CzechTrade Inviting Czech Companies To Russian Expanses

19.11.2009 — Analysis

Czechia has significantly reduced supplies to the Urals but still has interest in the region. Jana Brzoňova, the Director of the ChezhTrade agency office in Ekaterinburg, stated with confidence in the interview to RusBusinesNews that in a year to a year and a half's time the economic cooperation will be renewed with more vigour.

- Ms Brzoňova, you became the Head of the Ekaterinburg CzechTrade office three months ago. What have you managed to accomplish in this short time?

- I started with making arrangements for Czech companies' participation in the industrial exhibition StroyMashUral. This will be held in Ekaterinburg in April 2010. I assume that CzechTrade in Prague will find some money for this.

The agency used to organise the participation of Czech companies in two to three exhibitions in Ekaterinburg each year. So far the funding for only one exhibition in the first half of 2010 is confirmed. I think that in the second half of the year we will also participate in the energy sector exhibition.

- What exactly are your functions, apart from organising the participation in exhibitions?

- CzechTrade has representations in 35 cities globally, this includes three Russian cities - Moscow, Petersburg, and Ekaterinburg. Our agency helps promoting Czech companies' products abroad. We look for local partners for them.

We also have many Russian companies coming to us who want to enter the Czech market with their products. During my time in Ekaterinburg 12 companies approached me. Some of them have already found partners in Czechia, for instance one of the Urals plants that is involved in repairing railway locomotives.

Also Czech companies often come to us with legal issues in connection to the specifics of the Russian law regulating economic operations. For consultations we find Russian lawyers.

- What Russian regions are covered by the Ekaterinburg office?

- All Russian territory from the Urals and further east. We do not deny cooperation to anyone, however, regardless of from which Russian city a company is in.

Naturally, the Czechs prefer to work in Russia via Moscow as this is the capital and is geographically closer to our country. We are trying to have more companies working with our office in Ekaterinburg.

- Many representatives of other foreign economic missions in Ekaterinburg complain that the Urals are too far from Europe and it is hard to do business here due to high transportation costs. How do you resolve this problem?

- It is true, transport does cost rather a lot. Delivering goods from Czechia to Moscow by truck takes 2 days. It is much longer than that to Ekaterinburg. Nevertheless some Czech companies are looking for opportunities to supply their products directly to the Urals. For instance one company is going to ship ceramic tubes to Ekaterinburg. It is possible that air transportation will be used since the tubes are small and light.

- Are there many Czech companies who are trying, through your agency, to carry out business activities in the Urals? Has their number changed during the crisis?

- Many companies are conducting their business in the Urals independently. There are 18 companies steadily working in the region through our representation, the number has not changed in the last year. TON, for instance, is a company that makes wood furniture and kitchens in Czechia and sells it in the Urals. This company used to send almost 20 trucks of furniture to the Urals annually. This year the amounts have been limited by just one truck. This crisis is not the crisis of the vendor, but of the buyers.

- Why doesn't TON make the furniture in the Urals?

- It is difficult. First of all investment is needed for the new production capacities, and it is very risky to invest during crisis. Also in some cases the production has to be licensed. Secondly, we need to keep jobs in Czechia.

- What other sectors of economy are presented by Czech companies working in the Urals currently?

- Some years ago Czech companies supplied medical equipment to the region. At the moment, however, due to the crisis the Urals healthcare does not place any orders abroad.

Other Czech companies are coming, however. For instance, Evona, a maker of socks and stockings, has recently opened a representation in Ekaterinburg; the company is going to establish a sales network here. The company's representatives are hoping that their high quality products will be able to compete with Chinese ones.

Representatives of Inekon are coming to Ekaterinburg in November this year; this company is specialised in tram production. The negotiations with the Ekaterinburg administration on the supply of new equipment have been ongoing for several years and so far everything is hindered by funding issues. I think that most likely they will be talking about the modernization of existing trams rather than supplying new ones.

One of the first companies that started working in the Urals is ALTA, a huge machine building company. Since the nineties the company is in cooperation with Uralmashzavod, then later they started working with Uralvagonzavod and the Magnitogorsk Iron and Steel Works. ALTA's work in the Urals is ongoing.

- You speak of the crisis, but the Czechs are demonstrating a high activity in the cooperation with the Urals. Delegations from the Ministry for Regional Development, the Czech Export Bank, and a range of Czech companies visited recently.

- This is done in order to mitigate consequences of the crisis. Economic relations between us are worse than they used to be. The crisis will pass in 1-1.5 years. Today we are trying to lay the foundation for the future development of economic links.

- Does the Czech Government in any way stimulate companies to work in Russia?

- The Czech Export Bank owned by the State used to impose a requirement of purchasing Czech equipment for at least 50% of the amount granted when issuing investment loans to Russian companies. Now this condition has changed and sounds abstract: "issuing a loan must be beneficial to the Czech industry". This means that particular figures are discussed on a case by case basis.

The Czech Government organises free seminars for our companies where they are told of the specifics of work in Russia. Moreover, the Government pays for the participation of Czech companies in some Russian exhibitions. If a company is part of a sector-specific alliance (non-profit partnership) then the Government reimburses the costs of business trips abroad to representatives of this alliance.

- In October 2009 you gathered representatives of Czech companies working in the Urals. What was the purpose of the meeting?

- These meetings are held by the Czech Consulate in Ekaterinburg every 2-3 years. They discuss difficulties encountered by the companies. These include legal issues, transport services, relations with Russian partners.

- Do you discuss these problems with representatives of regional and municipal authorities?

- Companies try to run their business independently. We do, however, often get in touch with Oblast's ministries and the Ekaterinburg Mayor's office.