Doing Business: Is Russia Still the Place to Be in?

On June 19 the Expert and Advisory Board of the International Institute of Administration and Business held its regular meeting. They discussed the results of cooperation in 2013, 2014. Companies gave a summary of the master classes, and company consultancy projects for students on the Master in European Business programme and also discussed student internships. 

Members of the council also mentioned plans for working together in the next academic year, specifically running master classes with companies in the institute’s education programmes, organising student internships, open days at the company, etc. Jean-Luc Pipon, Managing Director, Head of Legal Division at Sberbank CIB was at the meeting and gave an interview to the HSE News Service about doing business in Russia today.

— How does the latest political situation with Russia, Ukraine and the world affect foreign business companies? Do sanctions have any impact on them? In general how does foreign business feel itself in Russia today?

— I am currently working for a Russian bank so 90% of my work is with Russian clients. So, I would say that I am seeing more the Russian side and my first reaction is to feel that Russia is a little bit scared by Europe - they feel that they are not welcome anymore, which is not true. But this is the first impression. On the foreign side, it is exactly the opposite. Due to political pressure, mainly from America, all investors are thinking, ‘Can we go to Russia?’ I’m quite sure that if investors say ‘Let’s go to Crimea, it is fun!’, the French authorities will not be very happy with that.  So it’s probably better to avoid Crimea but we are all sad about the Ukrainian situation.

— Are international businessmen still ready to invest in the Russian market? Is Russia still the place to be in or has the situation changed?

— To be honest, as a businessman when you make investments, you make them on a long term basis, especially in oil and some related industries, so, even if there will be a third world war I’m quite sure that Gaz de France and EDF will continue to invest in Russia. You know, when you have long term investment plans, you may stop, you may freeze, but I think big foreign companies can’t see themselves out of Russia. It’s a key market. If you take for instance the car industry in France, I can’t imagine Renault saying, ‘Goodbye, I give you the key back.’ 

— What about business relationships between Russia and the European Union. How will they develop, and is the strategic partnership still on the agenda?

— The problem here is not Russia, the problem is Europe, we don’t have a strategic policy in Europe. Before seeking a partner, there need to be common politics between Germany, France and England. . For me Russia is close to Europe, even geographically a part of Europe. And you know one day or another there will be a big strategic relationship with Russia.

— In your opinion, what is the future for international business in Russia?

— I think everyone is a bit misled about growth because there are some companies growing up, we don’t see them yet, but there is an internal market and it can grow up and sustain Russia, but due to the nature of the GDP because 56% is oil, I think they still need a lot of exchange. Russia still needs to make a big investment in agriculture. All the oligarchs were behaving more as raiders than developers so now a lot of this money should be put into real industry. I’m sure that the Russians are already doing it, but Russia has to find partners so there will still be some big flows. I can’t imagine Russia living on its own, by itself, ignoring everyone else.