IRISH companies are missing out on opportunities in Russia, according to Enterprise Ireland’s “Man in Moscow”.
Russian conglomerates are currently investing in specialist areas of construction, energy, telecoms and agri- machinery, Moscow-based Mike Hogan told a breakfast audience of Irish and Russian business leaders in Dublin yesterday.
“Russia’s power requirement is such that they would need to build one Poolbeg every year between now and 2020,” he said.
“A similar observation would be true of data centres, agri-machinery, medical devices, chemicals and areas of banking such as online billing.
“Banking is ripe for growth. The Russian mortgage book is only about 3% of GDP. Mortgages only account for about 7-8% of all banking transactions.
“Russians buy their homes with cash. Up to about 1992-93, they got their properties directly from the government.”
Russia experienced a 9.5% drop in GDP in the first half of 2009 but has been growing consistently since then. Irish companies such as PM Group, Mercury Engineering, Kentech, Kentz and Sepam have established a strong presence in energy, engineering and construction activities built around Russia’s gas and oil sectors.
Russia receives nearly half of all exports by indigenous Irish companies to the BRIC countries (Brazil, Russia, India and China).
The public perception, however, is that China and Brazil are stronger markets for Ireland.
This view was confirmed by attendees at yesterday’s breakfast briefing in Dublin’s Alexander Hotel, jointly hosted by Dublin City Council and the Russia -Ireland Business Association as part of Dublin’s first Russian Festival, which concludes this weekend.
Mr Hogan emphasised that the opportunities lie in specific niche areas, where Enterprise Ireland’s advisors in Dublin and Moscow can offer information.
For instance, Russia is seeking to expand its data centre activities but not build apartments or hotels. Telecoms is also ripe for new business.
Mr Hogan noted: “There is a nice cluster of Irish telecoms companies in Moscow, like iConX, who are delivering billing solutions into the top mobile phone companies in Russia.
“Ireland may be about to have a second coming in Russia. A lot of Irish companies were very active there in the early 1990s, but we have taken our eye off the ball since then. The UK is far more active there now.”
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