IE Singapore’s perception
of Russia and Russian
consumerism
Hanly Chen
Centre Director
Moscow Overseas Centre
IE Singapore
10 April 2012
Let’s begin with.. what is your impression of Russia?
Bombings?
Language
and cultural
barriers??
Communism?
Corruption?
Logistics?
Bears?
Bureaucracy?
Mafia?
2
Putin’s era..
GDP per capital (USD)
Source: International Monetary Fund (http:www.imf.org)
3
Oil dependence of Russian GDP growth
Structure of the Russian
economy, % of the total (2010)
70%
97%
3%
No. of Employees
Source:RosStat, CBR
30%
Revenues
79%
21%
Fixed Capital
Investment
4
One of the biggest challenges for Singapore
companies operating in Russia – Forex risks
Historical exchange rates (RUB/SGD)
Source: Oanda
5
Bilateral trade between
Russia and Singapore
Singapore's total trade in Russian goods ('000 S$)
2011
2010
DX
2009
RX
Import
2008
2007
0
1,000
Source: IE Singapore Statlink
2,000
3,000
4,000
5,000
6,000
7
Singapore’s Trade with Russia in 2011 (S$4.7 billion)
(a) Main Exports to Russia (S$530 mn)
Source: IE Singapore Statlink
(b) Main Imports from Russia (S$4.2 bn)
8
Main game-changing
economic drivers in Russia
Russia’s accession into WTO in 2012
• Agreeing to abide by WTO rules, including:- non-discrimination, standards, sanitary and
phytosanitary measures, and the protection of
intellectual property rights.
• Average import tariff cut from 10% to 7.8%.
- Manufacturing: For manufactured
goods the average import tariff will
be cut from 9.5% to 7.3%
Remaining
42%
Date of
Accession
33%
After 3
years
25%
10
Hosting of a string of international events (2012-2020)
European part –
23% of the territory,
72% of the population
• Largest producer of oil ,
• 2nd largest exporter of oil
• Largest natural gas exporter
• Largest natural gas reserves
• 2nd largest coal reserves
• Largest lead reserves
• Largest diamond deposits
• 2nd largest potassium reserves
Moscow
11
How strong is the Russian
spending power??
Russia’s per-capita is one of the highest among
emerging markets
GDP (PPP) per capita (2011)
18,000
16,000
14,000
USD
12,000
10,000
8,000
6,000
4,000
2,000
0
Russia
Mexico
Turkey
Source: International Monetary Fund
Brazil
South Africa
China
Indonesia
India
13
Economic Indicators..
04-08 avg.
2009
2010
2011
Year-end inflation, %
11.3
11.7
6.9
6.1
Average annual dollar rate, ruble/$
27.4
30.2
30.4
29.4
GDP growth rate, %
7.0
-7.9
Import**, %, comp. annual growth
30.9
-34.0
($ 248.6 Bln)
13.8f
Fiscal Balance, % of GDP
5.7
-6.0
-4.6
+2.5
Average gross monthly wages, S$
484
866
897
1,023e
3.64%
0%
2.5%
3%e
Savings Ratio, % disposable income
Source: Russia Economic Development Ministry,
EIU, IIF, IMF, EDC Economics, Troika Dialog
3.8
11.2%
4.3
(USD 1.86 t.)
Essentially, their income is
increasing every year and it seems
like they are spending 97% of it!
14
Approximately 10 million households with income
>US$50,000 at PPP
No. of households (million) (USD
PPP’000, 2009 actual prices)
Source: CEEMEA Business Group
15
Change in population distribution by per capita
Source: Russia’s Federal State Statistics Service
16
Not to forget, Russia is a land of billionaires and
millionaires..
(%)
17
Customer Segmentation
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
18
What kind of houses do they live in?
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
19
What kind of cars do they drive?
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
20
Where do they eat & shop?
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
21
Basic Services
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
22
Supplementary Services
Modern
Source: Lomonosov Moscow State University Business School, Institute for Complex Strategic Studies
23
In Summary..
SMEs should start considering to export to Russia
market because:- Middle-class’ wealth is increasing
- Urban population is concentrated
(making it possible to achieve
economies of scale for distribution
and marketing efforts)
- Trade barriers are being lowered
due to WTO
- Non-resident domestic demand being generated
from international events being hosted in Russia
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We are here to facilitate your market entry into
global markets via IE Singapore’s network
Offices worldwide
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* Represented by Honorary Business Representatives
25
Useful contacts
O/C Officer:
HQ Officer:
Hanly Chen
Centre Director, Moscow
+7 499 241 3702 ext 141
[email protected]
Serena Lim
Manager, Europe Group
+65 6433 4645
[email protected]
• Willingness to experiment, (due to
relatively high tolerance of uncertainty)
• Acceptance that there will be some
failures,
• Ability to learn, adapt & improve.
26
Thank You
www.iesingapore.com