to float. New legislation was introduced to create a more market-
friendly playing field. The Law “On Banks and Banking Activities” was amended in 2019, redefining the
JCC Flash, Dec 20/Jan 21 11JCC Newsletter December 2020/January 2021 role of the regulator and relaxing the rules of foreign ownership in domestic banks, which increased to 5%. A mortgage development facility supported by a USD 200 million loan from the Asian Development Bank (ADB) loan boosted lending by 26% in 2019. Uzbekistan’s adoption of the Banking System Reform Strategy Decree in 2020 promises to be a turning point as it charts the course for a complete overhaul of the industry through privatization from 2020 to 2025. The Decree’s targets are as follows: •Increase the share of fully private banks from the current 15% to 60%; •Attract at least three strategic foreign investors to at least three state-owned banks (SOB); •Increase the share of the private sector in total liabilities from the current 28% to 70%; •Expand the share of non-banking institutions in total lending from the current 0.35% to 4%. In addition, it calls for the adoption of international standards on banking supervision (i.e. Basel Accords), improved quality and efficiency as well as workforce development. Following an initial transformation phase in 2020 and 2021, the government wants to see six SOBs fully privatized by the end of 2025: Ipoteka Bank, Uzsanoatqurilishbank, Asaka, Aloqabank, Qishloq Qurilish Bank and Turonbank. Foreign banks are starting to get involved. Halyk Bank (Kazakhstan) established a subsidiary in 2019 named Tenge Bank, which is now looking to expand beyond the Tashkent area. TBC (Georgia) entered in April 2020 and wants to become the country’s leading digital bank. Gazprombank (Russia) is setting up a representative office and Sawada Group (Japan) is eyeing the privatization of Asia Alliance Bank. The Zurich-based ResponsAbility Investments holds a 7.7% stake in Hamkorbank. The reforms are backed by strong political will and their cumulative effect is likely to strengthen the system’s competitiveness and profitability. Over time cooperation with international financial institutions should also help to ease governance challenges. JCC Flash, Dec 20/Jan 21 12
JCC Newsletter December 2020/January 2021
Digital Marketing in Russia. 5 Steps to Position
Your Company in the Russian Market
By Caterina Horbatkova, Partner, EsplorEst www.esplorest.com
T
he Russian Federation with its population of 145.6 million and 18 million daily active online users
is considered a macro area in the web world. No matter what sector your company is in you need
an online presence in order to successfully sell your product in Russia.
Since March 2020, the traditional approach to cross-border sales in B2C and, above all, B2B markets has
been put to the test by pandemic-related travel restrictions and the cancellation of face-to-face meetings
at trade fairs.
That's why it's time to place a serious bet on the development of a digital presence in the Russian market.
Companies that have created online platforms have seen sales grow by 50-1’500% (depending on
product group and level of B2B presence).
STEP 1 Market Analysis
The process begins with an in-depth market analysis. Russia has a territory that extends over 11’000 km,
has 95 regions and 9 different time zones. There are important geographical and demographic
particularities to be aware of in order to position your product correctly. In Central Russia the online user's
attitude is significantly different from a user in Yakutia, for example.
JCC Flash, Dec 20/Jan 21 13JCC Newsletter December 2020/January 2021
Factors to consider in a market analysis:
Geographical and demographic structure;
Presence of the brand in the market;
Competitors.
Yandex (Russian search engine used by approximately 41% of the population) is one of the best tools for
researching and learning about Russian user preferences. Through Yandex Stat Service one can analyse
interest in a specific sector according to geographical location and calculate short-term market trends.
Using the Yandex Survey Tool it is possible to do surveys and perform a behavioural analysis of users.
STEP 2 Position Site on RuNET ( Russian internet)
For a site to be well positioned in Russia there are several factors to consider:
Optimise site for Yandex not only Google;
Select an authoritative domain preferably .ru/. рф with hosting in Russia (Localization Law);
Ensure quality content in Russian;
Use information and graphics that animate the Russian consumer;
Conduct paid campaigns on Yandex Direct.
One of the best examples of digitalisation in the Russian market is EVRAZ with its B2B marketplace.
EVRAZ Marketplace is an online shop for company employees, which enables them to accelerate the
purchase and delivery of goods required for their work. The main purpose of the service is to organise a
convenient and quick process of procuring inventory. Digitalisation allows the employees to avoid tender
procedures and arrange delivery of goods directly to the workshops, bypassing central and intermediate
warehouses. The time for employees to receive orders has been reduced to 48 hours. The order process
itself takes no more than 15 minutes on average and its status is managed and tracked in a private office.
Marketing work is possible from personal computers and mobile devices.
STEP 3 Social Media Marketing (SMM) in Russia
The site should appear on one or more of Russia’s most
popular internet platforms VK (97 million users a month),
Odnoklassniki (45 million users a month) and of course
Facebook and Instagram. During the pandemic YouTube
expanded its marketshare significantly.
JCC Flash, Dec 20/Jan 21 14JCC Newsletter December 2020/January 2021 Which platforms to choose? The young demographic uses VK where content includes fun posts, short videos and games. Generally, this platform works well for customer care management. Facebook and Instagram are best suited for promotion and sales of more expensive products and B2B contact searches. Ultimately, the optimal platform will depend on the sector itself. Facebook, for example, is often used by Russian architects and designers to search for companies that produce Italian furniture. So manufacturers can use this platform not only to raise brand awareness but also search for buyers. Social networking is a good tool for the mechanical and metallurgy sectors to increase user interest in a product that was previously unknown or unpopular on the Russian market. Severstal, a Russian company in the steel and mining industry, uses social networks to market itself. For companies that already have an active customer portfolio, we also recommend using Telegram to send newsletters directly to consumers. STEP 4 Digital PR in Russia Working with influencers is one of the most effective ways to promote a product online in Russia. This involves teaming up with a known blogger, celebrity or expert to create a joint promotion campaign. Influencers can be instagrammers, youtubers, viners (creators of videos), gamers, celebrities and interviewers (popular trend on YouTube). How to ensure a successful campaign? Consider bloggers with a small audience as they are more committed than those with millions of followers. When evaluating an influencer's account, don't focus on the number of “likes" but on the volume and quality of comments, which reflect the account’s level of activity. Abandon rigid formats and templates for bloggers. People prefer authentic personal expression rather than stock photos and sentences. Using video content brings in an additional dimension of color and meaning. If your experience with a blogger produces good results, consider repeating the campaign. Long-term collaboration is the key to getting the blogger's audience to trust your brand. In the industrial sector, digital PR work relies mainly on opinion leaders in the industry, online industry magazines, portals and corporate journals. JCC Flash, Dec 20/Jan 21 15
JCC Newsletter December 2020/January 2021
Step 5 Virtual Fairs and B2B Online Meetings
The metalworking industry has faced difficulties as a result of the pandemic. Some companies suspended
operations altogether, many focused on optimising costs and suppliers teamed up to manage the crisis
together.
All significant physical events, including trade fairs, were cancelled. In response, members of the National
Union of Equipment and Tool Suppliers for Metalworking (NUMM) decided to hold the first exhibition-
forum of metalworking equipment, tools and technologies online where they could network virtually with
contacts and potential clients.
Companies require the following to participate in a virtual fair:
Virtual stand
Online presentation
Digital export manager to organize b2b meetings during the event
2021 JCC EVENTS
JCC January 19, 2021 (16:00-16:30 CET)
Russia Chapter Series 2021
Webinar Shot: “Setting Up a Legal Entity in Russia: LLC, Branch Office or Representative Office?”
JCC February 4, 2021 (14:00-15:00 CET)
JCC Ukraine Chapter Launch
Webinar: “Update Ukraine - Business Environment and Growth Sectors”
February 10, 2021 (13:00-14:00 CET)
JCC Western Switzerland Launch Webinar
“Switzerland-Eurasia: 2021 Negotiations on Banking, Finance, Customs & Tax Regulation”
March 25, 2021 (10:00-11:00 CET)
JCC Uzbekistan Chapter Webinar
“Uzbekistan: Privatization 2.0”
In partnership with PwC Uzbekistan and Switzerland
NOTE
April 14, 2021 (15:00-16:30 CET)
JCC Webinar: Georgia 2021 This is a preliminary event schedule.
“Economic Environment & New Business Opportunities” There will be more events announced
Includes a virtual winetasting in due course. Please go to the JCC
website for additional information
April 21, 2021 (14:00-17:00) and to register online:
JCC Annual General Meeting www.jointchambers.ch
Victorinox, Schwyz
April 29, 2021 (14:00-15:00 CET)
JCC Ukraine Chapter Webinar
“The Energy Sector in Ukraine”
June 17, 2021 (14:00-15:00 CET)
JCC Ukraine Chapter Webinar
“The IT Sector in Ukraine”
JCC Flash, Dec 20/Jan 21 16JCC Newsletter December 2020/January 2021
ABOUT JCC
JCC is the leading private sector organization in Switzerland that facilitates bilateral business
between Switzerland and the following countries:
✦ Russia, Ukraine, Belarus, Moldova
✦ Central Asia — Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, Afghanistan
✦ South Caucasus — Azerbaijan, Georgia, Armenia
As the central unifying hub for all these countries‘ business activity in Switzerland, JCC assists Swiss
firms to engage in trade and investment in its target markets, and companies from the region to do
business in Switzerland. JCC members are companies (SMEs and MNCs) in the manufacturing and
service sectors. The chamber is headquartered in Zurich with representations in Western Switzerland
and Ticino.
JCC provides members the following services:
✦ Regular digital and physical events on the latest business development in JCC‘s target region a
steeply discounted rates;
✦ Members-only participation in JCC Chapters’ specialized programs —JCC Legal& Tax Chapter,
JCC Russia Chapter, JCC Ukraine Chapter and JCC Uzbekistan Chapter;
✦ Exclusive access to strategic partners and business opportunities in the target region and
Switzerland;
✦ Lobbying and troubleshooting on members‘ behalf in JCC‘s target region;
✦ A channel for new business. JCC refers all service-related requests to members;
✦ A platform for members to showcase their expertise and connect with potential clients.
How to become a member?
Go to the JCC Website/Become a Member - www.jointchambers.ch.
Fill out and send the electronic registration form. After receiving the
form, JCC will send you a confirmation of membership and your
invoice for the calender year. CONTACT
Dorit Sallis, Managing Director
We look forward to welcoming you to JCC. Joint Chamber of Commerce (JCC)
Kasernenstrasse 11
CH-8004, Zurich, Switzerland
T +41 32 510 0809
E sallis@jointchambers.ch
W www.jointchambers.ch
JCC Flash, Dec 20/Jan 21 17You can also read
