Business in Russia costs firms knowhow

30. 5. 2016 | Source: BusinessInfo.cz

motiv článku - Business in Russia costs firms knowhow Czech firms have been getting acquainted with Russian legislative novelties. Making a business breakthrough in Russia now means signing a special contract.

The Russian economy is to be fully opened to foreign companies – but their goods must be labelled “Made in Russia”. Non-resident investors must secure the tag in order to ensure that their products will stand a chance with firms that involve a state participation, which always play a weighty role on the Russian market. Businesspeople say that the price to pay for a ticket into Russia under an SIC (special investment contract) is the automatic sharing of knowhow with the Russian partner.

The SIC amounts to an agreement with the government that guarantees the foreign investor will be provided with an unchanged legislative environment for 10 years, particularly when it comes to taxation. “The sense of the contract is an advantageous investment with the objective of supporting Russian production and localising foreign production,” said Hana Hikelová, spokesperson for EGAP, the Czech state’s credit insurance corporation for exports.

Above all, the contract puts the foreign investor on a par with the domestic firm, with the non-resident player gaining the status of a Russian producer. “A final consequence is that the European firm is bringing their knowhow to the Russian company at no cost, but the reward will be the possibility of making company product sales on a potentially strong Russian market,” noted Hana Formánková, spokesperson for Czech machine tools maker Kovosvit MAS.

The first foreign investor to enter Russia under an SIC was Japanese automaker Mazda.

Originally published in E15 weekly, economic and business newsmagazine. Author: Jaroslav Bukovský

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