RBW: Spring 2013

Russia Business Watch VOL. 21 NO. 1

SPRING 2013

WASHINGTON, DC

THE REPORT OF THE U.S.-RUSSIA BUSINESS COUNCIL

Growth Story

PRESIDENT’S MESSAGE: p. 1

OUTLOOK: p. 3

EVENTS: pp. 5-15

REGIONAL PROFILE: p. 16

• Russian Market Still a Growth Opportunity

• TelePresence Event: How To Launch a Startup • Breakfast Briefing with Bashkortostan Deputy PM Ilshat Tazhitdinov • Russia M&A Forum • Briefing with Russia’s MED Deputy Minister Aleksey Likhachev • Briefing with Russia’s MED Deputy Minister Sergey Belyakov • Luncheon on Russia’s OECD Accession with Amb. Richard Boucher • Moscow City Road Show Events in Boston and New York City

• Michael Tappan on the Globalization of Russian Companies • USRBC Regional Visit to Tula

WTO MEMBERSHIP: p. 17

• USRBC Breakfast Seminar on Russia’s WTO Accession, Industry Standards and the Agreement on Technical Barriers to Trade

NEW USRBC MEMBERS: p. 19

CONTENTS BOARD OF DIRECTORS

BOARD OF DIRECTORS Klaus Kleinfeld, Chairman of the Board Edward S. Verona, President and Chief Executive Klaus Kleinfeld, Chairman of the Board Officer Edward S. Verona, President and Chief Executive Officer Chairmen Emeritus Robert S. Strauss Chairmen E. Neville IsdellEmeritus

Robert S. Strauss E. Neville Isdell

Russia Business Watch • Spring 2013

Board of Directors • Theodore Austell, III, The Boeing Theodore Austell, III, The Boeing Company Company Stephen E. Biegun, Ford Motor Company • Stephen E. Biegun, Ford Motor Company James P. Bovenzi, General Motors Company • James P. Bovenzi, General Motors Olivier Brandicourt, Pfizer Inc. Corporation Laura M. Brank, Dechert LLP • Olivier Brandicourt, Pfizer Inc. Randy Bregman, Dentons • Laura M. Brank, Dechert LLP Richard Burt, McLarty Associates • Randy Bregman, Salans LLP Carolyn L. Brehm, Procter & Gamble Carolyn L. Brehm, Procter Peter• A. Charow, BP America Inc. & Gamble • Richard Burt, McLarty Associates James F. Collins, U.S. Russia Foundation for • Peter A. Charow,and BPthe America Economic Advancement Rule ofInc. Law • Guy Cogan, The Monitor Group Marthin De Beer, Cisco Systems, Inc. • James F. Collins, U.S. Russia Richard N. Dean, Baker &The McKenzie Foundation

for Economic Neil W. Duffin, Exxon Mobil Corporation Advancement and the Rule of Law Dorothy Dwoskin, Microsoft Corporation • Marthin De Beer, Cisco C. Cato Ealy, International PaperSystems, Inc. • Richard N. Dean, Baker & McKenzie Terrence J. English, Baring Vostok Capital Partners • Neil W. Duffin, Exxon Mobil Corporation Piotr Galitzine, TMK IPSCO Dwoskin, Microsoft Corporation Toby• T.Dorothy Gati, Akin Gump Strauss Hauer & Feld, LLP • J. C.Gerson, Cato Ealy, International Paper Ralph Guardian Industries Corporation Terrence J. English, Oleg• Goshchansky, KPMG Baring Vostok Capital

Partners David Gray, PwC • Piotr Galitzine, TMKofIPSCO Herman O. Gref, Sberbank Russia Gati, Akin Strauss Drew• J.Toby Guff,T.Siguler Guff Gump & Company, LPHauer & Feld,

LLP Trevor Gunn, Medtronic, Inc. • Ralph J. Gerson, Industries Jay M. Haft, Renova GroupGuardian of Companies

Corporation D. Jeffrey Hirschberg, Kalorama Partners, LLC David Gray, PwC& Young Karl • Johansson, Ernst • Herman O. Gref, Russia Ltd. Alexey Kim, Philip MorrisSberbank Sales andofMarketing • Kleinfeld, Drew J. Guff, Sir Guff & Company, LP Klaus Alcoa • Trevor Gunn, Medtronic, Ramon Laguarta, PepsiCo, Inc. Inc. • Jay M. Haft, Renova Inc. Group of Companies William C. Lane, Caterpillar Eugene K. Lawson, Lawson International, Inc. • Greg Hill, Hess Corporation Peter• B. PBN Hill+Knowlton Strategies D.Necarsulmer, Jeffrey Hirschberg, Kalorama Partners, David H. Owen, Deloitte LLC Thomas R. Pickering, The Eurasia Foundation • Karl Johansson, Ernst & Young LLP Ronald J. Pollett, ElectricSales Company • Alexey Kim,General Philip Morris and Jay R. Pryor, Chevron Corporation Marketing

Ltd. Paul• Rodzianko, Hermitage Museum Klaus Kleinfeld, Alcoa, Inc. Foundation Charles E. Ryan, UFG Asset Management • Sergei A. Kuznetsov, Severstal North William M. Sheedy, Visa Inc. America Maurice Tempelsman, Lazare Kaplan • Ramon Laguarta, PepsiCo, Inc.International Inc. • William C. Lane, Caterpillar Inc. Peter• L. Thoren,K. Access Industries, Eugene Lawson, Lawson Inc. International, Clyde C. Tuggle, The Coca-Cola Company Inc. Alberto Verme, Citi • Peter B. Necarsulmer, PBN Hill+Knowlton Mark vonStrategies Pentz, Deere & Company Daniel H. Yergin,R. IHS CERA The Eurasia • Thomas Pickering,

Foundation

Honorary Director • Ronald J. Pollett, General Electric PeterCompany J. Pettibone, Pettibone International LLC

• Jay R. Pryor, Chevron Corporation • Paul Rodzianko, Hermitage Museum

PRESIDENT’S MESSAGE p. 1 OUTLOOK p. 3 The Globalization of Russian Companies, by Michael Tappan EVENTS p. 5 TelePresence Event: How To Launch a Startup p. 8 Breakfast Briefing with Bashkortostan Deputy Prime Minister Ilshat Tazhitdinov p. 10 Russia M&A Forum p. 13 Briefing with Russia’s Deputy Minister of Economic Development Aleksey Likhachev p. 14 Briefing with Russia’s Deputy Minister of Economic Development Sergey Belyakov p. 15 Luncheon on Russia’s OECD Accession with Amb. Richard Boucher p. 15 Moscow City Road Show Events in Boston and New York City REGIONAL PROFILE p. 16 USRBC Regional Visit to Tula WTO MEMBERSHIP p. 17 USRBC Breakfast Seminar on Russia’s WTO Accession, Industry Standards and the Agreement on Technical Barriers to Trade p. 19 1(: 0(0%(5 352),/(6

USRBC STAFF Edward S. Verona President and Chief Executive Officer verona@usrbc.org / 202-739-9181 • Jeff Barnett Senior Director of Policy and Programs barnett@usrbc.org / 202-739-9187 • William Beaver Manager of Membership and Programs beaver@usrbc.org / 202-739-9190 • Jo Bottalico Vice President of Administration and Finance bottalico@usrbc.org / 202-739-9188 • Keith Bush Research Director bush@usrbc.org / 202-739-9186 • Maryia Dauhuliova Head of RF Representation, Moscow Office dauhuliova@usrbc.org / [7] 495-228-5896

Randi B. Levinas Executive Vice President levinas@usrbc.org / 202-739-9196 • Julia Fabens Director of Membership bacon@usrbc.org / 202-739-9189 • Svetlana Minjack Director of Communications and External Affairs sminjack@usrbc.org / 202-739-9182 • Candice Pareshnev Administrative Assistant pareshnev@usrbc.org / 202-739-9180 • Lyubov Pasyakina Assistant to Head of RF Representation pasyakina@usrbc.org / [7] 495-228-5896 • Alina Ruzmetova Media/Communications Associate ruzmetova@usrbc.org / 202-739-9184

RUSSIA BUSINESS WATCH

The journal of the U.S.-Russia Business Council 1110 Vermont Avenue, NW, Suite 350, Washington, DC 20005 Tel: (202) 739-9180 • Fax: (202) 659-5920 • www.usrbc.org Novinskiy boulevard 8, Office 907, 121099 Moscow, Russia Tel: 7-495-228-5896 • Fax: 7-495-228-5893 Editor: Svetlana Minjack • Assistant Editor: Jeff Barnett Graphics, Design and Production: Alina Ruzmetova Research Assistants: Sarrah Bechor, Emma Cobert, Jaime Cordes, Natalia Satygo For additional information or copies of Russia Business Watch, please contact USRBC at (202) 739-9180 or email RBW@usrbc.org.

PRESIDENT’S PRESIDENT’SMESSAGE

Russian Market Still a Growth Opportunity which is still robust compared to the Euro Zone but considerably below recent levels. Industrial output has dropped, the RTS is 42 percent below its historic high, gas markets are softening, and consumer demand — an engine of growth over most of the past decade — is down by half in the past year, from 7.8 percent to 3.7 percent.

For those whose livelihoods are linked to the Russian market, this might seem like a good time to take a vacation to a sunnier locale — though Cyprus is decidedly not the destination of choice this year.

It was a long winter but at last spring has

• The demand for commercial aircraft in Russia over the next 20 years is estimated at 1,000 units. The current fleet is already tied for third place with the U.K. and Germany, and tied in fourth place with the U.K. and Malaysia for order backlogs.

• E-Commerce sales in Russia grew from $8 billion in 2008 to $12 billion in 2012.

One major investment bank predicts that e-commerce will triple by 2015,

• Despite the recent slowdown, Russia is forecast to become the largest market for fast moving consumer goods (FMCG) in Europe by 2018; in recent years consumer market demand has grown at an annual rate of 12-15 percent. The number of supermarkets and hypermarkets has grown by 6 and 10 times, respectively.

• Premiums collected by non-life insurance companies in Russia grew 21 percent in 2011 to $37 billion, and are forecast to rise another 80 percent in ruble terms by 2014. Growth potential is considerable: only 8 million of Russia’s 60 million homes are insured, and the rapid increase in new car registrations is driving the market for automobile insurance. Under Russia’s WTO accession agreement, the foreign capital quota for insurance will be increased from the current 25 percent to 50 percent.

• Cumulative spending on physical

Summer 2012

Spring tends to come late to Russia.

Moscow experienced a record snowfall in March, and as of this writing my colleagues tell me that daytime temperatures hover near freezing. Recent months have been similarly inclement economically: GDP growth slowed to 3.4 percent in 2012,

• Russia is currently the 10th largest automotive market in the world, and is expected to be the sixth largest by 2015. It will likely overtake Germany in that year to become the largest automotive market in Europe.

• Russian farm machinery imports grew from $7 billion in 2000 to $33 billion in 2008, making it the secondlargest agricultural machinery importer among emerging markets after China, according to U.S. government data.

The market for farm machinery is projected to grow by 140 percent over the two years from 2011 to 2013.

Russia Business Watch

arrived. Global financial markets are exhibiting some of the animal spirits customary for the season: the DJIA and FTSE 100 are close to record highs and most other markets are in positive territory; the U.S. housing market is recovering; and commodities markets are — if not exactly effervescent — at least holding firm. Despite worries about the Euro Zone and tepid economic growth in most of the world’s leading economies, there is reason for optimism with respect to the global economy. For now it seems that a recession is no longer in the forecast.

However, before you pack your bags, pause to reflect on the fact that when spring does eventually come to the Eurasian continental landmass its exuberance can be breathtaking. In economic terms, it is equally important to bear in mind the things that make Russia so attractive to those companies that have been doing business in the country over the past two decades or more. Here are a few of the industryspecific reasons why we remain upbeat:

accounting for 4.5 percent of all retail sales. The five-year compound annual growth for the top 10 Russian internet retailers is around 35 percent. With internet penetration reaching Western European levels, the market for IT services is projected to grow from $6.3 billion in 2012 to $ 12.8 billion in 2016.

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PRESIDENT’S MESSAGE

infrastructure is expected to top $1 trillion by 2020, according to the Russian government. The government plans to spend $260 billion on road repairs and construction of 11,000 miles of new roads by 2020.

Russia Business Watch Spring 2013

• Natural resources remain a significant draw for western investors. During much of the past decade government policies and legislation deterred foreign companies from making major investments in oil and gas and other sectors defined as strategic. Changes in policy and amendments to relevant legislation have resulted in the announcement of several new initiatives.

This includes major opportunities on the offshore continental shelf and in unconventional oil plays, such as the Bazhenov shale formation, which the Russian government estimates could alone contain upwards of 13 billion barrels of oil. The government is also proposing legislative changes to make it possible for foreign companies to participate in major gold prospects, such as the massive Sukhoi Log deposit in Irkutsk.

This is by no means an exhaustive list of growth opportunities in Russia, but it suffices to illustrate the potential of the Russian market and the compelling case it makes for business. As long as Russia continues to depend so heavily on rev-

enues from oil, gas and other commodity exports, its economic “weather” will remain highly variable. Nevertheless, the trend is pointing in the direction of increasing demand for the goods and services that our member companies provide, and a reason to be optimistic about the future harvest. n

Edward S. Verona

President and CEO U.S.-Russia Business Council

It is with great pleasure that we invite you to the USRBC’s 21st Annual Meeting, to take place on October 28-30, 2013, in Houston, TX. The Gala Dinner will be held at the Houston Museum of Natural Science on October 28 with the Annual Meeting taking place at the Four Seasons Hotel on October 29-30.

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For more information please visit www.usrbc.org/activities/am/

outlook

outlook The Globalization of Russian Companies

By Michael A. Tappan Michael A. Tappan is the President and Chief Executive Officer of RSR Russia LLC.

In a Moscow Times article dated March 7,

2013, partners of PwC predicted a “sharp rise” in foreign mergers and acquisitions by Russian companies. The article was based on a report by the firm entitled “Resetting the Compass: Russian Investors Look West.” The report, co-authored by Andrew Cann, Partner – Transaction Services at PwC Russia, states that foreign investment by Russian companies reached an annual peak just above $20 billion in both 2007 and 2008 but has since remained at around $10 billion per year. The number of Russian cross-border deals dropped in that period from over 60 in 2008 to about 40 in 2011 and about 30 in 2012.

In contrast, in 2011 Chinese companies did around 120 foreign deals and Indian companies about 80.

• Acquisition of technology and skills to leverage at home.

• Achieving globalization.

The Deloitte study identified the main challenges faced by Russian companies during the deployment of multinational operations, and they would seem to be as pertinent today as they were five years ago:

International network management — This mechanism should be built into the corporate organizational structure, for example through the creation of an international division or through integration of foreign operations into existing functional or product-based divisions.

• The formation of a foreign direct investment and international production development strategy.

• The creation of effective organizational structures to manage the international network.

• The integration of foreign production entities into corporate management and governance mechanisms.

• Adaptation to foreign legal and tax environments.

• Taking advantage of opportunities as mature market companies seek to divest.

• Adaptation to foreign social and economic environments and building relations with local communities.

A study by Deloitte in 2008 identified some

• Growing “investment protectionism” in developed market economies.

Internationalized corporate management and governance systems — Incompatibility of business processes, accounting and operation planning systems, financial and management reporting and information systems as well as differences in business culture and practices, including corporate governance practices, must all be addressed through integration and adaptation. The adoption of international standards of corporate governance will be essential to all aspects of any corporate globalization program. Anything that contributes to easier due diligence and a positive assessment by the company considering acquisition by a Russian company

Spring 2013

• Diversification away from the domestic market.

Strategy formulation — The failure to adequately address strategic issues raised by a policy of acquisition abroad risks financial losses and harm to the company’s international business reputation. With vision, commitment and direction from the board of directors, a long-term global expansion planning process must be established and a management team formed specifically to oversee all aspects of a company’s foreign expansion, including the targeting of potential acquisition candidates. Foreign directors can be added to the board explicitly for the particular contributions they can make to the management of a company’s globalization strategy.

Russia Business Watch

The PwC report points out that to date about 70 percent of all Russian M&A activity has been domestic due primarily to privatization plans and industry consolidation. It is now expected that Russia will ramp up its participation with the other high growth market countries in M&A in mature markets to accelerate corporate growth. The main drivers for Russian investors will be:

advantages enjoyed by Russian companies as they faced the challenges of cross-border transactions and expanding their business abroad, including a high technological base inherited from the former Soviet Union and adaptability to adverse external environments acquired in the course of painful market reforms in Russia. Nonetheless, the results of early Russian attempts to expand into global markets did not meet with 100 percent success. The problems these companies faced were, of course, exacerbated by the global financial crisis, which in many cases forced companies to turn their attention and resources back to problems at home.

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should be undertaken.

Foreign legal and tax environments – The board and management will face a host of issues that have legal and tax consequences and will seek professional help from bankers, lawyers, accountants, and other consultants.

Host country social and economic environment — One of the first obstacles an acquiring Russian company is likely to meet is negative perception of Russian business, such as an association with criminality and corruption, still being fostered by international mass media coverage. This view can hinder acquisition negotiations, prejudice local authorities against sale to a Russian entity, complicate relations with labor unions, and interfere with recruitment of senior staff. A strong board including foreign directors of high reputation can go a long way in avoiding these problems.

Russia Business Watch

Spring 2013

Investment protectionism — The trend toward “targeted” investment protectionism in many developed market economies is of particular concern for Russian companies acquiring existing foreign companies as opposed to “greenfield” investment.

Russian companies with state shareholdings are particularly vulnerable. Integration of the company’s corporate governance standards with those of the host country helps, as do programs designed to demonstrate transparent reporting and decision-making. An understanding of the local political environment is extremely important.

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As stated above, the execution of a successful cross-border acquisition or greenfield investment program requires the assistance of an array of professional consultants, including bankers, lawyers, accountants, and management consultants. At the most strategic level, however, Russian companies contemplating such a program should consider adding one or more foreign independent directors to the board to gain the specific contributions they can make from plan conception through to its implementation: • Strategic guidance based on prior experience at the board or top management level in the execution of a corporate globalization program.

• Specific knowledge of foreign markets of greatest interest.

• Experience in and therefore deep knowledge of the industry in which acquisition candidates will be sought.

• Specific knowledge of key technologies relevant to the acquisition program.

• Full understanding of the business culture and standards in the target market or markets.

• Awareness of potential political issues affecting acquisition of companies in particular foreign markets.

• Perspective on the company, its general stance in the acquisition process, and the specifics of its presentations to acquisition candidates and their professional advisers.

• Ability and the right position to serve as spokespersons for the Russian company in the prospective new market.

• High reputation and visibility that will enhance the credibility of the Russian company as a trustworthy negotiator and potential business partner or owner.

• Ability to make key introductions.

Unlike the earlier surge in cross-border

acquisitions by Russian companies, which was effectively stymied by the global financial crisis in 2008, participation in the new trend will extend beyond a few natural resources and metals and mining companies to a much wider range of industries.

Furthermore, globalization will be sought not just by major Russian multinationals but also by smaller companies through acquisition as well as organic growth abroad. For example, at a conference in Moscow in October 2012, Igor Agamirzian, General Director of the Russian Venture Company, stated, “Russian development institutions, including RUSNANO, RVC, and Skolkovo, are extremely interested in globalization of Russian technology businesses.” Our own experience at RSR Russia has made us aware also of relatively small publiclyowned companies pursuing aggressive growth plans in foreign markets, and we expect this trend to become established and continue. n

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events

outlook events February 12, 2013 • Washington, DC; Denver, Colorado; Moscow, Russia

TelePresence Event: How to Launch a Startup Moderators:

Randi Levinas, Executive Vice President, U.S.-Russia Business Council Samir Shakhbaz, Editor-in-Chief, RIA Novosti

Panelists:

Evan Burfield, Chairman, Startup DC Rinat Dosmukhamedov, Russian Trade Representative in the United States Brad Feld, Managing Director, Foundry Group (Colorado) Oleg Fomichev, Deputy Minister, RF Ministry of Economic Development; Coordinator, Innovation Working Group of the U.S.-Russia Bilateral Presidential Commission Lorraine Hariton, Special Representative for Commercial and Business Affairs, U.S. Department of State; Coordinator, Innovation Working Group of the U.S.-Russia Bilateral Presidential Commission

The USRBC, in cooperation with the Trade

Representation of the Russian Federation in the United States, hosted a videoconference of U.S. and Russian entrepreneurs on February 12. The event “How to Launch a Startup,” served as a training seminar for Russian entrepreneurs gathered at the Skolkovo Foundation in Russia and was led by U.S. experts located in Washington, DC and Denver, Colorado. USRBC member Cisco Systems donated the use of their TelePresence studios in Washington, DC, Denver and Moscow for the event.

Ms. Hariton pointed to the working group’s cluster mapping project with the U.S.

Economic Development Administration and Harvard University, www.clustermapping.us,

as a resource for Russian companies to

Creating density — bringing entrepreneurs together — is key to the success of a startup community.

Spring 2013

Lorraine Hariton highlighted the mutual U.S.-Russia commitment to spurring innovation and entrepreneurship, focusing on the efforts of the Innovation Working Group.

She noted its work encompassed three main areas: fostering regional innovation clusters, developing a legal framework for innovation and commercializing innovation technologies. The Working Group has undertaken many initiatives in promoting these three aims, such as a paper by the American Bar Association outlining how legal and regulatory reforms can help to drive innovation and the creation of connections at the sub-national level by starting “centers of excellence” in individual cities and states. She emphasized that startup communities in the U.S. are robust and that places other than Silicon Valley have strong innovation clusters.

learn more about potential partners in a variety of locations in the United States.

Depending on the industry — from energy to biotech to aerospace, etc. — different locations may be of particular interest.

She pointed out that the next working group meeting, a trip to the Maryland biotech cluster, would provide an opportunity to grasp these regional clusters’ capabilities. She encouraged the Russian delegates to pursue connections with these clusters.

Russia Business Watch

The day’s discussion provided an opportunity to strengthen U.S.-Russia ties in innovation and entrepreneurship in the face of bilateral political tension. The session was organized under the framework of the Innovation Working Group of the U.S.-Russia Bilateral Presidential Commission, and was supported by the U.S. Department of State and the Russian Ministry of Economic Development. Thanks to Telepresence technology provided by Cisco, the U.S. participants shared their experiences working with startups, providing suggestions for Russian companies to emulate successful U.S. practices and to

leverage their networks to connect with U.S. startup communities.

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events new members Spring 2013 Russia Business Watch

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Oleg Fomichev described decade or two to gain tracRussian attitudes and polition, which must be reflected cies toward startups and in the community view. Such fostering innovation, noting a view may be unfamiliar to that the question of how to many feeders; for example, launch a startup will be an governments focus on twointegral aspect of Russia’s to-four-year cycles, while unicurrent and future plans versities and big businesses for supporting small and operate in yearly, or even medium-sized enterprises quarterly, rounds.

(SMEs). He highlighted the relatively new “Strategy for Third, the community must Innovation Development be inclusive of anyone who of the Russian Federation wants to engage, whether to 2020”, stating that one novice or experienced, govof its major components is ernment or business, etc. supporting the creation of The successful community new businesses. SMEs that has no hierarchy and no gatecan commercialize all innovakeepers.

Washington participants Rinat Dosmukhamedov, Randi Levinas, Lorraine Hariton, Evan Burfield and 6DPLU 6KDNKED] tive ideas, not just scientific ideas, are underdeveloped Finally, Mr. Feld emphasized in Russia. The new strategy that the community should be provides special support for continually providing activiinnovative companies in the ties and events that engage form of grants given to individual Russian all members. These events should not be Mr. Burfield noted that creating density — regions who present a compelling plan for exclusively networking sessions or awards bringing entrepreneurs together — is key localized support of SMEs. ceremonies, but rather opportunities for to the success of a startup community. members to actively work together on projStartup DC has facilitated such density Mr. Fomichev pointed out specific initiaects and hone their skills. He pointed to two by providing a center for entrepreneurs to tives and federal instruments to bolster examples of such events: a 90-day mentorsee and discuss one another’s startups. the Russian innovation economy, including, ship program for aspiring companies and a Finally, he emphasized the importance among others, Skolkovo, the Foundation for 54-hour entrepreneurship simulation. It is of entrepreneur-led and government-supAssistance for SMEs, Vnesheconombank, not uncommon for successful companies ported initiatives over those driven entirely to be formed as a result of these events. and Federal Law No. 217, which allows by government. The latter often create universities to create small enterprises by adverse selection problems, with the most commercializing their intellectual property. successful startups pursuing their own Question & Answer Session Russia has many instruments, he noted, means and the faltering ones relying heavily but lacks the practical experience to use on the government.

Q: How does government involvement in them successfully. startups look in the U.S.? Is it Brad Feld presented what he dubbed the important?

Evan Burfield noted that, as business “Boulder Thesis,” named after Boulder, changes and government contracts, we Colorado, which has the highest density Ms. Hariton asserted that must work on developing startups to grow of startups per capita in the world. His the government does indeed jobs and change regions. Several of the thesis consists of four principles that can have a critical role in making challenges of doing so are clear: finding foster startup development in any city in the startups successful and can investors, attracting the “right” talent when world. First, there are two critically imporbe highly involved in doing so. even the best universities may not protant stakeholders in a startup community: On a basic level, an appropriate vide startup-friendly training, setting up an leaders and feeders. The “leaders” must legal framework, such as bankoffice, and connecting with mentors who be the entrepreneurs, while the “feeders” ing and licensing laws or intelwill help entrepreneurs avoid unnecessary comprise everyone else: venture capitallectual property protection, is failures. ists, lawyers, accountants, governments, crucial for fostering innovation universities, and big companies, among and ease of doing business.

Other challenges are more subtle, espeother actors. Not all entrepreneurs in a Moreover, it must be properly cially developing a culture that accepts and given city must participate in fostering a implemented, a challenge in even embraces risk-taking. At Startup DC, strong startup community, but there must many countries. She urged which focuses specifically on developing be a critical mass involved. Members of delegates to engage with their the Washington, D.C. startup community, a organizations can play critical roles but governments to ensure proper major part of its work has been combating the organizations at large themselves candevelopment and implementathe fear of pursuing a less “safe” career. not. When hierarchical organizations try to tion of such frameworks.

The prevalent attitude in the nation’s capicontrol the development of startup comtal is often that “a government job is a job munities, the process becomes chaotic and Beyond a legal framework, for life,” and it can be difficult to convince messy. Rather, the development should governments can also actively Washingtonians to try a job that may only be entrepreneur-led. invest in startups. last three months if the startup fails. A startup community’s success rests upon Second, Mr. Feld stressed the importance Ms. Hariton pointed to the U.S.’s the ability to change education and chalof maintaining a long-term view — at least Small Business Innovation lenge received ideas instead of accepting 20 years. Most startups are not successResearch (SBIR) program, part the status quo. ful within a year or two, and many take a

outlook

Mr. Burfield added that a distinction must be made between small businesses in the traditional sense versus startups, which are very scalable and potentially high growth businesses. Traditional small businesses are “predictable and linear.” A challenge in applying programs to startups, on the other hand, lies in their inherent unpredictability, as their very business is in disrupting and changing the status quo. At the national level, Startup America was based in recognition that initiatives must be entrepreneurled, as it is hard for governments alone to keep up with constantly changing, fastpaced startups. A local government can also help by identifying credible leaders, but they first need to let them naturally emerge rather than pre-selecting them. Mr. Feld’s “Boulder Thesis,” he said, upends the environment in which traditional business operates. Governments usually want to “programmatize” business, he said, and reiterated his earlier point that doing so in a startup context can lead to adverse selection problems.

Q: What are some tips for entrepreneurs who want to form partnerships in order to enter the U.S. and find customers for their projects?

Mr. Feld advised the delegates to identify one or more companies participating in

sales organizations with customers similar to those they wish to target. No entrepreneur should expect an organization to magically find a partner for them without first doing their research to figure out what type of partner they need. He stressed that by being precise about what they are looking for in a company, rather than casting a wide net, the delegates would be far more likely to succeed both at working with organizations and in their own pursuit of a partner.

Ms. Hariton suggested focusing on cluster analysis and identifying economic development agencies related to a company’s industry — for example, nuclear or space.

Such agencies will generally be in touch with local businesses that would potentially make for good contacts. Ms. Hariton noted that the U.S. Foreign Commercial Service, which operates abroad, can help American businesses in entering foreign markets, and she encouraged the Russian delegates to contact their embassy in the U.S. to explore opportunities for similar assistance.

The diaspora community is also a resource.

Russian companies already operating in the U.S. could potentially be very useful partners. She expressed an eagerness for U.S. organizations to work to develop more resources for Russian companies in the future.

Mr. Shakhbaz directed delegates to the website http://rbth.ru/startups, which presents the top 50 Russian startups, updated every six months, and provides

useful information on potential partners.

Q: Are there any particular consulting or other special companies in the U.S. who can assist with research and marketing in America and make Russian entrepreneurs feel safer about entering U.S. markets?

outlook

Mr. Burfield echoed Mr. Feld’s advice about doing sufficient research individually. Many such firms, he noted, perform services similar to what entrepreneurs can do themselves online. When entrepreneurs do decide to work with one of these firms, the process goes more smoothly if they have first identified precise goals and can present their own background research. They can also bypass the need for an outside firm by finding and working closely with a mentor who can share insights.

events new members

of the Small Business Administration, as a successful example of such government investment. The program provides small companies with grants for research and development.

Ms. Hariton agreed that the internet has drastically reshaped the market entry process and advised entrepreneurs to be aggressive and reach out to others in their online networks. She also recommended thinking carefully about the whole spectrum of potential partners before honing in on target companies or individuals.

Mr. Feld added that startups should be especially attentive to finding companies with a motivation to foster a “worldwide ecosystem” for their products. Such globally-minded companies have designated parts of business for making the types of connections that could help startups.

Additionally, some companies such as Microsoft have “accelerator programs” that reach out to startups and bring them through, for example, a 90-day program to connect them to the industry. He urged delegates not to overlook the potential of their current partners, as they too can be a resource to catapult new businesses at home and abroad.

Q: Where are the discussions of visa opportunities for startups at the moment, and how do you see the future of such opportunities?

Ms. Levinas added that the recent agreement on providing multi-year visas for

Spring 2013

Rinat Dosmukhamedov discusses his perspectives on support for startups as the Moscow audience looks on.

Russia Business Watch

Ms. Hariton drew attention to a current immigration bill under discussion on Capitol Hill and its provisions to make the process of obtaining H1-B visas for educated foreign workers easier. Although there is no specific answer yet to the progress that will be made on visas, as the bill is still under discussion, she reminded that everyone in government understands that a successful economy depends on spurring innovation.

Thus we should do all we can to make that process easier internationally as well as domestically.

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Russian business officials is a promising sign for further developments in business visa regimes moving forward.

Q: Following up to the previous question, what steps should Skolkovo companies take to enter U.S. markets?

Mr. Feld noted that businesses on both sides of the U.S.-Russia partnership are increasingly eager to go international, whether alone or with partners. The current movement for startup visa assistance began in 2009, he stated, and has progressed beyond simply facilitating expansion to the U.S. to also enabling various means of entry.

Mr. Feld also directed delegates to the online portal “Entrepreneur Pathways” at www.uscis.gov/portal/site/uscis/eir for further resources on helping entrepreneurs enter the U.S. Mr. Burfield encouraged startups to look at accelerator programs in the meantime.

He added that even before immigration laws pass, the government is looking to streamline its regulations for new businesses to make startup-accelerator partnerships easier. Oftentimes, however, accelerators are concerned about the legal domicile for startups’ intellectual property rights, so startups would need to take these legal considerations into account when seeking out accelerator programs.

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Q: Is there any way for Skolkovo to assemble a contact network of people to present their ideas and products?

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Ms. Hariton suggested speaking with USRBC Board of Directors member Dr. Trevor Gunn, who has considerable expertise and an extensive network, as well as with industry associations. She reiterated that entrepreneurs should look at cluster maps available online to identify potential opportunities. There is no one network that will give access to all U.S. opportunities, but combining multiple resources can open up a very large network. The Working Group can begin working now to develop a more systematic approach for future use, she said.

Ms. Levinas expressed the USRBC’s intention to work toward further developing partnerships with groups such as Startup DC and hopefully in the future, a Startup Moscow, Startup Russia, or Startup Skolkovo. She agreed that the delegates should definitely investigate industry associations to broaden their networks.

Mr. Burfield noted that he had recently started a platform, 1776, aimed precisely

at creating such larger networks with specific expertise. In looking for networks, entrepreneurs should find organizations that take them seriously. There is “a fine line between brilliant and crazy” in the world of startups, and credibility comes from a bit of crazy, in the sense of new ideas, with the persistence to show they are committed to them. Finding the perfect partner generally requires very hard work, but that work demonstrates credibility and ultimately pays off.

Q: What tools and facilities for innovation are most available in the U.S.?

Mr. Burfield highlighted the importance of finding dense communities, with both many entrepreneurs and many mentors to advise them. Working together, such dense communities can think their way through a wide range of problems; acting alone or surrounded by few others can feel like being stranded on a desert island.

Mr. Feld agreed that density is key. People often focus primarily on getting capital for their startups, but if they shift focus more to creating that density, access to capital will follow naturally. Beyond a large network of advisers who are willing to invest money in startups, there is a real need for mentors to actively ask how they can help.

Such a mentor-mentee relationship need not be a one-way street, he added. The best relationships are ones where the mentor learns as much from the mentee as the mentee does from the mentor. These types of relationships are indeed possible when a dense community forms organically, whether online or in person. Top-down mentorship programs, where mentors are assigned to specific mentees, are more artificial and tend to stifle the creation of such robust partnerships.

Mr. Burfield explained further that in Russia, interestingly, individuals place trust in small networks around them but are distrustful of a bigger community. In American startup communities, on the other hand, people are willing to help those they do not know personally, even if it is unclear if they will receive anything in return. Such an attitude creates a wealth of opportunities.

In Skolkovo, a big challenge moving forward is to foster that type of culture.

Ms. Hariton agreed that organizations in the U.S. work hard to build robust networks, although they encounter different challenges in doing so depending on the location of different companies. Moreover, government support of business and use of a good legal framework is often taken for granted in the U.S. She advised the

delegates to urge their government to focus on creating such a framework in Russia.

Mr. Feld encouraged the delegates to stay in touch. He reminded them to be as precise as possible in their requests when approaching partners, rather than asking open-ended questions. He noted that in dense communities making connections is easy and advised following the principle of “give before you get.” In other words, entrepreneurs should develop relationships even if they are unsure what they will get from their connections.

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Mr. Burfield added that in communities where appearing credible is key to finding mentors and investors, demonstrating credibility stems from having done the research sufficient to make a targeted ask rather than a general request. n

February 14, 2013 • Washington, DC

USRBC Breakfast Briefing with Bashkortostan Deputy Prime Minister Ilshat Tazhitdinov On February 14, 2013, the Council hosted

a breakfast briefing with Ilshat Tazhitdinov, Deputy Prime Minister and Chief of Staff of the Government of the Bashkortostan Republic, who discussed current trade and investment opportunities in Bashkortostan, as well as potential policies to spur further innovation and cooperation between companies in Bashkortostan and the U.S. Mr. Tazhitdinov began his briefing by giving an overview of the region and the opportunities for investment.

Bashkortostan is one the largest regions in Russia, ranking seventh by total population, and is a major center for trade and communications. The republic is also renowned for its prehistoric heritage, cultural diversity and reputation as one of the most politically and socially stable regions in Russia. The region’s wealth of natural resources, along with its expanding industrial sector, has contributed to its current rapid economic development. In recent years, the gross regional product

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Question & Answer Session

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region and increasing the distribution of Bashkir honey to international markets.

Other areas for development include horse and sheep breeding and the construction of a grain processing facility in the Birsk District. He also drew attention to a number of promising investment projects in the region’s agricultural sector, such as the development of sugar mills, the Colza Recycling Plant, an animal waste recycling plant, and a wholesale distributional center.

Q. What is the basis for financing of these projects?

Deputy Prime Minister Tazhitdinov outlines Bashkortostan’s investment case with USRBC members. of Bashkortostan has grown at a rate of 9 percent, as compared with a 4.3 percent growth rate in Russia overall.

The Republic of Bashkortostan has a highly developed industrial sector and serves as a leader for Russia’s petrochemical, engineering and agro-industrial industries.

The Bashkortostan government is currently working to develop the petrochemical, mechanical engineering, agro-industrial, ecological, education, and science sectors as well as quality of life issues and international involvement. Improvements in overall quality of life, for instance, have been evident by the steady growth in retail turnover and housing construction in the region. In promotion of the Republic’s aspirations to become a major venue for international gatherings, Bashkortostan will host several high-profile events, including the Shanghai Cooperation Organization Summit and the BRICS Summit in 2015.

for Reconstruction and Development to finance the long-term wastewater treatment program implemented by Ufavodokanal and there are several major infrastructure projects underway, including the construction of a new express tramway, a tunnel and bridge across the Ufa River and a bridge across the Belaya River. Other projects focus on the modernization of several districts in Ufa and the expansion of the hotel industry in Bashkortostan. Finally, several projects are being undertaken to improve the region’s water and heat supply and an international airport is being developed in the city of Sibai.

Mr. Tazhitdinov concluded with an overview of the developing projects in the Republic’s agro-industrial sector. As the leading producer of honey in Russia since 2003, Bashkortostan is currently focusing on developing bee-keeping conditions in the

Mr. Tazhitdinov commented on the impact of Russia’s WTO membership on the development of industrial facilities and increased subsidies to the agricultural sector. The move has also been profitable for the region’s participation in the international market, particularly in relation to the expansion of the petrochemical industry. Considering that Bashkortostan’s capital city, Ufa, is a major trade center in Russia, Bashkortostan often works closely with neighboring regions.

Q. What goals and needs do you have in regard to your projects related to road building?

Mr. Tazhitdinov responded that financing of these road building projects will be taken from both regional and federal budgets.

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There are a number of investment projects currently in progress in Bashkortostan, including by Ikea, Lasselsberger (Austria), and Witzenmann GmbH (Germany).

Bashkortostan is also working with European and International Banks

Q. How do you view Russia’s accession to the World Trade Organization from a practical standpoint and what challenges do you foresee?

Russia Business Watch

The Republic of Bashkortostan is also striving to strengthen its participation in the world economy. In 2011, foreign trade volume in the Republic reached $14 billion and total trade turnover between the Republic and the United States amounted to $485.5 million. In 2012, the U.S ranked 17th among Bashkortostan’s foreign trade partners with total trade turnover at $164 million.

Aside from infrastructure projects, Mr. Tazhitdinov also drew attention to the high potential for growth in Bashkortostan’s industrial sphere. The region has an actively expanding IT community gaining approximately 900 professionals from regional universities every year. In 2022, the number of IT professionals is expected to reach 15,000. Major industrial projects include the construction and development of a biotechnological cluster, a biopharmaceutical technopark and the oil and gas cluster of the Republic of Bashkortostan. Participants in the oil and gas cluster will include up to 500 oil and gas manufacturing companies including OAO Gazpromneftekhim Salavat, OAO Kaustik, and OAO Sintez-Kauchuk.

Mr. Tazhitdinov explained that in regard to infrastructure projects, the ten companies who intend to build hotels have already committed financial resources and are open to potential offers for co-financing from other participants in the projects.

The construction of the tunnel, which will cost approximately $1 billion, was launched using budget revenues, but there is now a lack of public funds. The government intends to complete the tunnel’s construction either through additional public funds or resources from an investment company, which will in turn be provided access to a plot of land across the Ufa River. This land will be available for the development of 3 million square meters for housing facilities. For other projects, there are different levels of concessions that would potentially be available from the government. In the end, all interested investors will be able to participate in these projects.

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Nine billion rubles have been designated for the construction of regional roads in Bashkortostan’s annual budget, but the financing for connecting roads, however, is the concern of the federal government. In the building of these roads, Mr. Tazhitdinov noted that quality was of utmost importance and that increased cooperation with U.S. companies would be necessary for the achievement of their goals. He has hopes that these roads will be some of the best in the Russian Federation.

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Q. How can U.S. companies explore opportunities for cooperation with Russian companies in Bashkortostan considering the cultural and linguistic hurdles involved?

Mr. Tazhitdinov answered that U.S. companies would be welcome to visit the Republic to explore the opportunities available. In regard to linguistic issues, he remarked that Bashkir State University’s Department of Linguistics has trained many skilled English translators, who would be available to facilitate dialogue with representatives from U.S. companies. He also emphasized that regional and federal legislation should be easily accessible to U.S. companies. n

Rinat Dosmukhamedov (l.) looks on as Deputy Prime Minister Tazhitdinov (c.) presents Randi Levinas with a gift from %DVKNRUWRVWDQ.

February 28, 2013 • New York, NY

USRBC Russia M&A Forum Keynote Address:

Andrei Tsyganov, Deputy Head, RF Federal Anti-Monopoly Service

Russia Business Watch

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The USRBC co-hosted the Russia M&A Andrei

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Forum 2013 in New York City on February 28 with Debevoise & Plimpton LLP. The forum provided participants with an opportunity to learn about current trends in the Russian M&A market and to discuss its future trajectory with representatives from business and government.

Keynote addresses were provided by Andrei Tsyganov, Deputy Head of the RF Federal Anti-Monopoly Service, and Lord (Peter) Goldsmith, QC, PC, Head of European and Asian Litigation at Debevoise & Plimpton, LLP.

Tsyganov outlined the development of the Federal Anti-Monopoly Service (FAS), Russia’s competition authority, and the plans for future reform and expansion of the service’s work. The federal competition authority in Russia has its roots in the beginning of the transition to capitalism, although the Federal Anti-Monopoly Service was only established in 2004. Today the institution has over 3,000 employees, making it one of the largest competition authorities in the world. Its many functions include, among others: regulating issues and entities such as competition, public procurement, state-owned companies, and the electric power industry; supervis-

ing implementation of advertising law and trading activities law; and controlling foreign investment. It also includes specific provisions for laws governing natural resources such as timber and water, which are oriented toward introduction

Next, Mr. Tsyganov outlined the procedural responsibilities of the Service. It starts with general supervision of the law and investigation of cases and also includes duties such as detecting violations, making decisions on punishment and imposing remedies and sanctions, and controlling the implementation of its decisions and payment of fines. FAS also participates in court hearings in case of an appeal. He noted that he and his peers are able to manage a seemingly overwhelming case load by differentiating between large, highly significant cases and smaller ones. They then seek to minimize the burden of the smaller cases by making new legal provisions for them.

Competition legislation was initially adopted in 1991 and began to develop more rapidly in the mid-2000s.

Interesting recent developments include the creation of a Special Governmental Commission on Competition and Small Business Promotion, which combines representatives from federal government authorities, regional leaders and business representatives, and a Road Map of Competition Development and AntiMonopoly Policy Enhancement. The road map includes provisions for developing competition policy not only at-large but also for specific sectors such as oil and educational services.

Keynote Address:

Lord (Peter) Goldsmith, QC, PC, Head of European and Asian Litigation, Debevoise & Plimpton, LLP The following is an excerpt of Lord Goldmsith’s keynote address at the Russia M&A Forum.

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“… hat I’ve learned in the work that I’ve been privileged to do with Debevoise & Plimpton is to see some of the key issues that doing business in or with Russia gives rise to. A fair amount of my time has been spent working with or for Russian clients. So if you’re looking at that midnight moment about what is your dispute resolution process going to be, there are a number of choices, but there are a number of sub-options and choices within them, and this will be well known to you, but let me just say a few words about some of the difficulties that one gets into.

Of course, many businesses will, to the extent that they have a choice, shy away from finding themselves in a Russian court if they can avoid that. And that’s not actually an unusual experience, because many of our clients, even though they are concerned with other countries, not with Russia and not necessarily, for example, with CIS countries, will prefer not to litigate in the courts of the place where they’re doing business. There’s a risk that you’re playing on someone else’s territory. Even though there’s no real evidence of any bias, will you have some issues? So that’s one of the reasons that arbitration is such a popular choice.

Let me just give you two or three examples of the concerns. One phenomenon that I don’t see as frequently in other countries is asymmetric arbitration laws. That is, arbitration laws that don’t work the same way both ways. It’s a logical choice to say, this is what we’d like to do because a foreign party wants the opportunity of going to court or going to arbitration, but in Russia Telefon or Sony Ericsson, an award based on an arbitration clause that was asymmetric, was held by the Russian Higher Arbitrage Courts to be unenforceable. And we’re not entirely sure we understand why, but the argument appears to be that because it was asymmetric, this was an invalid choice of dispute resolution by the parties, with

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In closing, Mr. Tsyganov stressed that the most effective way to develop competition in Russia is through prevention of violations and excessive concentration of power rather than punishment. He pointed to the introduction of a warning system, which gives companies in violation a specific period of time to respond, as one example of prevention that has a success rate of about 70 percent.

Information transparency also helps with prevention. FAS has created a public information office and a Community Advisory Council with representatives from over 30 sectors, among other initiatives, in order to improve transparency.

And if one turns to arbitration, then you have a number of choices there. We find that where arbitration is chosen, the popular choices are Stockholm, which has a long and strong tradition in dealing with Russian cases and the expertise to do it; the London Court of International Arbitration; and Moscow itself. We are not, as a firm, terribly keen on the Moscow Chamber. Although the rules in terms of being close to UNCITRAL rules are not bad, there are issues in relation to the Moscow Chamber, particularly language issues, so that you can’t do a case there that’s not in Russian unless you get the agreement of the parties. Documents have to be translated. This causes an issue for non-Russian clients who are doing business there, though we have no criticism of decisions that we’ve seen. So that may lead one to the view that a foreign arbitration may be the better way to proceed in terms of a potential dispute with a Russian party. But that’s not straightforward either.

Increasing concerns and issues in a number of areas — the enforceability of foreign arbitration awards is a particular issue that has been concerning.

Russia Business Watch

FAS recently outlined a long-term strategy to 2024, whose priorities include: fighting against cartels, supervising laws against the abuse of a dominant position, the reduction of administrative burdens for businesses, and controlling activities of other relevant state authorities. FAS also wants to focus on introducing general measures and rules for natural monopolies, improving informational transparency and interacting more deeply with foreign competition authorities.

The biggest choice is between court and arbitration. English courts, for example, are doing a lot of Russia-related work at the moment. That tends to come about because the English court is prepared to assume jurisdiction over individuals who are physically present within the jurisdiction, even temporarily, which was how Roman Abramovich was served with process in a shop on Bond Street. So that sort of temporary presence can give rise to a jurisdictional hook. Then, of course, the courts will have to decide whether they will keep the case, having regards to the usual test for foreign conventions, and the English courts have actually been quite outspoken in allowing cases to stay in England on the grounds of concerns about the judicial process in Russia. That may be beginning to change, which is all for the good. But in the Cherney and Deripaska case, for example, there’s a very long judgment, and a very good commercial court judge called Justice Clark, Christopher Clark, which analyzes in detail the issues in relation to the process….

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of competition and proper allocation of resources.

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the consequence that an award which had been made could not be enforced. There are other examples of awards, foreign arbitration awards, which haven’t been enforced. In such cases where it can only be decided by Russian arbitrage courts, it seems to be extremely wide, it seems to draw the boundaries even further than we thought it was before. And that leaves one with a question about how you can agree on a valid arbitration clause in relation to that sort of deal, and it’s a common deal to make. We don’t know how far that decision is actually being applied…. It’s great to win the case in Stockholm, London, Paris, New York. If the only place you can enforce it is in Moscow or somewhere else in the Russian Federation, and you can’t enforce it because the courts won’t, well, you haven’t actually achieved anything.

So there’s an issue.

Russia Business Watch

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There’s another problem. One of the reasons you would arbitrate in Russia rather than litigate in Russia is because Russia is a party to the New York Convention, the great standard for the enforceability of arbitration awards. If you get an award in a New York Convention country, then the consequence is you should be able to enforce it anywhere else, and likewise, they should enforce the awards that you get in another New York Convention country. Whereas for court judgments there’s no bilateral or multilateral treaty relating to the judgments between the UK and Russia…. So being able to use the New York Convention is a very convenient and important mechanism, but there is one very important exclusion in the New York Convention: the public policy exclusion. When the New York Convention was adopted, it was accepted that certain countries might say that they can’t enforce this particular award because it offends our public policy. Examples might be a contract for prostitution or the supply of alcoholic liquor in an Islamic country.

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But it’s interesting that there are cases in Russia that seem to be giving a very expansive view to what public policy in Russia means. In Stena RoRo and Baltiysky Zavod there was a case where the award from the Swedish Chamber of Commerce was enforced by the lower courts but that was overturned on appeal on the grounds that it was contrary to public policy. And the public policy in question appeared to be that, if enforced, it would lead to the bankruptcy of the Russian company. And it was contrary to Russian public policy to allow a foreign party to bankrupt a Russian company using an arbitration award. I don’t think that was what was meant in Article V of the New York Convention when it was agreed, but there it is, and it stands as an illustration of this sort of problem….

It’s not all bad news. There are some important changes, and these are very much to be welcomed. The Russian International Arbitration Court has introduced new rules on impartiality and independence of arbitrators in 2010 that increases the confidence that the arbitrators that were operating under those rules will actually give objective decisions based on the evidence and will not in some way be affected by impermissible considerations. And one thing that’s very important is in relation to interim measures. …There’s been an increase in allowing arbitrators to give interim measures.

The Stockholm Chamber, Singapore, International Arbitration Center, etc. now actually have a special emergency arbitrator who’s not the arbitrator who will hear the case. Their job is simply to deal with an urgent case, to give interim relief before the tribunal can be constituted. But the good news is that the Russian courts have demonstrated a willingness that they will grant interim measures in support of arbitration. So that’s important, because you can only get these orders from a place that has jurisdiction over the person you want to enjoin. You can have arbitration in London, but if your defendant is in Moscow, you need to get an order from the Moscow court so that you can have that order then enforced. …One of the issues that is quite live at the moment is anti-suit injunctions. There’s anti-suit and anti-anti-suit and anti-antianti-suit injunctions. There is no end to the number of courts that can enjoin other people from going to further courts. Here is an issue that you need to have in mind if you’re doing a deal. If you’re doing a deal and you’re using an offshore jurisdiction, you need to have in mind whether or not that offshore jurisdiction can deal with disputes in the courts if that arises. …Let me just spend a couple of minutes on another area that is hugely important when it comes to investment, and that is the availability of bilateral investment treaty (BIT) protection. There are something like 3,000 bilateral investment treaties in existence today, under which, as you know, two countries agree that they will protect the investments of the nationals of the other, not expropriate them save for good reason and with compensation, give them fair and equitable treatment, quite often give them most favored nation treatment as well, and, critically, provide a dispute resolution mechanism that doesn’t depend on national courts.

That’s the key in bilateral investment treaties and in the few multilateral investment

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treaties as well, that you don’t have to go to the national court to get protection, you have an independent, international arbitral tribunal that decides it. And the reason that’s important is not just because it’s independent and neutral, also because it means it operates under a different legal system. You have to operate under international principles….

Russia does have a number of bilateral investment treaties. It has one with the United States but it’s not in force. It’s never been brought into force. There is one with the UK, but quite a number of Russian BITs are actually a bit restrictive. I’ve got here the UK BIT, and whereas commonly the dispute resolution procedure will allow the international tribunal to adjudicate on the legitimacy of expropriation, that’s not what the UK-Russia BIT does. And the same, actually, holds for the Germany-Russia BIT and a number of other countries as well. It allows there to be an adjudication about the amount of compensation or the method of payment of compensation, but not about the legitimacy of the taking in the first place. And that’s quite a big hole….

I think the overall message that I wanted to provide, and I think I’ll bring this to a conclusion, is that this midnight in Moscow moment, the moment of deciding what your dispute resolution mechanism is, is critically important in all business transactions, but I think it’s particularly challenging when you’re doing business in Russia. It needs a lot of thought. I think it is very important to

Briefing with Russia’s Deputy Minister of Economic Development Aleksey Likhachev On March 18, the U.S.-Russia Business

Council held a breakfast briefing with Russia’s Deputy Minister of Economic Development Aleksey Likhachev.

Opening the briefing, Deputy Minister Likhachev stated that Russia and the U.S. are entering a new era of trade relations given Russia’s membership in the WTO. He noted that the purpose of his trip to Washington was to sign a new Work Plan for the Business Development and Economic Relations Working Group (BDERWG) of the Bilateral Presidential Commission with his counterparts in the U.S. Department of Commerce.

think these things through because they’re not straightforward and there isn’t a single answer to all of them. So those are the few remarks that I wanted to make today. It’s been a great privilege speaking to you, it’s a great privilege to have you in our offices.

It’s very good to see such a distinguished group. Thank you for listening.”

Panel SHVVLRQV

The Russia M&A Forum featured two

Addressing a question about Russia’s delay

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The second panel, led by, Alan Kartashkin, Partner at Debevoise & Plimpton LLP, took an in-depth, practical look at M&A Structuring and Financing From Regulatory Approvals to Dispute Resolution. Panelists included Charles Hiatt, Vice President and Midwestern Representative at RB International Finance; Eugene Kashper, Chairman of Oasis; and Ivan Shmelev, M&A Project Manager at PepsiCo East Europe Region. n

Deputy Minister Likhachev characterized the current economic situation in Russia as moderately positive. Russia’s GDP growth reached 3.4 percent in 2012, unemploy-

Deputy Minister Likhachev then highlighted the importance of Eurasian economic integration for Russia, a process that would result in the creation of a global market of 165 million customers. At the moment, the project involves Russia, Belarus and Kazakhstan, but the addition of other CIS countries will enable the development of a common market for services and united rules for technical and sanitary regulation.

Russia Business Watch

panel sessions that examined the issues pertaining to mergers and acquisitions transactions in Russia. The first panel, led by Geoffrey Burgess, Partner at Debevoise & Plimpton LLP, discussed the Trends, Prospects and Key Drivers of the Russian M&A Market in 2013. The panel included Michael Marrese, Head of EMEA EM Economics and Sovereign Strategy at JPMorgan; Charles Ryan, Chairman of UFG Asset Management; and Andrey Tsyganov, Deputy Head of the RF Federal Anti-Monopoly Service.

The new BDERWG Work Plan sets as priority goals the expansion of trade opportunities on the basis of WTO regulations, enhancement of the bilateral dialogue, increasing joint direct investment, advancement of both the domestic and international the legal system, the search for new high potential spheres of mutually beneficial collaboration, the development of the renewable energy sector, support for research institutions for innovative technologies, and new business activities.

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ment rates hit an all-time low of 5.5 percent and inflation fell to 6.6 percent for the first time, down from double-digit figures for the last five years. In addition, positive changes have been occurring in promoting favorable investment conditions in the country. Even though The Word Bank’s Doing Business report put Russia at 120th place in 2011, it improved to 112th last year due to the implementation of a set of investment roadmaps. Deputy Minister Likhachev mentioned customs clearance procedures reform as one area of success that has resulted from the roadmap initiative. The number of customs documents required for clearance was reduced from 10 to 4 for exports and from 8 to 4 for imports, reducing document preparation time from 27 to 7 days and time for customs clearance procedures from 96 hours to 2 hours.

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March 18, 2013 ● Washington, DC

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in joining the WTO’s Information Technology Agreement (ITA), Deputy Minister Likhachev announced that the problem had been resolved at a recent meeting of the government. Minister of Economic Development Andrei Belousov is to send a letter regarding Russia’s accession to the ITA to WTO headquarters as well as to the Eurasian Economic Commission.

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In answer to a question about how scientific partnerships and collaboration could be used to improve innovation and the economy in both countries, Deputy Minister Likhachev stressed the importance of developing a mechanism for interaction between both countries on this issue as Russia has accumulated a great deal of intellectual property to share and develop. Skolkovo can serve as one of the examples to prove that. He added that the government is ready to consider and support new, mutually beneficial exports of technologies with financial assistance from Vnesheconombank and the Russian Direct Investment Fund. n

Russia Business Watch

Breakfast Briefing with Russia’s Deputy Minister of Economic Development Sergey Belyakov

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The government has also adopted an important agreement on automotive components which states that, starting in 2018, foreign manufacturers will be granted quotas either at a reduced or even zero rate for manufacturing foreign-branded cars in Russia.

Regarding regulatory impact assessment practices in Russia, Deputy Minister Likhachev stressed that this was launched as a pilot project in 2008 and has been developed into a governmental regulation within which each and every legislative decree is subject to public assessment of regulatory control by such organizations as the Russian Union of Industrialists and Entrepreneurs. He noted that Deputy Minister of Economic Development Oleg Fomichev has oversight of this process.

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March 27, 2013 ● Washington, DC

On March 27, the U.S.-Russia Business

Council held a breakfast briefing with Russia’s Deputy Minister of Economic Development Sergey Belyakov. Deputy Minister Belyakov stressed the growing need for Russia to improve its investment climate and reduce the risks of investing in the country in order to attract more foreign businesses and foreign investment into the country.

To that end, the government has developed a new investment policy that has included the creation of seven investment roadmaps with five more currently under development. Each investment roadmap provides a detailed description of the goals, responsibilities and expected outcome of each priority segment of the plan. All legislation passed within these roadmaps is

subject to assessment based on the results.

The Deputy Minister also underlined the fact that, despite being ranked 112th in the World Bank’s annual Doing Business report, Russia is among those countries that have recently implemented the highest number of reforms.

Describing the current economic situation in Russia, Deputy Minister Belyakov highlighted Russia’s interest in attracting long-term direct investment, noting that the rate of return on investments continues to be high. The current economic situation is sustainable, with a high level of social stability and positive macroeconomic indicators such as low state foreign debt and single-digit inflation. Commenting on the continued capital outflow, Deputy Minister Belyakov ascribed a large

Mr. Belyakov also raised a number of issues related to the perception of Russia today. An objective image of Russia is only possible through the conduct of an efficient dialogue on the international level.

He continued by saying that the Russian government is addressing this issue by implementing efficient policies.

March 18, 2013 ● Washington, DC

Luncheon on Russia's OECD Accession with Amb. Richard Boucher

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March 18, the USRBC held an off-therecord luncheon with Ambassador Richard Boucher, Deputy Secretary-General of the Organization for Economic Cooperation and Development (OECD), to discuss Russia’s OECD accession and the steps that the country is taking in order to progress toward

Question & Answer Session Answering a question about localization policies, Deputy Minister Belyakov noted that the average rate for local content is 40 percent, though it varies depending on the industry sector and production cycle.

He stressed that Russia wants to see an increase in the level of value-added among manufactured goods, with not only the finished product but its components being manufactured within Russia. Speaking of localization measures for the medical industry, Deputy Minister Belyakov noted that the higher the localization rate, the more competitive advantages the company will enjoy.

In answer to a question about the government’s plans for tax rates for greenfields in Russia, Deputy Minister Belyakov noted a recent proposal to reduce the federal part of the Profit Tax from 2 percent to 0 percent, whereas the remaining 18 percent that is paid to the regional budgets may be reduced as well as a result of direct negotiations on the regional level. Moreover, tax incentives are also to be granted for Land and Individual Property Taxes. He also mentioned a draft law to be adopted regarding tax incentives for companies operating on the Far East, Transbaikal and Irkutsk oblast.

March 18, 2013 ● Boston, MA March 20, 2013 ● New York, NY

Moscow City Road Show Events in Boston and New York City In cooperation with USRBC member

KPMG, the U.S.-Russia Business Council supported the Moscow City Government Road Show events in Boston and New York City on March 18th and 20th, respectively, featuring a delegation that included the Moscow City Government and senior representatives of the Bank of Moscow and KPMG CIS. Seminar participants took advantage of a unique opportunity to hear first-hand

accounts of Moscow’s growth story and received an update on efforts for Moscow to become an international financial center.

The Road Show was part of a concerted international outreach to provide investors and potential investors with the latest information regarding financial developments and opportunities in Russia’s bustling capital. The Moscow City delegation also held meetings in London, Frankfurt, Tokyo, and Singapore, and completed its global tour in the United States. n

Spring 2013

In conclusion, Mr. Belyakov highlighted the importance of such briefings aimed to help the governments to correct the policies implemented to conduct a more productive dialogue in all areas of bilateral cooperation. n

membership. Amb. Boucher spearheads the Organization’s global relations portfolio, including outreach and accession. He also has oversight of the OECD’s work in anticorruption, science and technology, investment and corporate affairs, and private sector development.

The luncheon was sponsored

by JTI. n

Russia Business Watch

Regarding the legislation on “secondment” currently being discussed in the Duma, the Deputy Minister said that the Russian government strongly opposes the bill.

While a large number of companies use this practice as the only way to attract new experts into projects, there is no discrimination in the workplace for a Russian worker. The legislation should aim to prevent any risks by creating equal conditions for both parties. He also added that a new draft law with a different approach toward “secondment” is to be examined soon in the State Duma.

new members events

portion of it to measures implemented by numerous companies in order to cover business expenses in other regions of the world.

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regional profile

regional profile February 7-9, 2013 ● Tula, Russian Federation

USRBC Regional Visit to Tula

On February 7-9, 2013, a delegation of USRBC member companies, led by Council President and CEO Ed Verona, visited the Tula Region where they met with Governor Vladimir Gruzdev and his economic team.

The delegation was briefed by First Deputy Governor-Prime Minister of Tula Yuri Andrianov and Deputy Prime MinisterMinister of Economic Development and Industry Denis Tikhanov and discussed investment opportunities with local business leaders.

Russia Business Watch

Spring 2013

Governor Gruzdev expressed his desire to attract foreign investment and has reached out to the Council to help highlight the measures that the region is taking to make it a more investor-friendly destination. The Tula government highlighted its potential as a transportation and logistics hub, given its proximity to Moscow and ability to allow air cargoes to bypass the congested capital region traffic.

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At the conclusion of the meeting, Ed Verona and Governor Gruzdev signed a Cooperation Agreement that calls for joint activities to promote investment in Tula in the fields of science, education, health, culture, social security, employment, physical education, and sports.

The delegation’s two-day visit to Tula included a tour of one of the region’s industrial parks as well as a cultural excursion to Yasnaya Polyana, the estate of Leo Tolstoy. n

outlook

new membership activities WTO members

outlook WTO membership events March 1, 2013 ● New York, NY

USRBC Breakfast Seminar on Russia's WTO Accession, Industry Standards and the Agreement on Technical Barriers to Trade Moderator:

Randi Levinas, Executive Vice President, 8.S.-Russia Business Council

Panelists:

Mark Lunn, Partner, SNR Denton Joseph Wereszynski, International Trade Specialist in the Office of Russia, Ukraine and Eurasia, U.S. Department of Commerce

made by Russia in its WTO accession and their value to the private sector.

USRBC Executive Vice President Randi Levinas opened the discussion by noting the relevance of product standards and the reduction of non-tariff trade barriers for trade relations with Russia. She also emphasized the importance of the transparency, which had been stimulated

by Russia’s WTO accession. While the new standards have benefited trade with Russia with exports increasing 29 percent from 2011, increased trade has also caused frictions.

WTO member countries have a special opportunity to engage with Russia to prevent barriers early on while they are more open to negotiations.

Spring 2013

breakfast seminar hosted by Salans LLC on Russia’s WTO accession, which focused on the key provisions of Russia’s WTO commitments to industry standards and the Agreement on Technical Barriers to Trade. The panel featured Mark Lunn, Partner in the Washington, DC, office of SNR Denton and Joseph Wereszynski, International Trade Specialist in the Office of Russia, Ukraine and Eurasia at the U.S. Department of Commerce. The seminar was the first in a series of USRBC events arranged to examine the commitments

Joseph Werezynski first gave an overview of the benefits of Russia’s WTO accession and then discussed the emergence of trade barriers and how they are handled by the U.S. government. WTO accession has had a beneficial impact on both Russia and other member countries as it has allowed for greater predictability, transparency and regulation of international trade with Russia. While accession usually causes

Russia Business Watch

On March 1, the USRBC organized a

Mark Lunn provided a brief history of the WTO and elaborated upon the place of the TBT Agreement in WTO structures.

The WTO was preceded by the General Agreement on Tariffs and Trade (GATT), within which members its members could choose which agreements they would accept. This “cafeteria approach” was done away with in the Uruguay Round and members of the WTO are now required to accept all agreements upon accession.

The TBT Agreement rests mainly on the concept of national treatment, which ensures the fair competition of imported and domestic goods in a country. Mr. Lunn also emphasized the difference between technical regulations and standards,

explaining that, unlike regulations, standards are voluntary. Nevertheless, member countries must provide an explanation if they choose not to abide by them.

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WTO membership

tariffs to decline, non-tariff rates tend to increase.

WTO accession has had a beneficial impact on both Russia and other member countries as it has allowed for greater predictability, transparency and regulation of international trade with Russia.

Russia Business Watch

Spring 2013

The TBT Agreement addresses standards, technical regulations and the assessment of trade procedures. Technical regulations are evaluated according to their grounding in relevant international standards and their ability to fulfill objectives in the least trade-restrictive way possible. Member countries are also required to abide by transparency provisions under which other WTO members must be notified of new regulations, ample time must be provided for public comment, and a national enquiry point must be established. In the case of a trade issue, the TBT Committee will usually arrange a meeting with the country directly involved. If the issue is not resolved in the bilateral meeting, it may be raised on the floor before a committee of other member countries, who may put pressure on the country to comply with WTO rules. Typical trade barriers arise when regulations are implemented without advanced notice or product rules are duplicative.

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Mr. Wereszynski next presented an informational video demonstrating how the U.S. government has dealt with trade barriers in the past. In the video, the U.S. government successfully dealt with an issue of the misapplication of a technical regulation by the Chinese government by arranging a government-to-government roundtable discussion. After the video, Mr. Wereszynski remarked that this approach was merely one of a number of methods used for resolving barriers including phone calls, periodic TBT reports and dispute settlement.

In the specific case of Russia, WTO member countries have a special opportunity to engage with Russia to prevent barriers

early on while they are more open to negotiations. The U.S. has three main goals in regard to building trade with Russia, which include improved mutual understanding of each country’s national standard systems, further discussion on TBT and the exploration of potential areas cooperation.

Question & Answer Session Q. When will Russia be officially required to provide notification of its regulations?

Mr. Wereszynski remarked that the language in the actual agreement is vague.

Russia was temporarily set back by PNTR, but engagement may begin at any time.

Q. Where is the national enquiry point in Russia?

Mr. Wereszynski answered that the enquiry point is in the Ministry of Industry and Trade and it is currently functioning.

Q. Can you explain a little about the CODEX Alimentarius and how it relates to the issue surrounding the use of ractopamine and meat exports? What are the procedures for putting products on this list?

The CODEX Alimentarius and Organization for Animal Health (OIE) set standards according to a consensus reached about the science behind the regulation. In Russia’s case, if the chemical is deemed safe, Russia is still free to ban it if they have a scientifically-based reason for doing so.

Q. The trade of aftermarket trucks from the U.S. to Russia has recently been negatively impacted by a change in Russia’s customs tariffs and the imposition of a utilization tax. How could one address this tax issue through the U.S. Department of Commerce or the USRBC? Mr. Wereszynski advised companies to contact his office directly. He clarified that this issue was actually related to national treatment rather than standards. The trade barrier in this case arose from the fact that domestic manufacturers have an exemption to the tax. USRBC President and CEO Ed Verona added that Russia recently announced plans to equalize the utilization tax so that it would apply to domestic manufacturers as well.

They would include exemptions for any manufacturer able to certify that their product will be recovered at the end of its useful life. Mr. Wereszynski also noted that they would be interested to look at the excessiveness of the fees in regard to

manufacturers of heavier-weight trucks, which face higher tariffs.

Q. What are the current issues involving the intersection of standards, technical barriers and intellectual property rights in Russia?

outlook

Ms. Levinas reported that last fall the U.S. created an IPR Action Plan for cooperation with the Russian government. The IPR Working Group is independent of Russia’s WTO accession, but focuses on the rules of the WTO’s Trade Related Intellectual Property Rights Agreement. Enforcement, particularly in regard to copyright, continues to be an obstacle. A special IPR Court is currently being set up in Skolkovo, which will have broad authority over IPR issues.

While amendments have been made to Russia’s civil code to conform with the WTO agreement, there are still weaknesses, particularly in the area of internet service provider liability.

Q: What are the WTO rules on natural resource and mineral trade?

Mr. Wereszynski responded that the WTO does not have a specific natural resource agreement, although there are natural resource and export restriction rules. While energy products in and of themselves are not covered by Russia’s WTO accession agreement, the agreement stipulates that the domestic price of these products must increase over a set period of time toward an equalization of the price differential.

Q: Do you expect more anti-dumping cases with Russia in the future?

Mr. Wereszynski did not foresee a dramatic increase in anti-dumping cases, but he mentioned that issues would be most likely to arise in the pipe manufacturing sector, since they have been active in antidumping cases and Russia’s pipe sector is large and advanced. WTO accession, however, has not had an effect on this. n

new members

new members outlook 32 Advisors

www.32advisors.com

32 Advisors is a New York-based, global consulting and advisory firm providing senior executives with strategic intelligence and actionable guidance on a broad spectrum of issues affecting immediate and long-term growth and success. The firm’s experts act as trusted advisors and confidential solution partners to public and private companies, private equity and hedge funds, money managers, governments and other institutions in the U.S. and countries around the world. The firm offers expert advice based on extensive experience and expertise in the business, political and economic arenas, guiding clients through complicated situations to achieve critical business objectives, cross-border investment, protect reputation, navigate economic, political and regulatory challenges and enhance value.

Automotive Industry Action Group (AIAG) www.aiag.org

With more than 30 years of experience collaborating with diverse organizations across the global supply chain, AIAG helps your organization realize significant cost improvements by eliminating inefficiency and redundancy from the supply chain, fosters environmental and social responsibility, and increases the effectiveness and speed of your communications — internally and externally. With expertise in quality, supply chain management, corporate responsibility, and global engineering and IT, AIAG is your resource for training, e-Learning and publications on common processes that minimize disruptions and maximize performance.

Alliance Logistics www.all-logist.com

Eagle Consultancy International www.eagleci.us

Spring 2013

Eagle Consultancy International equips Russian and CIS manufacturing enterprises to achieve excellence in principle, practice and performance — “Manufacturing Excellence through Cultural Transformation.” The company achieves its mission through collaboration with foreign companies seeking to establish manufacturing operations in Russia and the CIS with principles and practices consistent with their own standards, and Russian and CIS manufacturing companies aspiring to transform their operating principles and practices to conform to world class standards of excellence, leading to superior financial and operational performance. Eagle Consultancy International’s consulting methodology is strategic, creative, collaborative, customer-focused, and results-oriented.

Russia Business Watch

Alliance Logistics is a transportation and logistics company providing a comprehensive range of services in freight import and export. The company provides global door-to-door delivery with around-theclock monitoring of both the freight and the vehicle while in transit by container, truck, ship, or rail, and provides convenient customs-clearance services at the Baltic, St. Petersburg, Kingisepp, Ivanovo, Bryansk, Voronezh, and Pskov customs check points. Alliance Logistics’ management consists of experts with years of experience in transportation logistics and customs clearance and a wealth of knowledge in working with specific product categories such as chemicals (including hazardous freight), fresh and frozen food products, wood and cellulose paper products, sheet metal, textiles, and more.

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new members

Innovative Pharma - Association of Pharmaceutical Companies www.inpharma.info

The Association of Pharmaceutical Companies “Innovative Pharma” (InPharma) unites the world’s leading pharmaceutical research-based manufacturers. Currently InPharma has 10 member companies, namely Abbott, Amgen, AstraZeneca, BMS, Boehringer-Ingelheim, Eli Lilly, Janssen, MSD, Novartis, and Pfizer. InPharma’s ultimate aims are to enable patients’ access to and promote the value of innovative medicine, and ensure a favorable legal and regulatory environment for innovative drug producers in Russia. InPharma actively engages with Russian authorities on these matters, elaborates healthcare related policies and programs, as well as cooperates with a variety of external stakeholders in the healthcare sector in and outside of Russia.

outlook MSD Pharmaceuticals

www.merck.com

Today's MSD is a global healthcare leader working to help the world be well. Through its medicines, vaccines, biologic therapies, and consumer care and animal health products, the company works with customers and operates in more than 140 countries to deliver innovative health solutions.

MSD is a tradename of Merck & Co., Inc., with headquarters in Whitehouse Station, NJ, U.S. In Russia, MSD is committed of developing innovative, first-in-class products, improving health and saving the lives of Russian citizens. MSD in Russia is dedicated to science and scientific excellence, focusing on clinical research activities in the country. MSD products have been available in Russia for many years. In Russia, the company was recently renamed into MSD Pharmaceuticals LLC.

Northwest Foundation for the Development of Housing Cooperatives www.fondrgk.ru

The Northwest Foundation for Development of Housing Co-operatives supports effective reforms related to socially-oriented housing construction in Russia’s Northwest Federal District. The fund’s goal is to encourage cooperation over residential housing construction and develop residential nongovernmental associations while creating a socially-oriented market for rental housing. It also aids employers in attracting and retaining employees by improving their living conditions and creating conditions for economically justified migration and relocation of labor resources.

State Solutions LLP

www.state-solutions.com

Russia Business Watch

Spring 2013

State Solutions LLP offers a wide range of services in government relations, lobbying and public affairs consulting to support your business operations in Russia and the CIS. The firm's expert knowledge and thorough understanding of legislative, regulatory and administrative systems in Russia and the CIS enable the company to provide effective and practical solutions.

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Zimmer, Inc.

www.zimmer.com

Zimmer is a world leader in orthopedic implantable medical devices. Headquartered in Warsaw, Indiana, the company specializes in designing, developing, manufacturing, and marketing implantable devices that help restore joint-related function lost because of disease or trauma. Leading product lines include reconstructive joints, such as hip, knee and shoulder implants; dental implants, such as restorative and reconstructive implants and regenerative products; spine implants; trauma devices that help reattach or stabilize damaged bone or tissue; surgical products; and biologic treatments that help repair hard and soft tissue. Zimmer is a major exporter and maintains significant business operations throughout the United States and in numerous countries around the world.

Special Room Rates for USRBC Members at Marriott Hotels in Moscow Marriott is pleased to provide members of the U.S.-Russia Business Council with discounted room rates at Moscow Marriott Royal Aurora, Moscow Marriott Grand and Moscow Marriott Tverskaya hotels.

With questions regarding this special room rates offer for members of the U.S.-Russia Business Council, please contact Moscow Marriott Cluster Reservations Department at reservations@marriott-moscow.ru or via phone +7 495 937 00 55.

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