Canadian Business in Saint Petersburg

There are growing business opportunities for Canadian companies interested in the Russian market in Northwest Russia, an area blessed with rich natural resources and an educated workforce.

Northwest Russia, which includes the cities of St.-Petersburg, Novgorod, Murmansk and several large administrative areas, accounts for 10,5% of Russia’s territory, 11% of the Russian population and 11% of Russia’s overall economic output.

Timber, copper, nickel, cobalt, diamonds, oil, coal, and manganese are among the natural resources of the region. Some 60% of the wood harvested in European Russia originates in Northwest Russia, and 56% of Russia’s newsprint is produced there. As well, some Russian oil companies expect that this area will some day augment production in western Siberia’s oil fields.

SAINT PETERSBURG - ECONOMIC HUB

St. Petersburg, originally established by Peter the Great as a "Gateway to the West", has reclaimed this role with renewed vigour in recent years. The city, now the second busiest port on the Baltic Sea, increased its industrial output by 19% in 2004. As a former hub for high-tech defence industries, St. Petersburg has retained its well-educated highly-qualified and specialized workforce.

The city boasts dozens of research institutes, colleges and universities. Today, St. Petersburg is a centre of telecommunications and light industry, and home of Telecom Invest (with stakes in 36 companies in Northwest Russia and GSM licences for 77 of Russia’s 89 regions), Baltika Brewery (the second-largest brewery Europe), the $ 150 million Ford Vsevolozhsk plant, the $330 million Philip Morris tobacco plant and food-processing companies dominated largely by European and Asian firms that have established local sales offices and warehouses.

BUSINESS CLIMATE HEATS UP

Northwest Russia was one of the first regions to adopt progressive investment laws, and it ranks second only to the Moscow area for inflows of foreign direct investment (FDI). The business environment in Northwest Russia may be somewhat complex, but economic trends are positive for imports from the West, with more than 1000 foreign joint ventures accounting for almost 50% of St. Petersburg’s economic output.

The presence of multinational investors such as Ford Motors, General Electric, ABB, Siemens, Wrigley, Nestle, and Proctor and Gamble is further proof of the improving business climate in Russia.

OPPORTUNITIES BY SECTOR

Opportunities are centred around the following sectors:

• multi-million dollar expenditure for increased port capacity of St. Petersburg, to accommodate fertilizer shipments;



• Primorsk oil port;



• Ust-Luga port for shipping coal and iron ore;



• upgraded rail and road links, including the Helsinki-St. Petersburg rail link and a $1-billion ring road around St. Petersburg;



• air traffic control systems;



• forestry equipment (including used equipment)



• pulp and paper technologies;



• digital replacements for analogue equipment;



• upgrades for water, energy and resource-related equipment in major centres, including water-treatment equipment in the oil and gas, pulp and paper, pharmaceuticals and automotive sectors;



• equipment, network management software, and wireless equipment manufacturing;



• restoration of natural products of salmon and other species;



• upgraded equipment for oil and gas extraction.

CANADIAN PRESENCE

Close to 40 Canadian companies have already teamed up with local partners. Most of them represent small and medium size business, cooperating in telecommunications, high tech, construction, forestry, mining, transportation.

Canadian exporters may establish branch offices and franchises or engage local distributors and sales representatives to sell their products and services in Northwest Russia. The trade officers at the Canadian Consulate General in St. Petersburg can help Canadian firms enter the local market.

For more information contact:
Andrei Galaev or Margarita Sandal, Trade officers,
Canadian Consulate General, St. Petersburg
tel.: (011-7-812) 325-8448, or (011-7-812) 325-8393;
e-mail: spurg@dfait-maeci.gc.ca
website: www.infoexport.gc.ca/ru