Download Russia through a lens | 4Q 2016

Russia through a lens
Deloitte Research Centre | Fifth issue | 4Q 2016
Macroeconomic outlook
Key Russian macroeconomic
indicators in 4Q 2016
CFO Survey Winter 2016
A comprehensive analysis
of trends in the Russian
business environment
Media consumption
The results of our second
comprehensive study of media
consumption in Russia
Businessmen on the banks
Interaction between small
and medium-sized enterprises
and the banking industry
Page 04
Page 12
Page 14
Page 20
Russia through a lens Content
Page 19
Page 26
We are pleased to present the latest edition of Russia
Through a Lens, the macroeconomic journal produced
by Deloitte Research Centre in Moscow.
Established in December 2015, the journal is published
quarterly and falls under the Research Centre’s
monitoring activities.
Page 28
04
12
Russia in figures
Macroeconomic outlook
(GDP, inflation, trade indicators,
currency rate, Central Bank
key rate, top-pricing, etc.)
Research Centre
market analysis
"CFO Survey",
"Media consumption",
"Innovations in agribusiness",
"Companies with
intangible assets",
"Businessmen on the banks"
26
28
Top M&As
Top-5 deals in Russia
Global wind
Top news about
China-Russian relations
29
29
Useful stickers regarding
innovations in Russia
Other useful
stickers
In Russia Through a Lens, we focus on current key trends
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02
Russia through a lens
03
Russia through a lens | Russia in figures
Russia in figures
GDP
GDP per year
50%
150, 000
130, 000
25%
110, 000
8.2%
24%
24%
8.5%
5.2%
90, 000
–6%
–7.8%
12%
30, 000
10, 000
4.3%
4.5%
70, 000
59,698
50, 000
26,917
21,610
33,248
41,277 38,807
30%
29%
19%
3.5%
10%
6%
1.3%
4%
0.7%
–3.0%
77,803 81,287
66,927 71,017
–0.5%
–0.5%
80,881
10%
–10%
–30%
–50%
46,309
–70%
–90%
–110%
0
–130%
2005
GDP, bln RUB
2006
2007 2008 2009
GDP growth (at current prices)
2010 2011 2012 2014 2015 2016F
Source: Rosstat, Ministry of
Economic Development (forecast)
GDP volume indices
The data for the period from 2011 includes changes
related to the implementation of the international
methodology for housing services evaluation, the
evaluation of capital consumption taking into account
its current market value, and the conformation of
data on exports and imports with the data presented
2013 in the balance of payments developed
according to the methodology provided
by the Sixth Edition of the Balance of
Payments and International Investment
Position Manual (BPM6) introduced by the
International Monetary Fund.
4Q GDP
25,000
20,000
16,877
15,000
18,411
19,566
21,515
22,016
2014 2015 19,670
13,249
10,000
9,797
10,619
10,816
2007
2008 2009
7,480
5,000
2006
2010 2011 2012 2013 2016F*
Source: Rosstat, Ministry of
Economic Development (forecast)
GDP, bln RUB
• The Ministry of Economic
Development forecasts +0.2% in
2017, +0.9% in 2018, +1.2% in 2019.
Forecasts for 2016:
Ministry of
Central
Economic
Bank
Development
–0.5%
04
–0.3% to
–0.7%
Additional information:
Russian Academy of Standard & A. Kudrin,
Gaidar
International
Sciences Institute
Poors
ex-Minister Institute Monetary
of Economic
of Finance
Fund
Forecasting (IEF RAS)
JPMorgan
–1.0%
–0.6%
–1%
–1%
–2%
–0.8%
• The Central Bank forecasts +0.5
to 1%, the IMF forecasts +1.1%,
the EBRD forecasts +1.2%
and S&P forecasts +1.4% in 2017.
• The Institute of Economic
Forecasting of the Russian
Academy of Sciences (IEF RAS)
forecasts in 2017: +1.5%
in 2018: +2.2%.
Russia through a lens | Russia in figures
Inflation
Inflation, %
14.0
13.3
12.9
11.9
12.0
11.4
12.2
10.0
8.8
9.0
8.0
8.8
6.1
6.0
6.6
6.5
5.8
5.6
4.9
5.4
4.4
4.0
4
4
2017
2018
4.1
2.0
0.0
2006
2007
Rosstat (Fact)
2008
2009
2010
2011
Central Bank (forecast)
2012
2013
2014*
2015
2016
2019
2020
Ministry of Economic Development (forecast)
Forecast:
Source
2016
International Monetary Fund
5.9%
World Bank
7.1%
Gaidar Institute
6.5–7.0%
Gaidar Institute (Consumer Price Index)
7.7%
Inflation in November in 2016*: 5.8%
Inflation target** in 2017: 4%
*The inflation figure is the consumer price growth rate over the corresponding month of the previous year.
**The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Central Bank).
05
Russia through a lens | Russia in figures
Trade structure
Exports of energy products to non-CIS/CIS countries (2006–January to October 2016)
80
70
70.3
68.0
72.4
70.8
69.6
60
50
40
53.0
72.7
73.0
55.3
54.2
74.5
47.0
44.0
35.5
40.9
42.3
73.4
43.6
66.4
39.5
30
2006
2007
2008
2009
2010
Percentage in Exports to non-CIS countries
2011
2012
2013
Percentage in Exports to CIS countries
2014
62.5
32.8
2015
2016
Jan-Oct
Source: Federal Customs Service
Period Jan–Oct 2016
•• Foreign trade turnover: USD 376.2 billion (-15 percent YoY)
•• Trade balance: surplus of USD 79.7 billion (-USD 58.4 billion YoY)
•• Exports: USD 227.9 billion (-21.5 percent YoY)
•• Imports: USD 148.3 billion (-2.6 percent YoY)
Imports from non-CIS countries (period Jan–Oct 2016):
Percentage in imports
from non–CIS countries
In monetary
terms YoY
In physical
terms YoY
Textiles and
footwear
6.0%
–4.4%
–10.5%
Metal products
5.4%
–6.6%
–6.1%
Chemical products
19.2%
–1.4%
3.6%
Machinery and auto
49.9%
3.8%
N/A
Food and raw
materials for food
production
12.3%
–10.1%
–9.5%
Categories (in physical terms) YoY
•• Ferrous metals (– 4.5%)
••
••
••
••
••
••
••
••
••
Varnishes and paints (–6.0%)
Medicines (–2.0%)
Pharmacuticals (–1.2%)
Cars (–23.6%)
Trucks (–14.2%)
Beef (–24.1%)
Fish (–11.7%)
Cheese and curd (–17.5%)
Citrus plants (–5.0%)
Imports from CIS countries (period Jan–Oct 2016):
Percentage in imports
from CIS countries
In monetary
terms YoY
In physical
terms YoY
Energy products
4.0%
–68.0%
–14.5%
Metal products
13.8%
–1.6%
5.3%
Chemical products
14.5%
–14.5%
2.1%
Machinery and auto
22.8%
1.3%
N/A
Food and raw
materials for food
production
23.2%
N/A
9.9%
25.3%
38.5%
Textiles and
footwear
7.9%
Categories (in physical terms) YoY
•• Pipes (31.9%)
•• Flat rolled products of iron
or non-alloy steel (11.0%)
•• Products of organic chemistry (22.9%)
•• Plastics (27.2%)
•• Pharmacy (12.7%)
•• Varnishes and paints (–46.5%)
•• Mechanical equipment (–8.8%)
•• Electrical equipment (–1.8%)
•• Optical instruments and apparatus (–22.3%)
•• Cars (–26.3%)
•• Trucks (88.1%)
•• Pork (–82.8%)
•• Poultry (–9.7%)
•• Butter (3.0%)
•• Cheese (14.0%)
•• Citrus (–41.9%)
Source: Federal Customs Service
06
Russia through a lens | Russia in figures
Exports to non-CIS countries (period Jan–Oct 2016):
Percentage in exports
to non–CIS countries
In monetary
terms YoY
In physical
terms YoY
Energy products
62.5%
–27.6%
3.2%
Metal products
10.1%
–16.3%
5.5%
Chemical products
6.2%
–25.8%
–5.5%
Machinery and auto
6.3%
–7.2%
N/A
Food and raw
materials for their
production
5.2%
6.9%
14.0%
Timber, pulp and
paper products
3.4%
13.7%
N/A
Categories (in physical terms) YoY
•• Crude oil (7.6%)
•• Oil products (–9.8%)
•• Coal (8.6%)
•• Natural gas (11.7%)
•• Copper and copper alloys (–9.3%)
•• Flat iron non-alloy steel (12.2%)
•• Aluminum (6.7%)
•• Semi–finished products of iron
or non–alloy steel (3.9%)
•• Products of inorganic chemistry (6.6%)
•• Fertilizers (–7.4%)
•• Plastics (–7.8%)
•• Pharmaceutical (–13.5%)
•• Rubber (4.6%)
•• Mechanical equipment (–32.6%)
•• Ground transportation (54.3%)
•• Electrical equipment (19.2%)
•• Optical instruments and apparatus (21.6%)
••
••
••
••
••
Lumber (22.8%)
Plywood (14.3%)
Cellulose (2.4%)
Rough wood (7.6%)
Newsprint (–2.0%)
Exports to CIS countries (period Jan–Oct 2016):
Percentage in exports
to CIS countries
In monetary
terms YoY
In physical
terms YoY
Energy products
32.8%
–34.1%
–6.8%
Metal products
12.0%
–12.8%
–10.4%
Chemical products
16.1%
–4.5%
25.5%
Machinery and auto
15.3%
–22.8%
N/A
Food and raw
materials for food
production
11.1%
–4.2%
–0.5%
Timber, pulp and
paper products
4.6%
–6.9%
–8.5%
Categories (in physical terms) YoY
•• Oil products (–8.7%)
•• Coal (6.4%)
•• Electrical energy (–33.0%)
•• Natural gas (–19.1%)
•• Ferrous metals (–11.0%)
•• Rolled iron (2.2%)
•• Semi–finished products
of iron or non-alloy steel (–20.3%)
•• Copper and copper alloys (14.1%)
•• Pharmaceuticals (14.9%)
•• Products of inorganic chemistry (10.9%)
•• Products of organic chemistry (8.1%)
•• Fertilizers (17.7%)
•• Plastics (–2.1%)
•• Rubber (9.5%)
•• Mechanical equipment (–12.7%)
•• Ground transportation (–46.7%)
•• Milk and cream (30.6%)
•• Fish (11.0%)
•• Cheese and curd (4.1%)
•• Sunflower oil (14.0%)
•• Lumber (–19.4%)
•• Newsprint (–15.0%)
•• Cellulose (–7.3%)
Source: Federal Customs Service
07
Russia through a lens | Russia in figures
Currency rate
RUB vs. EUR and USD, Jan 2014 – Dec 2016
US dollar
31-Dec-16
1-Oct-16
1-Nov-16
1-Sep-16
1-Jul-16
1-Aug-16
1-Jun-16
1-Apr-16
1-May-16
1-Mar-16
1-Jan-16
1-Feb-16
1-Dec-15
1-Oct-15
1-Nov-15
1-Sep-15
1-Jul-15
1-Aug-15
1-Jun-15
1-Apr-15
1-May-15
1-Mar-15
1-Jan-15
1-Feb-15
1-Dec-14
1-Oct-14
1-Nov-14
1-Sep-14
1-Jul-14
1-Aug-14
1-Jun-14
1-Apr-14
1-May-14
1-Mar-14
1-Jan-14
Euro
1-Feb-14
100
90
80
70
60
50
40
30
20
10
0
Source: Central Bank of Russia
EUR-RUB
USD-RUB
100.00
80.00
72.39 –6%
60.00
75.79 –14%
67.98
66.11
65.52
–5% 63.10
69.70
–11%
62.09
40.00
20.00
0.00
Q4 2015
Q4 2016
Source: Central Bank of Russia
December
2015
December
2016
Q4 2015
Q4 2016
December
2015
USD-RUB forecasts
(average per year)
December
2016
EUR-RUB forecasts
(average per year)
Ministry of
Ministry of Gaidar Institute,
Economic
Finance
Ranepa and RFTA
Development
(base scenario)
Apecon (Economic
IEF RAS
Forecasting Agency)
2016
RUB 67.1
RUB 67.6
RUB 64
RUB 66.1
2016
RUB 72.7
2017
RUB 63.3
RUB 67.5
RUB 64.1
RUB 59.5
RUB 62
2017
RUB 68.2
2018
RUB 62.1
RUB 68.7
RUB 63.4
RUB 58.7
RUB 62
2018
RUB 68.2
2019
RUB 61.3
RUB 71.1
n/a
n/a
n/a
08
IEF RAS
Russia through a lens | Russia in figures
Central Bank key rate
Central Bank of Russia key rate, %
31-Dec-16
31-Oct-16
30-Nov-16
30-Sep-16
31-Jul-16
18-Aug-16
30-Jun-16
30-Apr-16
31-May-16
31-Mar-16
31-Jan-16
29-Feb-16
31-Dec-15
31-Oct-15
30-Nov-15
30-Sep-15
31-Jul-15
31-Aug-15
30-Jun-15
30-Apr-15
31-May-15
31-Mar-15
31-Jan-15
28-Feb-15
31-Dec-14
31-Oct-14
30-Nov-14
30-Sep-14
31-Jul-14
31-Aug-14
30-Jun-14
30-Apr-14
31-May-14
31-Mar-14
31-Jan-14
28-Feb-14
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0
Source: Central Bank of Russia
The refinancing rate is 10 percent
(from 19 September 2016).
From 1 January 2016, the Central Bank of Russia will
not set a separate value for the refinancing rate of the
Central Bank of Russia.
In accordance with the decision of the Board of
Directors of the Bank of Russia, effective 1 January
2016, the value of the refinancing rate of the Central
Bank of Russia will be equal to the key rate of the
Central Bank of Russia set at the respective date.
Indexes (daily): Jan 2014 – Dec 2016
2500
2300
2100
1900
1700
1500
1300
1100
900
700
MICEX Index, RUB
RTS Index, RUB
31-Dec-16
16-Nov-16
31-Oct-16
30-Sep-16
18-Aug-16
31-Jul-16
30-Jun-16
31-May-16
30-Apr-16
31-Mar-16
29-Feb-16
31-Jan-16
31-Dec-15
30-Nov-15
31-Oct-15
30-Sep-15
31-Aug-15
31-Jul-15
30-Jun-15
31-May-15
30-Apr-15
31-Mar-15
28-Feb-15
31-Jan-15
31-Dec-14
30-Nov-14
31-Oct-14
30-Sep-14
31-Aug-14
31-Jul-14
30-Jun-14
31-May-14
30-Apr-14
31-Mar-14
31-Jan-14
28-Feb-14
500
Source: Moscow Exchange
09
Russia through a lens | Russia in figures
Top-pricing (nickel, gold, aluminium)
Nickel
Maximum for the period
21,000
19,250
19,040 18,800
18,325
18,505
16,265 16,275
15,165
15,740
15,150 14,095 13,950
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
Nickel, LME, USD/t
May-16
Mar-16
Jul-15
Jun-15
Jun-15
Apr-15
May-15
Mar-15
Jan-15
Feb-15
Dec-14
Oct-14
Nov-14
Sep-14
Jul-14
Aug-14
Jun-14
Apr-14
May-14
Mar-14
Jan-14
Feb-14
7,000
Jan-16
9,000
Feb-16
11,000
11,395
12-year
11,170
minimum10,635 10,515
10,330
9,425
10,045
10,425
10,060
8,820 8,530
9,315 9,770
8,855 8,610 8,495 8,465
12,600
12,015
11,040
Dec-15
12,395
Oct-15
14,677
13,980
13,000
Nov-15
15,911
15,000
Sep-15
17,000
Aug-15
19,000
Source: Finam Holdings
Nickel forecast:
Source
2016
2017
Goldman Sachs
USD 8,500
USD 11,000
Morgan Stanley
USD 8,629
USD 9,921
World Bank
USD 9,200
USD 10,029
IMF
USD 8,506
USD 8,532
Gold and aluminium
Maximum for the period
2,300
2,097
2,100
2,037
2,014
1,920
1,864
1,815
1,853
1,740
1,785
1,691
1,950
Gold, COMEX, USD/t oz
Aluminium, LME, USD/t
Dec-16
Source: Finam Holdings
Gold forecasts:
Source
2016
2017
Morgan Stanley
USD 1,149
USD 1,300
Barclays
USD 1,150
N/A
HSBC
USD 1,205
N/A
World Bank
USD 1,250
USD 1,219
Goldman Sachs Group
USD 1,280
USD 1,250
Aluminium forecasts:
Source
2016
2017
2018
Goldman Sachs Group
USD 1,450
USD 1,600
USD 1,350
World Bank
USD 1,575
USD 1,626
USD 1,679
Morgan Stanley
USD 1,543
USD 1,620
USD 1,764
IMF
USD 1,548
USD 1,586
USD 1,630
10
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jan-14
900
Jul-14
1,100
Jun-14
1,300
May-14
1,500
Apr-14
Minimum for the period
1,737
1,737
1,673
1,672 1,626
1,605
1,731
1,572
1,572
1,620
1,501
1,640 1,615
1,481
1,521 1,557
1,501
1,357 1,319
1,449
1,329
1,289 1,328 1,288
1,277
1,284
1,245 1,295 1,323
1,313
1,192
1,285
1,187
1,183
1,177
1,246
1,142
1,142
1,251 1,284 1,207
1,233 1,217
1,214 1,182 1,174
1,151
1,122
1,114
1,174
1,139
1,095
1,071
1,061
Mar-14
1,700
Feb-14
1,900
1,988
1,800 1,891
1,784
1,829
1,754
1,706
Russia through a lens | Russia in figures
Top-pricing (oil, gas)
Brent oil, natural gas
120
110
100
106
4.9
109
4.6
90
109
108 108
4.8
112
Maximum for the period
106
6
103
95
4.6
5
86
4.4
80
4.4
70
4.0 4.1
4.0
3.9
3.8
68
60
58
50
65
3.5
53
50
52
48
2.8
2.9
2.7 2.7 2.7 2.7
30
63
55
53
40
4
67
62
2.7 2.7
2.6
Minimum for
the period
45
2.5
20
2.3
2.3
38 36 37
2.4
2.2
47 50
50 49
47
50
3.0 43
2.9
2.8 2.9
40
3.3
54
52
3
3.0
2
2.3
2.1
Brent crude oil, ICE, USD/bbl
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
1
May-16
Jan-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Mar-15
Jan-15
Feb-15
Dec-14
Oct-14
Nov-14
Sep-14
Jul-14
Aug-14
Jun-14
Apr-14
May-14
Mar-14
Jan-14
Feb-14
Natural gas, NYMEX, USD/mmbtu
Feb-16
1.7
0
2.0
Mar-16
10
Source: Finam Holdings
Natural gas forecasts:
Source
2016
2017
2018
World Bank
USD 2.3
USD 3
USD 3.5
Standard & Poors
USD 3
USD 3.25
N/A
EIU
USD 2.3
USD 2.7
USD 3.3
Crude oil forecasts:
Source
2016
2017
2018
U.S. Energy Information
Administration
USD 42.54
USD 51.58
N/A
World Bank
USD 43
USD 55
USD 59.9
Central Bank of the Russian
Federation
Ministry of Economic
Development
Base scenario: USD 40
USD 41.8
USD 48
USD 52
USD 42.5
USD 51.58
USD 50
IMF
USD 43
USD 50.6
USD 53.1
European Central Bank
USD 42.8
USD 47.4
USD 50.6
Goldman Sachs
USD 43
USD 53
N/A
IEF RAS
USD 44
USD 55
USD 59.3
11
Russia through a lens | Research Centre market analysis
Research Centre
market analysis
CFO Survey
Key findings
FINANCIAL PROSPECTS
FOR 2017
KEY FINANCIAL
METRICS
UNCERTAINTY AND
RISKY DECISIONS
The general mood is somewhat
optimistic:
Overall, the perceptions are quite
optimistic. The share of respondents
expecting growth in operating profits has
increased by 16 pp.
During the second half of 2016, the
aggregate level of certainty about strategic
business decisions grew nearly twice,
with the overall level of uncertainty
falling by 42 pp.
•• 64 percent of the CFOs do not anticipate
any positive developments
•• 36 percent believe that their company’s
financial prospects are likely to change
for the better
•• 61 percent of the CFOs anticipate higher
operating profits in 2017, and only
16 percent forecast weaker financial
performance
The real estate sector is facing
a weakened position:
•• 78 percent expect an increase in their
real income
•• The share of pessimistic answers
grew by 12 pp.
The best-performing industries are:
•• Oil and gas sector (45 pp up)
•• Banking sector (8 pp up)
•• Manufacturing sector (40 pp up)
In the second half of 2016, the
majority of respondents (55 percent)
still believed that the best conditions
for business can be found abroad.
However, Russia has become more
appealing to businesses as compared
with the beginning of the year (19 pp up).
•• In general, the attractiveness of the USA
for business in the current economic
climate is rated somewhat higher.
•• The EU countries are seen as the least
attractive region in terms of business
outlook.
12
Negative trends in human resources
policies are giving way to more stability
and optimism. Companies are striving to
retain both the number of staff and the
wage/salary levels.
•• The share of respondents planning staff
cuts has fallen by 10 pp
•• The number of companies planning to
reduce wages/salaries has fallen by 7 pp
•• Almost a quarter of the CFOs (24 percent)
intend to increase their staff numbers
•• Almost half of the respondents
(49 percent) plan to increase
wages/salaries
Driven by rising certainty levels, risk
appetites have grown significantly over
the last six months.
•• 47 percent of CFOs think that Q4 2016
is a good time to make risky decisions
•• The number of respondents
demonstrating a high risk appetite has
gone up 33 pp since two years ago
Overall, lower uncertainty and a higher risk
appetite suggest that top managers of the
leading Russian companies prefer to make
carefully considered decisions.
The top-five risk factors that had the
greatest negative effect on business
development in Russia in 2016:
•• Stress in the financial system
•• Weaker domestic demand
•• Deterioration of cash flow
•• Dwindling operating income
•• Weak Russian rouble
Russia through a lens | Research Centre market analysis
STRATEGIES
AND RISKS
DRIVERS AND
BARRIERS
SOURCES OF
FINANCING
The survey shows that 56 percent of
companies have special measures in place
to manage currency risks.
In the second half of 2016, weakening
domestic demand became a significant
barrier to business development in Russia.
The trend from early 2016 continued,
with bank borrowing becoming
more attractive
CFOs that consider now to be a
good time to take risky decisions are
more interested in strategies such as:
Cost minimisation strategies remain
the key driver for business development
in Russia. Yet the latest survey shows
that strategies aimed at increasing
production in Russia have become
an important driver.
•• On-going cost control
•• Cost cutting
•• Increasing cash flow
The top-three risk factors that had the
highest negative effect on large business
in Russia in 2016:
In 2015 and the second half of 2016, the
barriers to the recovery of businesses in
Russia still outnumbered the drivers.
•• Weaker foreign demand
Drivers of business development
in Russia in 2016:
•• Cost of capital
•• Optimisation of production costs
•• Russian deoffshorisation law
•• Increasing production in Russia
The top-three anti-crisis strategies
in Russia in 2016:
•• Organic growth
•• Cost cutting
Barriers to business development
in Russia in 2016:
•• Reducing leverage
•• Financial condition
•• Reducing financial risks (interest
rates, derivatives, etc.)
•• Weaker domestic demand
•• The attractiveness of this source of
financing grew by 22 percentage points
Internal financing remains the most
attractive source of funding despite a drop
of 11 percentage points.
Loans from companies or private
individuals have become more
attractive to the respondents
•• The attractiveness of this
source of financing grew
by 25 percentage points
Foreign investments remain
essentially just as attractive, with a
measured positive outlook
•• The attractiveness of this source
of financing grew by 7 percentage points
•• Weak Russian rouble
Overall, 51 percent of companies
participating in our survey plan to expand
the geography of business relations.
13
Russia through a lens | Research Centre market analysis
Media consumption in Russia
Key findings
DURATION OF MEDIA SOURCE USAGE
MEDIA USAGE TRENDS 2016
Overall media consumption in Russia
continues to grow, however, 2016 saw a
slowdown in media usage growth compared
to 2015 (from 8% to 6%).
The slowest growth (by 6 to 7%) was seen
in the following leisure activities:
TV
Work day
2hours 10 minutes
Rest day
3hours 35 minutes
cinema visits
Internet
Compared to 2015
–7 minutes
Unchanged
Single Russians tend to watch less TV (7%).
reading printed books
St. Petersburg residents have begun to watch
more TV (media usage index of 17%).
reading printed media
video games
The number of people watching news
programmes fell 0.4%, socio-political
broadcasts – 0.2% and professional
programmes – 0.2%.
MEDIA USAGE INCREASED*
Primarily in the following segments:
Internet 62%
electronic books 31%
video games
4%
Radio
Work day
1 hour 33 minutes
Rest day
MEDIA USAGE DECLINED*
1 hours 25 minutes
In the following segments:
printed media
–24%
printed books
–16%
TV
–8%
radio
–4%
*according to the media usage index [proportion
of those who indicated higher usage minus the
proportion of those who indicated lower usage]
14
Work day
3hours 42 minutes
Rest day
4hours 24 minutes
Compared to 2015
–18 minutes
–7 minutes
Internet activity is growing among senior
respondents (media usage index of 72–73%
for respondents aged over 60).
Compared to 2015, laptop and PC users’
average time spent on the Internet fell
by 13 and 14 minutes, respectively.
However, smartphone users have started
to spend more time on the Internet
(18 minutes per day).
Printed books
Compared to 2015
–3 minutes
–2 minutes
Work day
26 minutes
Rest day
35 minutes
Compared to 2015
Unchanged
–1 minute
Respondents aged 20-24 and St. Petersburg
residents tend to listen to the radio
more (14 and 15%, respectively).
Respondents aged over 45 tend to read
less printed books (media usage index
of –22 to –28%).
The greatest decline in interest towards
radio was shown among senior respondents
aged 65 and over (media usage index of 24%).
Respondents from St. Petersburg
(media usage index of 17%) and those
aged 20-24 read printed books more
often (media usage index – 14%).
Russia through a lens | Research Centre market analysis
SMARTPHONES
TRUST IN THE MASS MEDIA
Mass media ranked by trust level:
Top-3 most commonly used
smartphone features*:
Mobile calls
21%
Messengers (WhatsApp, Viber
and social network messengers)
15%
Social network applications
12%
* according to the features usage index
(proportion of those using a function more often
minus the proportion of those using it less often)]
News, analysis, official
Internet websites
35%
TV
28%
Social networks and Internet blogs
13%
Opinions of others/acquaintances
8%
Newspapers/
magazines/radio
from 1% to 3%
ADVERTISING
General advertising tolerance
in Russia is –7%, which indicates persisting
negative sentiment towards advertising:
•• Tolerance is lowest towards radio and TV
advertising (–16 and –17%, respectively);
•• Russians are more tolerant towards ads
in the printed media (3%) and outdoor
ads (9%).
In 2016, overall advertising effectiveness in
Russia fell to 6%, indicating that the majority
of Russians do not find advertising information
valuable. This figure is growing.
•• TV advertisement was deemed to be
the most effective: the largest share
of Russians claimed to have found
information in TV advertisements
valuable (effectiveness index at 7%).
•• Internet advertising ranked second.
According to respondents, Internet
ad effectiveness has dropped
3-fold (from 15 to 5%)
Audience tolerance ranked
by media source:
Television
youngsters aged 16-19
Printed media
Women
People aged
30-34
55-59
Internet
Middle-aged people
35-39
Television is the most effective
tool for advertising:
10%
10%
9%
11%
2%
Radio
youngsters aged 16-19
–3%
20-24
–5%
Outdoor advertising
Women
12%
Middle-aged people
food
59%
pharmaceuticals
50%
household goods
43%
The Internet is the most effective
tool for advertising:
electronics
48%
clothes
46%
appliances
41%
services
40%
The radio is the most effective
tool for advertising:
services
43%
Printed media is the most effective
tool for advertising:
30-39
14-15%
services
43%
50-54
16%
cosmetics/perfumery
31%
People aged
65+
21%
Outdoor advertising is the most
effective tool for advertising:
*according to the advertising tolerance index
[proportion of those favouring advertising minus
the proportion of those who disapprove]
services
32%
electronics
30%
household goods
30%
food
30%
15
Russia through a lens | Research Centre market analysis
Innovations in Russian agribusiness
Global investor interest in the agribusiness
sector has grown over the past three to five
years. This is reflected in the establishment
of new institutions and venture funds
investing in agricultural research projects.
Twenty years ago, investments were
flooding into IT, and ten years ago, red
biotechnology was soaking up investors’
capital. However, over the past five years
the flow has shifted towards R&D in
agriculture. The largest funds in Russia
include Skolkovo, RBK, VEB Innovations,
The Foundation for Assistance for Small
Innovative Enterprises and the Internet
Initiatives Development Fund.
A great deal of interest in Russian
agribusiness has also been shown by
private Russian and foreign investors.
Foreign companies and entrepreneurs
have invested in Russian companies such
as RAV Agro-Pro, Sistema, Cherkizovo
Group and others.
Furthermore, agricultural intensification is
clearly beginning to outpace the global rate
of population growth, and new technology
is a key factor in this.
NEEDS:
Factors that drive innovation:
•• Innovations and reputation on the
market
•• Research and engineering capabilities
•• Government recognition of the
importance of technology uptake
•• The appearance of platforms for
cooperation between producers and
consumers of technology
Barriers to innovation:
•• The lack of a comprehensive approach
towards technological development
•• HR problems (the average age of
agribusiness workers is 43, salaries are
58 percent of the average Russian salary)
•• Problems with the quality of basic
Russian equipment
•• Difficulties in working with start-ups
Amelioration
Cultivation and breeding
Automation
RELEVANT TECHNOLOGY:
DIGITALIZATION
BIG DATA
BIOTECH
GENTECH
ROBOTECH
TRENDS:
Precision agriculture
Individualized nutrition
Biofuel
Biopesticides
Advanced processing
Energy conservation
Biofertilizers
Genetic data accumulation and handling
16
“Smart” farms
Biopharmaceuticals
Russia through a lens | Research Centre market analysis
Companies with intangible assets
Key findings
The companies’ overall level of economic confidence
stands at 80 percent.
The overall outlook index amounts to 60 percent,
suggesting that positive changes are expected in 2017.
For an absolute majority of the companies that participated in our survey, intangible assets
do not form the core business activity (82 percent). For fifty percent they are an essential
component of the business and for 32 percent they constitute a company initiative to
improve competitiveness.
Top-five intangible assets:
•• Trademark (100 percent)
•• Company website (62 percent)
•• Computer program (62 percent)
•• Patent (52 percent)
•• Know-how (48 percent)
The reason that best describes why
most companies work with
intangible assets (50 percent):
Intangible assets are a means to
improve the company’s non-financial
competitiveness (market reputation,
visibility, etc.).
70%
of companies spend less than 1 percent of annual revenues on intangible assets.
The remaining 30 percent report that intangible asset expenses exceed 1 percent
of annual revenues. Of this 30 percent, the majority (33 percent) spend 5 percent
of revenues on intangibles.
78%
of companies report that the share of intangibles in the total assets is less
than 1 percent, while only 22 percent of companies note a share of intangibles
in the total assets that exceeds 1 percent. Among the companies with a
share exceeding 1 percent, 40 percent have overall assets that consist
entirely of intangibles.
The most popular sources of information on intangible assets are
professional online resources and consultants specialising in intangible assets
(95 percent and 76 percent respectively).
17
Russia through a lens | Research Centre market analysis
The most frequent practice in working with intangibles is obtaining
rights of use from foreign companies (62 percent). Obtaining rights
of use from Russian companies (52 percent) is the second most
frequent practice, and in third place comes the independent creation
of intangible assets with or without the subsequent transfer of rights
to a Russian and/or foreign company (38 percent and 33 percent
respectively).
Companies use both external and internal resources
to register rights of use over intangible assets:
Top-five reason for using/registering intangible
assets:
75%
of companies report that they engage experts
to register rights of use over intangible assets.
•• To defend intangible assets from use by competitors
65%
of companies report that they have used internal
resources to register rights of use over intangible
assets.
•• As part of an international initiative
The general popularity of intangible asset use
in Russia (across various sectors of the economy)
stands at 62 percent.
60%
•• To increase the demand for goods/services
•• To launch a new product
•• To reduce business risks
The key problem for companies registering
rights to use over intangible assets is the
long registration process (75 percent):
of the surveyed companies face difficulties when
managing intangible assets.
• Number of months spent on registering
rights: 14
Companies most frequently face problems at the
following stages when managing intangible assets:
• Number of employees engaged in the
registration of rights: 4.1
•• Identification and classification (47 percent)
•• Determining the value of intangible assets (37 percent)
•• Accounting for intangible assets (26 percent)
81%
of companies report that they use their own resources
to value intangible assets.
On average, 2.4 people participate in the intangible
asset valuation process, which takes an average
of 2.7 months.
Top-five problems when working
with intangible assets:
•• Long process for registering rights
to use intangible assets
•• Lack of information about intangible asset
management in Russia
•• Lack of legal regulation for intangible assets in Russia
•• Poor quality information on intangible asset
management in Russia
•• Low level of legal protection
The overall complexity rating of working
with intangible assets stands at 3.1 out of
5, which suggests that companies
experience difficulties on a fairly regular
basis when working with intangible assets.
18
Russia through a lens | Research Centre market analysis
95%
of survey participants have never been involved in court
proceedings involving intangible assets.
90%
of survey participants note a positive effect from holding rights
of use over intangible assets; 10 percent report that it has no
influence on the company’s position.
Half of companies (50 percent) are not planning to make any
changes to their accounting policies as regards expenses on
intangible assets. At the same time, 28 percent note plans to
increase investment in intangible assets, while 22 percent intend to
reduce expenses on intangible assets.
Top-three territories for intangible asset development:
•• EU (60 percent)
•• Russia (53 percent)
•• USA (27 percent)
Top-three territories for intangible asset registration:
•• Russia (86 percent)
•• EU (43 percent)
•• Other CIS member states (29 percent)
93%
of companies participating in the survey note that BEPS-related
changes to the international taxation system and the government’s
deoffshorisation measures have had no effect on their companies’
operations. At the same time, 7 percent of companies note a
negative effect. No companies reported positive effects resulting
from the introduction of these changes.
19
Russia through a lens | Research Centre market analysis
Businessmen on the banks
Key findings
Our research into the interaction between small and
medium-sized enterprises and the banking industry
Statistical portrait of SMEs in Russia
Portrait
In 2016 the threshold revenues for legal
entities and individuals were revised:
Microbusiness:
<120 million roubles per annum
Key activities of SMEs (small and
medium-sized enterprises) in Russia
(by number of companies, excluding
individual entrepreneurs):
Small business:
<800 million roubles per annum
Trade (wholesale and retail)
45%
Real estate sales, rental and services
23%
Medium-sized business:
< 2 billion roubles per annum
Construction 13%
Manufacturing 11%
Transport and communications
8%
Trends
The number of SMEs grew by
between 2010 and 2016.
60%
5.67
million companies:
the number of SMEs registered
as at 1 September 2016.
95%
of SMEs are
microbusinesses.
41.9 trillion roubles: SMEs’
turnover (revenue) from the sale
of goods (work and services)
as at 1 January 2015.
Today
Business climate in Russia
The business climate in 2016 is largely favourable: the overall state
of business index stands at 52 percent.
The most favourable business
climate is reported by:
The least favourable business
climate is reported by:
•• Medium-sized businesses (by 8 pp)*
•• Small businesses (by 5 pp)
•• Companies in Siberian and Far Eastern
Federal Districts (by 14 pp and 7 pp
respectively)
•• Companies in Ural and Southern Federal
Districts (by 7 pp and 5 pp respectively)
•• Companies in the service sector (by 5 pp)
•• Companies in the manufacturing
sector (by 6 pp)
* Subgroups comparisons are made against the
average indicator for the overall sample.
Tomorrow
Expectations among SMEs are positive: the overall confidence index
for 2017 stands at 53 percent.
Optimism about 2017 prevails among:
•• Medium-sized businesses (by 5 pp)
Pessimism about 2017 prevails
among:
•• Respondents who view the
current condition of their business
positively (by 9 pp)
•• Respondents who view the
current condition of their business
negatively (by 63 pp)
•• Companies in Siberian and Far-Eastern
Federal Districts (by 7 pp and 13 pp
respectively).
•• Companies in Ural Federal
District (by 5 pp)
20
Russia through a lens | Research Centre market analysis
SMEs and external financing
62% of respondents attracted thirdparty capital over the past three years:
•• 65 percent of them turned to banks
for loans
•• 27 percent of them attracted funds
from private third-party investors
•• 8 percent of them took loans
from microfinance institutions
40%
the demand for financing from
banks among SMEs over the past three
years. Higher demand was observed
among:
•• Medium-sized businesses (46 percent)
•• Wholesalers and manufacturers
(50 percent and 52 percent respectively)
17% the demand for financing from
private investors.
5% the demand for financing from
microfinance institutions. Greater interest
in microfinance institutions was reported in
Siberian Federal District (12 percent)
55%
the potential demand for bank
loans (based on company financing plans
for 2017). Higher potential demand was
observed among:
•• Respondents in Ural and Siberian Federal
Districts (65 percent and 63 percent
respectively)
•• Manufacturers and construction
companies (64 percent)
45%
the potential demand for private
investment. Higher potential demand was
observed in:
•• Siberian Federal District (53 percent)
•• The construction sector (56 percent)
17%
the potential demand for loans
from microfinance institutions. Higher
demand was observed in Northwestern
Federal District (30 percent).
15%
the potential demand
for crowdfunding.
90%** of respondents were satisfied
with the amount of credit approved despite
the fact that 41 percent of them received
only part of the requested amount.
Trend
Companies whose loans were only
partially approved are more likely
to consider the current state of
their business to be negative (by 5
pp) and/or forecast a deterioration
in their business position in 2017
(by 7 pp). Despite the fact that
45 percent of respondents are
not planning to attract external
financing to support and grow their
businesses, access to financing
and financial infrastructure are
important factors for SMEs both
when assessing their current
business conditions, and when
forming economic expectations.
Optimism prevails in:
•• Ural Federal District (94 percent)
•• The real estate sector (94 percent)
10%** of respondents were
unsatisfied with the amount of credit
approved.
Pessimism prevails among:
•• Microbusinesses (16 percent)
•• Companies in Siberian
Federal District (15 percent)
** Among respondents that applied for loans
(62 percent of the overall sample).
21
Russia through a lens | Research Centre market analysis
Growth in financial services
among SMEs
Technological environment
for SME banking
69% of companies are clients
86% of respondents report that
The use of mobile devices for internet
banking is more attractive to small and
medium-sized businesses.
•• Siberian Federal District (57 percent)
•• Medium-sized businesses (89 percent)
Representatives of small businesses
are more likely to use internet
banking through smartphones (by 5 pp),
while 31 percent of respondents from this
group consider it more convenient to access
internet banking services through a tablet.
of respondents switched banks
for more favourable terms of service.
of more than one bank. A higher
proportion of such companies is found
among:
•• Companies in Siberian, Northwestern,
Volga and Ural Federal Districts
(94 percent, 84 percent, 82 percent
and 76 percent respectively)
•• Companies in the service
sector (85 percent)
26% of companies are served
the main device used for internet
banking is a computer/laptop.
by a single bank. A higher proportion
of such companies is found among:
Potential users of internet banking
applications for smartphones and tablets
are most likely to be found in:
•• Microbusinesses (37 percent)
•• Northwestern Federal District
•• Companies in Far-Eastern and
Central Federal Districts (40 percent
and 35 percent respectively)
•• The retail, transport and service sectors
Loyalty towards banks
47%
of respondents have needed
to switch banks over the past five years.
This is most commonly observed in:
•• The wholesale sector (55 percent)
69%
27%
of respondents switched banks
due to poor service quality.
13% of respondents were forced to
switch banks as a result of their bank’s
licence being revoked.
8%
the average loyalty index among
SMEs towards their current bank. Greater
loyalty is reported by:
•• Microbusinesses (14 percent)
•• Companies in the real estate sector and
the transport and communications sector
(42 percent and 39 percent respectively)
•• The transport and communications
sector (28 percent) and manufacturers
(14 percent)
Top-10 banks serving SMEs:
•• Companies from Far-Eastern, Siberian
and Ural Federal Districts (15 percent,
14 percent and 14 percent respectively)
•• Sberbank of Russia (69 percent)
•• V TB 24 (28 percent)
A lower degree of loyalty is reported by:
•• Alfa Bank (21 percent)
•• Medium-sized businesses (2 percent)
•• V TB (8 percent)
•• The construction and wholesaler sectors
(–4 percent and 2 percent respectively)
•• Promsvyazbank (8 percent)
•• Rosselkhozbank (8 percent)
•• Raiffaisenbank (8 percent)
•• Gazprombank (6 percent)
•• B&N Bank (5 percent)
•• Rosbank (5 percent)
22
•• Companies from Northwestern and
Southern Federal Districts (–12 percent
and –15 percent respectively)
Russia through a lens | Research Centre market analysis
SME satisfaction with the banking sector
3,1 out of 5: the overall rating for banking
infrastructure (which is slightly higher than
average).
SME satisfaction with interaction
with banks in Russia
The main stages at which problems
arise:
•• Receiving loans (33 percent)
The most highly rated criteria were:
•• Settlement and cash services (27 percent)
•• The adequacy of banking products
for SMEs (3.24 out of 5)
•• Activating additional services (27 percent)
•• The quality of banking products
(3.24 out of 5)
•• The reliability of information on banking
products (3.21 out of 5)
The following criteria received
the lowest quality ratings:
•• The flexibility of banking products
in a dynamic business environment
(2.95 out of 5)
•• The attractiveness of banking products
for SMEs (3.04 out of 5)
•• The accessibility of banking products for
SMEs (as regards pricing) (3.04 out of 5)
71%
of respondents report that
they have experienced problems
with banking services. The majority of
them note that these problems arise
rarely or sometimes (47 percent and
42 percent respectively). Those most likely
to experience problems are:
•• Companies in Siberian and Ural Federal
Districts (by 11 pp and 7 pp respectively)
Top-10 problems arising during banking
services for SMEs in Russia:
•• Unfavourable credit proposals
for SMEs in general
•• Bureaucratic complications when
opening current accounts
•• Technical problems in Bank-Client systems
(particularly in remote banking services)
•• Unprofessional/incompetent banking staff
•• Declined credit
•• Inadequate amounts of credit approved
•• Lengthy process for opening current
accounts
•• Revocation of the bank’s licence
63% the overall level of SME satisfaction
with banking services.
Respondents served by a single banks
are distinguished by more comprehensive
expectations of banking services than those
who are served by a number of banks (the
level of satisfaction is 12 pp higher).
Areas of banking service in which key
deficiencies were identified:
•• Access to/flexibility of credit programmes
for SMEs (33 percent)
•• Comprehensiveness of information in SME
sections on bank websites (39 percent)
•• Cost of banking services for SMEs
(39 percent)
•• Availability of innovative banking products
for SMEs (42 percent)
•• Availability of additional services for SMEs
(acquiring, accounting support, payroll
card programmes, etc.) (47 percent)
•• Low quality of bank consulting services on
opening accounts and other issues arising
for SMEs before entering into a services
agreement
•• Difficulties in selecting a bank
(uncertainty)
•• Wholesalers (by 9 pp)
23
Russia through a lens | Research Centre market analysis
How SMEs choose a bank in Russia
Top-10 factors affecting SMEs’
choice of bank:
•• Bank reputation
•• Cost of banking services for SMEs
•• Length of experience on the market
52%
of respondents have a high degree
of certainty when selecting their bank. The
proportion of such respondents is higher
among:
•• Medium-sized businesses (by 6 pp)
•• Efficiency of services for SMEs
•• Companies in the construction sector (by
15 pp)
•• Positive experience of working with the
bank (including as an individual)
•• Companies in Southern Federal District
(by 9 pp)
•• Professionalism of the managers on SME
issues
•• Positive reviews and recommendations
from colleagues, business partners and
acquaintances
•• Access to/flexibility of credit programmes
for SMEs
•• Trusted relationships with the bank/
personal contacts
•• Interface and convenience of internet
banking
24
48%
of respondents are uncertain
about their choice of bank. The proportion
of such correspondents is higher among:
•• Microbusinesses (53 percent)
•• Wholesalers (by 13 pp) and
manufacturers (by 11 pp)
•• Companies in Volga Federal
District (by 16 pp)
Overall, SMEs are most likely to consider the
following banks
•• V TB 24 (19%)
•• Alfa Bank (16%)
•• Sberbank (16%)
•• Gazprombank (13%)
•• Rosselkhozbank (12%)
•• Promsvyazbank (11%)
•• V TB (11%)
•• Raiffeisenbank (10%)
•• Tinkoff Bank (8%)
•• B&N Bank (6%)
Russia through a lens | Research Centre market analysis
Sources of information
Top-three sources of information when
choosing a bank:
•• Recommendations from own accountant/
lawyer (32 percent)
•• Information received upon a personal visit
to the bank’s office (30 percent)
•• Recommendations from friends/business
acquaintances (24 percent)
Key defects in online banking
resources for SMEs:
•• Inadequacy of information on websites (an
example from a review of the Sberbank
SME webpages: “The information on the
website is too vague. We can’t even find
out how to open an account and how
much it costs”)
•• Unstructured information (an example
from a review of the SME Bank and
Promsvyazbank webpages for SMEs:
“There is a lot of information and a lot of
pop-ups. Who is going to read it all?”, and
on the equivalent Tinkoff Bank pages:
“There is a lot of information, you click on a
tab and the website takes you somewhere
else… Then you have to go back up or
down to understand what you’re looking
at and where you are on the page”)
•• Complicated presentation of information
on websites (an example from a review of
the pages on settlement and cash services
on the VTB 24 website: “It’s very simple to
open an account, but I lost a lot of time
trying to work out what they were trying to
say”)
•• A lack of specific information on required
documents and service fees
•• Being required to leave personal details
to receive more detailed information (the
majority of respondents do not want to
leave their details before making a final
decision to work with a given bank)
By integrating the results for various data
sets, we found that there is a certain
breakdown in communications between
SMEs and banks.
This problem is the result of specific
infrastructural features of the market that
are based on a poor understanding of the
typical Russian businessman, particularly
the diversity of businessmen depending
on both sociodemographic processes in
business and the personal characteristics of
each respondent.
One way to solve this problem is the
creation of an infrastructure centre (a
disinterested party) to ensure effective
interaction between banks and SMEs and
promote smooth operations for SMEs.
Our research reveals the issues on which an
infrastructure centre would be of most help
to SMEs in Russia:
•• Bookkeeping (92 percent)
•• Tax optimisation (92 percent)
•• Business planning and strategic
management (91 percent)
•• Security checks (89 percent)
•• Marketing (89 percent)
•• Financial support (88 percent)
•• Legal support (88 percent)
•• Banking services (88 percent)
Initial demand for intermediary services
between banks and SMEs stands at 33
percent: one in three businessmen would
value access to help from external experts
through, for example, a central company
offering businesses comprehensive
support.
•• A lack of trust in the reliability of the
information provided by bank specialists
25
Russia through a lens | Research Centre market analysis
Top M&As*
(Russian companies)
Target company Industry
Bidder
company
Seller company
Deal value Additional information
(USD, mln)
Rosneft Oil
Company OAO
(19.5% stake)
E&R
A consortium
led by Qatar
Investment
Authority
Rosneftegaz OAO
11270
Bashneft
ANK OAO
(50.08% stake)
E&R
Rosneft Oil
Company
OAO
The Federal Agency 6622
for State Property
Management
Bashneft
ANK OAO
(31.2% stake)
E&R
Rosneft Oil
Company
OAO
3112
Rosneft Oil Company OAO has launched a mandatory
offer to acquire a 31.2% stake in Bashneft ANK OAO
from its minority shareholders.
Arkhangelskgeoldobycha OAO
E&R
Otkritie
Holding JSC
Lukoil OAO
1450
The transaction will allow Lukoil to effectively
monetise the significant shareholder value that it
has created over the past five years, by divesting
this non-core asset. The transaction is a strategic
investment in an attractive asset for Otkritie with
potential for further development. The transaction
diversifies Otkritie’s range of business interests as the
largest privately-owned financial company in Russia.
Post deal, Mr. Dmitry Romaev, a member of Otkritie
Holding’s Board of Directors, will be responsible for
the strategic management of the diamond mining
company.
M.Video
CB
Safmar
Financial &
Investment
Group
Alexander
Tynkovan (private
investor); Mikhail
Tynkovan (private
investor); Pavel
Breev (private
investor)
1206
The transaction will enable M.Video to achieve new
and aspiring goals in addition to fresh investment
from Safmar, which will help the company reach
new levels. The transaction will enable Safmar to
develop its business in the non-food retail sector.
The experience and expertise of the professional
management team of M.Video will benefit Safmar.
*Open information about deal value
Source: Merger Market
26
The acquisition provides Glencore with opportunities
in terms of infrastructure, logistics and global trading.
The proceeds of RUB 710.8bn (EUR 10.4bn) from the
disposal of the stake will be used to cover the state
budget deficit. The acquisition is in line with QIA’s
strategy to generate long-term financial returns and
to diversify their portfolio across geographies, sectors
and asset classes.
The decision was made by the government in the
wake of falling oil prices and to generate revenue,
thereby reducing its budget deficit. Rosneft
was initially banned by the government to bid
for the company as it would not reflect a real
privatisation deal, since Rosneft is 69.5% owned by
Rosimushchestvo which in turn is wholly owned by
the government. In October 2016, Rosneft received
approval from the government as well as its own
board of directors to take part in the privatisation
of Bashneft, since Rosneft and Lukoil were the only
potential bidders that could afford to purchase the
government’s stake in the company as well as meet
the conditions set out by the ministry.
Russia through a lens | Research Centre
Russiamarket
through
analysis
a lens
27
Russia through a lens | Research Centre market analysis
Global wind
Top news: China and Russia
21 November 2016
Agricultural park in Penza Region
The total investment volume will amount to
CNY 1 bln (RUB 10 bln). The project will be
implemented within five years. Vanyan will
start the construction of the agricultural
park including a drying plant, grainery,
feed mill, pig-breeding complex, meat
processing plant and other agricultural
objects. (Source: TASS)
16 November 2016
Xiaomi spoke about plans to open an
office in Russia
Chinese smartphone manufacturer Xiaomi
is going to open an office in Russia. Lei Jun,
Xiaomi President, told TASS about it on
the sidelines of the Third World Internet
Conference. (Source: TASS)
28
11 November 2016
Alibaba will continue investments
in its Russian business
“Russia is a large and important market
for us and for our AliExpress business.
Russia is the first among the leading states
to perform trans-border purchases from
China via the AliExpress platform. We are
very active in our work with local partners.
And we will continue to be because the
Russian people like Chinese goods and we
can find very nice goods and offer them to
Russian customers.” – Zhan Daniel, CEO of
Alibaba Group. (Source: RIA Novosti)
11 November 2016
Investors will invest USD 500 mln in
Tigre de Cristal
Investors of the entertainment complex
Tigre de Cristal, the first object opened
in the integrated entertainment zone
Primorye, will invest over USD 500 mln
in the second stage of the project. The
Tigre de Cristal entertainment complex
became the first object opened within the
territory of the integrated entertainment
resort zone Primorye, one of the three
gambling zones established in Russia.
(Source: www.Primorsky.ru)
10 November 2016
China becomes the largest buyer
of Russian products
China has become the main buyer of
Russian food products in 2016, according
to the data of the Federal Customs
Service. From January to September
China bought USD 1.13 bln worth of food
products in Russia, which is 22.1 percent
more than during nine months of the
previous year. Thus, China’s share in
Russian agricultural exports reached 10.8
percent, according to the Russian Exports
Centre. Last year it was 9 percent for the
same period. At that time, Turkey was the
main importer of Russian foods, its share
being 11 percent. Currently, Turkey covers
9.1 percent. (Source: RBC)
Russia through a lens
Useful stickers regarding
innovations in Russia
Deloitte CIS advised S7 Airlines
(PJSC Siberia Airlines) on blockchain
technology application, and provided
legal support to the project.
On 20 December, S7 Airlines and AlfaBank closed a deal with the use of smart
contracts. Currently, many innovative
companies are engaged in blockchain
technology research and development.
However, today we witnessed a practical
application of the technology for letter
of credit settlements. Only a few similar
transactions have been completed globally
and this is the first one in Russia.
“China and Russia: Innovation and
Entrepreneurship” analytical report is
published by the Skolkovo Foundation
and Chinese TusPark.
The report includes an analysis of the
innovation systems of Russia and China,
and also describes the current status of
economic cooperation between the two
countries. Of particular interest are the
results of an information survey conducted
among Russian hi-tech startups regarding
cooperation with China.
Sberbank joins international
blockchain project
Under an agreement signed with the Linux
Foundation, Sberbank is joining the
Hyperledger Project.
Russia rises in global innovations
ranking
Russia ranked 48th (+8 positions) in
the 2016 Global Innovation Index (GII),
just ahead of Chile and Costa Rica and
immediately after the United Arab Emirates
and Turkey.
Other useful stickers
The Russian Economy Inches Forward:
Will That Suffice to Turn the Tide?
The latest Russia economic report
by the World Bank Group.
Doing Business 2017: Equal Opportunity for
All. Russia rose from 51st to 40th position.
29
Russia through a lens Contacts
30
Joe Pacelli
Partner
[email protected]
Marina Elovskaya
Senior Manager
[email protected]
Lora Zemlyanskaya
Research Centre Leader
[email protected]
Dmitriy Kasatkin
Research Specialist
[email protected]
Vladimir Sokolov
Research Specialist
[email protected]
Artyom Belyaev
Designer
[email protected]
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