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How the understanding of Asian partners attracts large investments - EastRussia |






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How understanding of Asian partners attracts large investments

Head of the Investment and Development Agency of the Khabarovsk Territory Vyacheslav Kushnarev told EastRussia about the results of the Agency's work and the specifics of doing business with Asian partners on the example of successfully implemented investment cases

- Vyacheslav Anatolyevich, how do you assess the effectiveness of the work of the Investment and Development Agency of the Khabarovsk Territory over the past six months?

How understanding of Asian partners attracts large investments
The work of the Agency should be assessed not by us, but, first of all, by those investors who are already working on the territory of the Khabarovsk Territory and implementing their projects.

The agency performs the tasks set by the supervisory board, headed by the governor. In 2015, we launched the investment map of the Khabarovsk Territory currently contains 66 investment sites and 99 investment projects. Sites are divided into various categories - territories of advanced socio-economic development (TORSED), special economic zones, industrial parks and industrial sites, and others.

Simultaneously, the Agency prepared investment passports of the city of Komsomolsk-on-Amur and 8 municipal districts. Passports contain all the necessary information about the territories, useful to potential investors. All passports are placed on the investment portal and on the investment card on the pages of the relevant municipal entities.

- How else can you evaluate the effectiveness of the Agency?

We are working in accordance with the program to improve the investment climate of the region, which indicates the quantitative and qualitative indicators that need to be achieved in a year. By most indicators, the Agency has exceeded the plan.

The plan provides for the provision of information and consulting support to at least 15 enterprises. The number of initiators of investment projects that received information, consulting and organizational support in 2015, a ¬- 61 company. The total number of information requests for measures to support investors in the Khabarovsk Territory, including obtaining resident status of the TOR and industrial parks of the Khabarovsk Territory, was more than 350. The number of organizational support from the Enterprise Agency - 31, the number of events, workshops organized with the invitation of all interested parties - 58.

- Still, the main criterion is the concrete implementation of investment projects in the Khabarovsk Territory with the help of the Agency, isn't it?

That's right. If we talk about support of large investment projects, then according to the results of the third quarter there were 9, while the actual number of investment projects accompanied by the Agency on the "single window" principle amounted to 47 with an investment of more than 50 billion rubles. If we talk about specific examples, today, thanks to the work of the Agency, 11 investment projects are being implemented in the province. One of them lies in the area of ​​development and involves the construction of the hotel complex “Apartment - Hotel” in Khabarovsk by CJSC “CHANA-TRADING”. Construction is designed for two years, the amount of investment is about 465 million rubles, while 90% financing will be at the expense of the company's own funds. Another project is the construction of "Extensions to the building on the street. Muravyev-Amursky, 9 house ”LLC“ Far Eastern Development Company ”with the amount of investment 1213,8 million rubles.

- What other investment projects are implemented in the region thanks to the Agency?

There is such an interesting investment project with 450 million rubles of investments of the company "JGC Corporation" to create a greenhouse complex in the industrial park "Avangard". Production of the greenhouse complex (the first experimental batch of tomatoes) has already begun to be sold in the test mode in the region. Now there are negotiations with large retail chains and representatives of the restaurant business, the company has already created its own brand. We expect that next year the project will work at full capacity, and premium segment organic vegetables will be exported to China. I want to emphasize that sometimes the Agency performs sometimes unexpected functions so that investment projects come to life.

- Which for example?

Sometimes, we select options for renting housing for employees of both Russian and foreign companies who have come from other regions or from abroad to work in the Khabarovsk Territory. Our partners also selected and recommended office space. Investors themselves say that it is much easier for them to rely on us because we know the conditions and specifics of the local market. In addition, the Agency's employees help to fill out the necessary documents and questionnaires for obtaining a visa by the management of foreign investors. We consider it important to establish such a system of providing a package of services that would be characterized not only by a formal, but also by a more individual approach.

- If we talk about the work of the Agency in the context of the TOP Khabarovsk and TOR Komsomolsk, which companies, declared for residency in the TOP, managed to attract the Agency?

The agency worked absolutely with all the companies that applied for the status of a resident of TOR. The Agency and the Development Fund for the Far East and Siberia signed a cooperation agreement, under which the Agency works with all residents. Companies received all the primary and necessary information about preferences, the procedure for obtaining resident status. We were directly involved in filling out the application documents. At the same time, we brought two specific investors who considered the possibility of doing business in the PDA in the Far East. Having received exhaustive information, the companies decided to become residents in the TOP of the Khabarovsk Territory. These are OAO RBEF with a project to build a plant for the production of composite products (while a business plan is being developed) and OOO Trest Zapsibgidrostroy with a project to build a plant for the production of steel sheet piling and building materials with an estimated investment volume of 500 million rubles. Moreover, Zapsibgidrostroy initially considered the option of building a plant in Primorye. However, having visited the Khabarovsk, having received the necessary informational support and having reviewed the investment sites in Khabarovsk, Komsomolsk-on-Amur and Sovetskaya Gavan, the company management decided to work in our region. I would like to emphasize that the management of the company paid special attention to the comfort and quality of the information support provided by the Agency.

- What other companies at the moment are the Agency negotiating?

Now we are negotiating with the seaside investor - the company LLC "VL-Park" group of companies "CSN" - to build a production and logistics complex with an estimated investment of 1 billion rubles. The company has a lot of experience: in Primorye, they launched the largest logistics center and announced that they will be the first residents of the open port in Vladivostok. The company showed interest in placing its complex on the territory of an industrial park on the basis of OOO Khabarovsk plant of building ceramics, which is created with the support of the Agency. The industrial park assumes investments in the amount of 2000 million rubles. With the creation of 300 jobs. According to experts, this is an ideal site to which all necessary engineering communications have been brought, there are road infrastructure, railway entrances, water, sewerage, gas. There are already two production facilities and an office building on the territory. Now the Agency is working on finding partners-residents for the park. In particular, we are actively working with the Korean company Korea MECEN IPC Co.Ltd, which is ready to place on the territory of the park the production of modern building materials.

- Does work with foreign investors differ from working with Russian investors?

Yes, they have a special system of doing business, and they need more basic information, including on the peculiarities of the legislation of the Russian Federation. Accordingly, they need more time to make a decision than Russian companies. An example of successful practice of our Agency was the agreement reached with the Thai company Sutech Engineering Co. Ltd. on the construction of a plant for the production of 1500 tons of refined sugar per day in the SEEZ "Sovetskaya Gavan" with an investment in 200 million.

- Tell us more about the algorithm of the Agency's work with the Thai company ¬- from attracting an investor before signing an agreement on cooperation.

The agency is very actively working with trade missions of the Russian Federation abroad, in Asia, in particular. As part of this systematic work, we obtained information about the intentions of the Thai company to enter the market of the Far East. As part of the initial correspondence, the Agency invited the company to visit and see the Khabarovsk Territory. In advance, the Agency's specialists prepared and translated into English information on the parameters of industrial sites in the Khabarovsk Territory, including the territory of SESP “Sovetskaya Gavan”. If we talk about deadlines, the first meeting took place on 27 in March, and already on 28 in March, experts of the Agency prepared the necessary information with translation into English for Sutech Engeneering. Within three days, the information was delivered by a Thai company through a sales office. A week later, we held talks with a sales office in Thailand about joint actions and steps on this project.

Taking this opportunity, I want to thank the trade mission in Thailand for the active position and high-quality work on this joint project. 29 April, we have already agreed the timing of visits and inspection sites. Already on May 13, the Thai delegation arrived on a visit, during which a number of meetings with representatives of departments and ministries of the Khabarovsk Territory took place. After that, a working group was created from representatives of the company, the Ministry of Investments of the region, the city and Sovetskaya Gavan district to consolidate actions to implement this project.

- How many times did the delegation from Thailand visit the Khabarovsk Territory?

The specialists of the Thai company came to us twice, having managed to inspect the site, to obtain the necessary technical and economic information about the cost of engineering equipment and engineering support of the site. Two weeks later, Agency experts visited Thailand for a detailed study of a cooperation agreement. Frankly, for four days in Thailand, we simply did not leave the office, because we needed to prepare documents on world standards. According to the results of work in Thailand, an agreement was signed between the company and the Agency on the provision of information and advisory services and support of the investment project.

At the Eastern Economic Forum in Vladivostok, an official agreement was signed between the Governor of the Khabarovsk Territory and the management of Sutech Engeneering. Today, the company is starting to conduct technical research directly on the territory. Moreover, the company presented the first draft design of the plant with reference to the ground. The plant, according to the Thai side, should start its work next year.

- The main foreign investors in the Far East are representatives of Asian companies. Are there any features when working with them?

If we are talking about specifics, we need to talk here not about the specifics of working with them, but about the specifics of doing business by Asian partners. For Koreans, for example, most corporations are connected with the state. This is, at a minimum, the state's share in large Korean corporations, as a maximum, the system developed in Korea for the rotation of the cadre of business to power, from power to business.

- In your opinion, is this an obstacle or an aid?

This is an aid, because state support automatically goes to large corporations. Large projects are beginning to be implemented, as a rule, within the framework of government agreements, which to a large extent both corporations and the state facilitates understanding. There are a large number of investment projects implemented in this way, for example, the Korean Hyundai Corporation and its agricultural project in Primorye.

As for medium and small businesses, the peculiarity is that Korean businesses actively interact with the local Korean diaspora in the Far East. Practice shows that this is a successful cooperation, because representatives of the Korean diaspora are well aware of the specifics of doing Korean business and at the same time have an understanding of doing business in Russia.

Another Korean national proverb will tell about one national peculiarity: "If everyone knows about the party, it becomes uninteresting." In other words, for Koreans, it is important for the implementation of the project some of its exclusivity. Korean companies do not like to divulge information about the project ahead of time.

- Is Japanese business different from Korean?

Japanese businessmen have an interesting decision making system. Often, Russian partners do not understand why the Japanese ask the same question several times in the framework of negotiations. This should be treated calmly, since the system of primary information gathering and decision making by the Japanese is a very important procedure. They collect information for a long time and from all sources. They can be called perfectionists because their system involves making one decision, final and unambiguous.

- What about the features of Chinese investment?

This is also a very interesting system. Historically, we are working with territories bordering Khabarovsk territory. But do not forget that 90% of investment projects, one way or another, are implemented with the support of the government of Beijing (we are talking about projects in central and western Russia). Most of the private financial resources are in the south of China: Shanghai, Guangzhou, Shenzhen. Unfortunately, they do not know anything about the investment projects of the Russian Far East. Although the conditions created by us, believe me, are not worse than in Europe and Asia. To know about us, we need intensive work on the correct positioning, and this work is not one year.

- That is, it is necessary to work on bringing the information to the final investor?

The problem is not only to bring and tell. No need to think that Asian investors have great plans for the implementation of investment projects in the Far East. Our neighbors have been successfully cooperating with the countries of Europe and the USA for a long time. Asian partners have an understanding of the large marginality of investment returns they can get, while they have an understanding of the risks. And the third important point is that they do not have the amount of necessary information to understand that these risks are in fact minimal. This is a big problem.

"Is that the only problem?"

The Chinese have a clear understanding of how to make money. At the same time, Far Eastern businessmen have a rather low level of understanding of standards for managing investment projects with foreign partners. Most of the owners of Far Eastern businesses do not have much experience with a foreign party. When the Chinese come with an investment proposal, representatives of the Far Eastern business, as a rule, announce overstated prices, not realizing that the Chinese partners have calculated absolutely everything before coming. This approach immediately repels the Chinese partners. Russian businessmen often do not understand why, after active negotiations, the Chinese, returning to their homeland, do not communicate their decisions. The answer is very simple. They always go prepared, get information at negotiations, come to their place, once again they weigh everything, and then, unfortunately, make negative conclusions about starting a business in the region.

- Do they give feedback even on a negative decision?

For Chinese businessmen, this is even a moment of insult. There were examples when Russian partners a month later 2:3 Times lowered the price, offering the Chinese to continue negotiations, not realizing that in this case there will be even greater refusal. The Chinese perceive this as a disrespect for the partners.

- And how can you solve this problem?

It is very important that there is a mediator in the quality, as the Chinese say, of a “bridge” between Russian and foreign business. Our Agency often acts as such an assistant during the initial negotiations. For the Eastern Economic Forum, we prepared presentation materials in different languages ​​for Far Eastern businessmen. Next year we plan to hold a series of business training seminars on how to negotiate, and in general, on understanding the specifics of doing business with foreign partners.