Positive export forecasts and falling ruble make Russian market attractive for Italian SMEs
By the editorial staff
Italian exports to the Russian Federation have rebounded from the pandemic but, as forecasts show, there is still plenty of room for growth. With the value of the ruble at its current level, even small and medium-sized businesses can find great opportunities; however, they may need to consider longer term scenarios and innovative approaches to get the most out of this difficult market.
According to a recent report published by SACE (an Italian export credit agency), Italy’s exports to Russia still have room for improvement. Topping the list of growth forecasts are exports of mechanical construction products (forecast + 18.7%), metal products (+ 21.9%), and basic chemicals (+ 13.4%) . Moreover, thanks to the drop in costs due to the weakness of the ruble, this is the best time for Italian companies to invest in a physical location in Russia.
What is the best way for small and medium-sized Italian companies to seize the opportunities offered by this market? What tools do the Regions offer?
The last public conference organized by the Italian-Russian Chamber of Commerce, in Milan on September 21, 2021, addressed this topic: “From exports to joint ventures: the importance of collaboration between Italian and Russian companies and regions”.
At this event Massimiliano Fedriga, President of the Autonomous Region of Friuli-Venezia Giulia and of the Conference of Autonomous Regions and Provinces, expressed his opinion on the strategic importance of economic collaboration. He underlined the strong presence of companies from Friuli in Russia and the very favorable data from the latest SACE Export Outlook Report – which places Russia among the “Gold Medal 2021” markets along with the United States and Germany.
He also highlighted the growing collaboration between the chambers of commerce systems of the two countries, the commitment to joint action by the Italian Regions and the need for a non-ideological approach to the issue of environmental, social and economic sustainability.
Corn, he also raised the issue of raw materials: “Supply is a problem for Italy and for the world. The risk is that with the current international speculation, our respective companies find themselves penalized by shortages and price increases which have exceeded any market logic. So countries need to take joint action and find common ground to make comparisons and stem these kinds of phenomena.
In the first half of 2021, the Russian share of exports from Friuli Venezia Giulia (FVG) increased by 13.2% compared to 2019. Mechanical construction articles and furniture are the main categories: in the first half of 2021, industrial machinery accounted for 42.1% and furniture 19.2%.
The capital of Russia is also the economic and decision-making center of the country, and the regions interested in collaborating with Italy are located within a radius of 2000 to 3000 km from Friuli Venezia Giulia. Therefore, within a range that allows frequent travel. It is difficult for SMEs to fully serve and keep up with such a complex market (and that has changed so drastically from just a few years ago) that they often only have one person visiting them more or less frequently.
Friuli Venezia Giulia uses a platform, the Sportello Unico Sprint, which has had its own headquarters in Moscow for twenty years: an integrator particularly oriented towards SMEs that intend to increase their participation in the Russian market.
The FVG Branch of the Sprint Office in Russia, managed by the financial company Finest SpA, is a single point of contact that links the various entities working to support the internationalization of local businesses: the Autonomous Region of Friuli-Venezia Giulia, the Ministry of the Economy Development, the ICE-Agency, SACE, SIMEST, Finest, Friulia, Technological Hub of Pordenone and all associated Chambers of Commerce.
“Russia is an interesting market where you can do good business, although the margins are generally lower due to the weakness of the ruble. However, to grow, you have to act in the long term», Observes Best President Alessandro Minon. “It is no longer possible to think that exporting with cash sales will work as in the past: in Russia, it is more and more necessary to be present with at least a lean sales structure on site, and Russian staff, who directly follow customers for business development and technical assistance.