COMMERCIAL UPDATE—NW RUSSIA (JANUARY 2000)

 

AUTHOR: ALEXEI KIM, BISNIS REPRESENTATIVE

APPROVING OFFICER: MICHAEL RICHARDSON, PRINCIPAL COMMERCIAL OFFICER, US CONSULATE ST. PETESRBURG.

 

International Copyright, U.S. & Foreign Commercial Service and U.S. Department Of State, 2000.  All rights reserved outside of the United States.

 

Summary: This report summarizes business developments in NW Russia for January 2000.  Topic text continues in paragraph 3. End Summary.

 

1. GOLD KEY SERVICE: U.S. companies interested in gaining access to prospective business partners in St. Petersburg and NW Russia are encouraged to utilize our very effective “Gold Key Service.”  Experienced Commercial Specialists identify opportunities, arrange business appointments with pre-qualified Russian agents and distributors, and accompany you to the meetings. The current charge for our Gold Key Service is $500 for 4-6 meetings (1-2 days of appointments), and $150 per additional day of appointments (maximum 4 appointments per day).  Major credit cards accepted. Driver and professional interpreter services can be arranged for an additional fee. We require sufficient company literature at least three weeks prior to the desired appointment dates.

 

2. WEBSITES & OTHER SERVICES:  The Department of Commerce’s US&FCS office in St. Petersburg offers a range of services to U.S. companies interested in doing business in NW Russia. In addition to traditional FCS services (such as the Agent Distributor Search), in our offices at Nevsky Prospect 25 we provide a conference room for up to 20, free computer and local telephone line use, and we can provide fee-based translation, business card and color printing services upon request.  For more information, visit us at:  “www.usconsulate.spb.ru/fcs.” American exporters and investors may wish to visit the Commerce Department’s BISNIS website site at:  “www.bisnis.doc.gov”

 

3. IT  MAY BE TOUGH TO BE A RUSSIAN EXPORTER

The Russian Government supports the proposal of the Central Bank of Russia to force all Russian exporters to sell 100 percent of hard currency profits.  Currently, Russian exporters have to sell only 75 percent of their hard currency profits.  According to Expert magazine, the final decision will not be made until summer 2000.  The decision should be approved by the Russian Duma as an amendment to the Hard Currency Law.

 

4.  CHAIN OF CONSUMER ELECTRONIC STORES FORMED IN ST PETERSBURG

As a result of the merger of two local companies, Tekhnoshock and Simteks, a new chain of consumer electronics stores was formed in St Petersburg.  The name of the brand will remain Technoshock, but the number of stores will continue to grow.  Tekhnoshock spent about USD 2 million for brand promotion and is a leading consumer electronics chain in NW Russia.

 

5.  GUBERNATORIAL ELECTIONS IN ST PETERSBURG

St Petersburg's Legislative Assembly did not support the idea of combining the presidential and gubernatorial elections on March 26, 2000.  Thus, the gubernatorial elections will take place in late May 2000, as planned.  Govenror Yakovlev will have served a full 4-year term by that time.

 

6.  LUCENT TECHNOLOGIES EXPANDS ITS OPERATIONS IN RUSSIA

St Petersburg factory of Lucent Technologies  has completed the certification process to meet ISO 9002 international standard.  Lucent Technologies opened its factory in St Petersburg, Russia in 1998 and is assembling various telecommunication blocks for the local market.  Obtaining a new international standard will enable Lucent Technologies to market its locally-assembled products internationally.

 

7.  CELL PHONES BECOME MORE "AFFORDABLE" IN ST PETERSBURG

According to the St Petersburg Times, the number of cellular phone users in St. Petersburg continues to grow.  Almost 5 percent of local residents now use cell phones, once considered to be an elite accessory.  Two out of three St Petersburg cellular phone operators announced ambitious expansion plans for 2000. 

 

8.  VAT RATES CHANGE

Acting Russian President Putin signed a law in early January 2000 reducing the import VAT on many items to 10 percent.  Among the items included in the law  are meat and fish products, eggs, sugar, grain, and children's goods.

 

9.  LIGHT AT THE END OF A TUNNEL- U.S. INVESTORS MAY GET THE LOMONOSOV PORCELAIN FACTORY BACK

 

Two U.S. investors, Kohlberg Kravis Roberts and the U.S.-Russia Investment Fund, major shareholders of the Lomonosov Porcelain Factory, filed a law suit when they learned that the St Petersburg Arbitration Court declared the initial privatization of the factory illegal.  On January 24, 2000, the NW Russia Regional Arbitration Court temporarily suspended the St Peterburg court decision, pending the results of the Federal Court appeal scheduled for February 17, 2000.  As a result, the U.S. investors were able to access the factory's premises for the first time since October 1999, when the factory was renationalized by the local government.

 

10.     LENINGRAD OBLAST BUDGET APPROVED

The Legislative Assembly of the Leningrad Oblast has passed its budget for the year 2000.  The budget is viewed by many analysts as realistic.  The budget allows for a five percent deficit, which is lower than all of the previous budgets.

 

FCS would appreciate your feedback on this report.  Please share your comments and suggestions with us:

Business Information Service for the Newly Independent States (BISNIS)

U.S. & Foreign Commercial Service St. Petersburg

25 Nevsky Prospect

St. Petersburg, 191186 Russia

Tel: 7-812-326-2560

Fax: 7-812-326-2561/62

Email: Alexey.Kim@mail.doc.gov, Tanya_Shuster@ita.doc.gov