#1`2014 English version

SPRING 2014

Supplement to the International furniture magazine “MEBEL Professional” ENGLISH VERSION

16+ WHAT DOES RUSSIA REALLY THINK ABOUT VLADIMIR ÍÎÌÅÐÀ: PUTIN? ÒÅÌÀÊÀÇÀÕÑÒÀÍ p. 8

ECONOMY

INTERNET

HR

INTERVIEW

CRIMEAN HISTORY. Current situation and forecasts of participants

Furniture purchase. Online vs Offline with Sergey Shiferson, commercial director of the City&MallsPFM company

Furniture market today. What qualifications are in demand and what salary is offered in Russia and CIS?

Alexander Shestakov, president of Association of furniture and woodworking enterprises of the Russian Federation

p. 10

p. 20

p. 26

p. 28

CONTENTS EDITOR`S LETTER

3

INTERNET FURNITURE PURCHASE. Online vs Offline ......................................17 DIGITAL STATISTICS IN RUSSIA .................18

26

SOCIAL NETWORKS OF RUSSIA ............... 20

14 3 ECONOMY WILL THERE BE A CRISIS? Mikhail Hazin. Economist, the president of consulting company “NEOKON” ............4 ONE MUST WORK MORE EFFICIENTLY. Sergey Shigin, CEO of « Ronikon» company ......................5 WHERE ARE YOU GOING, UKRAINE? ........6 WHAT DOES RUSSIA REALLY THINK about Vladimir Putin? ..................................8

Supplement to the International furniture magazine “MEBEL Professional” ENGLISH VERSION Founder, Editor Contact person in Russia NIKOLAY BULANKIN E-mail: editor@mprorussia.ru Tel.: +7 (915) 137-5972 Publisher VISION Ryabinovaia st., 8-1-123 121471, Russia, Moscow Contact person in Italy SERGIO TELAN ITELAN sas via Cesare Battisti 71 - 33080 Prata di Pordenone - PN 01643020934 tel: 0434.620447 fax: 0434.620447 Contact person in Belarus DARIA SEREDICH tel.: +375 29 5889990 #-mail: dashaseredich@gmail.com

HR

Art Director SERGIO TELAN

PERSONNEL POLICY. Specificity of the near abroad countries ......22 FURNITURE MARKET TODAY. What qualifications are in demand and what salary is offered? ........................26

CRIMEAN HISTORY. Current situation ..........................................10

Managing editor DARYA SEREDICH Designer DMITRY PETRUSENKO Translator YANA FEDORENKO Print PERVIY POLIGRAFICHSKIY KOMBINAT 143405, Russia, Moscow Region, Krasnogorsk district, “Krasnogorsk-5”, Ilinskoe highway, 4 km

CRIMEAN HISTORY. Forecasts of participants .............................12 MARKET OF MOSCOW: specialized shopping centers: outcome` 2013 ...........................................13

2 issues per year Distributed free of charge The magazine “MEBEL Professional” has been registered with the Federal Service for Supervision of Law of Mass Communications and Protection of cultural heritage.

THE TRANSIT BELARUS .............................14 TENGE DEVALUATION ...............................16

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Certificate of Registration PI №77-39264 of 30th march, 2010.

Russia, Moscow

31 EXIBITION

SPRING 2014

Supplement to the International furniture magazine “MEBEL Professional”

NONSENSE. ...............................................32

ENGLISH VERSION

16+

PRIVATE OPINION. Elena Slomchinskaya, chief executive of «Mebel» exhibition, Moscow ..................35

WHAT DOES RUSSIA REALLY THINK ABOUT VLADIMIR PUTIN? p. 8

INTERVIEW ALEXANDER SHESTAKOV. President of the holding company «Pervaya Mebelnaya Fabrika», president of Association of furniture and woodworking enterprises of the Russian Federation ........................4

33 ECONOMY

HR

INTERNET

CRIMEAN HISTORY. Current situation and forecasts of participants

p. 10

Furniture purchase. Online vs Offline with Sergey Shiferson, commercial director of the City&MallsPFM company

p. 20

INTERVIEW

Furniture market today. What qualifications are in demand and what salary is offered in Russia and CIS?

Alexander Shestakov, president of Association of furniture and woodworking enterprises of the Russian Federation

p. 26

p. 28

Special thanks for creating illustrations for this cover to ANASTASIA ALEKNA

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INTERNATIONAL EXHIBITION OF COMPONENTS, SEMIFINISHED PRODUCTS AND ACCESSORIES FOR THE FURNITURE INDUSTRY th

P O R D E N O N E F A I R 1 4 - 1 7 O C T O B E R 2 0 1 4

the right direction Exposicam srl Via G. Carducci, 12 20123 Milano - Italy Tel: +39 0286995712 Fax: +39 0272095158 info@exposicam.it

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for your Business www.exposicam.it

Editor`s letter

Winter half ` 2014 was very eventful for the staff of our magazine. January - exhibitions in Cologne, Paris, Milan, Birmingham. February an exhibition in Poznan and the cancelled plans of visiting the «Interior Mebel» exhibition in Kiev. Growing tensions in Ukraine and the message about postponement from the beginning of March to the end of May of another furniture exhibition of Kiev- KIFF, which, in our opinion, is one of the most interesting and perspective at the territory of the former Soviet Union.

In just half a year the situation in the market has changed cardinally. Ruble depreciated in Russia. Unexpectedly for many people the National Bank of Kazakhstan started tenge devaluation. A difficult situation in Ukraine.

It seemed that just a year ago we wrote about a serious growth of furniture deliveries from Ukraine to Kazakhstan, but now Ukraine expressed a desire for withdrawing from CIS and it will certainly hit at this sales channel.

The world is impetuously changing. It is getting more and more difficult to foresee and predict something by the day. That`s why we decided to buckle down to the publication of magazine appendices in English and Italian.

We`d like to give you an actual information about furniture markets of Russia, Ukraine, Belarus and Kazakhstan - the markets we work at and where we are experts. In turn, we will be grateful if you don`t simply read our editions but also do tell what occurs in the countries and business areas where you are competent.

Let’s make markets open and give the chance of developing for us and our colleagues.

The situation around is changing, but one thing is clear to us - when there are changes in legislation, a political situation and even the weather outside the window - someone always gains huge money by it. Do you remember the phrase: “The greatest fortunes are made in the troublous times “? So be it, a question only is who that one who manages to raise money on it. Anyone who possesses information. So who, if not we are?

Nikolay Bulankin Chief editor MEBEL professional editor@mprorussia.ru

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ECONOMY ЛЮДИ

WILL THERE BE A CRISIS? It is possible to tell that a year ago we were got involved the conditions of the falling markets can be worth much. by force in the WTO. Even a year and a half ago I counted Your main task is to grab that part of consumers who that decrease in our duties on entering the WTO would be are becoming free from your dying competitors. Finally one compensated by ruble devaluation at 15%. The government will win who for some reasons manages to survive a little bit will do everything for foreign longer than the competitor competitors to suppress and at the definite moment us because they represent begins to grow quickly. As the political support of known from experience the our Government. Even at biggest fortunes are made at G20 in 2008 the decision the falling markets not at the was made for the WTOgrowing ones. countries not to be engaged I like very much to in protectionist measures spin a yard. Imagine you through the monetary policy. are in Abu Dhabi at the That is not to devaluate investment forum together their currency. In a year with the representatives after it Mr. Kudrin won a of Russia and the United prize for the best Minister Arab Emirates. There you of Finance. What for? For have got acquainted with Russia was the only country the sheikh who says: «I from G20 which followed like you and I am ready to that rule? The only country invest in your business 50 which wasn't protecting million dollars. Cheap junk, its markets? After entering I understand, but it is just we «have improved»: for for the first time. On what eighteen months have terms are you ready to take devaluated ruble more than them?». Now then if we are at 10%. talking about the falling What is going to happen market, it is necessary to in future with us? Work say: «I am ready, but for the at the falling markets. It is next 5 years I won't pay you an extremely specific thing a penny». A dumbfounded standing in marked contrast sheikh will ask: «I usually with those schemes that have take 12%, from friends been existing for 35 years in 8%. But here … How so?». the world and for 15 years Your answer: «Now I MIKHAIL HAZIN in our country. Differences control 11% of the market ECONOMIST, THE PRESIDENT OF CONSULTING COMPANY «NEOKON» are very serious because too and if I have a cushion of much stereotypes don't work 50 million dollars, in two at the falling markets. For the last 35 years all the system of years I will control 35% of the market. That`s what you`ll business-education and management studying was built up get». for work at the growing markets.

The main criterion of success at the falling markets is It is necessary to understand pretty well what is really not a profit but a share of the market. Thereafter all the happening at your markets and with the economy as a resources you have must be put in it. whole. Enormous efforts must be paid to management.

There are three basic rules of today's life: not to borrow If at the growing markets you can employ 10 people money, to value one`s work, not to buy tinned stewed meat of «office plankton» and pay them an average market yet. If earlier it was possible to leave and look for a new salary, at the falling markets it is better to find a good job, now even if you have found a new place of work, all specialist and pay him 5 times more. All the same you the same you risk. You can come there and in a month you will save money on the wage fund. It is necessary to will be told: «You haven`t passed an evaluation period». But find this specialist and to minimize credit costs, having actually, it means only: «Sorry, dear, we`ve got our damages emphasized on investments. Because the fixed refund in so we can't».

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ONE MUST WORK MORE EFFICIENTLY It is absolutely definite neither public sector employees nor military personnel will feel wage increase next year.

Thereafter the enormous quantity of money which before created an additional demand is leaving the market now. But the inflation in products, in clothes, in services remains.

And money savings which people could have put by for furniture will be left on more needed types of goods.

Through force of the situation with the WTO it is possible to say that in fourfive years, if we don’t study to work more efficiently than now, we will be discarded from the market. And if it happens we will have to produce something either exotic or more habitual but consequently we will lose volumes. If now european costs are being fixed but neither reduced nor increased, here in four years the supplier will be able to sell furniture 7-15% cheaper than now. Let`s superimpose inflation on it and as a result we will grow in costs if do nothing. But they will be selling everything cheaper and cheaper. And their profitability won’t change.

And if they wish to move us strategically or, for example, SERGEY SHIGIN within the next three years CEO OF « RONIKON» COMPANY they give up a part of their income to annihilate us there will be a hard time. For this reason whatever there is a company - large, small or medium, it is necessary to be engaged in efficiency of everything you`ve got in business people, equipment, product, advertisement.

As an example I`d like to demonstrate little calculations.

Under decreasing of duty for imported furniture from 0, 75 to 0, 23-0, 25 euros, even in terms of an estimated cupboard about 6 m2 of which is a particleboard, a western producer will save only on duty and only for one cupboard a sum equivalent to 1, 400 russian rubles or 7-10% out of the cost of a russian product. Exactly such preference they will receive doing nothing if enter our market in three-four years.

Something must be done with it.

It is not a secret that Russian factories including “Ronikon” still work under the efficiency lower than Europeans. There are plenty of factors including historical ones, but it is necessary to fight against it. In connection with it I call upon to declare war to costs. It is very important to understand and control accurately cost chains which you create. Make a start from a first cost of what you buy.

Look what is superimposed on it, what services you offer, what their first cost is, how much cash assets go to a product unit and how to improve all these things.

It doesn’t mean to reduce but - to improve efficiency.

Where possible - you should increase productivity reducing unnecessary expenses. It must be the main strategy at least for the next three-four years. And with it we will have to live further. It is very important to concentrate on efficiency because we are not going to do the market of gifts.

Considering that there are more than a little production capacities in Russia plus import pressure which is now only intensifying will grow... Generally speaking if we want to exist and earn money here, it is necessary to prepare for a more rigid market.

Poland is actively loading its capacities to earn money. This country is a number one now. Polish producers will be able to restrict us for quite a long period of time, and it is necessary to be prepared for this situation. Exactly on it I wanted to pinpoint- we speak a lot about the WTO itself, about clients, but now the most important is to know how to work with costs. If you comprehend it and accept this strategy forever (you are ready to pay attention to specific costs per a square meter, per a rent ruble, per a person and many other things), you will be able to work calmly and perfectly realizing what is going on. Thus of course you shouldn`t stop. It is necessary to look for own niches. But it is difficult because the competition is strengthening more and more every day.

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ECONOMY ЛЮДИ

WHERE ARE YOU GOING, UKRAINE? Before much-talked events in Ukraine State Statistics Service of the country as well as furniture experts said about availability of the branch and its high potential. So, in January, 2013 production of furniture increased by 1,5% compared with the same period of the year 2012. In Ukraine the output of chipboard grew 15,8% in June 2013 year on year- up to 121 thousand cubic meters. By the furniture market participants` evidences in 2013 the total market capacity was 500-600 million UAH a year under furniture production profitability at the level of 13%.

Everyone calls to remain calm against any hostilities and violences.

One should attain democracy peacefully following the right way.

OPINION

LYUBOV SUKNENKO CEO OF UKRAINIAN ASSOCIATION OF FURNITURE MANUFACTURERS (UAFM)

We watch what Russian TV channels broadcast. It is an information war. What they televise is wrong because we don’t demand any help from Russia, we are well.

Of course, people came to the Maidan not because everything was good. High taxes, lawlessness... But nobody invited people there. No political forces paid anything. I know it because our companies also supported the Maidan - personally, voluntary.

Someone brought food; someone was in the mass meetings.

These people simply wanted to change something for the better.

What is going on now in the Crimea I personally interpret as invasion of our independence. You were in Ukraine more than once and saw that people speak Russian with no worry.

We also communicate with all the companies in Russian.

People don’t want war that`s why we don’t react in any way to interventions.

I have relatives in Lithuania - in Vilnius, Klaipeda.

There Russians interview - they collect opinions of people about separation of the Crimea and its annexation to Russia. I don’t know why we are set at loggerheads. We peacefully coexisted, loved and respected each other.

How will annexation of the Crimea help the Russian economy? In Russia there are undeveloped territories demanded investments. Ukraine needs no help. We need to stand on our own feet. It is necessary to leave us in peace with our problems and to let us sort them out ourselves. We can make it ourselves.

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Prior to February, 2014 the events in Ukraine were distant for us. Certainly, we tried to be in the know, worried about Ukraine but all that was somehow far.

In the middle of February the staff of our magazine went to a furniture exhibition in Poznan (Poland). There we got in the thick of things. On Polish TV channels the Maidan was broadcasted round the clock, and Russia was mentioned as an aggressor. Having returned to Russia, here we saw that Europe and the USA were accused of sponsorship of the Ukrainian revolution. We understood that it was politics.

The Kiev Interior Mebel exhibition was the following point of our work. It was to begin right after the Poznan one, but at that moment in Kiev everything became serious with real victims. We phoned the Kiev office of organizers and they told that everything had to be without changes, and the exhibition would take place. Nevertheless, we postponed that business trip. Then we learned that the exhibition had really taken place. But on its second day in full swing of hostilities at the Maidan on the special flight practically all the Italian representatives were evacuated from the exhibition for safety reasons. The exhibition took place by near-empty halls as visitors were occupied with other matters to attend it.

The situation was becoming more and more tense every day. We phoned Ukrainian Association of Furniture enterprises and Kyiv International Contract Fair, the organizers of another exhibition - KIFF, which was to pass in May. We were told that they had got everything under control and it had not been the time to talk about cancellation of the exhibition.

At the end of the February the message came - the Kiev KIFF exhibition was postponed to the end of May. “… On the basis of a wish of the overwhelming majority of KIFF 2014 participants and MTKT Innovation 2014 exhibitions, the dates of the exhibition are postponed from March 12-15 to May 28-31, 2014”, - the organizers reported. Thereupon it was stated about the annexation of the Crimea to Russia. The events have been developing in the scenario unknown for the majority.

More than three months have gone since then. Petr Poroshenko was elected to be the president of Ukraine. The KIFF exhibition took place in new terms and the organizers think of recording these terms on a constant basis. Hostilities in the east of Ukraine haven’t finished yet, the installations at the Maidan haven’t been pulled down yet, but the country has already lived its rhythm. Nobody knows what it leads to.

We will try to keep up with the latest news and to tell you about it. The analysis of the current situation in the Crimea is one of the first articles you can already read on the following page.

OPINION

DMITRY DYACHUK PRESIDENT OF UKRAINIAN ASSOCIATION OF FURNITURE MANUFACTURERS (UAFM)

Nobody was indifferent to the events of the last months in Ukraine. In November, 2013 people came to the Maidan to affirm the right to be legally entitled to their own opinion.

During the next difficult months the prior authority showed its true character, having lost legitimacy in the eyes of the people.

Ukrainians united around a common desire to assert their legal rights and their freedom. We grieve over victims, and now all the people of Ukraine - regardless of nationality, language, social status - are united in their desire of peace and stability.

Ukraine - a sovereign state which has the right to choose its future, its political and economic policy. Now the Ukrainian people have made their own choice.

Our economy is going through a hard time and the reasons of the crisis have long been maturing. But if conflict escalation in the Crimea doesn’t stop, our furniture branch as well as other branches will suffer the most serious losses as one shouldn’t expect furniture purchase to remain consumers` priority at a time of war.

I consider that some period there won't be sales. Time is necessary for economic settling, but it is worth it.

OPINION

ANDREY ZAVALNYUK DIRECTOR GENERAL OF THE “MEBELNYE TEHNOLOGII” COMPANY, KIEV

The situation in Ukraine is not the easiest, but we are full of optimism. There are serious problems with sales and finance.

Now people simply don’t think about furniture, and because of a sudden change of the hryvna rates, banks felt outflow of deposit funds. But we are full of determination. I think in few months some progresses will be already visible.

Are there any problems with import of goods from abroad and payments? No, for us it has become even simpler as we work officially. But really there are some difficulties with payments. For the National Bank imposed restrictions at the times of the prior authority - money is to be on loro account for six working days. But in fact - the first and the last days are left out. So we have eight working days. As there is no money in the state treasury, the new team has not changed this law yet.

Now we wait for the American and European help to stabilize the situation.

I consider that some period there won’t be sales. Time is necessary for economic settling, but it is worth it.

Concerning the Crimea I hold my own opinion, but in the Crimea I have got relatives and they think differently. They want to annex to Russia, and we couldn`t get away from it. It is a pity, if the Crimea isn’t the same resort any more as it used to. Annually out of 5 million holidaymakers about 1 million is Russians and 4 million - Ukrainians. But Ukrainians will avoid the Crimea now, and it will strongly affect the economy of the region. Nobody envies Russia, if in times of economic recession it has to also shoulder the burdens of the Crimea. I am afraid, it can be the last straw for the Russian economy.

In my opinion, Ukraine won’t be at war for the Crimea. The majority of people says: let the citizens of the Crimea try. But there no illusions, and in two-three years the region can become the same as Abkhazia.

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ECONOMY ЛЮДИ

WHAT DOES RUSSIA REALLY THINK ABOUT VLADIMIR PUTIN? Public opinion Foundation published research records according to which 66% of Russians want Putin to remain a president after 2018, don’t want - 14%. While in 2012 (previous elections) a number of people who wanted him to win an election of 2018 was half as much - 29%.

According to Public opinion Foundation, 72% estimate his occupation of the presidency positively. Last April there were 48% of respondents sharing the same opinion. More than a half (55%) considers that now Putin manages his president`s obligations better than for the first two terms, and only 4% worse. Besides in April, 2013 an equal number of people (16%) gave an answer to a similar question telling both better and worse. Previously 56% answered that Putin managed his president`s obligations no better nor worse, but now - 32%.

3% noted also political relationships with the West, advance of wages and pensions, improvement of living standards of people, social policy; 2% fence-mending with China. About 1% of respondents told about enhancement of the country`s defense capability, policy of peace, prevention the threat of war, solution of economic problems, establishment of order, stability, anticorruption drive, meetings with people, pressing the flesh. It was also noted that Putin - a strong, resolute, confident politician.

But the following acts, decisions and Putin’s statements were unpleasant for the past two years. 6% consider that Putin is poorly involved in economy; he is responsible for breakdown of agriculture and industry, growth of taxes, unemployment, price policy and inflation.

Assessment of actions in Ukraine is interesting. 4% noted that they didn’t like “inactivity about Ukraine” that “he does nothing to stop disturbances in Ukraine”, “didn’t want to annex Donetsk and Lugansk to Russia “; price concession for gas and impossibility to recover a debt from Ukraine.

3% are dissatisfied with a low standard of living of people, social policy, insufficient fighting corruption, a weak team and poor control of bureaucracy activity.

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What is it that has inspired Russians for the past two years?

29%

Annexation of the Crimea and Sevastopol to Russia

5%

Holding of Olympic Games-2014 in Sochi

7%

Line towards Ukraine

4%

Strengthening of authority of Russia in the international arena, foreign policy as a whole

6%

Economic policy

3%

Low standard of living of people

More frequent than others the following groups consider that V. Putin's activity isn't equitable to their interests: general population

18% income 4001-9000

23%

men aged 18-24

4%

Line towards Ukraine

3%

Social policy

men aged 35-44

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Growth of Putin`s rating - a reverse side of growth of moods “solve and make everything for us”. We delegate all the completeness of power. We agree to absolutism, but ensure for us a celebration over America and an appropriate level of life, and growth of this level further.

But the main mood of people - we want to have everything but nothing happens to us for it. Actually all were astonished not only by annexation of the Crimea, but also by the fact that there has happened nothing for it. Dollar rate hasn’t fallen, shops are oversupplied, European countries like Austria are ready to carry on negotiations with us and in general they support us. But there were quite disturbing expectations about it.

People hope that we have new Putin, so our life will be new as well.

This means that the growth of rating is explained not only by the annexation of the Crimea. Actually, if to watch the content of news flow, it is evident that with the Chinese contracts and the Austrian agreements we have to become richer and more cheerful.

Euphoria on the fact, that we have taught America, will pass quickly; it is not a short story, but everything, what is going on now, gives rise to a hope which, maybe, can’t be decomposed now. There is a sense that a radiant future is opening up before us. If

24% 26% 25

50

100

KONSTANTIN KALACHEV HEAD OF POLITICAL EXPERT GROUP FROM THE INTERVIEW OF SLON.RU

previously there were some doubts about sympathies and sentiments of the majority, now sentiments are clear. The Russian opposition underestimated a drive of our people for a warm sea.

If we annexed territories in the north, hardly we would have been so glad.

Putin has created his new image.

He opposed himself to the West and in the eyes of citizens he became the hero who is ready to risk it all. The accusations against him scattered and became worthless. Are the sentiments of people situational or deeper? Do they have a vivid but changeable character? Still I incline to the idea that an underlying cause of national emotions is the growth of paternalism sentiments (protection, trusteeship over minors). And as for adoration of the national leader, it can change if in medium-term prospect it appears that we reluctant to refuse a habitual way of life and all our hopes don`t come true.

The question - when it happens - in a year or two and how these expectations face the reality. The problem is that under all these expectations people

don`t have a desire to work more.

These expectations aren’t corroborated by the readiness to change the personal physical state; however it is impossible to give a radiant future but for all that to do nothing. It is a dream of a Russian.

Under absolutism when Putin is our EVERYTHING and he is responsible for everything, it is he who will be guilty of everything. I don’t believe that our long-suffering people, when being continuously explained whom they are obliged to; in case of problems desist from raising a claim. It is a couple of steps between “Putin is answerable for everything and everybody” and “Putin is guilty of everything “. If you are responsible for everything and everybody, it is possible to assume that some time Putin “misses” and this rating falls down.

The material is prepared on the basis of information from open sources and the sites www.fom.ru, www.slon.ru. You can look at the original of research of Public opinion Foundation here: http://fom.ru/Politika/11568

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ECONOMY ЛЮДИ

CRIMEAN HISTORY CURRENT SITUATION

The situation in the Crimea, except serious political, geopolitical and national problems, caused a set of questions for business. In this respect the Krasnodar furniture UMIDS exhibition which had come to the end in the first decade of April of the current year appeared to be indicative for furniture makers. It is the exhibition welcomed “the first echelon” of now Russian furniture business representatives trying to establish new business relations in the changed condition.

Annexation of the Crimea to the Russian Federation provoked not only disputes in the international community but also put a number of topical issues and tasks in the face of the Crimean and Russian business representatives. It is quite natural if to take into account that the full functioning of the region within the Russian economic space requires a number of measures for creating the uniform regulatory and legal basis.

The re-registration of legal entities in the capacity of the Russian tax residents became one of topical issues having caused a number of comments concerning the implementation of this procedure. At the very beginning of the history plenty of the Crimean enterprises have already got a problem of blocking their accounts by the Ukrainian part. And the Russian enterprises which the Crimean firms having earlier dealt with, didn’t want to cooperate with the Crimea before their renewal under the requirements of the Russian legislation.

The registration of legal entities and individual entrepreneurs (IE) under the Russian Federation legislation began on the 3 d of April in the Crimea and Sevastopol. But the turns to the inspectors aren`t going to reduce up till now. Such a situation can be dragged out for an uncertain term considering that in the territory of the republic there are nearly 50 thousand legal entities and to include them in the Uniform State Register of the Legal Entities of Russian Federation the relevant normative documents have to be accepted. And if to take into account that for beginning the registration procedure it is necessary to solve a lot of other questions, for example to change the civil passport...

The director general of the representative office “Makmart” Sergey Monin, Rostov-on-Don comments: «The situation for the Crimean furniture makers is rather difficult. The majority of them can’t purchase in Kiev any more, and for them the nearest access to the Russian territory - Rostov and Krasnodar. The distance from the ferry is almost identical, but Rostov may be a little bit farther. We are glad to start working with the Crimean furniture makers even now, but there are a lot of the current problems they must solve. The Crimean tax inspections «choke» with applications for registration of enterprises, again problems with currency, banks. But how to receive the settlement account if the bank doesn’t work? I think for two-three months there will be confusion with the registration in the Crimea. When the problem with the registration is been solved, there will be a question with the transportation of freights to the territory of Russia and back. Currently the only direct way -

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the ferry which can`t already cope with it now. To the Crimea side the transport has to waits in queues for 15-17 hours. And it is a spring time, but in summer when tourists move, the situation will be even worse, but after all travel business is one of the main income items for the Crimea. Of course, it is possible to start up motor transport through Ukraine, but here a lot of things will depend on the Ukrainian customs policy.

As a whole the inhabitants of the Crimea are optimistic, they just need some time to solve their current questions. I think, by the fall or at least by the next year everything will be good.

It is difficult to say whether there is a sense to liven the activity of the Russian companies in the Crimea. But the market is open, and I think who is the first to come, to invest money, to wait temporary difficulties, the first “serves”. There is no source of raw materials there, but there are people who have already engaged in furniture production and well known materials and accessories. I hope everything will settle down there».

According to the latest messages from the tax service of the Republic of Crimea, for decreasing the expenses of the Crimean businessmen the state dues won’t be collected for those who registers the legal entity under the laws of the Russian Federation till the 1 st of January, 2015. Also Federal Tax Service of Russia issued the letter of the 17 th April, 2014 № CA-4-14/7403 under which IE registration becomes simpler.

Besides, the legislation of the Russian Federation provides to legal entities of the Crimea and Sevastopol an option: either to obtain the documents under the Russian legislation or to remain the Ukrainian legal entities. In both cases the legal entity should visit the tax inspection. In the first situation one should fill an application for registration in the tax authority in the capacity of the Russian organization (then at the same time with the registration in the tax authority the information about the company must be entered the USRLE (the Uniform State Register of Legal Entities of Russian Federation). Having chosen the second option, the company keeps the status of the foreign organization operating in the territory of the Russian Federation.

Then it will be registered in the tax authorities in this very capacity.

However even before the releasing the document Crimean companies started consulting actively the tax authorities of the republic about the re-registration procedure. As the status of the Ukrainian companies prevented these legal entities from acting effectively. As de facto they were in Russia but de jure - in Ukraine.

And the Russian companies simply didn’t understand how to return the VAT releasing production.

Per se, the law provides to the business of the Crimea an option not only jurisdictions but also a pattern of ownership. Patterns of closed and public companies are similar in Ukraine and Russia. Therefore there is an opportunity to change PrJSC (private jointstock company) to ZAO (closed joint-stock company) and PJSC (public joint-stock company) to OAO (joint stock company).

It seemed difficulties with the re-registration shouldn’t have been arisen. However not always active consultations with the tax authority are followed by opening the Crimean company of the Russian legal entity. Insignificant differences in work of legal entities turn to serious problems. Literally four years ago Ukraine had the same structure of joint-stock companies as well as Russia. But because Ukraine had been preparing for the entry to EU, the tasks to draw the legislative basis under the European standards were set up. As a result in some charters of joint stock companies there were special conditions protecting shareholders both large and minority. When a procedure of the re-registration of joint-stock companies is on, the changes of legal

rights of minority shareholders have restrictions and theoretically under the re-registration it can lead to a large number of claims from shareholders.

The absence of property transference for legal persons makes the enterprises of the Crimea slow down the re-registration process of the companies under the legislation of the Russian Federation. The tax authorities offer only the registration of new firms. But to begin economical activity in the capacity of industrial enterprise it is necessary to receive licensing documents on labor protection, ecological and many others. Now the companies have the right to use documents till the expiration date, but with the registration of a new legal person this right is been left.

The special issue concerns future customs relations for the companies of the Crimea with the Russian Federation and the countries of the Customs union. They have been commented neither in the Federal Customs Service nor in the Eurasian economic commission yet, and it is already a subject for the next material.

While preparing the article the data of open sources, Internet resources are used: interfax.ru, reghelp.ru, rg.ru, regnum.ru, kommersant.ru

11

ECONOMY ЛЮДИ

CRIMEAN HISTORY

FORECASTS OF PARTICIPANTS After the Crimea had affiliated with Russia, our furniture makers had a new market for their production. Crimean trade operators and retail shops are also greatly interested in Russian producers, and especially it has become noticeable after the Krasnodar UMIDS exhibition. About twenty Crimean businessmen visited the stand of our company, besides while talking with them we found out that their decision to visit the exhibition in Krasnodar was spontaneous, earlier they didn`t hold an interest in it.

EVGENY KIREEV DIRECTOR OF THE FURNITURE COMPANY OOO «KIMER», TM “ALSO”

I consider that trade of the Russian furniture at the peninsula is going o start during a season - in the fall.

But now there is a number of complications which prevent us from selling our production to the peninsula.

Firstly - inhabitants of the Crimea still aren’t ready to work with Russian companies as their economic links with the Ukrainian partners haven`t been broken yet. Secondly -the Crimean producers are benefitting by the current situation as the Ukrainian furniture price is now 20-30% lower than the Russian one, and together with the devaluation of hryvna it gives the chance to receive a cheaper product and to earn.

And thirdly - there is a necessity to free up the own capitals from hryvnas and to sell out the warehouse remains of the Ukrainian furniture.

As far as I know, the Crimea has no large furniture enterprises; there are only small production shops with furniture to order. The Crimean businessmen are interested in the Russian production. According to them, the latter improves significantly upon the Ukrainian one and besides it has a huge choice of models offered by various producers.

But under the assumption of living standard and respectively furniture prices in Ukraine which always were about 30% lower, the cost of the Russian furniture, even its economy class, often seems high for them. Considering the range of our furniture, the inhabitants of the Crimea were firstly interested in the cheapest products. For example, the furniture of small forms - kitchen corners, lunch groups, computer tables, reasonably priced kitchen furniture and some other categories. We believe that the furniture for a resort sector (beds, wardrobes, bedside tables, desks and dressers) will be demanded.

12

If to speak about the forecasts, I consider that trade of the Russian furniture at the peninsula is going to start during a season - in the fall. How will it happen? At the earliest possible time the national boundary will be defined between the Crimea and Ukraine, and respectively, it will be much more expensive to deliver furniture to Russia as to another state; as the customs and duties will matter. It will be more reasonably and quicker for the inhabitants of the Crimea to buy furniture from the Russian producers.

The second factor which can be positive for the Russian furniture makers is the growth of living standard for the population of the Crimea. Even now the majority of pension benefits have grown almost twice and soon they are going to reach the Russian level. Our oil companies will build their own gas stations in the Crimea, and the cost of gasoline which is so expensive now will be balanced with the Russian one. Thirdly, by the fall there has to be a final transition from hryvnas for rubles in the region, and the prices are going to become the same as in Russia.

The stocks of the Ukrainian furniture will be sold out, and the population of the resort region Crimea will both have money at the expense of the vacationers and the need for dwelling updating. Besides the fact that the majority of the population numbering 2, 2 million is the military will matter. If to consider the state policy, this segment will provide with housing, and it is an essential push to increase the sales of furniture.

We had wanted to take participate in an exhibition on May, 15 in Yalta, but then learned that a lot of Crimean businessmen participating in the exhibition at Krasnodar, didn`t plan to go there. Besides it would be passing in the hall of the hotel complex at the poor equipped territory.

So we decided to refuse the participation in this exhibition.

The only question is logistics. Still for us there is no another way to the Crimea but through the Strait of Kerch. If to consider the ferry, it is necessary to be ready for a turn. And the transport expenses are also essential.

The transportation price by the car is formed not from the tonnage, but from the places occupied by this car on the ferry. The automobile car, about 4 m long, costs about 1200 rubles, the gazelle car 5-7 m long - about 3000 rubles etc.

MARKET OF MOSCOW SPECIALIZED SHOPPING CENTERS:

OUTCOME` 2013

Staff of analytical division in the City&Malls PFM Company summarized the results of Moscow malls specializing in goods for repair and furniture articles.

The total area of Moscow specialized shoppping centers in the category Furniture/Products for Construction and Repair 1 072 204 sq.m.

950 740 sq.m.

11,3 %

2012

2013

87 600 sq.m.

212 000 sq.m.

NEAD

NAD 210 000 sq.m.

EAD

NWAD 36 400 sq.m.

CAD 120 000 sq.m.

83 200 sq.m.

WAD

SEAD

120 300 sq.m.

SWAD

258 000 sq.m.

SAD

SERGEY SHIFERSON COMMERCIAL DIRECTOR OF THE CITY&MALLSPFM COMPANY

The overall area of the shopping centers (SC) located in nine administrative okrugs of Moscow (shopping centers situated near Moscow but formally allocated out of the okrug areas are also considered) is 1 105 740 m2 in 2013. The growth over the last year made 121 500 m2 or 11% of the total selling space volume.

The Southern A.D. has become a leader with 258 000 m2 of qualitative selling spaces or 24,1% of total volume as reported for 2013.

The second and the third places are occupied by the Northern A.D. and Western A.D. with indicators of 212 000 (19,8%) and 153 500 m2 (11,3%) respectively.

The share of the City & Malls PFM facilities reached the level of 139 000 m2 or 13% of the total volume of current shopping centers: among them 7,8% (86 000 m2) - a share of MC «ROOMER» and 4,8% (53 000 m2) - a share TRK «YEKSPOSTROY na Nakhimovskom».

In terms of availability of high-quality selling spaces the leaders are the Northern A.D. - 190 000 m2/one thousand people, the Southern A.D. - 151 000 sq. m/one thousand people and the North-Western A.D. with the indicator of 130 000 m2/one thousand people.

The Central and the Eastern A.Os became outsiders both in the total areas - slightly more than 3% of the total volume of selling spaces in Moscow - and in terms of availability for citizens.

For the year 2013 three shopping centers were brought into service.

The largest one is MC «ROOMER» with 86 000 m2. There were also a shopping center «Mandarin» and a mall within a trade center "Konstructor" with the area of 20 500 and 15 000 m2 respectively.

MC «ROOMER» became also the largest shopping center in the Southern A.D. and within the Moscow Encircling Highway (MKAD in Russian) having overtaken by the area previously leading mall «Armada» with 65 000 m2. In total there are seven specialized malls in the Southern A.D. The same number of shopping centers has been registered in the North-Eastern A.D. The leader on the shopping center number is the South-Eastern A.D. with eight malls declared.

CAD - Central Administrative District NWAD - North-western Administrative District WAD - Western Administrative District SWAD - South-western Administrative District SAD - Southern Administrative District SEAD - South-eastern Administrative District EAD - Eastern Administrative District NEAD - North-eastern Administrative District NAD - Northern Administrative District

13

ECONOMY ЛЮДИ

THE TRANSIT BELARUS More than 1,88 trillion BYR (~ 218 million USD. - Editor’s note) was allocated to the implementation of investment projects in the network of the State program of logistics development for rather a short period of time. It is planned to mobilize another one billion USD investments into this branch till 2015. However the intermediate results of the program implementation still don’t please the experts.

Out of 11 current transport-and-logistics centers (TLC) in the country eight handle goods for the own needs. That is they are distribution centers of large retailers or they serve from five to fifteen foreign companies distributing their goods in the territory of the country. It turns out that in most cases TLCs work as distributive and storage ones or as warehouses for the large companies. Virtually, there are no the full-fledged transit centers but, in fact, for the sake of their creation the state program was developed.

Not so much time - till 2015 - is left before the completion of the logistics development program.

Today such investment projects are already being

14

realized at 29 sites (16 of them are declared as TLCs) of 36 that are planned. The main volume of work is being performed near the capital due to the crossing of large transportation routes there. More than 110 000m2 of storage rooms have been already placed in operation.

But only 11 TLCs have been already phased in.

According to the experts of the magazine “Delo”, the average workload of these TLCs doesn’t exceed 40%.

But it is not the main problem. Actually all the active storage facilities deal only with the domestic logistics in spite of the fact that the program is figured on increasing of volumes exactly the freights of transit.

As it is noted by Minsk Oblast Executive Committee,

the transit potential of the EurAsEC member countries is about 220 million tons, therewith due to Russia’s entering the World Trade Organization import traffic to this country will increase more than by 40%. Most probably, a certain share in transit of these freights can get to Belarus.

Of course, the perspectives are developing, but the things, alas, won`t go as far as that. First, until now the Customs Union partners haven`t examined yet the principle of residence according to which after supervision at the external frontier of the Customs Union it is possible to get customs clearance for goods only in the country of the importer registration. Still there is no solution to this problem: in the network of the Customs Union there are too many distinctions in tax, currency and civil legislations. Probably, its solution will be connected to the creation of the Eurasian economic union that is not earlier than 2015. If Russian residents have the opportunity to get customs clearance for freights in Belarus or Kazakhstan, it will help them to optimize freight traffic. Such a scheme of work, when customs clearance of cargoes can be undergone in any country, is accepted in EC countries.

A lot of Russian and Kazakhstan companies have half a mind to open their missions in Belarus (according to the legislation, only in this case a company can get customs clearance for freights).

According to the ex-director of the TLC “24”, and nowadays - the deputy chairman of Board of Development bank Vasily Shved, he forfeited at least two high profile customers because he couldn’t provide the full service including customs.

How can these problems be solved? A hint can be found close by the western boundary of Belarus. 20 years ago Poland logistics passed approximately the same way. Thenadays there was an administrative command system of economics, and till 1990s logistics was solely distributive mechanism for domestic goods. In the midnineties the country faced qualified personnel famine.

Nevertheless the solution was found. For a start all the efforts aimed at improvement of professional skills in the field of logistics and search of a place of the country in logistic streams of Europe. The choice of those places, where the centers were to be created, had been computed mathematically and only then real investments were allocated in their construction. It required about 20 years for the system to start working.

“In Europe logistic business is realized differently, Vasily Shved says. - It is divided: there are investment companies - the groups of proprietors who build the premises, create the equipped warehouse and buy vehicle fleet. Their business is a leasing of a warehouse with all the ready equipment. But there are logistic operators, and their business is logistics. They provide the services on the basis of the leased areas therefore they have no problems with credit debt. It is one of secrets for cheaper logistic services than we have. For example, in Lithuania. When our enterprises deliver freight from the Baltic territories, it is more favorable for them to store purchased production and to bring production to Belarus only by one truck. On account

of storage costs structure the service payments come to about 30% cheaper for them than in Belarus”.

According to the experts of the magazine “Delo”, even at the design stage nobody planned to make practically all Belarusian logistic centers as transit, but already now many are ready to change the line of business, and besides it is necessary to correct the plans of those centers that are under construction now.

However Belarusian domestic logistics is also full of different problems. The representatives of many state enterprises still don’t understand what for to use outsourcing when there are own warehouses and transport for goods delivery. Moreover, many enterprises rename the “supply departments” into “logistics departments”, they begin re-equipment of storage rooms, build terminals. But it isn`t talked of the integrated logistics. Meanwhile, the European statistics says that the use of TLCs services increases the logistics efficiency up to 30-35%! In Russia and Ukraine this indicator reaches 15%, but in Belarus, obviously, nobody even kept such a count.

The majority of the logistic centers which are to put in operation in the network of the state program actually will be small terminals-warehouses for the needs of domestic logistics. Large placements of fund in this branch without the cancellation of residence principle aren’t of interest to foreign investors. So here it turns out that while the whole world rejects construction of own TLCs, the Byelorussians buck the trend.

According to the experts of the newspaper «Belorusy I Rynok», recently one more negative tendency for transport workers is getting more and more vivid: Belarus is gradually losing transit of freights by rail. For the first two months of the current year transit traffic of freights through Belarus has decreased by 11,6% - to 7,5 million tons.

Freight traffic is gradually displacing to Russian ports located near St. Petersburg. Russia develops actively these ports in the network of strategy for the maximum reorientation of its freights from foreign ports to the own ones.

In its turn, this urged on competitive fight among the Baltic ports. The experts pay attention that now Klaipeda fights violently for any new freight, including those that traditionally went through the port of Liepaja (it is a question of ro-ro freights, Belarusian oil products and grain).

Russian reorientation of their freights from the Baltic direction to the ports of Leningrad region forces Belarusian transport workers to reflect even more on the transit efficiency and to look for the alternatives to Russian freights. It is right the point when the interests of Belarusian transport workers coincide with the interests of their colleagues from Lithuania, Latvia and Estonia.

However, it should be noted that this year the Government of Belarus anchors its hopes on transport branch. It is awaited that the enterprises of Transport Ministry will increase the export of services at 18% in comparison with 2012 and demonstrate budget surplus of foreign trade in services at the level of 1,15 billion USD.

15

ECONOMY ЛЮДИ

TENGE DEVALUATION Kazakhstan national bank refuses to hold the line of tenge exchange rate and in general reduces its intervention in the process of forming an exchange rate.

We wrote that as far back as 2012 the head of Kazakhstan National bank Grigory Marchenko made a declaration of unacceptability of the Russian policy in respect to an exchange rate for Kazakhstan. The rate of home currency in Kazakhstan had been rather stable for a long period of time. “And it is our essential difference from the Russian Federation where ruble movements were plus-minus 20%”, Mr. Marchenko noted earlier.

The difference in the international monetary policy of the Central Banks in Russia and Kazakhstan led to the situation when, for example, ruble fell for 10%, while tenge lost only 1% to dollar. In the total a tenge-to-ruble rate became stronger. The imbalance favorable for Russian exporters and not only for them in the network of the Customs union was created. But Kazakhstan producers lost their positions. It resulted in export reducing and essential increasing in import volumes to Kazakhstan in the network of the Customs union. It meant that Kazakhstan producers couldn’t receive a share in the market of the neighboring country, and therewith began to lose their stands in their domestic market.

On the 11th of February, 2014 the National bank of Kazakhstan unexpectedly to so many began tenge devaluation: its decision of refusing to maintain a rate of domestic currency at the level of 150-155 tenges for 1 dollar was a bombshell. In a few minutes the rate of tenge petered out approximately for 20%. At the auction of the Kazakhstan stock exchange one gives about 182 tenges for 1 dollar now. In currency exchange offices dollars are even more expensive.

The chief economist of FC “Otkrytiye” Vladimir Tikhomirov calls a growing speculative pressure of currency

16

buyers from Russia as the main reason for falling a tenge rate.

“January devaluation of a ruble exchange rate increased appeal of purchasing currency through Kazakhstan owing to a gap on ruble and dollar cross rates to tenge, Tikhomirov explains. - The possibility of a free overflow of the capital from Russia to Kazakhstan in the network of the Customs union created conditions for growing a pressure upon tenge. In effect, the situation of several last weeks is duplicated to the developments of five years` prescription when tenge devaluation to dollar also happened later than ruble devaluation, and also under the growth of speculative pressure upon the reserves of Kazakhstan National bank”.

In February, 2009 so did the National Bank refusing to maintain a rate tenge in a currency band of 117-123 tenges / 1dollar, so the rate was fixed at the level of 147-153 tenges / 1 dollar.

The head of Kazakhstan National bank called a ruble falling as “collapse”. Most probably, just the prospects of further reinforcing of the national currency against the Russian one forced the National Bank of Kazakhstan to take such steps. Rise in price of tenge can knock export flows as it will make goods less competitive at a foreign market. As it is known that for last year the rate of tenge to ruble became stronger for 10% that bore hard on competitiveness of the Kazakh economy. Now it is too early to judge about the aftereffects of the policy of Kazakhstan National bank for the inhabitants as well as about its echo on cooperation in the network of the Customs union, but changes obviously will come pat.

While preparing the article the open sources and the Internet sites top.rbc.ru, gazeta.ru, kurs.kz were used.

INTERNET

FURNITURE PURCHASE ONLINE VS OFFLINE

According to Data Insight the volume of retail electronic trade in 2013 totaled about 520 billion RUB (16,3 billion USD). By the year 2012 the growth in terms of ruble made 28%, in a dollar equivalent - 25%. From 520 billion RUB 350 billion (+25%) were spent on material goods, but 170 billion RUB (+36%) - on digital goods and tickets.

In Russia 30 million Internet buyers were noted, by the year2013 the growth of online customers made 30%. Noticeable growth was observed in such segments as goods for housing and furniture, articles for children and sports. However, according to Sergey Shiferson, e-commerce having quite a high potential still can`t compete in a segment of DIY&Household in leaps and bounds.

SERGEY SHIFERSON SALES MANAGER OF THE CITY&MALLS PFM COMPANY

It is still too early to make negative forecasts for development of shopping centers, but emporia should learn to earn in new competitive conditions not to turn into bulky meetings of show-rooms uncalled by tenants.

To be of interest both to visitors and tenants it is better to apply a useful concept of “the third place” for a shopping center - the idea of a space which is neither work nor home.

In the Russian reality such "third place option" option can become not only park but also a shopping center.

Today the number of Russian online stores has exceeded an indicator of 33 thousand. Obviously purchases by the Internet save not only time but money, and online shops don’t bear expenses on show-room maintenance costs and, therefore, offer goods at more favorable prices. However choosing between online and offline shopping, the buyer considers other factors such as, for example, time, distance, pleasure from searching and purchasing.

Among claims on goods and services of online stores are in the lead the following: discrepancy between the picture and the delivered goods, impossibility or high cost of return and exchange, poor quality of goods and accessories. On the other hand, online choice is more convenient, since it is so simple to lose your head in a large shop. But special online services allow to compare models by the key characteristics. Though, according to the polls, more than a third of furniture online catalog visitors admitted that having chosen furniture on a site they went to a shopping center for purchasing.

Large furniture online-shops observing buyers` behavior quite often create offline show-rooms for demonstrating their production and operating shopping centers, on the contrary, develop their online platforms.

According to the research of buyers` preferences conducted by «RosBusinessConsulting» agency 39,8%

of respondents buy furniture in large shopping centers; 21,9% - in independent furniture stores; 14,3% - in furniture retail chains; 9,5% made-to-order; 7,6% acquire furniture in online stores; 0,7% - at the markets.

Specialized furniture centers are in a great favour in megalopolises: Moscow (38,6%), St. Petersburg (49,4%), Novosibirsk (46,0%), Yekaterinburg (34,1%), Nizhny Novgorod (69,7%), etc. In regions, under the absence of specialized shopping centers furniture, is acquired in small furniture stores.

The Russians don’t hurry to buy furniture at foreign online resources. Acquisition of large-sized goods at a foreign online store is attended with additional time and financial expenditures. Even if a shop delivers goods to Russia, a buyer will have to pay customs duties, packing costs, transportation and furniture storage. The risk of damage and loss of goods while transportation is high; moreover in case of rejects or damage detection all return costs are often carried by a buyer. Guarantee certificates upon foreign online purchases are excluded.

Statistically, an average Russian family updates an interior not often than once in three-five years, and, therefore, the choice is responsibly weighted; not only models, prices, options are compared, but also a set of the additional services provided by the companies which are presented in shopping centers as well. While visiting a sales area, examining and comparing pleasant models, consulting experts, choosing additional options and accessories, buyers make a deliberate and tram decision. Online trade doesn’t give such an opportunity.

I think that at least in a short-term prospect there is no direct competition between real and virtual platforms.

Most probably online catalogs are going to become an integral component of the furniture market. Now we are observing an active development of this direction.

17

INTERNET ЛЮДИ

DIGITAL STATISTICS IN RUSSIA At the beginning of the current year the WeAreSocial agency provided the report containing the key data on social, digital and mobile statistics sections all over the world. It is interesting that Russia ranks the 14th place among the studied countries on the Internet entering, the 12th place on the average time spent by a user in the social network, and the third place on mobile communicationsentering. A half of the country population is active users of social media.

U

18

nder the offered data, the Internet enteringin Russia totals 53%. The worldwide leaders are Great Britain - 87% and Canada - 86%. The third place is occupied by Germany and South Korea: the share of the Internet users in both countries forms 84%. France and the United Arab Emirates has made 83%. The lowest level of the Internet enteringis in Indonesia (15%) and India (12%).

On average Russian users spend daily 4 hours and 56 minutes in the social networks (here the time spent both before desktops and in front of portable computersis considered). It is interesting that in South Korea people use the Internet least of all - 3 hours and 27 minutes a daythough the country has one of the highest rates on the Internet enteringin the world. The Brazilians are the leaders in the number of hoursspent in the Internet(6 hours 3 minutes a day).

According to the TNS data, the highest level of using the Internet is recorded in Moscow and other megalopolises - 77% and 71% from the total population respectively. In towns and settlements where less than 100 thousand peoplelive, the Internet enteringforms no more than 51%. The most experienced users of the social networkslive in Moscow - 55% have already started using the Internet more than seven years ago. In Russiancities with the population from 100 to 799 thousand people there is the same percentage of the Internet users.

The majority of the Internet users is in age group from 25 to 44. This category makes 48% of all users in the small towns and 46% - from the number of all users in Moscow. Inhabitants of Moscow and other megalopolises use network possibilitiesmore actively: Muscovites spend in the Internet more time (a little over 2 hours a day) and visit larger number of sites (on average about 120 sites in a month).

The popularity of social networks keeps on demonstrating the high growth rates. Only for the last 12 months there were more than 135 million of new participants in the most widespread socialmedia. Today 26% of the world population use social networks and this is more than 1,8 billion people.

The share of account owners in the social networks of Russia makes 50% of the population exactly and byturnit is equal to 94% of the total number of Internet users. 80% of these userswent to their pages in December, 2013.

According to the results of the WebIndex researches during the February, 2013, the social networks won 80% of day audience. Depending on the region users spend inthe social networks from 30 to 41% of the total time spent in the Internet. Andinhabitants of towns with less population spend more time in the social networks (41% in settlementswith the population sized 100 000 people).

33% of inhabitants of our country (46,8 million people) are users of the largest social network “VKontakte”. In Russia 75% ofthe Internet users have the ownaccounts”VKontakte”. About 52% of them went to their accountsin December, 2013, the last month of the researches. In the social network “Odnoklassniki” 69% of users are registered and 44% went to their accountsin December. A similar statistics is in Facebook: 68% against 41%, Google +: 52% against 24% and Twitter: 39% against 18%.

An average period of time spent by the Russians in the social networks makes 2 hours and 11 minutesa day.

Distribution of mobile communications statistics arouses a particular interest. Today 93% of the Globe population (more than 6,5 billion people) uses mobile communications. Meanwhilethe level of mobile communications enteringexceeds 100%in many regions(including developing countries).Thus in Russia there arenearly 262 million of mobile network subscribers and it makes 184% with respect to the total number of inhabitants. Certainly here it is more likely reported about thequantity of SIM cards butnot of real subscribers having from three to five SIM cards (in several phones, a tablet, a modem, a car and so forth). Russia is on the third place in the worldon mobile communications entering. The United Arab Emirates are in the lead (252%); the second place is taken by Saudi Arabia(197%).

Only for 2013 the number of “mobile” users grew by 48% in the cities with the population from 100 to 799 thousand inhabitants, up for 45% in Moscow and up for 34% in other megalopolises. Such increase is directly connected with the growth of smartphones and tablets in the country.

At the beginning of 2014 the share of the mobile Internet in Russia made 36%. On average we use the mobile Internet 1 hour and 22 minutes a day. 93% of users utilize smartphones for orientating and searching about the district. 82% by means of gadgets study goods which could get. 39% at least once made purchase using their smartphones. 46% of mobile users in Russia utilize apps for access to theiraccounts in the social networks.

The share of LBS serviceusers makes 12%.

Under the offered data, the Internet enteringin Russia totals 53%. The worldwide leaders are Great Britain - 87% and Canada - 86%.

For preparing the article the report materials of WeAreSocial agency by “Globaldigitalstatistics 2014”, the reports of the international research group TNS “WebIndex”, the information of open sources were used. You can receive the references for the used reports and sources byenquiring: editor@mprorussia.ru

19

INTERNET ЛЮДИ

SOCIAL NETWORKS OF RUSSIA It is difficult to imagine modern communications without social networks, however recently their audience hasn`t been sufficiently studied. Mail.RuGroup decided to correct it having carried out the analysis of the largest social networks in Russia. According to the version by the international research group TNS five especially popular social networks were selected for this purpose. Here we give the most interesting data of the report.ks are equally

SEX According to the recent surveys, it is slightly more women among users of the Runet than men (52% against 48%). The same tendency is exhibited among users of social networks. The highest percentage of women is among users of “Odnoklassniki” (56%) whereas they are only a little more than a half in Twitter.

20

47% male

44% male

46% male

53% female

56% female

54% female

47% male

48% male

53% female

52% female

MONTHLY AUDIENCE OF SOCIAL NETWORKS

52,7 million users

42,6 million users

25,4 million users

30,6 million users

11,6 million users

Vkontakte

Facebook

Odnoklassniki

Twitter

My World (Moi Mir)

AGE

BEHAVIOR

The most active users of social networks are people between the ages of 25 and 34. This group amounts about 27% of Runet users in tote. But Facebook differs from other social networks on more age audience while the majority of Twitter and Vkontakte admirers isyoung people under 24 years.

Behavior of participants preferring different social networks varies significantly.

If users of “Odnoklassniki” go to their accounts rarely and spend a lot of time on the social network pages, the users of Vkontakte, on the contrary, prefer more frequent but short visits.

“Odnoklassniki” is an unconditional leader in the number of sites visited in a month; it is 1,7 times more than the same indicator of the Vkontakte network.

It is interesting that by the number of visited sites”My World” leaves behind Facebook and Twitter unitedly.

12-17 18-24 25-34 35-44 45-54 55-64

11% 20% 28% 19% 15% 7%

8% 15% 29% 22% 17% 9%

8% 14% 29% 23% 18% 8%

7% 15% 26% 22% 19% 11%

12% 23% 21% 19% 16% 9%

The mean residence time, minutes per session

Average number of visits per user per month

Number of pages per month

20,3

31,2

64,3 million

9,7

39,2

37,1 million

3,3

7,0

1,5 million

7,6

7,3

1,1 million

1,8

6,9

0,2 million

EMPLOYMENT Among users of Twitter and Vkontakte the share of pupils is much higher (23% and 19% respectively). Among users of “Odnoklassniki” there are slightly more employees (20%), and in Facebook - experts (25%) are observed.

EXECUTIVES EXPERTS EMPLOYEES WORKING MEN STUDENTS HOUSEWIVES UNEMPLOYED

13% 22% 19% 14% 19% 6% 7%

14% 22% 20% 15% 14% 7% 8%

14% 23% 19% 16% 13% 7% 8%

16% 25% 18% 14% 13% 5% 9%

14% 23% 16% 12% 23% 5% 7%

Social networks are equally popular in cities and villages; still there are differences in size of settlements and a share of this or that network. So, the share of “Odnoklassniki” users is much higher in towns while there are more users of Facebook and Twitter in cities with the population more than 800 thousand people.

GEOGRAPHY

more than 800 thousand people

29%

23%

28%

34%

35%

Users of social networks are unevenly distributed on the Russian federal districts. The greatest share of all the considered social networks falls on the Central Federal District. Least of all users are concentrated in the Far Eastern Federal District.

Facebook (31%) and Twitter(30%) are in the lead in the Central Federal District,”Odnoklassniki” is the preferred leader in the Southern Federal District and the Siberian Federal District (17% and 16% respectively), in the Northwestern - Vkontakte and Twitter (11%). In the Volga, Ural and Far Eastern Federal Districts the popularity of social networks is distributed rather evenly.

from 500 to 800 thousand people

9%

9%

10%

10%

10%

from 100 to 500 thousand people

23%

25%

23%

24%

25%

less than 100 thousand people

39%

43%

39%

32%

30%

CENTRAL FEDERAL DISTRICT

28%

27%

27%

31%

30%

VOLGA FEDERAL DISTRICT

20%

19%

20%

19%

20%

SOUTHERN FEDERAL DISTRICT

15%

17%

16%

15%

14%

SIBERIAN FEDERAL DISTRICT

13%

16%

14%

13%

13%

URAL FEDERAL DISTRICT

9%

9%

9%

8%

9%

NORTHWESTERN FEDERAL DISTRICT

11%

7%

9%

10%

11%

FAR EASTERN FEDERAL DISTRICT

4%

5%

5%

4%

4%

Mail.RuGroup is one of the most considerable players of a Russianspeaking segment of the network. Visitors of the Mail.RuGroup projects are about 90% of the monthly audience of the Internet users in Russia (TNS, January, 2014). Mail.RuGroup rates amongthe three world’s largest Internet companies on the attendance indicator (by the number of browsing pages, comScore, January, 2014).

The company owns two of three largest Russian-speaking social networks ”Odnoklassniki” and “My World”, two instant-messengers of Russia the Agent Mail.Ru and ICQ, the mail service, one of the largest portals in the Runet, and also a portfolio of the largest online games. Besides, Mail.RuGroup has the equity stakes of “VKontakte” (51,99%) and Qiwi (10,40%), minority shares in a number of the small Russian and Ukrainian Internet companies.

Source: Mail.RuGroupresearch. Social networks of Russia, September, 2014.

21

HR

ЛЮДИ

PERSONNEL POLICY: SPECIFICITY OF THE NEAR ABROAD COUNTRIES The personnel matter is always actual especially under conditions of market instability.

That`s why throughout our four issues together with the furniture-expert companies we try to understand various personnel problems and find their solutions: why employees leave, how to motivate them, where to look for them. And how do the matters stand with personnel in the near abroad? We will try to answer this question.

ANASTASIYA GLAZKOVA MARKETING SPECIALIST, JOURNALIST

FROM RUSSIA IN...

The competition aggravation, quite good representation in the native market, desire to increase sales volume and marketing geography push Russian companies to search for new promising markets. In that respect markets of the former Furniture production vacancy size of the total number of vacant positions in different countries*

% furniture production vacancies of the total number of vacant positions in «Production» field

Country Russia Ukraine Belarus Kazakhstan

4,3 4,1 11,4 4,7

union states - Ukraine, Belarus and Kazakhstan are considered to be the most attractive. Each of them has in own unique way: starting with the legislation, economics, customs rules, logistics and finishing with national features of employed workers. So, the decision is made.

How to start searching for the employee?

Russian companies planning to develop their trade representations outside the country can start personnel search with the help of the familiar online resources. “If Russian company enters the markets of Ukraine, Belarus and Kazakhstan, - Evgenia Vasilyeva, a marketing manager and PR of HeadHunter group of companies, commented, -

it can find employees for its representations using the Russian site hh.ru. In Ukraine, Belarus and Kazakhstan employer registration on the sites of HeadHunter group is free and open. The cost for access to resume database varies depending on the country, for example in Russia the cost is significantly higher than in other states. In Evgenia`s words, if to take the list of demanded qualifications, the differences in these countries are not essential. An assembler, a designer, a carpenter are necessary everywhere. But the salary would depend rather on the company than on the country. For example, to a furniture assembler on the average 28 000-30 000 rubles are offered.

Employability of furniture branch specialties in different countries * Russia

Ukraine

Kazakhstan

Specialty

% of planned vacancies in furniture production

Specialty

% of planned vacancies in furniture production

Specialty

% of planned vacancies in furniture production

Specialty

% of planned vacancies in furniture production

Constructor

12,8

Assembler

21,8

Assembler

17,0

Assembler

14,9

Assembler

10,8

Constructor

11,5

Operator

11,1

Designer

14,9

Engineer

8,8

Carpenter

11,5

Carpenter

12,7

Foreman

9,6

Designer

7,5

Operator

10,3

Engineer

7,8

Chief

7,0

5,3

Engineer

8,0

Constructor

7,6

Constructor

5,3

Carpenter

* Period of analysis: September, 1 – November,30, 2013

22

Belarus

… UKRAINE

The majority of the companies having entered the Ukrainian markets as well as country residents say that the Russians and the Ukrainians are alike in human capacities and competencies. Kindness, sharpness, endurance, economy and emotionality are peculiar to Ukrainian employees. Social envy and unpunctuality are common negative traits. All these must be considered while creating motivation systems and recruitment. The most important factors of motivation for the Ukrainians are interesting tasks, a good staff and a convenient schedule of work. It is reported by the researches of hh.ua personnel portal that money is not the most important for pleasant and productive work for Ukrainian workers. Nearly a half of Ukrainian office employees likes their work despite of a rather low payment.

The economic situation also dictates the rules of game in the personnel market. Stability and secure about the future become the key factors for Ukrainian workers. A third of hh.ua surveyed say they work at a low-paid position because of impossibility to find the best place. However this situation has also a positive side but mostly for employers. According to the director of the Ukrainian company OOO «PRODEKS» Evgeny Kachanov, economic factors, certainly, influence staff recruitment. “Under the current crisis it has become easier for the company to recruit personnel satisfying our requirements, Evgeny said. - It became possible due to appearance of a greater number of free single-minded candidates”.

Many people rejoice even at the fact that they simply managed to find a job- such a conclusion is made up by hh.ua basing on the example of offers simultaneously considered by candidates. A crisis situation of the Ukrainian market is confirmed indirectly by the following fact: hh.ua polls indicate that every second office worker of Ukraine is ready to change his office chair for a place in a field or at the machine. But in Russia only a third of office workers would agree to choose manual work and one more third among them would never like to earn a living using manual skills. For 20% of Ukrainians manual skill is a good way to survive at a crisis time. And more than 70% of office workers are ready to such change and possess the whole set of various skills which could help to keep them and their families if necessary.

Crisis influences manners of the Ukrainian companies. Striving for cost reduction and expense optimization, at times they have to employ less skilled experts whose salary requirements are lower. But if a question arises what personnel to prefer, experienced Russian companies give a definite answer - it is unprofitable to transfer their employees from the Russian Federation. Russia, Belarus and Kazakhstan are included in the Customs union so residents of these countries don’t have to get permission to work moving within the CU territory. But Ukraine doesn’t enter the CU, so the citizens must have employment permission for work in Russia and other countries of

The competition aggravation, quite good representation in the native market, desire to increase sales volume and marketing geography push Russian companies to search for new promising markets.

OPINION

EVGENY KACHANOV DIRECTOR GENERAL, OOO «PRODEKS», UKRAINE

Setting out a search of employees in Ukraine our company uses two proven methods depending on qualification of demanded workers: the special-purpose site work.ua and the «Ot I DO» newspaper. We don’t address at all to recruiting agencies as our way we have never met professionals among them. According to our experience, the most effective method of recruitment process developed in our company is holding many-hours-long competitions to fill any vacancy.

As to Ukrainian national personnel features, perhaps, I can call a little. In Ukraine people don’t like to be twisted for a long time even if it is a well-paid business. But in general our people are open, friendly and good-natured. But I don’t advise to use these traits for mercenary ends. Nobody is going to work for the sake of an idea. If you want to receive the marked result, it is necessary to pay employees a little more than it costs.

Today comparing some companies of approximately same level in Russia and in Ukraine, it is vivid that salary of employees hardly significantly differs unless in top management. As for motivation of personnel we have developed the own system which really helps them to realize their importance in the company and to affect personally their own income and respectively to increase our common achievements. Except financial motivation the common result is influenced by employees` internal satisfaction that everyone can strengthen the skills and thereby affect processes which help to achieve objectives using more effective methods for a quite short period of time.

Unfortunately, in Ukraine there are no institutions of higher education which train future furniture makers. I have never heard about any programs of young specialist intake.

In short, today it is possible to survive in furniture branch of Ukraine only having a huge desire to be on the top and thus constantly using enterprise sharpness.

23

HR

ЛЮДИ the CU. For work in Ukraine an employee must have at least a residence permit. But to obtain an invitation having a visa on an employment basis is an impossible and expensive problem.

The portals work.ua, rabota.ua, job.ukr.net are considered to be one of the most effective sources of employee searching in Ukraine. With their help a company entering the market can initially create its staff. Then the company can use personal connections.

It is reported that there is no difficulties under the

OPINION

TATYANA KURTIN LEADING EXPERT OF MARKETING DEPARTMENT, GROUP OF PAN FASAD COMPANIES, THE REPUBLIC OF BELARUS

Traditionally the highest level of labour remuneration is in Minsk and the Minsk region. As a whole it is possible to speak about the growth both nominal and real wages in the woodworking branch that is one of the export-oriented for the Republic of Belarus. But salary of employees is strongly differentiated depending on organizational structure and pattern of ownership, size, specialization and activity efficiency of the concrete enterprise or firm.

The main higher education institution training furniture experts is considered to be BGTU - Belarusian State Technological University. Almost all range of engineering and management personnel for the wood-based branches including furniture industry is trained here. There are also a number of vocational schools: Kobrinsky State Polytechnic College, Pinsky State Vocational School of Furniture Making and Automobile Transportation, Gomel State Vocational College of Folk Arts and Crafts.

Formally there are also training programs for demanded personnel. Since September 1, 2013 according to the request of «Bellesbumprom» concern and Association of woodworking and furniture enterprises, the specialty “Equipment and Technologies of Furniture Production” (qualification “The master of furniture production” and “Master of vocational training”) has been opened. In my opinion, the importance of experts in the marketing sphere has considerably increased in Belarus. Today some furniture enterprises work not simply with support of certain marketers but in the staff they have got the departments solving the widest range of strategic and tactical tasks.

24

registration on these websites but Evgenia Vasilyeva specificates that hh.ua can request the registration certificate. Besides under the vacancy publication gender and age discrimination is forbidden in Ukraine. However it is often difficult for enterprises with foreign capital to get money for turnover at the company accounts. … BELARUS

Belarus depends largely on the Soviet heritage especially for the structure of economics itself (“manning” and half-free market), recruitment peculiarity and motivation of employees. Within the Belarusian model it is necessary to consider a habit to work in the ideological environment. To perform at the peak, an employee needs to have the idea humming in the air or to follow “the party policy” transforming into a modern concept of a “company mission”. The identity of the head is not the least in motivation system. Because of the Belarusian history, there has always been a strong leader, the father in a family, society, party. There must be a charismatic person able to fugle and clearly explain where a company moves, what purposes face and how work of employees can affect the common success.

As well as in Ukraine, money isn’t the main motivating factor. Relations, confidence and longterm cooperation are the most important here.

These positives can often outweigh insufficient professionalism or momentary benefit.

The atmosphere of humanity, trust and support in the organization are of equal significance for Belarusian staff.

Tatyana Kurtin, the leading expert of marketing department for the Belarusian group of PanFasad companies, specifies the typical traits associated with Belarusian workers. “The majority of the Belarusians is responsible, honest and hardworking. High professionalism, integrity and ability to work in a team are peculiar to them, - Tatyana noted. - However they often lack high self-appraisal, initiative, desire to risk and national self-identification”.

It is known that furniture production is one of the major branches for Belarus. According to the data from the group of HeadHunter companies, Belarus ranks first in number of vacancies placed in the furniture production section- 11,4%. While Russia has 4,3%, Ukraine - 4,1%, Kazakhstan - 4,7%. However Russian companies searching for employees in Belarus may face rather serious obstacles. Even for registration confirmation on the website rabota.tut.by (HeadHunter in Belarus) legal entities and individual entrepreneurs have to provide certificates of state registration; foreign companies` representative offices in the Republic of Belarus must have «dazvol» (permission for opening foreign companies` representative offices in Belarus). Only residents of the republic can publish vacancies on the website. Under publication of the vacancies connected with employment of Belarusian citizens outside the country there are legislative restrictions

and prohibitions. Legally only residents of the Republic of Belarus can publish on the website vacancies assuming employment of citizens abroad.

They are obliged to have the license to run the business of job placement abroad if they provide texts of such vacancies agreed with Department of Citizenship and Migration of the Ministry of Internal Affairs of the Republic of Belarus.

Producers of furniture in Kazakhstan as well as in other countries face a problem of lack of single-functioned experts. There has always been a deficiency of qualified candidates but now it is especially aggravated.

… KAZAKHSTAN

Kazakhstan, probably, is the most perspective market among all the considered near abroad countries. Besides it is the least problematic for Russian companies both within the legislative plan and customs matters. Favorable political regime, loyalty of the buyer and a great demand for production - essential motives for country development. But to run a successful business in Kazakhstan it is necessary to know its specificity including the personnel peculiarities.

Starting business in Kazakhstan it is worth knowing about differences between Southern and Northern parts of the country. And the climate isn`t the only queer thing there but first of all mentality features must be taken into account. In the northern part of the country people are more “russified”, here all speak Russian or even English. The South of Kazakhstan is an area most subjected to national traditions of the Central Asia. Here, as anywhere, the Kazakh language and culture are strong, traditions and customs are observed. In the south Russian companies may have much more difficulties without local workers in their staff. Networking and job placement referrals play an important role in the south of the country. Whereas in the north money matters are often of primary importance. According to the Kazakh concepts it is necessary to observe age hierarchy or seniority in business. Really, people of mature age carry authority and can become a powerful advantage while negotiating. The tradition of domesticity when close and distant relatives are involved in family business is very strong in Kazakhstan.

What are the distinctive features for the Kazakhs?

Good nature, unity with team, spirit of enterprise, broad vision and mutual assistance are positive.

Negative treats are cunning, poor learning ability, sluggishness, laziness, eagerness to fight, tendency of being late, desire to receive everything and at once. While opening representative office there can be difficulties with paper work for foreigners eager to work in Kazakhstan. Therefore many companies prefer to entice local ready experts. Firstly, they know the market better; secondly, the youth after higher education institutions isn’t ready for a rush and possesses poor knowledge in branch. But when it comes to top managers, many companies from Russia prefer to bring their experts though it costs much. The level of salaries in Kazakhstan is on the average comparable with the Russian one, but here all depends on education and position.

OPINION

MIKHAIL GLUKHOV PRESIDENT OF ASSOCIATION OF ENTERPRISES OF WOODWORKING AND FURNITURE INDUSTRY OF THE REPUBLIC OF KAZAKHSTAN

Producers of furniture in Kazakhstan as well as in other countries face a problem of lack of single-functioned experts. There has always been a deficiency of qualified candidates but now it is especially aggravated. Now there is simply neither inflow of personnel nor educational institutions training representatives of blue-collar job for furniture branch. But now the development level of furniture technologies is presenting a challenge of lack the whole chains of single-functioned experts. Institutions of higher education do not sufficiently attend to the practice, new technologies of work, specialized software. No higher education institution of the republic graduates designers of furniture production.

As a result an overwhelming majority of furniture industry enterprises is reluctant to train new employees practically in all spheres of work - from the machine operator to the designer. Large furniture companies open training centers and qualify experts for their enterprises themselves.

We have already been working towards practical training among the pupils of vocational school No. 10 in Almaty and we placed in a job well proven guys. Thanks to our initiative on the basis of vocational school No. 10 in Almaty the Resource center was created. It is equipped with modern woodworking machines, lathes for furniture production, educational materials and stands for training of specialists. But the main problem of these educational establishments there is a lack of teaching staff, masters, and the most important thing is the absence of curricula.

It is necessary to revise educational programs of vocational secondary education institutions and modify them according to business needs. We would like these educational programs to change in the interests of real needs of production, and Department of vocational and professional education as well as Ministry of Education and Science of the Republic of Kazakhstan to take part in it.

25

HR

ЛЮДИ

FURNITURE MARKET TODAY

WHAT QUALIFICATIONS ARE IN DEMAND AND WHAT SALARY IS OFFERED? Research Department of the HeadHunter Company analyzed more than 950 vacancies published in Russia, Ukraine, Belarus and Kazakhstan for the last three months and found out, how many vacant positions were posted and what salary was offered in furniture branch in cities of Russia and other CIS countries.

In research the following positions of furniture branch were analyzed:  Sales representative;  Cabinet furniture assembler;  Constructor/technologist;

Furniture branch is presented in labor market very weakly in Russia. Vacancies are few in number even in Moscow. Ratings of cities by vacancy size for the enumerated positions and offered salary in cities with the vacancy number for these positions exceeded five are set out below. assembler

3

1 k irs

No

Kr

vo

as

sib

Ka

no

za

da

n

r

rg

od

ny

.P

Ni

zh

St

at

Ek

bu

ur sb

co

er

os

et

bu

er

in

M

k

rg

n

irs sib

No

No

vo

vg

Ka

or

za

od

r

g

da

as

2

Ni

n

k

za

irs sib

No

vo

Ka

od or

da

Ek

ny

at

Kr

No

as

vg

no

bu

sb er

et

r

rg

g ur

w co .P

Ni

zh

Ni

zh

St

Ek

ny

at

No

er

in

M

bu

os

rg

n Ka

vg

n-

or

za

od

n Do

da

-o st

Ro

2

1

da

os

n za

M

Ka

w co

irs ib os

No v

ny

.P

zh

St

k

od vg

sb et

No

er

no as Kr

or

ur

da

r

g

no

Ni

The average salary in Russia (thousand RUB, November 2013 - January 2014) 38 33 31 31

The average salary in Russia (thousand RUB, November 2013 - January 2014) 38

26

24

No N vg izh or ny od

35

r

38

6

3

as Kr

in er

6

Number of vacancies in Russia (November 2013 - January 2014)

r

rg bu

irs ib os

at

Ni

er

7

1

Ek

No v

No ny

2

k

n za Ka

or

5

zh

St

sb

Upholsterer

da no as Kr

er et .P St

No

vo

sib

sb

irs

ur

k

g

n za

or vg No ny

zh Ni

Ka

od

k irs ib os No v

sb .P

et

er

os St

bu in er at Ek

* Production director

M

k

rg

co

ur

w

g

40

irs sib vo

28

et St

64

No

29

.P

at Ek

86

w

8

od

g

vg

sb er et

.P

g ur

n za

bu er

in

Ka

rg

k irs

No vo s

ib

w co os M

ur

w co

1

M

1

os

2

10

The average salary in Russia (thousand RUB, November 2013 - January 2014)

co

33

Number of vacancies in Russia (November 2013 - January 2014)

21

Number of vacancies in Russia (November 2013 - January 2014) 2

os

ov

Kr

24 22

M

5

The average salary in Russia (thousand RUB, November 2013 - January 2014)) 50 40 30 27 23 23

56

Carpenter

Furniture store manager

26

38

r

g ur

as

er et

.P St

Ro

38

no

sb

co os M

Kr

ov

45

w

n

r

as

Ka

no

za

da

n n-

-o

vg

60

26

st

No

vo

29

The average salary in Russia (thousand RUB, November 2013 - January 2014)

Ni

zh

ny

No

30

Do

k

od

31

or

irs sib

bu in

at Ek

St

41

rg

g

44

er

er

sb

ur

w co os

.P

et

M

45

5

2

zh

St

ny

.P

Kr

et

er

no

sb

ur

n

w

Do n-

os M

ov

Ro

Ek

st

at

er

-o

bu in

co

rg

k

n

irs sib

n-

vo

-o ov

No

Ni

zh

Ro

st

ny

Do

od

r

Kr

No

as

vg

no

Ka

or

da

n

g

za

ur

w

sb

co os

er

M

et .P St

The average salary in Russia (thousand RUB, November 2013 - January 2014)

60

6

in

4

w

4

4

er

9

10

at

19

11

in

22

16

Number of vacancies in Russia (November 2013 - January 2014)

8

er

26

17

11

Number of vacancies in Russia (November 2013 - January 2014)

Ek

Number of vacancies in Russia (November 2013 - January 2014)

g

33

or

representative 40

Constructor/technologist

Cabinet furniture

vg

Sales

No

RUSSIA 153

 Furniture store manager;  Carpenter;  Upholsterer;  Production director

For the last three months only six vacancies for this position (five - in Moscow and one - in St. Petersburg) were posted.

The average offered salary for this position has made 100 000 rubles in Moscow.

e in

e Uk

za an

ra

st kh za Ka

in ra

st kh

ne

an

ai

st kh

kh

Ka

Ka

za

st

Ru ss ia

an

s ru

21

Uk r

la

Ka

za

Uk

an

s la Be

an

s ru

Ru ss ia

Be

st

Ka 63

Production director Number of vacancies (November 2013 - January 2014) Belarus, Kazakhstanno information available

6

1

8

6

s

The average salary (thousand RUB, November 2013 - January 2014) Ukraine, Kazakhstan - no information available 65,0

ne Uk r

ai

Ru ss ia

Uk

Be

la

ra

in

ru

Ru ss ia

The average salary (thousand RUB, November 2013 - January 2014) Belarus, Kazakhstan - no information available 60,0

Uk

ra

in

e

31,6

Ru ss ia

Be

la

ru

s

42,7

Ru ss ia

kh za Ka in e ra Uk

e

an st

in ra Uk la

ru

s

The average salary (thousand RUB, November 2013 - January 2014) Kazakhstan - no information available 30,5 23,1 20,8

Be

13

1

The average salary (thousand RUB, November 2013 - January 2014) Belarus - no information available *according to the magazine MP

Number of vacancies (November 2013 - January 2014) Kazakhstan - no information available

3

e

s ru la Be

2

35

za

kh Ka

za

Uk

Number of vacancies (November 2013 - January 2014) 12

Ru ss ia

36

21,0

la

st

in ra

la Be

27,0

Be

an

e

s ru

Ru ss ia

r

Uk

Upholsterer

67

Ru ss ia

e

Number of vacancies (November 2013 - January 2014) Belarus - no information available *according to the magazine MEBEL

14,7

Carpenter 143

ain

Furniture store manager

Ka

18,8

30,0

Ru ss ia

24,3

4

The average salary (thousand RUB, November 2013 - January 2014) Ukraine - no information available

The average salary (thousand RUB, November 2013 - January 2014) 35,0

5

kh

an st kh Ka

za

Uk

8

za

e ra

la Be

35

s

8

Number of vacancies (November 2013 - January 2014)

ru

8

in

ru

Ru ss ia

s

46

19,8

Constructor/technologist

la

Number of vacancies (November 2013 - January 2014)

174

20,0

Be

assembler

ru

e

21,4

Ru ss ia

Cabinet furniture

6

The average salary (thousand RUB, November 2013 - January 2014)

35,0

Near abroad countries

According to the HeadHunter company having its branch network in Kazakhstan, Ukraine

13

an

16

st

Number of vacancies (November 2013 - January 2014)

329

kh

Sales representative

and Belarus, it is stated that in the Russian Federation demand for furniture experts is greater and wages are higher than in the above-mentioned countries.

Next to Russia, Belarus appears where furniture branch is one of leaders. For example, in the republic of Belarus a furniture assembler gets wages almost same as in Russia - 27 000 and 30 000 rubles respectively.

The lowest level of salaries among near abroad countries is in Kazakhstan and Ukraine.

Kazakhstan assembler gets on the average less than 15 000 rubles, and Ukrainian furniture sales representative - less than 20 000 rubles. The greatest difference in monetary compensation is in the example of the vacancy “director of operations” - in Russia he receives almost twice more than in Ukraine.

Ru ss ia

In the CIS countries vacancies in furniture branch are even less than in Russia for each of the position.

Uk ra in

Research showed that in domestic furniture branch, as well as in many others, singlefunctioned experts in Moscow and the Moscow region are traditionally more demanded.

It is the region where wages are significantly higher. The most demanded specialty belonging to furniture retail is a sales representative, followed by furniture assembler - the facts confirmed by the deficiency of these workers in the labor market.

The greatest wages are offered to top management: furniture store manager in Moscow - 86 000 rubles, director of operations about 100 000 rubles.

NEAR ABROAD COUNTRIES

Ru ss ia

Russia

27

ЭКОНОМИКА

OUTLOOK OF THE RUSSIAN MARKET ЛЮДИ

An interview with Alexander Shestakov, the president of the holding company «Pervaya Mebelnaya Fabrika», the president of Association of Furniture and Woodworking enterprises of the Russian Federation

28

Last year you were elected to be president of Association of Furniture and Woodworking enterprises of the Russian Federation.

In due time we created Association of North-West furniture industry enterprises where I had been the president for more than 10 years. With the lapse of time it formed a part of the Russian association where I had already been working as the vice-president. In March, 2013 I was elected to be president of the Russian association where I replaced Valentin Zverev - the chairman of the board of directors of the company «Shatura».

Recently the Russian association hasn`t been notable for a specific activity. How do you think, will your election influence its work in future?

The association has already started to work. There are plenty of positive things which we have made for a quite short period of time. Many processes have been corrected and our people again concern themselves with participation in life of this public organization.

So, the representatives of our association were included in the Industrial commission on timber processing complex by the Government of the Russian Federation.

We carry on an active work on changing formaldehyde standards of particle board materials. We participated in the Council of State on timber processing complex.

Generally, the association has reached the level it is to be.

What did happen to the Association of North-West furniture industry enterprises?

We liquidated it. All members of the association were included as individual members in the Russian association.

I think today there is no any sense to maintain regional associations. In early stages they fulfilled their task - set operational ties going, settled interaction of the furniture industry in the region. Today all the questions have become general and they are solved generally at the level of Moscow.

For us it is preferably to maintain a large Russian association for the solution of our general tasks. And those vicepresidents of regional associations, who are in the Executive Council, will control their regions on behalf of the Russian Association of furniture makers. To solve serious problems we need to create a single financial center.

On what directions are you planning to concentrate the work of association soon?

Our main task is to make the Russian furniture market civilized. We are the only branch of industry having managed to approve technical regulations on safety of furniture production - the main document for furniture industry. It is the document regulating everything in production, sale and furniture movement in the territory of our country. A serious, voluminous document is to come into force in the current year.

In its content there are some points causing great concern. The main question applies to the common standards of formaldehyde content in a particleboard.

Now they are simply unreal. Our task is to reduce them to a common denominator. To get 0,124 mg/m2 as in Europe instead of 0,010 mg/m2 as it is written in our current edition.

If we manage to put into practice this document and to organize the control system for its adherence while producing furniture in the territory of the Russian Federation, while importing and exporting furniture both into the European Union and into EurAsEC - we thereby will provide normal rules of the game for all participants of the market. As the first cost of a board made on E1class of formaldehyde emission and a board made on the class E2 or E3, differs cardinally. They can’t compete in essence.

It is necessary to create a working regulation which will be feasibly and really controlled. So at the market there won’t pass the handicraft goods badly smelling for many years. It is a real history. The most important thing in it is that a new structure has already been created Federal Accreditation Service which is going to issue licenses including those for controlling the adherence to this standard. Nobody has been granted such licenses yet therefore exactly today we have to create laboratories for controlling the adherence to the regulation. In order to create a normal and civilized market as it is made in Europe. They have TUV controlling everything therefore there is an order there, but we are to fight for it.

Considering our entering the WTO we have to be ready to live according to the European norms and to compete civilized with other countries.

Have you communicated with other Russian associations?

All the regional furniture associations are affiliated separate units of Association of Furniture and Woodworking enterprises of the Russian Federation. With the lapse of time they will be completely taken under the general association wing. So this what is really going on now.

What do you think of Russia’s entering the World Trade Organization?

I don’t consider that entry of Russia into the WTO is a global ruin for the domestic furniture industry. There are plenty of problems we ourselves created having opened the gate in the WTO. Everybody has been admitted, but no structures for the internal control and work at foreign markets had been organized. We are in need of lawyers who are able to work in the conditions of the WTO. And a lot of other things are necessary. Certainly it is more difficult to work now. The market is already changing.

Do I understand correctly that in point of document preparation you command support from the part of Russian producers of particle board materials?

Certainly. All the “plated” plants have already entered the association. Ours and foreign ones- all working at the territory of the Russian Federation. Now we have a complex block of particle board materials producers for whom we developed a program: it will help them with financing at the level of Ministry of industry and trade.

The projects concerning such companies as “Dyatkovo” and “Kronoshpan” are being developed now. There are plenty of the directions which the association can solve nowadays for its members including compensation of rates on credits and many other things. There are levers in the state and they can be used. They were before but by certain reasons weren’t involved. We understand that they exist and they can be used.

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INTERVIEW ЛЮДИ

Back on the WTO topic. Are there many Russian furniture companies which have already worked for the western market?

For example “The first furniture”?

Of course, there are examples but “The first furniture factory” hasn`t worked in this direction yet.

We had an experience; we delivered fronts to Sweden, Finland, now we don`t do it. To be honest, I don’t set such a great task for the factory. Today we are losing our own market, we have too many problems here and exactly they must be solved firstly. We have to make the most efforts to protect our domestic market, and only after it think about penetration of other countries.

We lose on an average 2-3% a year. Considering that our conditions at the domestic market are worsening but western markets are improving every year, we have what to do. We entered the WTO and within seven years their duty will be reduced from 42 to 13%. It means that during this period their advantage of price accounts for about 29%. And vice versa our electricity price, heating, gasoline and etc. will grow for the same period of time. For Russian companies the situation is going from bad to worse every day.

What steps should native producers take and how can the association help in this case?

For a start we at least have to create a technical regulation and make everybody follow it. Now we are losing our stands in an inexpensive furniture sectorwhere earlier the Russian producer had an advantage on the western ones. Poland and China are livening, and often the quality level of the furniture offered by them to the Russian consumer, is very low. Plus we let in Serbia free of duty. There are some offers to make similar with Vietnam, but, thank God, it hasn`t fulfilled yet. Otherwise through Vietnam all South East Asia would go to us. From the European Union through Belarus a lot of goods go and in the republic itself eight particle board plants are being built and most part of their production will go to Russia. The situation for the Russian furniture industry is very difficult. Therefore the role of the association has to grow and it is necessary not only for us but for the state itself.

Are there any other problems at the furniture market which we haven’t mentioned?

Undoubtedly. The most obvious obstacle in the way of furniture industry development is the absence of intelligible statistical accountability. Our “valorous” enterprises only chatter but nobody reports. According to our data among eight-nine thousand enterprises all over the country only 500-600 of them report.

Therefore there is no evaluation of results for Ministry of industry and trade of what is actually going on in the branch. According to the official number, there is no any great problem with the branch. The ratio of sales 2013 vs. 2012 accounted for only 98, 3%. Though, actually we perfectly know that decline about the country achieved no less than 15-17%.

You needn`t to go far to find examples, let`s take Petersburg. Having looked at the account of the regional reporting, it turns out that “The first furniture

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factory” produces more than 50% of furniture. But it is a nonsense because in Petersburg 10 enterprises report. But there are 300 or 400 indeed. We are guilty for the government doesn’t consider us as a branch.

And if we don’t report further, it won’t see us at all.

If our share in the report of national produce total volumes accounts for 0, 0000... , who will pay attention to the furniture industry? If we show an objective statistical accountability, we will be noticed, we will be responded to. For example, automobile companies.

Though they aren`t better than we are, but they are numerous and all of them report. Practically all world companies are situated round Petersburg, but how many years have we been amusing with “AVTOVAZ” yet? If the furniture industry had so many preferences as well, I believe, we would have an order at our market and would manage to hold it.

While we are at cars, will it be possible for Russia that western furniture companies come and organize their production here?

It doesn`t exist practically and nobody need it.

Because there are no economic preferences. Why, what for would a western company build the enterprise here? What will it receive? To be closer to the market?

We don’t produce accessories here... In the West everything had been constructed long ago, and they firstly have to load their capacities. But we have an endless growth of tariffs, millions of inspections and coordinations, taxes. Import duties will decrease soon and ready-made furniture will be received. Yes, the western plants producing particleboard work here, but altogether it is completely another story! And then, very few of them build from scratch. They replace our old, “died” plants and here they put in new factories.

It is a guaranteed outlet. Simply change one to another.

There are raw materials here, nothing has to be imported. Particleboard is a very heavy product and a truck can`t carry more than 1700 m2, but the price of a truck is 5000 euros. If to carry a particleboard from Europe, it will be gold! The field of economy concerning particleboard is very simple, as easy as a pie but furniture is another history.

Is there a sense to buy ready-made furniture enterprises here?

For major concerns - may be, especially if an enterprise works with furniture made to order.

Probably, there would be a sense in a kitchen sector.

Are there any furniture enterprises for the western concerns to be interested in with a view to their readiness for work according to the European standards?

I can’t say. At least I didn’t hear such offers.

Perhaps, this time isn`t suitable yet. Each market has its own definite period; however after all it is better to take more careful measures. Now a kitchen furniture sector demonstrates an obvious recession. If the contract furniture segment grows, more likely there will be a minus in a kitchen sector. It is very important to understand at what moment one or another sector

sags or, on the contrary, grows. That is why in due time I intentionally constructed a distribution network “MEBEL CITY”. It is very good litmus test which helps to understand what is happening to the furniture market. After all there are about 300 companies there.

Is the situation mainly shown across Moscow and the North-West?

Yes, where our shopping centers and salons are.

"Pervaya Mebelnaya fabrika" worked generally for the Northwest region earlier. Primarily I didn’t put any global task “to run” through all the country. I have other businesses besides the factory, construction, malls, business centers, real estate and etc. And the factory is far from being the largest one.

How is furniture business interesting now in comparison with others?

From the income point of view, tenant and construction businesses are much more interesting than furniture.

Describe 2014 from your own point of view. How will the situation in the branch develop?

I think there won`t be an obvious crisis. Everything will “dangle” plus-minus, as well as this year. We just have to get the hang of the situation that those volumes

having existed till 2008, will never repeat. It is an absurd to hold this thought. Today money is been earned here either hard as in Europe. They count all their pennies.

But we got used to count nothing. Therefore our first cost is so high but working efficiency is very low. Today we are able to earn only on a rational economy of our expenses: what we save, that we earn. One, who learns to do it quicker and better, will be ahead. Let`s take "Mekran" - a smart enterprise. What is happening to it now? The same as to “Maria” - all in debts.

The West, in comparison with us, has a great experience of development. But here even earlier nobody paid attention to the furniture industry.

Even at the time of the USSR. There was neither a development basis nor machine-tool construction.

Nothing.

We all have to understand that the stronger our association - the larger lobby resource for advancement of our branch. The government has a lot of different programs, including supporting the domestic industry: compensation of various bank rates on crediting enterprises for equipment purchase. There are plenty of mechanisms and levers which can be used today, but we badly use them, because we are small. The association has to be large. Global citizenship and activity in work of our branch are important. Then everything will be good.

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EXIBITION ЛЮДИ

NONSENSE Moscow exhibition fairgrounds involved: Central Exhibition Complex (ZAO)”Expocentre” International Exhibition Center (IEC) “Crocus Expo” Exhibition of Achievements of National Economy (VDNH) Participants: International exhibition company MVK (“Evroekspomebel” exhibition) ZAO “Expocentre” (“MEBEL” exhibition) "RESTEC" Exhibition Company ("ZOW"," FIDEXPO "exhibitions) MEDIA GLOBE, “Crocus Expo “, Koelnmesse (MMMC/MIFS/Rooms Moscow exhibition) Cosmit (iSaloni Worldwide Moscow exhibition)

Nonsense. Quite an exact word for characterizing a situation with Moscow furniture exhibitions in 2013.

I`d like to exclaim: “Gentlemen, what you are doing!”.

Exhibitions perish, take on a new life, again perish and once again rise from the ashes with new names, attractive figures and splendid slogans but with the same old ideology or rather with its absence. In season and out of season they share, share and share the already exhausted Russian participants. And after sharing they check off and with a triumphant call “The best, unique event of a year has taken place!” rush to a new fight for an exhibitor.

Whom do you deceive? Yourself? Furniture makers?

But they are a little, these active furniture makers who have left!

Let’s refer to the history. As far back as 10 years ago in Moscow there were two central furniture exhibitions -”MEBEL” in November and “Evroekspomebel” in May and the latter was held in the exhibition center of “Sokolniki Park” during the first few years, then it moved to the exhibition center “Crocus Expo”. Though there were a lot of defects, both were logically “built in” a conceptual line of the Russian and foreign furniture maker. The former - a world review of furniture. The latter - an exhibition of Russian producers.

Following oil price the furniture market - a tasty morsel for organizers of exhibition - was growing.

The exhibition project of “Crocus Expo” called “A furniture club” appeared. That project started, having attracted a couple of professional associations, grew up, leveled up prices and soon “blew out”. Then for a while it again revived and again safely fell into oblivion.

One would think it is high time to forget about it, but … it is again on the spot! In 2012 it took place in October in “Crocus” parallel Italian iSaloni Worldwide

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Moscow (the organizer - the Italian company Cosmit, the founder of iSaloni Milano in April) and suddenly in 2013 it again revived as would-be elite event “Furniture club Premium”. Its official message - an event of a new B2B-format focused on producers and buyers of middle +, premium and elite segments. Its informal ideology - an attempt to expose the companies which were not let in the next iSaloni (and the Italians don`t welcome everyone). A sort of concept can be caught but, oops... the organizers of “Furniture club” address a request on participation to the same Russian companies attracted from other exhibitions.

But after all it is not “The furniture club” that has been carrying on the main intrigue of the last two years; it hasn`t spoiled anybody`s game anyway. And it is not even the above-mentioned iSaloni Worldwide - with all due respect for Cosmit, all the same it is a niche project.

It is a joint project of IEC “Crocus Expo” and the MEDIA GLOBE company-”Moscow international furniture salon” (MMMC), later renamed MMMC/ MIFS/Rooms Moscow - they threw into confusion the exhibition order. Firstly, in 2011 it ousted “Evroekspomebel” from the exhibition fairground “Crocus Expo” at VDNH and, secondly, it started to attract actively the participants of “Evroekspomebel”. It must be admitted that in 2012 MMMC, having occupied the already well-publicized fairground, started pretty well if it is possible to call as a success the plagiarism due to the absence of its own concept and participants.

The declared in the 2012 th alliance between the Russian organizer and the Koelnmesse company - one of the largest players at the German exhibition market, the founder of the Cologne furniture IMM exhibition - kept the event on the boil. There were brave songs about

a fast market penetration, about the best exhibition logistics and bla-bla-blah.

The year 2013 was decisive in this “stubborn fight”.

As expected, “Evroekspomebel” lost VDNH, Battle of a spring furniture exhibition - from 2013 the project had been closed. It must be admitted that VDNH with a commendable, but the only modern 75 - meter pavilion is still little likely to put a claim for being a trend setter of the furniture market. As for the MMMC/MIFS/ Rooms Moscow project which was held for the second time in 2013 … The miracle didn’t happen.

Obviously, the exhibition became a little more interesting - a merge to Koelnmesse bore fruit. When it all comes down, aside from the expositions of upholstered furniture producers and fabrics suppliers which are adorning of any event, the German part was the most organized and complete one of the MMMC/ MIFS/Rooms Moscow exhibition. Is there a merit of the Russian side in it? Alas. But then what for all these loud statements about a market penetration were made?

The Russian side of MMMC didn’t cope even with the organization of exposition - there was the same “uproar” as with “Evroekspomebel”. Yes, there is a crisis in the country, it is difficult to find exhibitors, but why do you get down to it if you can’t cope even with

those participants whom you have attracted? I agree, it is difficult to collect many companies, but at least organize a competent zoning for those who are - it`s in your power. Why did an exposition of designers stand next to machines? Why are the fine expositions of upholstered furniture producers and fabrics suppliers close to the exhibitors obviously falling short of level and quality for production presentation? In my opinion, there is the only explanation for these - “filled in a hurry”.

You can ask - why am I “attacking” the exhibition?

Because I consider such an approach of organizing an event to be wrong. If you displace your competitor then be so kind to make an exhibition of a higher level. At least an advance. I can assure you, it is impossible to accuse me of protectionism. In 2012 when our edition agreed to support the second project of MEDIA GLOBE - the “Buildex” exhibition created to spite the largest construction “Mosbuild” event (the project of ITE company), we received an oral statement from ITE: “If you support Buildex, you don’t cooperate with Mosbuild”. On principle we supported Buildex. Mass media have to be independent of market policy and have an opportunity to express an independent opinion.

Addressing to the readers, I apologize for so rough monologue. But if you think that it is the end of the

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EXIBITION ЛЮДИ

Most of Russian exhibition has no distinct concept of promotion for the Russian producer.

history with organizers of exhibitions, you are mistaken.

Everything is much more interesting and the fight for an exhibitor only begins.

You are certainly familiar with the Russian version of the ZOW project which began its history at VDNH, then moved to the seventh pavilion of “Expocentre”, Krasnaya Presnya, “under the tutelage” of the November exhibition MEBEL. What has happened to it, you ask? In 2013 it passed on the same fairground with the MEBEL exhibition for the last time. This year ZOW left “Expocentre” for «free float». You think, where is it going to move to? The same VDNH and the same the 75 th pavilion where the Evroekspomebel exhibition singed its wing. When? Certainly, May, on the same date of a suddenly parted spring exhibition! What intrigue..? That`s not the half of it -parallel to ZOW an event has been announced... No, you even don’t guess!

A new event of RESTEC Exhibition Company - the FIDEXPO exhibition.

From the official press release of the RESTEC company:

In 2014 ZOW will run jointly with an absolutely new international furniture exhibition FIDEXPO. Reincarnation again? This “absolutely new” project was conceived at the beginning of the 2000 th as the international specialized exhibition of premium-class interiors Furniture Interior Design and even for some years it was held in spring in Moscow in the exhibition hall of Gostiny Dvor, and then it was safely phased out till the current year. Now it is “revived” again but already of another quality and in cooperation with one of the largest world exhibition operators UBM Asia, the organizer of the Furniture China exhibitions in Shanghai, MIFF in Kuala Lumpur, Index in Mumbai, and also Interiors and Decorex in London.

From the official press release “RESTEC”:

“The FIDEXPO exhibition will present all range of furniture production of Asian, European and Russian producers in the middle and middle+ price segments”.

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Note, the Russian producers again appear. Let`s face it. And we are talking only about the Moscow exhibitions, and after all there are also regional projects!

But don’t relax, let`s add a little more intrigue. In June, 2013, at the regular public meeting of Association of the furniture and woodworking enterprises of Russia (AMEDORO), the president of AMEDORO Alexander Shestakov declared that the association is planning to submit an offer on inclusion of two exhibitions - one foreign and one Russian event - in the government assistance plan for Russian furniture makers. The FIDEXPO exhibition was called as one of the potential events. Well, the Petersburger will understand the Petersburger and will support (both “RESTEC” and Mr. Shestakov are from St. Petersburg). I have no doubts that the association only wins due to of the new president`s activity, but what if a game “construction of Skolkovo” starts. After all one of the points the association insists on is a signing of an agreement and price fixation of the participation in an exhibition for a complex exposition of the member enterprises of association for 10 years forward but any sane Russian owner of exhibition facilities won’t make. Certainly, the purpose is noble, but what if it turns into a fiction. The furniture industry of Russia has to grow and develop in a competitive fight, instead of “a party”, but for this we need a really strong and large-scale exhibition with a good traffic and reasonable participation price capable to present the plenitude of goods range made by the Russian producer.

Everything hinges on fairgrounds. Two largest “Expocentre” and “ Crocus Expo” are already occupied with their own projects. To join them means to accept their rules of game. The third fairground - VDNH is still a very weak argument from the standpoint of development: except the 75 th pavilion there is nothing intelligible to present in the near-term outlook.

So, what do we have in 2014? From four to six only Moscow furniture exhibitions which will struggle with variable success for exhibitors.

Let’s face the truth. However much wanted to wave it away, but nowadays there is no the alternative for the expensive November “MEBEL” and within the next few years it even won’t be. Yes, today it is really the most expensive, not even Russian - a world exhibition, however anyone who has money for participation or at least for visit it, won’t allow it to take place. Do we need a more available alternative? Undoubtedly, it is necessary. On the basis of what fairground should we make plans? Personally I find it difficult to answer. Any Russian exhibition has no distinct concept of promotion for the Russian producer and can’t offer an exhibitor the optimal conditions of turning out the result for the spent money.

What to do? To take the situation into our own hands and unite. Otherwise, probably, there is no way we can do it alone. Though, may be you have any offers?

Nikolay Bulankin, chief editor “MEBEL PROFESSIONAL”

PRIVATE OPINION The current situation caused by the growth of furniture In light of this fact, I was very surprised by the exhibition projects in Moscow first of all negatively decision of Association of furniture and woodworking affects the furniture market. It is bad for all - organizers, enterprises of Russia which had supported the Fidexpo exhibitors and visitors, who not understanding where to project and wished to make it the main furniture go simply tire of events. exhibition.

Exhibition attendance is I am a manager and going down; efficiency I try to practice a normal of their participation administrative approach. is falling. Exhibitors` There is the Russian pursuit of the promised saying: «Iron first in a discounts and low velvet glove». If it does tariffs at an exhibition well to the project, it does takes a turn to the total well to everyone. I try to failure of financial, approach competently material and personnel and objectively to working costs. Any exhibition matters. It is wrong to must be estimated post accept a position “we payfactum. At an exhibition you owe us”. It is necessary the professional can’t to discount, to provide the be deceived. He can best place. If let things understand at once drift, there will be a chaos. whether a project is a Unfortunately, such examsuccess or not. ples are frequent in the It is always necessary Russian exhibition reality. to think of visitors - who Integrity of an exposition they are, why they will is losing, exhibition value come to an exhibition “is watered down”. and what they will look We make annual audit for there. A great deal of an exhibition and it is depends on how the our principled stand. We exhibitor interprets an are the most open and exhibition - as his own we are responsible for event or he simply acts the figures given in the as an interim guest. For exhibition statistics. It is a permanent exhibitors the question of our reputation. work of sending out inviUFI recommends to carry tations for their clients to out an audit annually. By ELENA SLOMCHINSKAYA an exhibition is habitual the rules of RUEF, we can CHIEF EXECUTIVE OF «MEBEL» EXHIBITION, MOSCOW and obligatory, but newsave money and conduct comers often forget an audit every two years, about it. Only joint efforts of organizers and exhibitors but then UFI publishes on the website the data of that year allow realizing of a really large-scale event which urges when the audit is been carried out. We decided not to save. on business development.

The economic situation changes, and we react, reform.

In 2014 our ways with ZOW have “parted apart” and Every year we organize an exhibition reflecting a real that was our general solution. Originally our partners picture of the branch. In 2013 we managed to make talked about synergy of two projects pointing that the the almost impossible - our event was visited by the ZOW participating companies would have been new, deputy Minister of Trade and Industry of Russia G. V. earlier having not participated in the «MEBEL» exhibition. Kalamanov. He did not simply see a number of Russian But in practice it was differently. It is high time to work manufacturing company stands, but also held a meeting independently with our audience. The organizers of ZOW with the heads of the furniture enterprises on branch decided to take place of «Evroekspomebel», VDNH, and development. There is a confidence the branch won’t be are reviving the Fidexpo project. left unattended by the state.

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ЛЮДИ

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