We talked with Dmitry Evtin, head of investment and business consulting at the holding company Russtroyconsulting. The holding consists of the few companies, whose experts are able to expertly tell about the specifics of working with Asian business … Recently, it seems that everyone is interested in this topic.
Russia and Asian markets: do not know how or do not want?
– Russian companies do not really know how to work with foreign markets, especially if we are talking about Asian countries, where everything is just different. Our business in the APR countries is only IT. Everyone knows the success story of Kaspersky in Asia, but there are and other examples too. So, in Vietnam there is a project with a significant “Russian component” – CocCoc, translated as “TukTuk”. Do you know why they have 30 million users? Why are they more popular then Google there? Asian users do not perceive the Internet as Western ones, and the CocCoc team has “re-invented” the browser in this regard.
Take a look at a Chinese or Japanese website – a really mess, right? They watch the news, look for, communicate, trade, and do everything at once. Look at WeChat. WhatsApp in Asia is not popular: there are simply too few features. Similarly, Dmitriy notes, the browser for Asia is the essence of a “window to the Internet”. And the more you see from this window, the better.
– And this is IT, the least dependent on the local specifics sphere, in other areas where more difficult. But imagine that in an exotic market, it seems, American and European companies have operated for centuries. We work on several projects in Indonesia, I am well acquainted with the local situation. I would say that both modern transnational corporations and historical trading houses originate from Old Europe there integrated into most processes, financial schemes and supply chains.
There are two things that I do not cease to wonder. First, the incredible, fantastic level of Russian technical solutions, some of which are superior to their analogues, for example, this is typical for drilling equipment. And, secondly, the cave level of work with world markets, which these proposals should tear off by their hands.
However, it is necessary to understand the differences between big western business and big Russian.
– For example, Exxon Mobil. American company? No, 90% of their assets are outside the United States. Are Gazprom and Rosneft global? No, the situation is reversed, and they are sharpened primarily for the development of domestic markets. I just met with the representatives of PetroVietnam, the national oil and gas company, and heard it literally: “They offered Russian company to participate in a project, but they have even not received a specific proposal from them.” And Exxon Mobil grabbed and took the project.
It is believed that the size of Russia makes the participation of domestic players in foreign projects unnecessary business: they say, we do not have time to master their own.
– Even if we talk about primary products markets, 5 liquefied natural gas plants are already operating in the same Indonesia, and a lot of are under construction now. We are huge Russia, have two factories, three are being built, the total capacity at times less.
Contrary to popular opinion, our country, our business, our entrepreneurs do not look so interested in foreign expansion.
This concerns not only the giants of the national level.
– Our holding company includes engineering company Engineering Consulting Company. There are 22 years old, working on the most important projects, with customers like Sakhalin Energy and Exxon Mobil … In general, there is a certain expertise in technology and equipment. There are two things that I do not cease to wonder. First, the incredible, fantastic level of Russian technical solutions, some of which are superior to their analogues, for example, this is typical for drilling equipment. And, secondly, the cave level of work with world markets, which these proposals should tear off by their hands.
Windows of opportunity
– Today, foreign semi-adventurers are often engaged in the supply of our equipment abroad. In the domestic companies there is often no even an international department, so … equipment is sold by anyone. It passes through 3-4 intermediaries, losing both the price advantage and an important factor for serious companies to work directly with the supplier, which usually guarantees quality service.
The situation with participation in complex projects is even worse.
– The problem is that, according to the Russian habit, we are trying to do everything ourselves.
There are old Soviet engineers, technical geniuses, docks in the full sense of the word – in Russia they are like fish in water, they know everyone and everyone knows them. But they are bad at international sales, do not know the laws and regulations of other countries, do not understand the local mechanics of decision-making. And such situations are obtained. Five years ago, an intergovernmental agreement was concluded between Russia and one Southeast Asian country, and we agreed to build an important railway. The project has still not moved from the dead point, because the contractor – a huge Russian company – decided to do everything herself. In particular, to coordinate the allocation of land. Of course, the railway was bogged down in local municipalities. So far, everything rests on the personal patronage of the Minister of Transport, but it cannot continue endlessly – and the wonderful project will go to more technological and fast Chinese companies that are ready to attract any local resources, including expert ones.
Dmitry notes that for this reason, any large-scale project abroad begins with a request to a consulting company that aggregates information, finds the right people and gives an opinion.
– It’s so easy. Understand that it is impossible quickly and without outside help to learn how to conduct business in a fundamentally foreign country, where not only laws and rules, but even the Internet is different.
Russian companies must come to terms with the fact that not always ” on one’s own” means “better.” Having mastered this logic, it is easy to find windows of opportunity, regardless of the size of the business.
And here’s a great example.
– As a rule, relatively small Russian companies are shy: they say, where are we going to the world market? Dear, your size is rather an advantage. TNK, transnational corporations do not need competitors, but they are very much interested in contractors. Let’s go back to Exxon Mobil – they are constantly looking for partners who can take on, for example, pipeline maintenance. By the standards of the global market, this is not so much money, not the most rewarding work, the minimum of technology … In general, in Asia such a task is usually outsourced to local companies that do not demonstrate an outstanding level. Ours are many times better, and TNK are so willing to pay for quality that they can carry out some contracts out of the tender.
Of course, there is the interest of Russtroyconsulting. The holding selects projects for its clients, helps to create a comprehensive application, directly reach a customer or submit documents for a tender.
“After all, we are also an engineering company capable of skillfully recruiting a pool of Russian companies for the development of the project “from and to”: technical solutions, engineering, installation, maintenance. After all, the expression “repair of the pipeline” just sounds simple. It is necessary to deploy repair shops in the field, scale them for tasks, aggregate various equipment – and this is in addition to the repair itself. Then the project needs to be managed, to ensure compliance with local regulations, legislation, obtain licenses, coordinate work, recruit employees and so on.
That is why the role of the consulting company is so important. No technical skills compensate the ability to properly apply them in the field.
The logic of international business, according to Dmitry, is universal, transparent and clear.
– You can work in competitive markets with substantial costs, small profits and minimal risks. An alternative to this is markets that are considered risky and, accordingly, highly profitable. So, the determining factor always concerns the risks of incompetence. Ask any Russian entrepreneur if he considers the home market riskier than the Malaysian one? And ask about it any company from Malaysia..
In other words, this is an extremely subjective question: when there are competencies, established business connections and knowledge of specifics, the level of risk is acceptable almost everywhere. Actually, the consulting company is a factor reducing the risk of an international investment project to an acceptable one.
– This summer the 3rd Belt & Road Project Summit took place in Hong Kong. Russtroyconsulting is developing a tourism cluster project in Primorye called Ecoterra. It is already entering the investment stage, so we decided to present it at a special session of the Summit – Rural & Urban Development – the result exceeded all expectations. We were approached by representatives of King and Wood Mallesons and the famous Shangri-La Hotels and Resorts chain.
KWM is a global consulting company outside the United States and the European Union. It is known, for example, by the organization in 2007 of PetroChina, the largest IPO in the history, after which the capitalization of the Chinese giant reached $ 1.1 trillion.
– It turned out that right now KWM and Shangri-La are working together on a large-scale development project for the territory of Hong Kong and southern China. A very significant part of it is the complex of theme parks, in many respects similar to what Ecoterra offers investors. They became interested, requested additional information, and we had several meetings, where everything was explained.
Foreigners understand when a consulting company deals with investor relations.
We do for Ecoterra exactly the same thing as KWM for Shangri-La, do you understand? As a result, we got everything we wanted at this stage – we are already actively exchanging information, conducting negotiations, building relationships with potential partners, and discussing the prospects for the mutual integration of projects. We spoke with them in a clear language, and therefore the result was predictable. In principle, this is the key to success in international business, whether you are doing it in Asia or anywhere else.
The material is published by Primorskaya Newspaper, 11.09.2018