Goods exports to Russia hit a peak of 722m euro at the end of 2014, having steadily increased over the previous 4 years. However, the collapse of the rouble, added to Russia’s food sanctions and a newly introduced Russian government ‘import substitution’ policy slashed that figure back to 369m in 2015. Imports from Russia likewise fell from 226m to 160m decreasing overall trade from 948m to 529m. The figures for 2016 show a further decrease with goods exports falling from 217m to 206m year on year for the period January to July. Enterprise Ireland’s client companies would have seen a less dramatic decrease in exports which we estimate at around 13%.
What do the Russians think about doing business in Ireland? How big a market is it for them?
We’ve seen a very strong, positive response from Russian investors and entrepreneurs to our promotion of the Irish start-up ecosystem in Russia. Over a third of the applications for Enterprise Ireland’s international Competitive Start Fund were generated in Russia (and the CIS), with around 40% of those awarded investment funding coming from here, indicating that awareness in that sector is very high, and demonstrating that Russians are very positive about using Ireland as a base from which to globalise, and are aware of our very developed infrastructure.
Ireland is a small market even for our own companies but that drives our expertise in exporting internationally, something which Russian companies see as a massive advantage. We would have a strong reputation in the education, aviation, and agricultural sectors in particular.
What appeals to them about Ireland?
We are an access point to the UK, EU, and US markets. We have great supports for international companies settling in Ireland through our government agencies. We have a mature legal system, and some very well thought out IP legislature. We also are home to so many leading international ICT, Pharma, Medical devices and financial services companies. Most of all, Ireland is appealing for lifestyle reasons. Russians feel very much at home all across the country, and appreciate our friendly, relaxed attitude to doing business, and our appreciation of the importance of relationship building to success.
What do the Irish think about doing business in Russia?
Irish companies tend to be cautious about doing business in Russia, especially over the last few years when the majority of media related to Russia has been negative, both politically and economically following the rouble collapse, and sanctions. However, almost without exception, Irish companies visiting the market for the first time are surprised by the opportunity the Russian market offers for the right products and services. And they are surprised by Moscow and the standard of living they encounter in the city centre. Russia is not a market for every company, but for those with sufficient resources, a willingness to look beyond the headlines, and a long-term view, it offers potential that most of our visitors are quick to identify.
You’ve been based in Russia for a while, has the relationship between the two countries changed over this time?
In the time I’ve been in Russia awareness of Ireland has increased, despite the fact that the number of Irish people in Russia has decreased. A lot of this is due to cultural activity, in particular the St.Patrick’s Day Parade and Irish Film Festival and Irish Week events which attract thousands of Russians, and get extensive national media coverage in the 10s of millions for 10 days in March.
From a trade point of view, we are in much closer dialogue with our counterparts on the Russian side, both through our Ireland Russia Joint Economic Commission (the main formal bilateral trade instrument), but also through our engagement with the key Russian government agencies that are responsible for international trade development. Our active promotion of the Irish start-up ecosystem and Ireland as a base from which to globalise through targeted social media outlets and regular networking events has also significantly raised awareness over the past 2 years.
How many Irish businesses are there in Moscow / Russia, has EI seen an increase in activity. over time?
We estimate there are about 100 companies actively engaged with the Russian market, with about 30 having local offices or representation on the ground. Despite the various economic and political ups and downs, the level of activity is consistent, but the nature of it changes as we try to adapt quickly to the moving sands beneath us.
Pre 2014 we would have seen a lot of general sectoral activity from companies that had a general hunch that the Russian market might be interesting, with companies being introduced to the Russian market through trade fairs, trade missions etc.
For the last two years, we have encouraged much more niche activity – companies with high specialised, specific products and services coming to the market very well prepared, knowing who their end users are, armed with ‘bespoke’ proposals. A lot of activity at the moment is also about maintaining relationships, showing up in market to demonstrate a long term view of things, something that is highly appreciated locally.