Understanding Localization in Russia

Published: February 2016

In this issue of Russia Briefing we discuss the advantages of localization in Russia for foreign companies, and provide an analysis of Russia’s industrial parks and Special Economic Zones (SEZs). We also feature an article from the General Director of ZENTIS Russia on their experience of producing jam, marmalade and other sweets in the country.

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In this issue:

  • Russia’s Special Economic Zones
  • Special Economic Zone ‘Lipetsk:’ Seeing is Believing
  • The Special Economic Zone in St Petersburg
  • Analysis of Stupino Industrial Park
  • Localization for SMEs: Project Types and Methods of Localization
  • Legal Requirements for Localization
  • Conducting a Due Diligence Investigation Prior to Purchasing a Production Facility
  • Understanding Taxation in Localization
  • The Substitution of Import and Localization
  • Administrative Issues to Consider during Localization
  • Experiences with Localization

With the Ruble dropping to a record low at the beginning of 2016, Russia is currently in a deep economic crisis. Foreign investors have taken note of this, with the automotive industry a prime example of an industry that has seen decreased foreign interest. That said, over the past year we have also seen major new foreign production sites in Russia, such as the German harvester producer CLAAS in Krasnodar or the German-Japanese producer of machine tools DMG Mori in Ulyanovsk.

We have also seen some existing Western production sites in Russia beginning to develop export capabilities, allowing them to compete with Chinese competitors in African and Arabian markets. This is possible thanks to strict cost management and the significant Ruble shortfall. Localization in Russia is a project for the long-term, and one that is worth consideration. As Russia’s economic crisis unfolds, foreign investors should not be completely inactive – the time should be used preparing for the country’s next consumer spending boom.

In this issue of Russia Briefing we discuss the advantages of localization in Russia for foreign companies, and provide an analysis of Russia’s industrial parks and Special Economic Zones (SEZs). We also feature an article from the General Director of ZENTIS Russia on their experience of producing jam, marmalade and other sweets in the country.  

SCHNEIDER GROUP staff in Russia compiled the content of this magazine.


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