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Doing Business in Russia

Doing Business in Russia


A Concise Guide
Volume II
Anatoly Zhuplev

Doing Business in Russia: A Concise Guide, Volume II


Copyright Business Expert Press, LLC, 2017.
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First published in 2017 by
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Abstract
Russia is the worlds largest geographic area, major economy, and important power in the global political-economic landscape. Over the past
quarter century, following the landmark dissolution of the U.S.S.R.,
Russia has become a premier global marketplace despite remaining

enigmatic and challenging. The book strives to serve as a concise guide in


understanding Russia from an international business perspective.
You will learn about strategic issues, business drivers, pros, cons, costs,
and risks of international expansion. The coverage includes analytical
tools, practical applications, sources of information, and assistance in
international business research. These are followed by Russias macro-
economic profile, drivers, strategic strengths and weaknesses in the
comparative global context, including its international market attractiveness and primary opportunities for U.S. companies.
The book examines Russias main industries, their profiles, dynamics
and business attractiveness, consumer trends, and marketing strategies.
The discussion of Russias regions covers regional subdivisions and economic profiles with the focus on the city of Moscow commanding top
attractiveness from the domestic and international business perspective.
The book covers the drivers and trends of the Russian small business
sector and entrepreneurial business venturing.
Despite the onslaught of capitalism and globalization, Russia retains
its relationship-driven culture. The book provides insights in Russian culture by evaluating the determinants of Russian culture, its national profile
in major global cross-cultural studies, and practical cultural applications
in business, negotiations, and communications.
The books pedagogy includes critical information sources and skill
development exercises and cases on doing business in Russia.

Keywords
business, commerce, culture, entrepreneurship, industries, international,
Moscow, regions, Russia, strategy, trade

Contents
Acknowledgmentsix
Chapter 1 Russian Regions: Business Dynamics and Attractiveness1
Chapter 2 Small Business, Entrepreneurship, and Business
Venturingin Russia71
Chapter 3 Russian Business Culture115
Appendix I: Information Sources on Doing Business in Russia169
Appendix II: Skill Development Exercises and Cases on Doing
Business in Russia177
Index245

Acknowledgments
The author would like to acknowledge the help of all the people involved
in this project and, particularly, express appreciation to the colleagues at
Loyola Marymount University and Business Expert Press for their outstanding editorial support.
Anatoly Zhuplev
Loyola Marymount University, U.S.A.

CHAPTER 1

Russian Regions
Business Dynamics and Attractiveness
The best thing we can do if we want the Russians to let us be A
mericans
is to let the Russians be Russian.
George F. Kennan
US diplomat, historian, explorer, and war correspondent
US Ambassador to the Soviet Union,
May 14, 1952September19, 1952

Main Points in This Chapter


Russia: Regional subdivisions and economic profiles.
Business environment and investment climate in the City of
Moscow: Domestic and international perspective.
Regional analysis is an integral part of business research or a feasibility
study preceding the companys international strategic expansion to the
target country. Regional analysis is particularly important when it comes
to large countries characterized by multifaceted demographics and complex politico-economic landscape.
For example, Japan is one of the worlds major markets and most
ethnically homogenous countries.1 From the distance of New York or
Los Angeles, Japan may well seem just thata large and very homogenous marketplace. However, two of Japans major metropolitan districts
Ethnic Japanese comprise 98.5 percent of the nations total population of
127million people (Central Intelligence Agency 2016).
1

DOING BUSINESS IN RUSSIA

with the capitals of Tokyo and Osaka that are only 246 miles (396 km)
apart, are quite different in their market dynamics, business practices,
and strategic approaches. Variations in market dynamics require different
approaches to formulating a company marketing mix, the 4Ps ( Consumer
Lifestyles in Japan 2016). Such variations in the marketing mix are also
common in Belgium, a small, ethnically diverse European country with
a population of 11.3 million that is 58 percent Fleming, 31 percent
Walloon, and 11 percent mixed or other. Yet another example is Singapore, a small Asian country-city of just 5.7 million people. Despite its
small geographic size,2 Singapore is also ethnically diverse74 percent
Chinese, 13 percent Malay, 9 percent Indian, and 3 percent comprised
of other ethnic groups (Central Intelligence Agency 2016). In large but
ethnically homogenous countries such as Japan or small but demographically diverse countries such as Belgium and Singapore, there is an evident
need for differentiation in marketing strategies and business practices. For
a country as large and diverse as Russia, the needs for regional, ethnic,
demographic, and other regional variations in marketing strategies and
business approaches and practices tend to be even greater (Russia 2016;
Russia: Country Profile 2016).

Russias Regional Subdivisions and Economic Profiles


Russias current governing-administrative system and regional subdivisions have come a long way, originating from the nations complex geography, history, political economy, sociocultural, and military developments
(A Country Study: Russia 1998).
As of 2016, there were 85 federal administrative subjects that are
constituent members of the Russian Federation.3 Russias federal subjects
Singapores area is just 687 sq. km of land, slightly more than 3.5 times the size
of Washington, DC (Central Intelligence Agency 2016).
3
Two of these federal subjectsthe Republic of Crimea and the federal city of
Sevastopolare internationally recognized as part of Ukraine.
2

Russian Regions 3

Figure 1.1 Federal subjects of Russia

can be categorized into six types: 22 republics, 9 krais (large districts,


pluralA.Z.), 46 oblasts, 3 federal cities, 1 autonomous oblast, and 4
autonomous okrugs (districts, pluralA.Z.) (Russian Investment Agency
2016) (Figure 1.1).
Along with the federal subjects, Russian regional structure is comprised of 9 federal districts,4 12 economic regions5 (Figure 1.2), 4 m
ilitary

Each federal district is administered by a Presidential envoy. Federal districts


envoys serve as liaisons between the federal subjects and the federal government
and are primarily responsible for overseeing the compliance of the federal subjects
with the federal laws.
5
Economic regions and their parts sharing common economic trends are in turn
grouped into economic zones and macro zones.
4

DOING BUSINESS IN RUSSIA

1. Central economic region


2. Central Black Earth economic region
3. East Siberian economic region
4. Far Eastern economic region
5. Northern economic region
6. North Caucasus economic region
7. Northwestern economic region
8. Privolzhsky(Volga) economic region
9. Urals economic region
10. Volga-Vyatka economic region
11. West Siberian economic region
12. Kaliningrad economic region

Figure 1.2 Economic regions of Russia

districts,6 and a multitude of municipal divisions. Additionally, there are


29 special economic zones set up to facilitate foreign investment through
tax breaks, insurance privileges, relaxed customs regime, ready-to-use infrastructure, and other incentives (Special Economic Zones of the Russian
Each military district operates under the command of the district headquarters,
headed by the district commander, and is subordinated to the General Staff of the
Armed Forces of the Russian Federation.
6

Russian Regions 5

Federation 2011). Until recently, the regional governance and development on the federal level had been under the jurisdiction of the Ministry of Regional Development of Russia (
). In 2014,
the Ministry of Regional Development was abolished and its responsibilities redistributed across other ministries. The task of facilitating foreign
investments in Russia was assigned to the newly created federal Russian
Investment (Invest in Russia) Agency (
).7
As noted earlier, an international corporate business expansion to
Russia or any other country is typically driven by either export-based
international marketing or foreign direct investmentbased manufacturing (foreign portfolio investment is beyond the scope of discussion in
this book). Furthermore, international expansion can be predetermined
by the dynamics of the industry or a specific business venture project.
Depending on the nature of a contemplated expansion, comparative
National Investment Agency Invest in Russia was established in December
2013 under the auspices of the Ministry of Regional Development of the Russian
Federation and in cooperation with the World Association of Investment Agencies
(WAIPA). From May 1, 2014, the Agency operates under the new nameRussian
Investment Agency Invest in Russia. Its primary objectives are attracting foreign
investment in the Russian economy by facilitating foreign investors in entering
the Russian market and promoting investment opportunities and business image
of Russia by the efficient system of communication and interaction with the
international investment community. Working closely with regional investment
agencies, the Agency creates a platform for investor-region interaction at the
federal level as well as forms a unique center of information on all regions,
ongoing projects and investors interested in projects in the R
ussian Federation.
The main task of the Agency is to function as a single Customer Center, which
serves for foreign investors as a source of extensive information on the investment
potential of Russian regions, ongoing projects, new investment opportunities,
as well as a tool to create favorable conditions for foreign companies to enter
the Russian market. More information about the Agency and its functions and
services can be obtained at http://invest-rf.com.
7

DOING BUSINESS IN RUSSIA

attractiveness of Russian regions may vary widely in terms of their


business potential. Analytically and practically speaking, strategic potential of such an international expansion in its entirety can be translated
into specific components: business benefits/advantages, costs/disadvantages, and risks.
Table 1.1 presents key economic characteristics of the Russian economic regions and major federal subjects selected on the basis of their
largest economic contributiontheir regional sharein the national
gross domestic product (GDP). Table 1.1 reveals that the Central
Federal District, which includes the City of Moscow and Moscow Oblast
(Moscow Oblast is used interchangeably with Moscow region), is clearly
the national economic leader.
The Central Federal District, the most economically developed one,
compared to other administrative districts, accounted in 2015 for only
3.8 percent of the Russian territory, but was home to 26.6 percent of the
nations total population. In 2013, the Central Federal District controlled
32.1 percent of the total fixed capital formation and contributed 35.0
percent to the Russian GDP nationwide. In addition, the Central Federal
Districts share in the national manufacturing output reached 14.56 percent in extracting industries, 33.94 percent in manufacturing industries,
and 29.96 percent in generation and distribution of electric power, natural gas, and water.
The City of Moscow and Moscow Oblast combined accounted
for less than 1 percent of the countrys territory nationwide, but their
population was 13.2 percent of the national total. In stark contrast,
together they accounted for 26 percent of the national GDP, 23.6 percent of the fixed capital formation, 13.02 percent output in extracting
industries, 21.21 percent output in manufacturing, and a 17.7 percent
contribution to the national output in generation and distribution of
electric power, natural gas, and water. Additionally, the Moscow Oblast,
and, especially, the City of Moscow, enjoys a wide-margin comparative advantage in employee compensation. For example, in 2014 the
average nominal monthly monetary labor compensation in the City of
Moscow stood at 61,208 rubles compared to only 39,945 rubles in the
Central Federal District and even the lower amount of 32,495 rubles for
Russian Federation nationwide. In the Moscow Oblast, the 2014 average

0.4

Republic of Tatarstan

2.6

2.4

20.3

6.1

Privolzhsky (Volga) Federal District


0.8

6.7

Republic of Bashkorstan

3.7

1.0

9.6

2.5
0.4

3.5

0.01

City of St. Petersburg

South Federal District

Krasnodar Krai

9.5

9.8

Northwest Federal District

North Caucasus Federal District

8.3

4.9

0.3

3.8
0.01

100

Russian Federation

Central Federal District

City of Moscow

100
27.0

Area

Moscow Oblast

Population
as of Jan. 1,
2015

2.9

2.3

16.0

2.4

3.0

6.5

4.6

10.3

21.5

4.5

35.0

100

2.4

1.4

14.1

2.4

2.9

6.4

3.3

10.9

19.5

4.1

32.1

100

Fixed capital
formation
(actual book
Regional
value at
GDP, 2013 years end)
100

Extraction
3.59

1.64

14.32

0.21

0.21

1.88

0.14

6.03

12.92

0.10

14.56

100

Manufacturing
3.93

2.97

20.98

1.08

2.20

6.10

6.94

14.16

15.34

5.87

33.94

(Continued)

2.67

2.33

18.43

2.47

2.06

6.26

3.79

12.02

12.19

5.51

29.96

100

Generation
and
distribution of
electric power,
natural gas
and water

Regional output by extracting and


manufacturing industries

Table 1.1 Russias economic regions and federal subjects* with the greatest regional GDP, percent


Russian Regions 7

10.6
1.1

Sverdlovsk Oblast

13.2

30.0
2.0
4.2

13.8
36.1

5.4

2.3

10.2

1.6

2.5

5.2

2.9

14.1

6.3

1.7

9.0

1.1

5.4

6.5

3.2

18.3

13.55

3.10

12.75

1.27

11.15

23.36

0.51

36.66

Extraction

1.71

2.58

10.39

1.76

0.52

1.32

4.46

11.64

Note: *Included in the table are selected federal subjects of Russia with their regional share in the national GDP equal or higher that 2 percent.

Source: . - (2015).

Far East Federal District

Krasnoyarsk Krai

Siberian Federal District

1.0

0.9

Tyumen Oblast without the autonomous


okrugs

0.4

4.5

Yamalo-Nenets Autonomous Okrug

1.1

3.1

Khanty-Mansi Autonomous Okrug-Yugra

Tyumen Oblast. Including:

8.4

Area

Ural Federal District


3.0

Population
as of Jan. 1,
2015

Fixed capital
formation
(actual book
Regional
value at
GDP, 2013 years end)

Manufacturing

Regional output by extracting and


manufacturing industries

Table 1.1 Russias economic regions and federal subjects* with the greatest regional GDP, percent (Continued)

5.60

2.85

12.19

0.92

1.06

4.39

3.63

12.67

Generation
and
distribution of
electric power,
natural gas
and water

8
DOING BUSINESS IN RUSSIA

Russian Regions 9

monetary compensation stood at 38,598 rubles or 63 percent of the City


of Moscow level and 119 percent of the Russian Federation overall level
( 2015).
Higher salaries tend to translate into a greater regional purchasing
power and boost Moscows potential attractiveness as a marketplace.
Moscows higher salaries, sophisticated lifestyles, and better quality of life
also tend to attract qualified workforce, thus providing favorable opportunities for foreign companies looking to recruit local talent in starting or
running their business operations in Russia.
According to the 2016 World Investment Report (UNCTAD 2016),
in 2015 Russia received 9.8 billion USD in foreign direct investment
inflows, a sharp drop compared to 29.2 billion USD in 2014.8 In 2014,
the Central Federal District registered 12.5 billion USD or 55 percent
of the total inflows of foreign direct investments in Russia. Out of the
Central Federal Districts 12.5 billion USD total, the City of Moscow in
2014 attracted 11 billion USD or 16 percent of the total foreign direct
investment inflows in Russia. The Central Federal District and Moscows role as the nations leading business hub and marketplace is also
evident from Table 1.2 containing Russias international trade statistics:
In 2014, the Central Federal District accounted for 51 percent of all
Russian national exports and 61 percent of imports. Moscow alone, as
part of the Central Federal District, accounted for a stunning 46 percent of the R
ussian national exports and 49 percent of imports (
2015).
On the opposite end of the Russian regional economic spectrum
are federal entities such as South Federal District, North Caucasus Federal District, Privolzhsky (Volga) Federal District, and Siberian Federal
District (their shares of contribution to the national GDP are notably
lower relative to their population size). Not surprisingly, these districts
lag behind in attracting foreign direct investment, with the exception of
the Privolzhsky (Volga) Federal District (in 2014 it received 1.2 billion
In addition to the foreign direct investment inflows, as of 2014 Russias
total foreign portfolio investment assets stood at 56.6 billion USD, including
3.7billion USD in equity securities and 57.9 billion USD in total debt securities
(U.S. Department of State 2016).
8

6,865

69,846
9,004
56,894

Sverdlovsk Oblast

Tyumen Oblast. Including:

1,809

3,073

2,968

18,896

Republic of Tatarstan

1,008

Ural Federal District

10,345

1,421
12,967

937

Republic of Bashkorstan

Privolzhsky (Volga) Federal District

North Caucasus Federal District


53,705

8,628

17,159

South Federal District


4,356

35,249

19,330

City of St. Petersburg


8,741

56,013

49,000

Northwest Federal District

Krasnodar Krai

118,531

182,416

City of Moscow

30,776

167,740

3,101

199,703

Moscow Oblast

Central Federal District

4,995

1,725

9,012

3,262

2,764

15,501

356

1,069

3,507

4,053

6,571

29,071

2,473

37,955

614

940

3,571

649

372

3,415

596

585

3,213

1,105

1,750

14,214

1,898

25,342

44,941

272,323

445,478

79,258

Imports Exports Imports

Exports

With NIS**
countries

Russian Federation

With the countries


of far abroad*

2012

Table 1.2 Russias top exporting and importing regions, millions of US dollars

22,281

6,478

31,943

16,595

12,439

52,848

797

9,641

17,177

19,592

51,082

205,016

2,569

221,053

433,850

Exports

1,948

2,933

6,552

3,601

932

14,508

1,598

4,704

8,624

29,309

51,939

114,830

22,991

154,218

253,864

Imports

1,357

2,050

5,793

1,511

1,416

10,880

489

559

3,038

2,735

4,669

25,426

3,173

34,299

63,984

Exports

129

773

2,132

607

255

3,132

479

585

2,424

1,561

2,592

10,808

2,323

19,600

32,806

Imports

With the countries of


far abroad
With NIS countries

2014

10
DOING BUSINESS IN RUSSIA

8,129

31,274
1,694
10,487

8,037
25,688

270

279

4,239

3,082

30

1,883

61

265

2,370

501

70

43

28,483

7,266

30,373

2,358

507

19,416

10,436

1,038

5,848

552

157

1,238

198

466

4,597

294

0.5

1,062

217

442

2,225

34

52

44

Notes: *The unofficial term far abroad ( ) was coined after the abolition of the U.S.S.R. in the early 1990s. It signifies the nations not included in the Newly
Independent States. Despite geography, the far abroad category also incorporates countries having common border with RussiaFinland, Norway, Poland, Mongolia, PRC
(mainland China), North Korea, and sometimes the Baltic countries (Latvia, Lithuania, and Estonia).
** NIS stands for Newly Independent States.

Source: . (2015).

Far East Federal District

Krasnoyarsk Krai

Siberian Federal District

452

Tyumen Oblast without the autonomous okrugs

360

3,044
31,736

Yamalo-Nenets Autonomous Okrug

997

22,114

Khanty-Mansi Autonomous Okrug-Yugra


Russian Regions 11

12

DOING BUSINESS IN RUSSIA

USD of foreign direct investment inflows), each of the federal districts in


the laggard group attracted less than one billion dollars in foreign direct
investments and generated substantially lower amount of international
trade in contrast to the Central Federal District and the City of Moscow
( 2015).
As mentioned earlier, the recent creation of the new federal Russian
Investment Agency Invest in Russia was intended to facilitate incoming foreign investments. Given Russias large economic size, complexity, and substantial discrepancies characterizing its 85 federal subjects,
each of them possessing varying potential for investment and economic
development, now almost every region has its own local affiliate agency
charged with attracting investments (regional investment agencies can be
accessed through the Invest in Russia [2016] entry point). Prior to the
establishment of the Agency there was no single framework integrating
all regional development corporations across Russia. The Agency became
a federal-level platform for the investorsregions cooperation and a tool
to provide support for foreign companies in entering the Russian market.
The main task of the Agency is to function as a single customer center, which serves for foreign investors as a source of relevant information
about the investment potential of the Russian regions, ongoing projects,
success stories, new investment opportunities.
Russian Investment Agency (2016) performs the following key functions: Developing recommendations for improving investment climate
in the Russian Federation and providing these recommendations to the
President and the Government of the Russian Federation, as well as other
parties; building relations with foreign investment agencies and public
associations of investors; provide foreign investors with reliable information about the advantages and opportunities of the Russian Federation, informing about possible problems and helping to minimize risks;
organizing meetings of foreign investors with Russian government agencies authorities and business community; supporting foreign investors,
including by resolution of arising difficulties with licensing and supervising authorities; facilitating interaction with subjects of the Russian

Russian Regions 13

Federation, cities, and districts on attracting investments and implementation of investment projects.
To perform these functions, the Agency and its regional affiliates
provide information and assistance that can become a starting point in
foreign companys strategic analysis and decision. More specifically, an
initial step in the regional investigation of Russia can be accomplished by
using the Agencys analytical tool that enables the user to compile comparative profiles for multiple (up to four) Russian regions with analytical
data downloadable in PDF or Excel format. Additionally, the Invest in
Russia portal houses business reports prepared by reputable global consultancies designated for the national economy at large as well as specific
priority sectors and industries in which Russia has investment potential.
They include: Pharmaceutical and Medical Industry, Real Estate, Innovations and Technology, Infrastructure, Aluminum, Iron and Steel, Lead,
Platinum-group metals, Precious metals, Nickel, Copper, Zink, Coal,
Telecommunications, Transportation, Agriculture and Food, Gas, Hotel,
and Entertainment (Russian Investment Agency 2016).
As an example, Table 1.3 presents comparative investment profiles for
Russias four leading regional entities: the City of Moscow, the City of St.
Petersburg, the surrounding Moscow region, and the Leningrad region.9
In the following section of this chapter we focus on examining the
business environment and investment potential of the City of Moscow,
Russias economic leader.
The selection of a business location within a country as large and
diverse as Russia, whether as a target destination in international marketing or a foreign manufacturing site, is a complex task that involves
multiple dimensions, analytical and decision-making criteria, and steps.
In 1914, during WWI, the name of the city was changed from Saint Petersburg
to Petrograd (), in 1924 to Leningrad (), and in 1991,
back to Saint Petersburg. Currently, the Greater St. Petersburg area is comprised
of two administrative-economic entities: the city of St. Petersburg and Leningrad
Oblast/region named after Vladimir Lenin that retains its name to date.
9

14

DOING BUSINESS IN RUSSIA

Table 1.3 Investment profiles: City of Moscow, City of St. Petersburg,


Moscow region, and Leningrad region, 2015*
Moscow

St. Petersburg

Moscow
region

Leningrad
region

Key macroeconomic indicators


GRP**, RUB billion
(2014)

8,248

1,431

1,646

383

GRP dynamics, percent versus previous


year (2014)

123

109

127

105

Equity investments
per capita, RUB
thousand

131.4

100.03

88.02

112.36

Registered unemployment rate, percent of economically


active population
(as at the end of the
periodbased on
the 2010 Russian
Census results)

4.49

1.30

3.00

0.509

Foreign direct investments, USD million

64,667

7,504

8,067

3,423

Region population
size, thousand people

12,198

5,192

7,231

1,776

Regional center
population size,
thousand people

12,198

5,192

12,198

5,192

Shortest highway distance to the nearest


border c rossing,km

440

163

480

n/a

Shortest highway
distance to the
nearest sea port, km

720

0 km

710

14

Highway distance
from regional center
to the nearest million-plus population
city, km/population
size in m
illion-plus
population city,
million people

0/12.11

0 km,
St.Petersburg,
5mln people

12/12.11

0/5.0

Geography

Russian Regions 15

Moscow

St. Petersburg

Moscow
region

Leningrad
region

Transportation and energy infrastructure


Number of international airports

n/a

Railway freight
transportation, MT

4.20

6.00

10.60

26.80

4,971.10

2,468.70

5,328.60

1,300.10

75.6

77.3

75.6

101

Motor transport
freight turnover,
MT/km
Electricity generation/consumption,
% (2014)

Domestic market size


Income per capita,
RUB thousand

59.50

38.60

40.10

24.00

Retail sales turnover,


RUB bn

4,474.50

1,057.60

1,724.70

304.50

Products shipped
in manufacturing
sector, RUB million

3,731,063.00

2,123,814.00

1,892,723.00

772,574.00

Labor market
Average monthly
salary, RUB thousand
Economically active
population, thousand people

62.50

43.50

40.20

33.10

7,140.20

2,968.20

3,911.00

959.10

Human capital
Number of students
per 10,000 people
(at the last reporting
date) (2014)

1,164

956

248

107

Mortality of working
age (per 100,000
people of working
age3-year average)
(2014)

415.5

514.4

686.5

693

(Continued)

16

DOING BUSINESS IN RUSSIA

Table 1.3 Investment profiles: City of Moscow, City of St. Petersburg,


Moscow region, and Leningrad region, 2015* (Continued)

Migration balance
(3-year average) per
thousand people
(2014)

Moscow

St. Petersburg

Moscow
region

Leningrad
region

98.97

154.79

149.43

123

Source: Invest in Russia (2016) www.investinrussia.ru/compare-four-regions?year=2015&region1


=41&region2=58&region3=42&region4=36
Note: *Some comparative data for the four regions on the latest 2015 Invest in Russia web portal
are marked as unavailable. For this reason we included the 2014 numbers instead of the missing
data for 2015.
**Signifies gross regional product.

For the sake of argument, we will be following a generalized framework


used by the Moscow City Investment Agency (2016). The framework
presented in their investment portal (http://en.investmoscow.ru) in six
languages is informative, reasonably up-to-date and dynamic in style. It
includes two main sections: Investment in Moscow and Guide for
Investor. Their intended purpose, respectively, is to highlight strategic advantages/benefits of investing or conducting business in Moscow
and provide a potential investor/business operator with orientation on
starting and running business. The framework also includes important
information about the citys social and business infrastructure, lifestyle,
current business projects, future developments, and contact information
in the City of Moscow.
The Investment in Moscow portal discusses factors shaping the
business environment and investment climate and includes the City of
Moscows Investment Strategy up to 2025 (2016). It contains profiles,
trends, and dynamics for selected industries and key development issues:
healthcare, education, transport infrastructure, high-tech, tourism and
urban environment, and modernization of old industries. This section
is also supplemented with the company success stories, special analytical reports, and investor support information from the Moscow city
government.
The Guide for Investor section contains information about starting a business, covers in detail the issues of special zones, small and
medium business, personnel, transportation, construction and real estate,

Russian Regions 17

engineering networks, investment protection, trade and services, and


investment support.

Business Environment and Investment Climate in the


City of Moscow Domestic and International Perspective
The Moscow city investment portal hosts extensive business information and offers support. Wikipedia also provides useful coverage containing comprehensive background information and extensive references
(Moscow 2016).
Investment Climate Factors
Investment Opportunities
From a commercial standpoint, Moscow10 is the largest consumer market
in Russia and Europe (Figures 1.3 to 1.8). Its 12 million strong population, together with the surrounding regional agglomeration, reaches
about 16.6 million people, and constitutes 11 percent of the total R
ussian
population, which is #15 in the world by population size of urban
Moscow () is the capital and the largest city of Russia with 12.2
million residents within the city limits and 16.8 million within the urban area. It
is the capital of the Central Federal District and Moscow Oblast, together with
the second one constituting the Moscow metropolitan area, totaling a population
of 19.4 million residents. Moscow is a major political, economic, cultural, and
scientific center in Russia, as well as the largest city on the European continent.
In broader definitions Moscow is among worlds largest cities, being the 13th
largest metro area, the 17th largest agglomeration, the 16th largest urban area,
and the 9th largest within city limits worldwide. According to Forbes (2013),
Moscow has been ranked as the 9th most expensive city in the world by Mercer
and is one of the worlds largest urban economies, being ranked as an alpha global
city according to the Globalization and World Cities Research Network and is
also one of the fastest growing tourist destinations in the world according to the
MasterCard Global Destination Cities Index. Moscow is the northernmost and
coldest megacity and metropolis on Earth. By its territorial expansion on July 1,
2012 southwest into the Moscow Oblast, the capital increased its area 2.5 times;
from about 1,000 sq. km. (390 sq mi) up to 2,511 sq. km. (970 sq mi), and
gained an additional population of 233,000 people.
10

18

DOING BUSINESS IN RUSSIA


Essen-Dusseldorf

6.7

Hong Kong

7.3

London

10.4

Paris

10.9

Istanbul

13.5

Moscow

16.6

Sao Paulo

20.6

New York

20.7
22.7

Shanghai

23.6

Seoul-Incheon
Tokyo-Yokohama

37.8
0

10

20

30

40

Million people

Figure 1.3 Population of worlds urban agglomerations


Source: Demographia World Urban Areas (2015).

Moscow
Moscow region

16%

Other regions
6%

78%

Figure 1.4 Geographic structure of Russias retail trade turnover


Source: Moscow Investment Strategy up to 2025 (2016).

agglomerations. Being home to a sizeable population, Moscow also enjoys


high purchasing power, accounting for 16 percent of the Russian retail
turnover. The city is characterized by a relatively high level of household
income; in 2014 the average salary in Moscow reached 971 USD (1,800
USD in 2013),11 twice as much compared to 493 USD nationwide. In
In 2014 the Russian rubles exchange rate against the U.S. dollar drastically
plunged.
11

Russian Regions 19
1,200
971
900
USD*

650
600

493

300

Russia

Saint Petersburg

Moscow

Figure 1.5 Average per capita income, 2014, USD*/month


Source: Rosstat (Russian Federal State Statistical Service).
Note: *According to average US dollar exchange rates from the Bank of Russia.

international comparisons of consumer spending Moscow (169 billon


USD) outperforms many leading global cities acceding only to London
and Paris. Additional assurance for retail operations in Moscow can be
derived from a relatively low level of the loan debt burden of population
compared to St. Petersburg and Russia as a whole.
Investment Opportunities
The City of Moscow is the leading economic region driving Russian
national growth (Figures 1.9 to 1.12). In 2014, the City of Moscows gross
regional product (GRP) reached nearly 13 trillion rubles, or 383billion
USD. In terms of cross regional domestic comparisons, Moscows GRP
per capita in 2012 reached 27,303 USD, more than double the average
Russian rate. Internationally, Moscow also fares strong being among the
worlds 10 largest urban conglomerates in regard to its purchasing capacity. Moscows per capita GRP is higher compared to Seoul and Shanghai,
although lower than that of some large conglomerates of Europe and the
United States.
The structure of Moscows GRP is close to the economic structure of
large metropolitan areas. The largest investment in the citys GRP is from

20

DOING BUSINESS IN RUSSIA


8...

In rubles

In foreign currency and precious metals

337

Thousand roubles

6...

304

248
160
135

4...

121

351

105

2...

300

262

370

326

370

208

2010

2011

2012

2013
Year

2014

2015

1KB 2016

Figure 1.6 Volume of individuals deposits per capita as of January 1,


thousands RUB
Source: Bank of Russia, calculations by Moscow City Investment Agency.
Money expenditure, RUB trln

Growth % against the previous year

24

RUB trln

+10%

+10.7%

+5.1%

12

+10.9%

+11.5%

7.2

2011

2012

8.9

9.3

2013

2014

10.4

2015

Figure 1.7 Money spent by the population in the City of Moscow,


trillion RUB
Source: Mosgorstat.

the trade sector (31.3 percent of the GRP) as well as activities that provide business and financial services, working with real estate and scientific
research and development (21.2 percent of the GRP). The manufacturing
industry accounts for 18.6 percent of the gross value added (including
machine manufacturing, which is 14.9 percent).

Russian Regions 21
60
46,5

45
28,6

30

14,7

15
0

Saint Petersburg

Russia

Moscow

Figure 1.8 The ratio of outstanding loans to the volume of individual


deposits
Source: Bank of Russia, calculations by Moscow City Investment Agency.

bn rubles

In % compared to 2010 (in comparable prices)


125

bn rubles

12,000

8,000

8 376
100

9 949
102.8

10 667
105.9

11 815
106.9

12 809
107

105

4,000

115

95

2010

2011

2012
Year

2013

2014

In % compared to 2010

16,000

85

Figure 1.9 Moscows gross regional product


Source: Rosstat, Department of Economic Policy and Development of Moscow, calculations by
Moscow City Investment Agency.

Economic-Geographical Position
Moscow is located in the heart of the most developed and diversified
region of the European part of the vast Russian land (Figures 1.13
to1.14), still far away from major global commercial destinations. The
flight time to some global financial centers (New York, Hong Kong, and
Singapore) is within 10 hours, and European financial centers (London,
Zurich, Frankfurt on the Main) can be reached by plane within 4 hours.

22

DOING BUSINESS IN RUSSIA


Kaluga region

8 355

Krasnodar Krai

8 551

Moscow region

9 758

Leningrad region

10 451

Republic of Tatarstan

11 256

Krasnoyarsk Krai

12 910

St. Petersburg

13 310

Tyumen region**

13 522

Moscow

27 303
0

7,500

15,000

30,000

22,500

USD

Figure 1.10 GRP per capita in Russian regions*


Source: Rosstat, calculations by Moscow City Investment Agency.
Notes: *According to the average annual dollar exchange rate, the Bank of Russia.
** excluding Khanty-Mansiysk and Yamal-Nenetsk regions.

Sao Paulo

20 650

Shanghai

24 065

Istanbul

24 867

Seoul-Incheon

34 355

Kln-Dsseldorf

41 763

Moscow

45 803

London

57 157

Paris

57 241

Hong Kong

57 244

Singapore

66 864

New York

New York
0

20,000

40,000
USD

69 915
60,000

80,000

Figure 1.11 GRP per capita metropolitan areas in the world


Source: Brookings Institution (2015).

Moscow is located at an approximately equal distance from large markets


of Eastern Europe, CIS countries, and the Baltics. Travel time via public
highways to the seaports of the Baltic and Black Seas, to regional centers

Russian Regions 23
Wholesale and retail trade
Business services, working
with real estate, R&D, IT
Manufacturing
Social sphere and state
management
Transport and connections
Construction
Other

4.4%
7.9%
35.4%
10.8%

18.7%
19.8%

Figure 1.12 Moscow GRP by economic sectors


Source: Rosstat, calculations by Moscow City Investment Agency.

12

Flight time, hours

10

10.5
9

9
6
4

3.5

3.5

Zurich

Frankfurt am
Maine

3
0

London

New York Hong Kong Singapore

Figure 1.13 Flight time from Moscow to global cities

of the European part of Russia and the Volga region, and to the cities of
Belarus and Ukraine is within 24 hours.
Business Activity
As the nations political-economic, cultural, and educational center, and
business hub, the City of Moscow is characterized by high density of
global companies, media, Russian federal government agencies and
regional representative agencies, and diplomatic and trade representatives

24

DOING BUSINESS IN RUSSIA

Archangelsk

17

Murmansk

23.5

St. Petersburg

Riga

10

Minsk

9
14

Rostov-on-Don
Novorossiysk

19

Astrakhan

18

Samara

12

Kazan

10
0

12
Journey time, hours

18

24

Figure 1.14 Domestic road travel time* from Moscow


Source: Avtodispetcher Cargo Transportation Portal.
Notes: *Fastest route (excluding traffic).

located in the city (Figure 1.15). Many of the largest international companies have their offices in Moscow. On this indicator, Moscow is one of
the top 10 business hubs in the world, outperforming Beijing, Dubai,
Madrid, Paris, and New York.
As Russias top business and financial center, Moscow is home to
about 1.3 million enterprises and organizations (about 25 percent of the
total number of all the companies registered in Russia). Over the past five
years, the number of enterprises and organizations operating in Moscow
has increased by 20 percent. Moscow accounts for about half of the operating banks and credit organizations in Russia. Banks headquartered in
Moscow account for 80 percent share of the total bank assets in Russia.
Investment Activity
In 2015, Moscow registered around 1.5 trillion rubles (38.3 billion USD)
of investment stock in fixed assets, or 10.9 percent of the total volume of
investments in fixed assets in Russia (Figures 1.16, 1.17, and 1.18). Over
70 percent of investments came from nonbudget (private) sources. Over

Russian Regions 25
Warsaw
New York
Paris
Dubai
Madrid
Beijing
Moscow
Shanghai
London
Tokyo
Singapore
Hong Kong

53.6
55.4
55.7
56.1
59.6
60.4
60.7
61.4
63.2
63.9
67.5
68.2

50

55

60

65

70

International companies, %

Figure 1.15 Presence of largest international companies in cities


worldwide
Source: CBRE, Global office location.
Notes: According to research results from 290 international companies.

100

4,0%
15,3%

5,1%
9,4%
10,1%

75

7,0%
35,1%

37,8%

Manufacturing
Manufacturing and distributing
of electrical energy, gas, and
water
Wholesale and retail trade,
repairs
Transport and connections
Financial activity
Using real estate, renting, and
business activities
Other types of activity

50

9,6%
25

16,1%

5,9%
19,5%

12,9%

12,2%

2011

2015

Figure 1.16 Investment structure in fixed capital* by type of business


activity, percent
Source: Mosgorstat.
Note: *Large and medium-sized businesses.

DOING BUSINESS IN RUSSIA


RUB bn

2,000

% for 2010 (comparable prices)

400
1 612

1 542
1 413

1,500

300

RUB bn

1 220
1,000

500

856

733

141.9

161.3

158.8

152

200

106.6

100

100

2010

2011

2012

2013

2014

2015

% for 2010 (comparable prices)

26

Year

Figure 1.17 Investments in fixed capital in Moscow billions RUB,


percent of 2010 (comparable prices)
Source: Rosstat, calculations by Moscow City Investment Agency.
60
45

44

45
USD bn

35

36

36
30

30
19

15
0

13

21

22

23

26

26
17

19

16

17

14

16

17

I Q II Q III Q IV Q I Q II Q III Q IV Q I Q II Q III Q IV Q I Q II Q III Q IV Q I Q II Q III Q IV Q


2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015
2011 2011 2011

Figure 1.18 Net inflows of foreign direct investments to Moscow,


billions USD
Source: Bank of Russia (according to balance of payments data from the Russian Federation).

the past four years, investments in fixed assets in comparable prices grew
by 52.2 percent at the 2010 comparable prices. In Q4 of 2015, Moscow
attracted 17 billion USD in foreign direct investment inflows outstripping
by wide margin other Russian regions in the incoming flows of foreign
direct investment on a per capita basis. In 2013 this indicator in Moscow
reached 855 USD in foreign direct investment per capita compared to 668

Russian Regions 27

USD in the Kaluga region, 570 USD in the Primorsky Krai, 517 USD in
the Leningrad region, and 245 USD in the Moscow Oblast/region.
Conditions for Investment
Labor Force
Moscow is one of the worlds largest cities in terms of the size of its economically active population and availability of skilled labor. It is also the
leader among Russian regions nationwide (Figures 1.19 to 1.22).
The size of the economically active population pool in Moscow is over
7 million and it is experiencing an upward trend. Moscows population is
characterized as having a high level of education: on average, 815 out of
1,000 residents, age 15 years and older have professional education; 42
percent of the residents have higher and postgraduate education. According to the Cities of Opportunity2012 study by Pricewaterhouse
Coopers, a global consultancy, Moscow ranks #5 among the worlds
largest cities in terms of the share of residents with higher education.
Moscows unemployment rate of 1.5 percent (compared to 5.5 percent nationwide in 2015) is lower than it is in many other metropolitan
cities around the world. Moscow also has a comparative advantage in
labor costs over major cities worldwide (a drastic downward trend in the
USD/RUB exchange rate in 20142016 has partially contributed to the
decline of labor cost in Russia in dollar terms).
7.5
7.09

Mln. people

7.0

6.8

6.88

6.64
6.5

6.44

6.0

5.5

2010

2011

2012
Year

2013

2014

Figure 1.19 Economically active population in Moscow


Source: Rosstat (Russian Federal State Statistics Service).

28

DOING BUSINESS IN RUSSIA

18.1%

Istanbul

27.7%

Hong Kong

28.0%

Vienna
Berlin

37.0%

New York

37.2%

Prague

37.5%
41.4%

Paris

42.1%

Moscow

44.4%

Stockholm

52.1%

San Francisco

52.9%

London
0

15

30

45

60

Figure 1.20 Adult population with higher education in cities around


the world, 2013, percent
Sources: Rosstat, Eurostat, the Government of the Hong Kong SAR, U.S. Census Bureau, the City
University of New York.

1.5%

Moscow

3.3%

Hong Kong
Seoul

4.2%

Warsaw

4.3%

Shanghai

4.4%

Sao Paulo

5.3%

New York

6.1%

London

6.6%

Berlin

8.3%
8.9%

Paris
Istanbul

11.6%
0

12

Figure 1.21 Unemployment in cities around the world, 2014, percent


Sources: Euromonitor International, the Government of the Hong Kong SAR, Mosgorstat.

Russian Regions 29

6.2

Moscow*

6.9

Sao Paulo
Shanghai

7.8

Warsaw

8.6

Prague

8.8

Tel Aviv

19

Paris

21.8

Berlin

25.9

London

26.2
32.9

New York
0

10

20

30

40

USD/hour

Figure 1.22 Average hourly labor rates in cities around the world
Source: Euromonitor International, Rosstat, Moscow City Investment Agency calculations.
Notes: *Average monthly salary according to Rosstat in 2014 at the USD exchange rate of the
Bank of Russia on January 1, 2015 (based on 22 working days a month and an 8-hour working day).

Economic and Financial Stability


Over the years, the City of Moscows finances have been characterized by
balanced budgets, stable growth, sustainable spending patterns, and low
level of public debt12 (Figures 1.23 and 1.24). Moscows budget deficit
for the past three years has not exceeded 0.5 percent of the GRP. In terms

Russias historic post-Soviet macroeconomic performance on the national


level has been susceptible to booms and busts. Economic busts and downturns
have happened in the early 1990s (resulted from the demise of the U.S.S.R. and
sharp drop in global oil prices), 1998, 20082009, and 20132014 (the current
unfolding downturn caused by fundamental political-economic factors is exacerbated by sharp drop in global oil and gas prices, Russias annexation of Crimea,
military-political confrontation with Ukraine, and resulting Western sanctions).
Moscow as a vital part of Russia experiences consequences of the nationwide
trends. Therefore its pattern of financial-budgetary stability should be interpreted
in relative terms.
12

30

DOING BUSINESS IN RUSSIA


Incomes, RUB bn

Expenditures, RUB bn

Proficit/defict, % of GRP*

Public debt, % of GRP*

2,000

3,6
2,4
0,2

1,8

1,5

1,3

0,4

0,4

0,4

0,8

1,750

1,1

1665

1480

1,500

1529

1546

1521

1482

1,5

1399

1,250

% GRP*

RUB bn

1601
1535
1488

10
1126
1106

1,000

2010

2011

2012

2013

2014

2015

15

Year

Figure 1.23 Moscow budget indicators 20102014


Source: Open book of Moscow, Department of Economic Policy and Development of the City of
Moscow.
Note: *2014, estimate.

160
132

% of GRP

120

104.7

80
40

40

11.7
0

Dubai

Singapore

Shanghai

New York

5.8

1.1

Hong Kong

Moscow

Figure 1.24 Debt in cities around the world


Source: Moscow Finance Department, IMF, NYC Office of the Comptroller, Shanghai Audit
Bureau, Singapore Department of Statistics, Moscow City Investment Agency calculations.

of the low budget deficit, Moscow outperforms the cities of Hong Kong
(5.8-percent budget deficit), New York (11.7-percent budget deficit),
Shanghai, Singapore, and Dubai. For the past four years Moscows ratio

Russian Regions 31

of public debt to GRP has been reduced in 2.5 times, from 3.6 percent of
GRP in 2010 to 1.4 percent of GRP in 2014. In contrast, the public debt
to GRP ratio in the cities of Shanghai and Dubai reached 40 percent and
56 percent accordingly. This is reflected in Moscows strong international
macroeconomic environment rating (according to the Economist Intelligence Unit, Moscow in this rating is ahead of such big cities worldwide as
New York, Istanbul, and London).
The 2014 balanced financial results of large-scale and medium-sized
organizations in Moscow amounted to RUB 1.46 trillion (USD 37.7 billion at the average annual USD exchange rate of the Bank of Russia).
About 76.2 percent of Moscows profitable organizations account for
25percent of the aggregate profit of enterprises in Russia.
Taxation of Legal Entities
In contrast to some major global cities, the City of Moscow levies a rather
moderate tax burden on corporations. The corporate (legal entities) profit
tax rate in Moscow is 20 percent, which is lower than London (21 percent), Shanghai (25 percent), and Paris (33.3 percent). The standard value
added tax rate in Russia is 18 percent, which is less than in most European Union countries. For instance, the standard value added tax rate
in Germany is 19 percent, in the United Kingdom20 percent, and in
Italy22 percent (Figures 1.25 and 1.26).
Additionally, Moscow laws and regulations provide special tax benefits to the entities engaged in investment activities. For example, under
certain conditions a reduced 13.5 percent rate of corporate profit tax payable to the budget of Moscow applies to legal entities that manufacture
cars within Moscow, are residents of science parks, technology parks, and
industrial parks, and are residents of the special economic zone for technical innovation such as Zelenograd.13 Tax exemptions are provided to residents of the special economic zone of Zelenograd for vehicles registered
Additional specifics can be obtained from the Moscow City Investment
Agency as well as KPMGs Doing Business in Russia. Your Roadmap to Successful Investments (2015) and Baker & McKenzies Doing Business in Russia
(2015) reports.
13

32

DOING BUSINESS IN RUSSIA

Sao Paulo

15

Berlin

15.8
17

Singapore
Prague

19

Moscow

20

Istanbul

20
21

London
Stockholm

22

Shanghai

25

Tel-Aviv

26.5
33.3

Paris
0

10

20
Tax rate, %

30

40

Figure 1.25 Corporate profit tax rates in cities around the world
Source: Moscow City Investment Agency.

18

Russia
Germany

19

Cyprus

19

United Kingdom

20

France

20
22

Italy

24

Finland
15

18

21

24

27

Tax rate, %

Figure 1.26 Standard value added tax (VAT) rates by country


Source: National sources.

in their name. This tax benefit is granted for a five-year term, effective
from the month of vehicle registration. Under certain conditions, corporate property tax exemptions are provided to the residents of science
parks, technology parks, or industrial parks, management companies of

Russian Regions 33

science parks or technology parks, and entities manufacturing cars within


Moscow. There are also land tax exemptions and investment tax credits
applicable to entities investing in Moscow, provided that the investing
entity meets regulatory compliance requirements.
Access to Real Estate
Figures 1.27 to 1.30 profile the dynamics of commercial real estate in
the City of Moscow. As of April 1, 2015, there was a total of 34.1 million sq. m. (367 million sq. ft.14) of high-quality commercial space in
Moscow. In 2014, investment in Moscow commercial real estate alone
exceeded USD 3 billion. As of April 1, 2015, the aggregate volume of
high-quality office space in Moscow had risen to 14.9 million sq. m.
(including 3.5million sq. m. of class A office space), with a vacancy rate
for the segment as a whole of 19.6 percent. The average office rental in
USD terms had dropped year-on-year by 2535 percent to USD 530
per sq. m. a year for class A and to USD 309 for class B offices. In Ruble
terms, rentals amount to RUB 27, 093 per sq. m. a year (USD 470 at the
Bank of Russia exchange rate on April 1, 2015) for class and RUB 16,
40

Office

Warehousing

Trade
32.89

mln sq.m.

30

28.74
26.19
6.56

20

10

7.16

34.13

8.98

9.58

9.15

9.7

14.76

14.85

7.48
7.93

12.46

13.33

2012

2013

2014

2015

Year

Figure 1.27 Availability of the quality commercial space in Moscow


Source: Knight Frank Research.

1 sq. m. = 10.76 sq. ft.

14

34

DOING BUSINESS IN RUSSIA

150

Entertainment centre (2 0005 000 sq.m.)

100250

Entertainment centre (1001 500 sq.m.)

150350

Childrens goods (1 0002 500 sq.m.)


Sports goods (1 5002 500 sq.m.)

80300

Domestic appliances (1 5003 000 sq.m.)

120300
200500

Supermarket (1 5003 000 sq.m.)


150350

City hypermarket (3 0007 000 sq.m.)


100250

Hypermarket (over 7 000 sq.m.)


100

200

300

400

500

USD per sq.m per annum

Figure 1.28 Lease conditions in retail centers in Moscow


Source: Knight Frank Research.

229

Seoul

344

Mumbai
Istanbul

387

Toronto

505

Moscow

506

Shanghai

568

Paris

724

New York

796
854

Singapore
Hong Kong

1,102

London

1,218
0

400

800

1,200

1,600

USD* per sq. per annum

Figure 1.29 Average class A office rent in cities around the world
Source: Colliers International, Moscow City Investment Agency calculations. Global Office
Highlights.
Notes: *Rental rates in national currencies as of the end of 2014 in USD to national currency
exchange rate on January 1, 2015.

Russian Regions 35

200

Class A

USD per sq.m. per annum

150

Class B

132
117

110

140

140
120

115

100
90

97

100

80
70

50

2010

2011

2012

2013

2014

2015*

Year

Figure 1.30 Average warehouse rental rates in the Moscow area


Source: Knight Frank Research.
Note: *Forecast.

769 (USD 290) for class B offices. Operating costs vary from RUB 2,500
to 6,700 per sq. m. a year (USD 43116).
The aggregate volume of high-quality warehousing in the Moscow area
as of April 1, 2015 amounted to 9.7 million sq. m. (including 7.7million
sq. m. of class A warehousing), the vacancy rate for the segment as a
whole being 9.8 percent. The range of rents in Ruble terms is from RUB
3,500 to 5,500 per sq. m. per annum (USD 6095), operating costs from
RUB 1,000 to 1,300 per sq. m. per annum (USD 1723).
As of April 1, 2015, the aggregate volume of high-quality retail premises in Moscow amounted to 9.6 million sq. m. (including 5 million
sq.m. of rented areas), with 8 percent vacancy. The base rents vary from
USD 100 to 400 per sq. m. per annum for anchor tenants and from 200
to 3,500 USD per sq. m. per annum for gallery tenants.15
More detail on real estate in Moscow and Russia at large can be obtained from
Global Property Guide (2016).
15

36

DOING BUSINESS IN RUSSIA


Sydney

40.1

Sao paolo

56.1

San Francisco

56.9

Hong Kong

63.3

Seoul

64.9

Moscow

76.8

Istanbul

80.4

Shanghai

87.4

Paris

90.1

New York

114.7

London
0

40

80
million passengers

120

143.8
160

Figure 1.31 Volume of airline passengers in cities around the world


Source: Euromonitor International, airport information services.

Transportation Infrastructure
The Greater Moscow is Russias major transportation and logistics center
that possesses a well-developed air, road, and rail transportation infrastructure16 (Figures 1.31 to 1.38).
As the nations largest aviation hub, Moscow includes three major
international airports (Sheremetyevo, Domodedovo, and Vnukovo), as
well as the second-tier Ostafyevo International Business Airport17 and
Bykovo regional airport. In 2014, passenger traffic in the Moscow air
transportation hub reached 77 million passengers. In terms of the number of airline passengers, Moscow is ranked among the top 10 cities in

Technically, Moscow is land-locked. However, thanks to the Moscow Canal,


built under Stalin between 1932 and 1937, Moscow obtained indirect access
to five seas: the White Sea, Baltic Sea, Caspian Sea, Sea of Azov, and the Black
Sea. This is why Moscow is sometimes semi-ironically called the port of the five
seas. Apart from transportation, the Moscow canal also provides for about half
of Moscows water consumption, and the shores of its numerous reservoirs are
used as recreation zones.
17
Ostafyevo International Airport opened in 2000 on the grounds of a former
military airbase owned by Gazpromavia, a division of Gazprom. It caters primarily to business aviation.
16

Russian Regions 37
6.0

km per sq.km.

4.5
4.2
3.0
2

1.5
0.9
0.0

New Moscow

Greater Moscow

Old Moscow

Figure 1.32 Moscow road network density


Source: Moscow Town-planning Policy and Construction Complex, Moscow State Program
Development of the Transport System 20122016 and for the longer term up to 2020 (version
of March 18, 2015).

Turkey

480

USA

683
780

Moscow area

817

Israel
Republic of Korea

978
0

250

500
km per 1000 sq. km.

750

1,000

Figure 1.33 Road density in the Moscow region and countries around
the world
Source: Rosstat, EMISS.

the world. In terms of flight arrivals and departures, Moscow is ahead of


Toronto, Istanbul, and Hong Kong.
Influenced by the radial-ring road design historically common for
some European cities (for instance, Paris), the City of Moscows ring
road system is part of the 19 directions of federal highways in a unified transport network. The density of hard surface roads in the Moscow
region has almost doubled over the last seven years and is comparable to

38

DOING BUSINESS IN RUSSIA


St. Petersburg and
Leningrad region

65

Republic of Tatarstan

86.8
119.7

Krasnodar Krai

126.8

Krasnoyarsk Krai
Moscow area

157.1
0

50

100
million tonnes

150

200

Figure 1.34 Road haulage


Source: Rosstat.

Moscow*

0.59

New York

0.84
1

Sao Paolo

1.2

Shanghai

1.56

Berlin
Singapore

1.58

Seoul

1.62

Paris

1.63

Istanbul

1.81

London

1.88

Hong Kong

2.14
0.0

0.6

1.2

1.8

2.4

USD per litre

Figure 1.35 Retail gasoline prices in cities around the world


Source: Rosstat, Numbeo.
Note: *Average price of A-92 and higher quality petrol at the USD exchange rate of the Bank of
Russia on April 1, 2015.

such countries as Israel, the United States, and Turkey.18 In terms of the
cargo transportation volume, the Moscow region is ahead of many other
One would be prudent to keep in mind Moscow road traffic jams; they are
notoriously known as being among the worst in the world.
18

Russian Regions 39

Tokyo

22
30

London
Hong Kong

38
40

Toronto
Moscow area

58

New York

70
236

Paris
0

60

120

180

240

km per 1000 sq. km.

Figure 1.36 Rail transport density in cities around the world


Source: Rosstat, railway transport information services.

Moscow area
Other Russian regions

39.9%

60.1%

Figure 1.37 Railway passengers in 2013

ussian regions. Comparatively low gasoline prices in Moscow also posiR


tion it as an attractive business hub.
The Moscow Railway Center is the largest railway center in Europe, as
it connects 11 radial and 2 ring lines, 9 terminal stations, and more than
50 freight and sorting stations. The total length of railways is more than
2,700 km. In terms of the rail transportation density, Moscow is ahead of
many major cities internationally, trailing only Paris and New York City.
The Moscow region accounts for more than half of the total volume of
the railway passenger traffic in Russia making transport infrastructure a top

40

DOING BUSINESS IN RUSSIA

800

Total, RUB bn

11.9

Budgetary funds, %

Extra-budgetary funds, %

24.6

33

37.3

38.9

75.4

550

552

549

62.7

61.1

100

88.1

456
400

67

382

50

25

200

75

Source of financing, %

Total, RUB bn

600

2013

2014

2015

2016

2017

Year

Figure 1.38 Development of the Moscow transport system


Source: Moscow State Program Development of the Transport System 20122016 and the longer
term up to 2020 version of March 18, 2015.

priority development area in Moscow. Within the scope of the Targeted


Investment Program of Moscow for 20152017, budget investments in
development of the transport infrastructure will amount to about RUB
800 billion (USD 14 billion at the Bank of Russia exchange rate on April
1, 2015). In 20152017, it is planned in total to allocated over RUB 1.65
trillion (USD 30 billion) for developing Moscows transport system, over
35 percent of this amount coming for nongovernment sources.
Availability of Electricity
The average electric power tariff in Moscow for enterprises and organizations at the beginning of 2015 was about RUB 3.2 per kWh (USD
0.057), which is less than in many major cities worldwide, such as New
York, London, and Hong Kong (Figure 1.39).
Moscow is focusing on making the energy infrastructure more accessible. The average cost of connection to the JSC MOESK grids has dropped

Russian Regions 41
Moscow

0.057

Seoul

0.072

Paris

0.09

Berlin

0.103

Sao Paulo

0.105

Shanghai

0.108
0.114

NY
Hong Kong

0.147
0.165

London
Singapore
0.00

0.191
0.05

0.10

0.15

0.20

USD per kWh

Figure 1.39 Cost of electricity for commercial and industrial


enterprises in cities around the world, January 1, 2015, USD* per
kWh
Sources: Mosenergosbyt OJSC, city energy supply companies.
Note: *At the national currency exchange rate on January 1, 2015.

by almost two-thirds from RUB 37,000 per 1 kW in 2011 to RUB 13,000


per 1 kW in 2013. The time required for technological connection of
facilities with a capacity of up to 150 kW was cut from 180 days in 2012
to 90 days in 2014. The proportion of actual connections under contracts
increased from 36 percent in 2012 to 70 percent in the first half of 2014.
Information and Communication Technology (ICT) Infrastructure
Moscow is the national leader in ICT, being ahead of most Russian
regions in terms of the mobile network coverage and fixed broadband
access and accounting for about 30 percent of all corporate ICT expenditures nationwide. More than 75 percent of Moscow organizations have
websites compared to about 40 percent on average for Russia as a whole.
One in two employees has an Internet-connected PC compared to one in
four in the country as a whole).
Internationally, Moscow is also competitive in terms of cost and quality of Internet access. The average broadband access price in Moscow is
0.65 USD per Mbit/slower than in many major global cities. Internet

42

DOING BUSINESS IN RUSSIA

broadband access quality in Moscow is comparable to that in Singapore or


London. In terms of the Internet connection speed Moscow outperforms
such cities as London and Berlin. In terms of the fixed broadband access,
Moscow exceeds the average level of the Organization for Economic
Cooperation and Development(OECD) members (Figures 1.40 to 1.49).
Business and Financial Services
As of January 1, 2015, Moscow had over 250 thousand organizations
operating in the financial and business services sector (including R&D
Moscow
Moscow region
Other Russian regions

22%

4.2%

73.9%

Figure 1.40 ICT expenditures by organization


Source: Rosstat.
Korea

37.9

United Kingdom

36.2

Moscow

31.5

USA

30.2
28.2

Japan
OECD members

27.4

Italy

22.5

Czech Republic

17.7

Russia

16.9

Poland

15.8

Turkey

11.4
0

10

20

30

Subscribers per 100 of the population

Figure 1.41 Fixed broadband Internet access subscribers, June


2014, per 100 of the population
Source: OECD, Rosstat.

40

Russian Regions 43

Russia

187.8
256

St Petersburg and Leningrad region

252.5

Moscow region
Krasnodar Krai

218.2
199

Samara region
Kaluga region

187.9

Novosibirsk region

182.7
172.8

Republic of Tatarstan

180

150

210

240

270

Subscribers per 100 of the population

Figure 1.42 Mobile radio telephone communications subscribers,


January 1, 2015, per 100 of the population
Source: EMISS.

Russia

17

Moscow

32.9

Novosibirsk region

29.3

St Petersburg

29.1

Republic of Tatarstan

22.8

Samara region

19.1

Kaluga region

18.5

Krasnodar Krai

14.9
0

10

20

30

40

Subscribers per 100 of the population

Figure 1.43 Active subscribers to fixed BBA


Source: EMISS.

and IT-services). This comprises 25 percent of all companies operating in


this sector in Russia and 23 percent of all Moscow companies. Moscows
infrastructure in business and financial services is profiled in Figures 1.50
to 1.55.

44

DOING BUSINESS IN RUSSIA

Russia

26

Moscow

54
35

St Petersburg
Novosibirsk region

33
31

Krasnodar Krai
Samara region

26
25

Kaluga region

23

Republic of Tatarstan
0

30

15

45

60

PC per 100 employees

Figure 1.44 Organizations having own web sites


Source: Rosstat.

Russia

26
54

Moscow
St Petersburg

35

Novosibirsk region

33

Krasnodar Krai

31

Samara region

26

Kaluga region

25

Republic of Tatarstan

23
0

15

30
PC per 100 employees

45

60

Figure 1.45 Number of PCs with Internet access, 2013, per 100
employees in organization
Source: Rosstat.

A significant number of organizations in Moscow offer professional


outsourcing services. For instance, there are over 5 thousand law firms
and about 3.5 thousand accounting and auditing firms.

Russian Regions 45

3.95

Paris
Istanbul

3.49
3.4

Hong Kong
3.08

New York
Singapore

2.85
2.77

London
Berlin

2.29
1.53

Sao Paulo

1.43

Prague
Shanghai

1.12
0.65

Moscow
0

USD per Mbit/s

Figure 1.46 Average cost of Internet access in cities around the


world, April 2015, USD per Mbit/s
Sources: Ookla, Net Index.

Sydney

78.34
83.72

Berlin

83.91

New York
Paris

85.04

Prague

85.45

London

87.32

Warsaw

87.4

Moscow

87.88

Singapore

87.95

75.00

78.75

82.50

86.25

90.00

Quality index (R-factor)

Figure 1.47 Internet broadband access quality in cities around the


world (R-factor), April 2014
Sources: Ookla, Net Index.

46

DOING BUSINESS IN RUSSIA


Upload, Mbit/s

Download, Mbit/s

Singapore

114.7

94
102.4
98.6

Hong Kong
Paris

85.4

40.5

New York

52.8

19.1

Prague

36.5

18.1

Shanghai

35.2

14.1

31.5
28.5

Moscow
Sao Paulo

11.5

London

10.8

Berlin

4.1

27.6
27

Istanbul

28.2

15

30

60
Mbit/s

90

120

Figure 1.48 Average data transmission speed by Internet in cities


around the world
Sources: Ookla, Net Index.
Korea

37.9

United Kingdom

36.2

Moscow

31.5

USA

30.2
28.2

Japan

27.4

OECD members
Italy

22.5

Czech Republic

17.7

Russia

16.9
15.8

Poland
Turkey

11.4
0

10

20

30

Subscribers per 100 of the population

Figure 1.49 Fixed broadband Internet access subscribers, June


2014, per 100 of population
Sources: OECD, Rosstat.

40

Russian Regions 47

There are 450 banks operating in Moscow, 149 of them with the participation of nonresidents in their authorized capital, including 69 that
are 100 percent foreign-owned.
International comparisons indicate that Moscow is ranked ahead of
New York, London, and other major cities internationally in terms of
the number of companies operating in the financial services sector. The
change in the citys economic structure is accompanied by a rise in the
proportion of the population employed in the business and financial
services, R&D, and IT services sectors. More than 1.6 million people
in Moscow are engaged in this sector, thus constituting 24.4 percent of
the total employed population of the city. In this respect, Moscow outperforms Sao Paolo, Prague, Shanghai, and Tokyo, In terms of employment in the financial and business services sphere (18 percent in 2013),
Moscow outstrips Tokyo and Shanghai, slightly trailing the worlds main
financial centers, where this level tops 20 percent.
Research and Development
The Moscow metropolitan area that includes the City of Moscow and
Moscow region (togetherthe Greater Moscow) is Russias top R&D
and innovation hub. The Moscow metropolitan area hosts five science
% of total number of
organizations in the industry in
Russia

75%

% of total number of
organizations in Moscow

77.1%
25%

Moscow

Other Russian regions

22.9%

Business and financial


services

Other

Figure 1.50 Business and financial service providers in Moscow,


January 1, 2015
Source: Rosstat.

48

DOING BUSINESS IN RUSSIA

Cleaning services

783
1,121

Employment agencies
Audit services

1,494

Accounting services

1,960
2,027

Consulting

3,013

Design services
Advertising and PR services

3,566
5,717

Legal services
0

1,500

3,000

4,500

Number of companies

Figure 1.51 Business service providers in Moscow


Source: www.yell.ru.

100% nonresident stake

69

50% to 100% nonresident


stake
Less than 50% nonresident
stake

20

Without nonresident
participation
60

301

Figure 1.52 Credit institutions in Moscow by type of participation by


nonresidents in the authorized capital, January 1, 2015
Source: Bank of Russia.

towns, Skolkovo Innovation Center, and five innovative regional clusters.


Figures 1.56 to 1.58 specify Moscows R&D profile.
Moscow accounts for about 20 percent of all Russian organizations
involved in R&D and a little less than a half of all Russian scientific personnel. Together, these organizations employ about 237 thousand people

Russian Regions 49

3.1

Berlin

6.6

Vienna
Zurich

Paris

27.3

Seoul-Incheon

29.3

Tokyo

38

New York

43.5

London

45.6

Moscow

63.9
0

20

40
Companies, thousands

80

60

Figure 1.53 Financial service providers in cities of the world


Sources: BvD, Mint Global.

Percentage of those employed, %

30

27
24.4
23.4

24
21.3

21.6

21.5

2007

2008

2009

22

22.3

2010

2011

21

18

2012

2013

Year

Figure 1.54 Employment in financial and business services in


Moscow, percent of total number employed
Source: Mosgorstat.

in the R&D sphere in Moscow, this constituting about 4 percent of the


entire Moscow employed population and about a third of all scientific
personnel in Russia. The City of Moscow also leads the nation in the
total number of issued patents for inventions and utility models holding
a 3.4-percent share nationwide. Moscows level of development in the
sphere of software developments and multimedia design puts it in the Top
Ten major cities in the world. According to the PricewaterhouseCoopers

50

DOING BUSINESS IN RUSSIA

Tokyo

10.7

Shanghai

15.8
16.4

Prague
Sao Paulo

17
18

Moscow

18.5

Berlin
London

21.6

Paris

21.6
24.5

New York
0.0

7.5

15.0

22.5

30.0

Percentage of those employed, %

Figure 1.55 Employment in financial and business service sector* in


cities around the world
Source: Euromonitor International.
Note: *Not including in the sphere of scientific research and development and provision of IT
services.

Moscow
Moscow region
Other Russian regions

20.2%

6.5%

73.3%

Figure 1.56 Organizations involved in R&D in the Moscow region


Source: Rosstat.

study Cities of opportunities 2014, Moscow is in 9th place, alongside


Tokyo and Stockholm. Of the 40 biggest companies on the Russian IT
market (according to the Kommersant daily, at the end of 2014), 31 are
based in Moscow.

Russian Regions 51

32.7%

Moscow
Moscow region
Other Russian regions

55.3%

12%

Figure 1.57 Personnel employed in R&D


Source: Rosstat.

Moscow
Moscow region
Other Russian regions
33.4%

60.1%
6.5%

Figure 1.58 Patents issued for inventions and models


Source: EMISS.

Taxation
The Russian government applies a flat (proportional) scale for income
tax. Thus, if a natural person is a tax resident of the Russian Federation,
the largest part of his/her income is subject to tax rate at 13 percent
(Figure 1.59). Such income, for instance, includes wages and incomes
from sale of property. The law of the Russian Federation and laws and
regulatory provisions of the City of Moscow for natural persons allow for

52

DOING BUSINESS IN RUSSIA

Russia*

13

Czech Republic

15

Slovakia

25

Poland

32

Turkey

35.8

Great Britain

45

The USA

46.3
47.5

Germany

54.5

France
Sweden

56.9
0

15

30
Rate, %

45

60

Figure 1.59 Maximum personal income tax rates


Source: OECD, Federal Tax Service of Russia.
Note: *Maximum combined income tax rate at central and regional levels.

special tax deductions for income tax, as well as property, land, and transport tax deductions. More details on taxes in Russia can be obtained from
Deloitte (2015), Doing Business in Russia (2016), and Doing Business in
Russia. Your Roadmap to Successful Investments (2015).
Urban Environment
Housing and Hotels
Information on the dynamics and availability of housing and hotels may
be important both as part of the companys logistical preparation for
expansion overseas and as an indication of the dynamics, business opportunities, and constraints in this sector.
More than 3 million sq. m. (approximately 32 million sq. ft.) of residential houses are built in Moscow each year. Moscows housing stock
contains around 233 million sq. m., or around 19.2 sq. m. per resident. In
2014, 3.3 million sq. m. of housing were installed in Moscow (including

Russian Regions 53

1.6 million sq. m. in New Moscow). Moscow accounts for 4.1 percent
of the volume of housing construction in Russia. In the State Housing
Program for the City of Moscow, the budget and nonbudgetary sources
financing will ensure the construction of around 9.4 million sq. m. of
new housing in 20152017 (Figure 1.60).
An average cost of housing (a typical average quality apartment, data
from Rosstat for the 4th quarter of 2014) on Moscows primary real estate
market is RUB 141,000 (USD 3,000) for 1 sq. m., and on the secondary
market it is RUB 168,000 (USD 3,500) for 1 sq. m. According to the
ratio of housing costs to disposable income, Moscow is comparable to the
mega-cities of Southeast Asia, and is below the level of cities in Western
Europe and the United States.
Moscow has more than 350 hotels, mini-hotels, and hostels. The
industry development scheme will make provisions for the construction
of 172 hotels (32,000 rooms) for 70,000 people in Moscow until 2016.
By 2025, Moscows hotel network will increase to 720 hotels, with the
growth in the 23 star hotel categories to 65 percent (Figure 1.61).
The cost of a hotel room at a 34 star hotel in Moscow is lower
than in New York, London, or Hong Kong. Hostel prices for a 12 star
accommodation are comparable with prices in most major cities, such as
Shanghai or Paris.
Introduction of housing (million sq m)

Volume of financing (from all sources, RUB bn)

3.50

350

3,33

3,14
3.00

3,05

262

229

300
3,10

3,12

3,14

3,16

230

233

235

237

250

200
2.75

2.50

200

2012

2013

2014

2015
Year

2016

2017

2018

150

Figure 1.60 New residential construction and financing in Moscow


Source: Rosstat, State Housing Program for the City of Moscow 20122018 (April 22, 2014).

RUB bn

Million sq m

3.25

DOING BUSINESS IN RUSSIA

1,000

Number of hotels

Number of bedrooms, thousand

Amount of hotels

750

200

150

724
127.9
541

500

79.5

369
250

100

50

47.8

2012

2016

2025

Number of hotel rooms (1000)

54

Year

Figure 1.61 Development of hotel networks in Moscow


Source: Hotel industry allocation scheme for the City of Moscow (ed from January 13, 2015).

Apartment rental rates in Moscow are in general higher compared to


other Russian regions, but still comparable with prices in large metropolitan cities of Europe and worldwide. According to (2016),
a Moscow-based real estate search system, there are around 90,000 active
rental offers in Moscow. The average cost of renting residential real estate
in Moscow, according to data from the global portal Numbeo, is around
USD 1,250 for a one-bedroom apartment in the city center, and around
USD 770 outside the center of Moscow. This is higher than average in
Russia, although it is comparable with prices in large global cities. For
example, rent prices in New York, London, or Hong Kong are higher
than Moscows by 3040 percent, and the Paris prices correspond roughly
to the Moscow prices.
Infrastructure of Trade and Public Catering
The quality of infrastructure for trade and public catering is an integral
part and indication of the level of country/regional development and
attractiveness for international business. It is also a critical contributing factor to the quality of life in general, making the country/region

Russian Regions 55

attractive or unattractive for living in the eyes of the company personnel, including expatriates. If the expanding company operates in trade or
catering, information on the infrastructure of trade and public catering
becomes of vital direct importance.
Moscow possesses an extensive retail infrastructure (Figures 1.62
to 1.70) with more than 25,000 retail trade facilities, including more
than 1,000 hypermarkets and supermarkets, as well as more than 4,000
mini-markets and convenience stores. The trade premises in Moscow take
up 780 sq. m. per 1,000 residents (for hypermarkets and supermarkets
this is 340 sq. m. per 1,000 residents). Over the last four years, the volume of the retail market in Moscow has grown by 15 percent (in comparable prices in rubles) and exceeded RUB 4.4 trillion in 2014 (USD 115
billion). Moscow is among the top five cities worldwide in terms of the
presence of major international consumer brands (44 new brands arrived
onto Moscows markets in 2014 and 31 in 2013).
The food stuff prices in Moscow tend to be lower compared to many
major cities worldwide; there food is about 3540 percent less expensive
than in Paris, London, or New York.
Hypermarkets and supermarkets

1,136

Specialty food shops

2,124

Specialty nonfood shops

6,267
6,325

Nonspecialized shops
4,585

Shops selling convenience goods


Trade pavilions

1,916

Pharmacies, pharmacy shops

1,814

Shops discounters

916
0

2,500

5,000
Retail, units

Figure 1.62 Retail trade facilities in Moscow


Source: Rosstat.

7,500

10,000

56

DOING BUSINESS IN RUSSIA

Moscow has the development potential in its catering infrastructure.


As of January 1, 2015 there were 11,087 catering enterprises in Moscow;
of those, 7,651 were public establishments in public access and 3,436
were cafeterias owned by institutions or organizations. There are around
45 locations per 1,000 residents in public access on average, which provide residents with food in Moscow.
The turnover across Moscows catering sector has risen from 2010 by
19 percent (in comparative prices in rubles) and in 2014 it was RUB 174
billion (USD 4.5 billion). The share of expenditure (including tourists)
on eating out in Moscow was around 7 percent, which is lower than in
large cities of Western Europe, the United States and Canada where it
often exceeds 2530 percent. In terms of the number of restaurants per
capita, Moscow is comparable to Sidney and Singapore, but lags behind
London, Paris, or New York. On average, visiting a restaurant in Moscow
costs less than in New York, Paris, or London, and is more expensive
compared to Berlin or Hong Kong.
Educational Infrastructure
Education is an important characteristic of consumer sophistication and
a critical factor in market segmentation. It is also a foundation of the
quality of labor necessary for manufacturing projects overseas. Moreover,
5,000

Billion rubles

In comparable prices, % by 2010

160

Billion rubles

3,750

140

3,640
3,322

2,500

2,882
106.6

1,250

108.4

112.2

114.9

100

2010

120

100

2011

2012

2013

2014

Year

Figure 1.63 Retail trade turnover dynamics in Moscow


Source: Rosstat. Calculations by Moscow City Investment Agency.

80

In comparable prices, % by 2010

4,437
4,017

Russian Regions 57

42.1

Madrid
Beijing

43.4

Singapore

43.4

Paris

43.7

Hong Kong

43.7

Shanghai

44

New York

45

Moscow

45

Dubai

55.3

London

57
20

30

40

50

60

Figure 1.64 Presence of international consumer brands in cities


around the world*
Source: CBRE.
Note: *According to the survey of sample from 334 international retailers.

Istanbul

43.2

Moscow

56.8

Shanghai

58.8
67.3

Berlin

81.8

Hong Kong

88.4

Singapore
91.3

London

93.6

Seoul
Paris

98.5
100

New York
San Francisco

111.9
0

30

60
The index of the cost of food*

90

Figure 1.65 Food price index in cities around the world


Source: Numbeo.
Note: *Ratio of the average cost of food in cities around the world and New York.

120

58

DOING BUSINESS IN RUSSIA

8.4%
9.5%

43.2%

Hypermarkets and supermarkets


Specialty food shops
Specialty nonfood shops
Nonspecialized shops
Convenience shops
Pavilions, pharmacies and drug
stores, discount stores

18.9%

15.8%

Figure 1.66 Retail facilities in Moscow

The public
Closed network
(organizations)
31%

69%

Figure 1.67 Catering enterprises in Moscow


Source: Department of Trade and Services of Moscow.

similar to trade and public catering, the quality of the educational environment can make the country/region attractive or unattractive for living from the company personnel standpoint (particularly important for
expatriate personnel). Figures 1.71 to 1.74 characterize the educational
environment in Moscow.
Moscow is home to more than 1,000 preschool educational centers. At
the beginning of 2014, 414,000 children of preschool age were enrolled
in kindergarten, which is almost 34 percent higher than the 2010 level.

Russian Regions 59

200

Billion rubles

In comparable prices, % by 2010

165

Billion rubles

150
120

118

140
118.8

109.7

107.3
50

174

145

135
100

160

100

120

% by 2010

100

2010

2011

2012
Year

2013

2014

80

Figure 1.68 Dynamics of market turnover for catering in Moscow


Source: Rosstat, calculations by Moscow City Investment Agency.

Singapore

44

Moscow (public network)

63

Sydney

99

Sao Paulo

111

Hong Kong

166

Paris

189

Shanghai

237

New York

295

London

478
0

150
300
450
Restaurants per 100,000 people

Figure 1.69 Restaurants in cities around the world*


Source: Department of Trade and Services of Moscow, World Cities Culture Forum.
Note: *Latest data available.

600

60

DOING BUSINESS IN RUSSIA


Sao Paulo

53.7
58.8

Hong Kong
Berlin

64.1
74.8

Toronto
Sydney

85.7

Moscow

91.2

Paris

97.7

San Francisco

99.2

New York

100

London

101.7

Zurich

146.9
0

40

80
Price index in restaurants*

120

160

Figure 1.70 Price index for restaurants in cities around the world
Source: Numbeo.

Around 40,000 students receive preschool education in short-stay groups,


and around 2,000 in family kindergartens.
In the 2013/2014 academic year in Moscow there were around 1,500
general education schools, education centers, gymnasiums, and secondary schools (including 131 private educational centers), with enrollment
totaling 837,000. Four Moscow-based academic institutions are members
of the Council of International Schools (CoIS), 11 schools operate under
the International Baccalaureate system (IB).
At the start of the 2013/2014 academic year, Moscow was a host of 223
higher education institutions (23 percent of the total number of higher education establishments in Russia, including 92 state and 131 private higher
education institutions19). In 2013, Moscow universities produced 226,000
specialists with higher education, and there were 887,000 students with university degrees. According to the amount of students calculated per 1,000
residents, Moscow is ahead of New York, Hong Kong, or London.
Institutions of higher education in Russia are a conceptual equivalent of fouryear universities and colleges in the United States and Europe.
19

Russian Regions 61

Number of children studying (1000s)

500

375

407

414

2013

2014

365
310

328

250

125

2010

2011

2012
Year

Figure 1.71 Student enrollment in preschool centers in the City of


Moscow
Source: Rosstat.

Thousands of childrens

900

800
763

782

794

2010/11

2011/12
School year

830

837

2012/13

2013/14

700

600

500

2009/10

Figure 1.72 Student enrollment in general education schools in the


City of Moscow
Source: Rosstat.

Culture, Leisure, and Entertainment


Culture, leisure, and entertainment are often considered as soft variables of a business environment and as such are sometimes overlooked
in regional analysis. However, similar to education, they contribute to

62

DOING BUSINESS IN RUSSIA


2

New York
Vienna

Paris

Seoul

Moscow

4
5

Shanghai

London

10

Singapore

28

Hong Kong
0.0

7.5

15.0

22.5

30.0

Number of CoIS schools

Figure 1.73 Council of International Schools (CoIS) affiliated schools


in cities around the world
Source: Council of International Schools (CoIS).

43.5

London
Berlin

45.6

Hong Kong

46.2
54.2

New York

61

Stockholm

68.7

St. Petersburg

73.3

Moscow

116

Prague

144

Paris
0

40

80

120

150

Number of students (per 1,000 people)

Figure 1.74 Enrollment in in higher educational institutions in cities


around the world*
Sources: Rosstat, Eurostat, HESA, the City University of New York, the government of the Hong
Kong SAR, calculations by Moscow City Investment Agency.
Note: *The Paris, Prague, Stockholm, and Berlin data is from 2012.

Russian Regions 63

consumer sophistication, impact market segmentation, and affect the


quality of life of the company personnel.
As the national capital city, Moscow offers extensive cultural, leisure,
and entertainment opportunities. In total, Moscow has more than 360
museums, and its general storage collection is 14.7 million units rivaling
most major cities around the world.
Moscow is the city of playhouses. It has 241 playhouses with a repertoire of productions ranging from classical to modern. Every year, more
than 7 million spectators visit Moscows playhouses. In terms of the number of playhouses and visits on a per capita basis, Moscow is comparable
to Berlin but trails London or New York.
Moscow has more than 110 movie theaters/cinemas20 (585 cinema
screens). According to the quantity of cinema screens, Moscow overtakes
the majority of the main cities around the world, and is comparable to
New York (501) or London (566). Therefore, Moscow has the potential
to develop and provide its citizens with more cinemas. On average, there
are 48 cinema screens in Moscow per 1 million residents compared to
more than 70 in London and Berlin, and 85 in Paris.
Public Transportation
Figures 1.75 to 1.77 characterize the Moscow public transportation system. This system carries around 15 million passengers in per day (5.5
billion passengers per year). Moscow has more than 1,300 ground urban
transport routes, including 8 night bus routes, 12 metro lines (327.5 km
of track, 196 stations), and more than 53,000 taxis. Moscow and its satellite cities are linked by railways in 11 directions.
The Moscow Metro is the main mode of transportation that carries
passengers around the city (56 percent of the total passenger traffic). The
Moscow Metro has one of the longest lines and highest level of passenger
traffic in the world. In 20152017, RUB 466 billion (USD 8.1 billion)
from the municipal budget will be spent on developing the metro via

The word (teatr) in Russian signifies playhouse, and


(kinoteatr) means movie theater.
20

64

DOING BUSINESS IN RUSSIA

Total

5.48

6.83
0.21
1.32

Taxi
Railway transport

0.1
0.68

2.5

Metro

4.84
0.01
0.48
2

2.35

2.5

2010

2014*
Year

bn passengers

Road passenger
transport

2.2

2.8

2020*

Figure 1.75 Volume of passengers in Moscow


Source: Department for Transport and Road Infrastructure Development of Moscow.
Note: *2014estimate, 2020forecast.

Sao Paulo

78.4

Istanbul

86.4

Berlin

147.4

Singapore

150.8

Hong Kong

178

Paris

219.9

Seoul

326.5

Moscow

327.5

New York

368

London

402

Shanghai

533
0

150

300

450

km

Figure 1.76 Metro (subway) lines in cities around the world


Source: World Metro Database, Moscow Metro State Unitary Enterprise.

Russian Regions 65
0.64

Shanghai
Istanbul

0.8

Moscow

0.85

Seoul

1.02

Hong Kong

1.03

Sao Paulo

1.15

Singapore

1.35

Paris

2.01

New York

2.75
3.02

Berlin
London
0

2
USA dollars per trip

3.79
4

Figure 1.77 Average public transport fares in cities around the world
Source: Numbeo.

the citys investment appropriation program, where 34 new stations and


70km of the rail track will be installed.
Public transportation fares in Moscow are relatively cheaper in comparison to the other large cities of the world. Depending on the tariffs and
other conditions, public transportation fares in Moscow vary between
RUB 14 and 60 per journey (USD 0.28 to USD 1.17 according to the
Bank of Russias exchange rates as of May 1, 2015), essentially cheaper
than New York, Paris, or London.
Public safety
Public safety is of high priority for daily lives and business operations. In
general, the trends and dynamics of Moscows public safety system are in
line with those in major metropolitan cities internationally (Figures 1.78
to 1.81).
Over the past five years the amount of reported crime in Moscow
has been reduced by 20 percent. The number of murders and attempted
murders during that time has dropped by more than twice.
Since 2012, the number of road accidents over the past two years has
decreased by 8 percent, and the number of traffic accidents has decreased
by 15 percent over the past five years. The city has around 120,000

DOING BUSINESS IN RUSSIA


Number of reported crimes (per 100,000 people)

66

2,400
1,886

1,871

1,800

1,622

1,469

1,512

1,453

1,501

2011
Year

2012

2013

2014

1,200

600

2008

2009

2010

Figure 1.78 Crime rates in Moscow


Sources: Rosstat, Moscow Department of the Russian Ministry of Internal Affairs, calculations by
Moscow City Investment Agency.

Road accidents (per 100,000 people)

200

150
118.4

109.8

102.6

102.2

100.8

94

92.9

2010

2011
Year

2012

2013

2014

100

50

2008

2009

Figure 1.79 Traffic accidents in Moscow per 100,000 people


Sources: Rosstat, Traffic Police of the Russian Ministry of Internal Affairs, calculations by Moscow
City Investment Agency.

surveillance cameras in operation (on average 47 cameras per 1sq. km.


area of Moscows new borders). The safety of residents and guests in
the capital is upheld by 68,500 strong personnel from the Ministry of
Internal Affairs. On a per capita basis, it is comparable to New York and
London. According to Numbeo.com, Moscows safety levels are comparable to cities in Europe such as Paris, Dublin, and Brussels.

Russian Regions 67
Sao Paulo

26.1

Rome

44

Paris

45.1

Dublin

45.4

Moscow

45.9

Brussels

47.2

New York

52.9

London

53.4
54.4

Beijing

67.5

Berlin
Shanghai

72.5
0

20

40

60

80

Security index

Figure 1.80 Safety index in cities around the world


Source: Numbeo.

Police staff per 100,000 people

1,000

750

715

500

591

595

600

Moscow

New York

London

453
250

Hong Kong

Singapore

Figure 1.81 Police staff in cities around the world*


Source: Russian Ministry of Internal Affairs, the Singapore Police Force, the Government of the
Hong Kong SAR, GOV.UK, Federal Bureau of Investigation (UCR), calculations by Moscow City
Investment Agency.
Note: *For Moscow, the data on the number of staff from the Ministry of Internal Affairs is from
2011; for other cities the data includes the civil services staff, and the latest accessible data is from
2012 to 2014.

References
Brookings Institution. 2015. Global Metro Monitor. www.brookings.edu/
research/global-metro-monitor/.
Central Intelligence Agency. 2015. The World Factbook 2015. Washington,
DC: Central Intelligence Agency. www.cia.gov/library/publications/theworld factbook/index.html

68

DOING BUSINESS IN RUSSIA

Consumer Lifestyles in Japan. 2016. Passport.


A Country Study: Russia. 1998. Washington: GPO for the Library of Congress.
1996. Glenn E. Curtis. ed. http://lcweb2.loc.gov/frd/cs/rutoc.html
Deloitte. 2015. Doing business in Russia 2015. Tax and Legal. www.
deloitte.com/content/dam/Deloitte/ru/Documents/tax/doing-business-inRussia-2015.pdf
Demographia. 2016. World Urban Areas. www.demographia.com/db-worldua.
pdf
Doing Business in Russia. 2016. Baker & McKenzieCIS, Limited. www.
bakermckenzie.com/-/media/files/insight/publications/2016/06/doingbusiness-in-russia-2016/bk_russia_doingbusiness_2016.pdf?la=en
Doing Business in Russia. Your Roadmap to Successful Investments. Tax and
Legal. 2015. KPMG in Russia and the CIS. www.kpmg.com/RU/en/
IssuesAndInsights/ArticlesPublications/Documents/Tax_2e.pdf
Doing Business 2016. Measuring Regulatory Quality and Efficiency: Economy
Profile. 2016 Russian Federation. 2016. World Bank Group. www.
doingbusiness.org/Reports/Subnational-Reports/~/media/giawb/doing%20
business/documents/profiles/country/RUS.pdf
Global Property Guide. 2016. Russia. www.globalpropertyguide.com/Europe/
Russia
Invest in Russia. 2016. http://invest-rf.com/about-agency/regional-agencies/
Moscow. 2016. Wikipedia. https://en.wikipedia.org/wiki/Moscow.
Moscow City Investment Agency. 2016. http://investmoscow.ru/agency/
Moscow Investment Strategy up to 2025. 2016. Moscow Investment Portal.
http://en.investmoscow.ru/media/2487305/B-en-2016.pdf
Russia. 2016. globalEDGE. http://globaledge.msu.edu/countries/russia/
corporations
Russia: Country Profile. 2016. Passport.
Russia 2015 Statistical Pocketbook. 2015. Federal State Statistics Service
(Rosstat). www.gks.ru/free_doc/doc_2015/rus15_eng.pdf
Russian Investment Agency. 2016. http://invest-rf.com/
Special Economic Zones of the Russian Federation. 2011. Ministry for Economic
Development of the Russian Federation. http://economy.gov.ru/wps/wcm/
connect/economylib4/en/home/activity/sections/specialeconomicareas/
main/index
UNCTAD (United Nations Conference on Trade and Development). 2016.
World Investment Report. Russian Federation: Country Factsheet. http://
unctad.org/en/Pages/DIAE/World%20Investment%20Report/CountryFact-Sheets.aspx

Russian Regions 69

U.S. Commercial Service. 2016. Doing Business in Russia: 2016


Country Commercial Guide for U.S. Companies. www.export.gov/
article?series=a0pt0000000PAulAAG&type=Country_Commercial__kav.
U.S. Department of State. 2016. Russia: Investment Climate Statement for
2016. http://www.state.gov/e/eb/rls/othr/ics/investmentclimatestatements/
index.htm#wrapper
The World Factbook. 2016. www.cia.gov/library/publications/resources/theworld-factbook/
World Energy Outlook. New Policies Scenario. 2012.
. - (Russian
Regions. Socio-Economic Indicators) (2015).
. http://www.gks.ru/bgd/regl/b15_14p/
Main.htm.
. 2016. http://stat.cian.ru/en/

Index
Accredited representative offices, 94
Agreements, 164165
Attitudes and styles, 160161
Avtoframos, 207208
Bargaining, 161163
Bridgestone, 238242
Business culture
attribution and rationalization,
117118
demographics
challenges, 125
dependency ratios, 124
overall life expectancy, 121,
123124
Russias Slavic ethnic groups, 121
Russia vs. United States, 122,
123
urbanization, 124125
determinants, 117
forces and forms, 117
generalizations, 116
geography and history, 118119
highly centralized governance
industrial revolution, 119
politico-economic liberalization,
121
problem-solving attitudes, 121
repressive political system, 120
socioeconomic dependency, 119
Soviet laws, 119120
Soviet penitentiary system, 120
individual and organizational
behavior, 115116
mental programming, 116
national profile (see Russias
national profile)
practical applications, 153156
agreements and contracts,
164165
attitudes and styles, 160161
bargaining, 161163

Business Culture on the World


Stage, 143
communication, 157158
conservative attire, 165
corruption, 148149
crises management, 147148
cross-cultural implication, 142
decision-making, 163164
empowered organization,
145146
Executive Planet, 143
Expat, 143
government and government
agencies, 149150
initial contacts and meetings,
158159
international business, 141
leadership positions, 144
local rules, 146147
long-term goals, 147
meetings and negotiations,
150153
negotiation process, 141
one-company organizational
culture, 144145
punctuality, 166
relationships and respect,
156157
women in business, 165
religion, 126127
social system and family, 128
values and norms, 116
Business-to-business marketing, 72
Business-to-government marketing,
72
Central Federal District, 6, 9
City of Moscow and Moscow Oblast,
6
Civil Code of the Russian Federation,
9798
Communication, 157158

246 Index

Consumer-to-business, 72
Consumer-to-consumer marketing,
72
Contracts, 164165
Corruption, 148149
Cost, insurance and freight (CIF)
value, 110
Council of International Schools
(CoIS), 62
Country Commercial Guide, 89
Decision-making, 163164
Demographics
challenges, 125
dependency ratios, 124
overall life expectancy, 121,
123124
Russias Slavic ethnic groups, 121
Russia vs. United States, 122, 123
urbanization, 124125
Dependency ratios, 124
Direct marketing, 9899
East-West Digital News (EWDN)
report, 106
Economic regions, 34
Elderly dependency ratio, 124
Electronic commerce
cash-on-delivery, 106
Chinese retailers, 106
cross-border sales, 105
current economic downturn, 107
customer service, 105
domestic e-commerce market, 105
EWDN reports, 106
FOM report, 106
foreign online stores, 104105
Research agency Data, 104
Russian data localization law, 107
Entrepreneurial business. See also
Small- and medium-sized
enterprises
accredited representative offices,
94
agents, 91
branch offices, 94
companies and taxation
dividends, interest, and royalties,
97
import duties, 95

land, property, and personal


income taxes, 97
profits tax, 9495
social security contributions, 96
social welfare taxes, 96
value added tax, 9596
Country Commercial Guide, 89
direct marketing, 9899
distribution and sales channels,
101103
distributors, 9192
due diligence, 112113
educational attainment, 88
electronic commerce
cash-on-delivery, 106
Chinese retailers, 106
cross-border sales, 105
current economic downturn, 107
customer service, 105
domestic e-commerce market,
105
EWDN reports, 106
FOM report, 106
foreign online stores, 104105
Research agency Data, 104
Russian data localization law,
107
foreign subsidiaries, 9293
franchising, 9798
FTS, 9394
fuel and energy sectors, 91
government procurement, 100101
intellectual property rights, 112
joint ventures/licensing, 99100
local professional services, 111
metropolitan cities, 88
mineral resources, 90
natural resources, 91
Northwest Federal District, 90
pricing, 110111
representative/branch offices, 92
sales service/customer support,
111112
selling factors/techniques, 103104
trade promotion and advertising
advertisers, 107108
enforcement, 107
market development, 109
media outlets and print
publications, 108, 110

Index 247

nonstandard communication
methods, 108
social networking, 108
U.S. Commercial Service, 87
Executive Planet, 143
Expat, 143
Federal districts, 34
Federal Tax Service of the Russian
Federation (FTS), 9394
Franchising, 9798
Get Taxi, 209211
Global Entrepreneurship Monitor
report, 76
Globalization and World Cities
Research Network, 17
Global Leadership and Organizational
Behavior Effectiveness
(GLOBE) study
autonomous style, 136138
charismatic/value-based style, 135
cultural dimensions, 134
cultural parameters, 137
humane style, 135
leadership and societal culture,
134
participative style, 135
self-protective style, 136
team-oriented style, 135
Highly centralized governance
industrial revolution, 119
politico-economic liberalization,
121
problem-solving attitudes, 121
repressive political system, 120
socioeconomic dependency, 119
Soviet laws, 119120
Soviet penitentiary system, 120
Hofstedes cultural dimensions
comprehensive framework,
128129
Individualism versus Collectivism,
129130
masculinity versus femininity, 130
Power Distance Index (PDI), 129
Uncertainty Avoidance Index, 130
Horizon framework, 151

Individualism versus Collectivism


(IDV), 129130
Indulgence, 131
Information and communication
technology (ICT)
infrastructure
active subscribers, 43
average cost of internet access, 45
average data transmission speed, 46
expenditures by organization, 42
fixed broadband internet access
subscribers, 42, 46
internet access, 4142
internet broadband access quality,
45
mobile radio telephone
communications subscribers,
43
number of PCs with internet
access, 44
own web sites, 44
Information sources, 170176
Intellectual property rights (IPR), 112
Joint ventures/licensing, 99100
Lada Automotive, 214218
Local professional services, 111
Masculinity, 132
Masculinity versus Femininity (MAS),
130
MasterCard Global Destination Cities
Index, 17
Meetings, 158, 159
Military district, 4
Ministry of Economic Development
(MED), 101
Moscow city investment
business activity, 2325
business and financial services,
4243
credit institutions, 48
employment, 49, 50
professional outsourcing services,
44
providers, 47
commercial real estate access
average class A office rent, 34

248 Index

average warehouse rental rates,


35
high-quality commercial space,
33
high-quality warehousing, 35
lease conditions in retail centers,
34
vacancy rate, 33
culture, leisure, and entertainment,
61, 63
economic and financial stability
balanced financial results, 31
budget deficit, 29
budget indicators, 30
public debt, 30, 31
economic-geographical position,
2124
educational infrastructure
academic institutions, 60
consumer sophistication, 56, 58
Council of International Schools,
62
general education schools, 61
higher education institutions,
60, 62
preschool educational centers,
58, 60, 61
electricity availability, 4041
housing and hotels
apartment rental rates, 54
average cost, 53
dynamics and availability, 5253
hotel room cost, 53
industry development scheme,
53
networks development, 54
new residential construction and
financing, 53
ICT infrastructure
active subscribers, 43
average cost of internet access, 45
average data transmission speed,
46
expenditures by organization, 42
fixed broadband internet access
subscribers, 42, 46
internet access, 4142
internet broadband access
quality, 45

mobile radio telephone


communications subscribers,
43
number of PCs with internet
access, 44
own web sites, 44
investment activity
foreign direct investment inflows,
2627
stock in fixed assets, 2426
labor force
adult population and higher
education, 28
average hourly labor rates, 29
economically active population,
27
unemployment rate, 27, 28
Moscow City Investment Agency,
1617
opportunities
average per capita income, 19
gross regional product, 1923
money spent, 20
ratio of outstanding loans, 21
Russias retail trade turnover, 18
urban agglomerations, 17, 18
volume of individuals deposits,
20
public safety
crime rates, 65, 66
police staff, 67
residents and guests, 66
safety index, 67
traffic accidents, 65, 66
public transportation
average public transport fares, 65
metro (subway) lines, 64
Moscow Metro, 63
volume of passengers, 64
research and development
inventions and models, 51
metropolitan area, 47, 48
organizations involved in, 50
personnel employed in, 51
software and multimedia design,
49
taxation, 5152
taxation of legal entities
corporate profit tax rates, 32

Index 249

land tax exemptions and


investment tax credits, 33
standard value added tax rates,
32
tax benefits, 31
trade and public catering
infrastructure
catering enterprises, 58
food price index, 57
food stuff prices, 55
international consumer brands,
57
market turnover dynamics, 59
quality of life, 5455
restaurants, 5960
retail facilities, 58
retail trade facilities, 55
turnover dynamics, 56
transportation infrastructure
airline passengers, 36
development, 40
hard surface roads, 3738
radial-ring road design, 37
rail transport density, 39
railway passengers, 39
retail gasoline prices, 38
road haulage, 38
road network density, 37
Moscow Railway Center, 39
Negotiation process, 141
PickPoint, 103
Potential support ratio, 124
Power distance, 132
Power Distance Index (PDI), 129
Presentations, 159
Profits tax, 9495
Public sector marketing, 72
Regional analysis
Belgium, 2
Central Federal District, 6, 9
comparative investment profiles,
1316
economic characteristics, 68
exporting and importing regions,
1011

federal administrative subjects, 23


federal districts and economic
regions, 34
foreign direct investment, 5
Japan, 12
market dynamics variation, 2
military district, 4
Moscow City Investment Agency
(see Moscow city investment)
regional governance and
development, 5
Russian Investment Agency, 1213
Singapore, 2
total foreign portfolio investment,
9
WAIPA, 5
World Investment Report, 9
Religion, 126127
Russias national profile
Hofstedes cultural dimensions
comprehensive framework,
128129
Individualism versus
Collectivism, 129130
masculinity versus femininity,
130
Power Distance Index (PDI),
129
Uncertainty Avoidance Index,
130
pragmatic vs. normative approach
GLOBE study, 133138
individualism, 132
indulgence, 131, 133
long-term orientation, 133
masculinity, 132
power distance, 132
uncertainty avoidance, 133
World Values Survey, 138140
Self-expression values, 139
Skill development
cases, 207242
cross-cultural negotiations,
191194
export market research, 199202
International Market Research
in the Health and Wellness
Sector, 195196

250 Index

international market strategy,


182185
joint venture manufacturing
partnership, 203204
location selection, 180181
strategic assessment and
organizational logistics,
186190
take-home final exam assignment,
205206
tariffs, trade barriers and leads,
197198
Small- and medium-sized enterprises
(SME), 73
characteristics, 79
economic activity, 82
financial instruments, 8384
GEM reports, 76, 8485
limitations, 80
microenterprises, 80
product innovation/competitiveness
index, 8687
regional structure, 83
revenue growth, 8283
Russia vs. European countries, 81
sectorial/industrial structure, 81
structural renewal, 85
technological innovations, 80
turnover, 80, 82
Small business and entrepreneurship
early-stage entrepreneurial activity,
77
e-commerce, 7172
enablers and constraints, 78
entrepreneurial environment, 78
foreign investment and technology
transfer, 73
free market developments, 75
Global Entrepreneurship Monitor
report, 76
international trade and foreign
direct investment, 72
large corporations, 7273
large-size foreign-based
corporations, 7374
restrictive legislation and
constraints, 75
small- and medium-sized
enterprises, 73

characteristics, 79
economic activity, 82
financial instruments, 8384
GEM reports, 76, 8485
limitations, 80
microenterprises, 80
product innovation/
competitiveness index, 8687
regional structure, 83
revenue growth, 8283
Russia vs. European countries, 81
sectorial/industrial structure, 81
structural renewal, 85
technological innovations, 80
turnover, 80, 82
state-owned enterprises, 74
TACIS program, 75
total entrepreneurial activity key
indicators, 77
Social welfare taxes, 96
Stalins harsh prosecution system, 120
Starbucks, 211213
State-owned enterprises (SOEs), 74
Sukhoi Superjet 100, 219238
Survival values, 139
Targeted Investment Program of
Moscow, 40
Technical Assistance to the
Commonwealth of
Independent States (TACIS)
program, 75
Total dependency ratio, 124
Uncertainty avoidance, 133
Uncertainty Avoidance Index (UAI),
130
Value added tax (VAT), 95
World Association of Investment
Agencies (WAIPA), 5
World Intellectual Property
Organization (WIPO), 98
World Investment Report, 9
World Values Survey (WVS),
138140
Youth dependency ratio, 124