Chinese ambitions

15.07.2015 — Analysis

Russian INNOPROM

The INNOPROM-2015 Exhibition that took place in Ekaterinburg summed up the preliminary results. The Russian organizers and Chinese partners note that, although not everything goes like clockwork, the exhibition is growing and stands a good chance to turn into one of the largest forums in the world. It is undoubtedly highly beneficial for the economic growth of the region. However, as the RusBusinessNews has found it out, the main advantage of INNOPROM is that it makes it possible to synchronize economic watches.

As reported by Alexey Orlov, First Deputy Chairman of the Sverdlovsk regional government, about 600 industrial companies, including 16 world’s largest brands topping the Forbes list, took part in the exhibition. Dozens of memorandums, partnership agreements and letters of intents for cooperation were signed during the exhibition. The announced amount of contracts exceeded 10 billion rubles.

The number of unique visitors totaled 52,000 people from 70 countries worldwide. The most representative delegation arrived from China – the partner-country of the Ekaterinburg industrial forum. 8,000 square meters were leased for showcasing their products by such heavyweights as the China State Shipbuilding Corporation, the China Aerospace Science and Industry Corporation, the China National Nuclear Corporation. As Tian Yongxiang, Consul-General of China in Ekaterinburg, states, the industrialists entered into ten provisional agreements with Russian partners in rolling-stock manufacturing, shipbuilding and ship-repairing, welding robotics, electronics and manufacturing of building equipment.

Chung Shan representing the PRC Ministry of Commerce in negotiations on international trade said in his speech at the forum that China is ready and willing to build bridges, transmission lines, refineries, logistics centers and other facilities of trans-border infrastructure. In his opinion, the trade patterns existing between the Celestial Empire and Russia need upgrading – consumer goods and primary commodities should be substituted with high-tech products.

After the speech of Juan Gan, Deputy General Director of the Inspur Corporation, it became clear what the Chinese minister had in mind. He thinks that Miсrosoft and other American IТ-companies have come across strong competition from Chinese companies specializing in cloud computing technologies. The Inspur top-manager says that, although Russia is competent in information technology, it has gaps in some areas; therefore, both the banking and manufacturing sectors would benefit from Chinese products. 

As alleged by the Chinese, they offer Russia advanced servers and talk Yandex into using their technologies. The Chinese businessmen want to create a platform in Russia, where they would be able to integrate their innovations with the Russian ones. They are interested in setting up a research center, which would promote high technologies and achievements of the People’s Republic of China.

The enthusiasm and pragmatic approach of the Chinese surprised a lot of people who visited INNOPROM. For example, during the expert panel discussion addressing construction of high-speed lines in Russia, Sun Yongcai, Vice President of CRRC Corporation Ltd, focused his speech on cold-resistant trains manufactured in China. The trains may be really good; however, China was invited to start a joint venture with Russian companies to share the cutting-edge technology in the area that is new to Russia, rather than to secure sales of their products. The standpoint of Mr. Yongcai, however, implied: "We agree to take part in designing of high-speed lines, though you’d better come over and see what wonderful railroads we have…"

On the other hand, other foreign participants of INNOPROM also demonstrated quite a pragmatic attitude. Ferdi Murat Gül, a member of the Board of Directors of the Turkish Machinery Group, said that he could try to persuade his fellow-countrymen to launch new production operations in Russia, but he did not understand why they would be interested. Alex Zaguskin, Managing Director of AZ LLC, a consulting company (USA), tried to convince the audience that it would take long for China to become the world leader, for people in the Chinese hinterlands cannot speak English. The “former Soviet citizen” asked Russian participants whether defense factories had become accessible to visitors.

Thus, it is hard to escape a certain conclusion: Foreign entrepreneurs come to Russia to sell their products, rather than to build factories and exchange technologies. Furthermore, the experience has shown that the products we are offered can hardly be characterized as innovative: Andrei Shibitov, Deputy CEO of Helicopters of Russia, a holding company, noted that the components available on the market were manufactured five years ago.

Russian manufacturers say that we should not count on investors; instead, we should train our own professionals and build high-quality industrial facilities. Taking this approach, we can benefit from the Chinese experience: It is believed that China is developing at brisk pace, because it spares no expense on education of young people.

The similar idea was uttered by Denis Manturov, RF Minister of Industry and Trade, urging to train technologists of the future starting from their school-days. In the meantime, Russian engineers note that today’s graduates of technical higher schools do not know even basic things. It is the problem calling for serious attention after INNOPROM is over. 

Vladimir Terletsky