Russia | 25.12.2007 /from d.welle
Booming Russian Economy Draws German Firms Eastward
Despite talk of deteriorating political relations, the Russian market is becoming increasingly important for Germany's economy. A new chamber of foreign trade has been set up to help German firms get started in Russia.
Profits resulting from commerce between the two countries rose by over 30 percent in 2006, making Russia Germany's biggest trade partner in eastern Europe.
Today, some 4,600 German companies have set up shop between Kaliningrad in western Russia and Vladivostok in Siberia, according to counts by the chambers of commerce.
Most recently, a new car factory was built in Kaluga, 300 kilometers (190 miles) away from Moscow, where Volkswagen will soon begin producing its Skoda-Octavia and VW-Passat models.
"The Russian economy is booming and the positive developments in the Russian Federation are improving conditions for trade relations and cooperation," said Fyodor Chorokordin, Russia's consul general to Germany.
There are opportunities in practically every sector, continued Chorokordin, "whether production, service or distribution."
Russia benefits from made-in-Germany
As far as investments go, however, there is a large discrepancy between the two countries. In 2006, German companies invested nearly $10 billion (seven billion euros) in Russia, while Russia invested only a tenth of that amount in Germany.
The main reason is that only a small group of Russia companies, predominantly in the machine sector, has settled in Germany. Many of these are made up of just a handful of Russian employees who have their permanent residence in Germany but sell modern German-made machine technology in their home country.
Machines and technology in Russia are outdated, said Chorokordin. "The Russian economy strongly relies on modern machines and German products, which have enjoyed a good reputation for a long time."
Barrier-free energy branch
Despite a growing economy, foreign companies looking to set up shop in Russia often complain of strict market regulations, excessive bureaucracy and monopolistic tendencies of state-run banks.
The energy sector, however, is an exception. Germany gets one third of its natural gas from Russia -- the country with the largest natural gas supply in the world -- and its energy need is increasing.
Though there is concern in Germany about becoming too dependent on Russian gas, Chorokordin sees the situation positively.
"Russia is just as dependent on Germany -- it's a mutual dependence," he said. "Dependence shouldn't be used for political pressure."
To ensure the regular delivery of natural gas, German energy companies E.ON, Ruhrgas and BASF have agreed together with Russia's state-run Gazprom to construct a pipeline off the coast of the Baltic Sea. Starting in 2010, over 27 billion cubic meters (950 billion cubit feet) of natural gas should flow from Vyborg near St. Petersburg to Greifswald in Germany.
Comments