Innovations cannot survive harsh environment of the Urals

05.10.2011 — Analysis

Ekaterinburg hosted the first Ural Innovation Forum. It demonstrated that Russian science is focused on itself, being almost neglected by big business. The Sverdlovsk regional government tries to rectify the situation by pooling researchers and manufacturer in clusters. However, experts expect that they will be out of fashion as soon as the country is out of money. The RusBusinessNews columnist has found out that clusters are frequently used to disguise traditional holding companies that are not able to change the innovation environment.

Maxim Godovykh, the chairman of the board of the Sverdlovsk Region's Infrastructure Hub for Small and Medium-Sized Business, says that small business consumes up to 70% of the products manufactured by innovation-targeted companies. Large companies, which might be customers ordering research and development products, prefer to purchase advanced technologies in other countries. This can be explained by numerous reasons: absent guarantees, high overheads, poor marketing, inflexible legislation, etc. However, the main problem, according to Anna Kolodkina, the executive director of the Innovation Center for Small and Medium-Sized Business of the Sverdlovsk Region, is that engineers' inventions are not sought after by manufacturers, whose needs are unknown to engineers, as they exist in information vacuum.

The forum participants acknowledged that the research-and-production infrastructure developed in the Middle Urals remains idle. Recently Alexander Petrov, the minister of industry and science of the Sverdlovsk Region, has reported that the region ranks among the Russian leaders in speed of establishment new institutions: "At the moment, the Sverdlovsk Region has 10 technoparks, 5 business incubators, 2 venture funds to support innovative projects, 2 centers of technology transfer". Today it is clear that the government authorities have merely duplicated foreign experience, thus defeating the purpose of further development of innovation-targeted enterprises.

The cheerless picture is slightly brightened up by the IT cluster that includes about 140 companies making software and, quoting programmers, different "metalware". It was not created by anyone from the top: according to Dmitry Kalayev, the head of the cluster, there were problems that could not be solved single-handedly. While discussing the problems, entrepreneurs arrived at the decision to enhance interaction through non-profit partnership. Today this cluster accounts for only point five percent of the gross regional product; however, it intends to increase its turnover five-fold by 2015, reaching the sales of 25 billion rubles.

On the other hand, the promising cluster has hardly any impact on the technological mode of the Sverdlovsk Region. It can be explained by the fact that other similar structures are formed in the wrong sectors or in the wrong way. The regional government announced the establishment of electrical, chemical, aerospace, timber, metallurgical, pharmaceutical and other clusters. The process started a few years ago; therefore, some preliminary results can be summed up. Pavel Neverov, the executive director of the UNIX Medical Company, states that the emerging structures have hardly anything to do with clusters. For example, the Yunona Holding Company renamed itself into a pharmaceutical cluster to be eligible for government funds. In the meantime, the cluster management system differs conceptually from the management system typical f the holding company: The cluster is a community of independent people who combined their efforts to expand the customer base and to decrease costs. The cluster has no vertical power structure that is typical of Yunona. Experts compare the cluster with mushroom room to facilitate spawn growth by creating favorable environment.

P. Neverov thinks that the government can only lay the basis for a cluster: to build infrastructure, refocus universities onto training of the required specialists, limit the number of unscheduled inspections, protect against crime, etc. The Sverdlovsk Region has not moved far in these issues, like other Russian regions, on the whole. The Kaluga Region has moved far ahead of other regions, having developed quite efficient logistics and having acquired knowledge of selling itself; however, this region encountered the problem of skilled personnel.

The ability of clusters to grow depends directly on concentration of enterprises manufacturing high-added value products and complementing each other in technological terms. The Sverdlovsk Regions cannot boast many high-added value products; therefore, experts tend to be skeptical about bright future expecting the formations attempted by regional officials in different sectors of economy.

In the opinion of Alexander Trakhtenberg, the financial director of the Lorry Forwarding Company, the desire of the Sverdlovsk government to develop metallurgical and tourist clusters can be explained only as some miscomprehension. The very problem is that the region is too dependent on metallurgy; therefore, it should diversify its economy in order to be sustainable. As for tourism, it is most unlikely that the Middle Urals can be seen as serious source of tourism-generated revenue: Pilgrimage place in Russia can be counted on fingers, and all of them are located outside the Sverdlovsk Region.

A. Trakhtenberg thinks that innovated-focused business should persuade the government to give its primary assistance to high-tech industries that are able to change the regional specialization. Entrepreneurs do not see this idea as efficient: according to Yevgeni Sharovarin, an IT producer at the Laser Information Telecommunications, CJSC, he has no intention to prove the commonplace truth like "the sun rises in the East" to the government authorities".

Ye. Sharovarin, certainly, is right: to change the specialization of the Sverdlovsk Region it is necessary to have tremendous political will, which is not available so far. At the moment, Governor Alexander Misharin is much more concerned how to retain the existing jobs rather than how to create new ones. Generally speaking, he artificially impedes natural market processes that define the destiny of specific enterprises. For example, the decreased prices for nickel made the owner of Rezhnickel, CJSC, announce downsizing of the personnel. The regional head, however, persuaded him to turn down this decision, having promised different economic preferences.

The approach demonstrated by the Sverdlovsk authorities is unlikely to help to diversify the economy of the traditionally industrial region. Therefore, the campaign rolled out to develop the so-called clusters will soon die out. Pavel Neverov assumes that bureaucrats are so preoccupied with clusters only because they are the latest craze similar to modernization. Officials see their main objective in establishment and reporting, having no concern whether the new structures are going to be of any benefit. Therefore, the expert is sure that the development of clusters will come to an end immediately after the presidential election in 2012 or at the new turn of the economic crisis when the Russian budget is short of money.

Vladimir Terletsky