What are the major corporates across sectors that have decision-making units based in the region?
The economic crisis and sanctions have not made life easier for international corporations working in Russia. But there’s still a way to reap the rewards of changing economic conditions. One potential strategy is to localize.
German sportswear company Adidas revealed plans to close 160 stores across Russia by the end of 2017. The multinational corporation has been scaling back business in the country for the last three years – with many shops already shut down – as consumer demand continues to tail off amid the economic crisis.
According to sources close to the company, Adidas has been rethinking its business strategy since 2014 and the closures represent one of the ways to optimize sales by cutting losses.
Other international companies have also been forced into a rethink in Russia. “The ruble depreciation has made localization of business in Russia one of the most attractive options,” Pavel Sigal, vice president of Opora Rossii – a Russian business association of small and medium companies. “Put off by sanctions and the crisis, the majority of corporations did not dare bet on localization, but the gradual adaptation of Russia’s economy to sanctions will eventually lead them to do it. The cost of labor in Russia has become lower than in China and large companies cannot ignore this.”
While localization has not yet become a mainstream trend, there have already been notable cases. Here are five international companies that have made steps to localize in Russia over the last three years.