Russia rolls out the red carpet for London firms

12 April 2012

My view of Russia will always be coloured by my first impression almost half a century ago as a student during the Khrushchev era. I remember the vast but mostly empty roads: no cars, only trucks and buses and trams.

Modern Russia, by contrast, has world-beating traffic jams. Congestion is one of the side-effects of rapid, albeit unplanned, growth in consumption.

That consumption also provides the market for leading British companies.

M&S can be found a short walk from the British Embassy in Russia, across the Moskva river via the Borodinsky bridge in the Evropeisky shopping mall. Marks & Spencer has nine stores and eight million customers in Russia, which is the equivalent of one firm selling clothes to everyone in greater London.

And just down the Novinsky boulevard, there is a BP headquarters. Uniquely for Russia, it is reputedly possible to pay after rather than before filling the tank at BP petrol stations and to be sure that it is petrol going through the pumps.

To someone of my generation, it comes as something of a surprise that British household names are so well-established in Russia. However, 600 British businesses are already active here and about 2,000 small and medium enterprises have approached UK Trade & Investment this year looking at export opportunities.

British firms are doing very well in areas where London is a world leader. The UK's top four law firms regard Russia as one of the world's best markets.

Russian companies raise their finance in London. This month's flotation of Mail.ru on the London Stock Exchange not only raised over £500 million but rated the Russian firm as the largest listed internet company in Europe.

And British fashion, from M&S to luxury design, is thriving in Moscow, one of the world's most expensive capitals.

In fact, our exports to Russia are up 36 per cent so far this year.

I have come to Moscow with the largest British business delegation ever to visit to boost bilateral trade, which has risen to £6 billion in the year to date.

The potential of the emerging BRIC nations, of which Russia is the R, has long been apparent, but the global financial crisis has underlined how important they are not just for world growth but for the UK's growth and jobs too.

Since May, when I became Business Secretary, I have made it my priority to target the BRICs and have visited all four — Brazil, Russia, India and China — each time taking British firms that are looking to expand their business.

Figures just published by my department on the UK's trade performance show that world trade is bouncing back after a disastrous year in 2009 at a pace far exceeding that of world GDP in 2010.

However, the UK's historic markets, the EU and US, are growing only slowly. Most world growth in the next years is coming from countries like the BRICs.

In each of these countries, the numbers enjoying what we would call a middle-class lifestyle are expanding and seeking the kind of goods that the UK is competitive at providing — professional services, creative industries, pharmaceuticals, low carbon and hi-tech products.

But we cannot rely on existing exporters alone. Research from the Department of Business, Innovation and Skills shows that about two thirds of recent growth in world trade has been through new firms entering the export market.

That's why I want to encourage more firms — and more London firms — to take up the export challenge.

Today, I held trade talks with Russian deputy prime minister and finance minister Alexey Kudrin to enable British companies to do just that.

No-one pretends it is easy to do business in Russia. Examples are often given of Shell and BP's difficulties, but both are on my delegation and both are doing good business in Russia. The Government can open doors, and UK Trade & Investment can provide good advice, but it is down to private sector companies to seize the opportunity for themselves.

Whether it's Fuller's selling London Pride beer in Moscow, GSK providing medicine for Russia's 140 million people or British Airways bringing over some of the Russian tourists that spend £500 million a year in our country, British firms have shown that it's possible, and profitable, to break into the BRICs.

My advice (from Red Square no less) is that if they haven't done so already, London firms should give it a try.

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