Russia looks East for trading tips

The country has an ambitious plan to turn Vladivostok into a hub that will link Asia to Europe by both sea and long distance rail.

Russia has a long way to go to match the likes of Singapore in terms of infrastructure but there is oil and minerals to be had in Russia’s underdeveloped East, very much of interest to the new, burgeoning Asian economies, so there might well be enough pull to get the ports and other links in place.

Holman Fenwick Willan’s Alistair Mackie adds that across the board, the old ports of both Russia’s east and west are very much linked to the Soviet era. With a need for investment and updating, the country has often “fallen between two stools” as it isn’t a centrally run communist country like China and it hasn’t yet learnt the responsiveness from the ground which directs other, more business oriented economies.

The very strategic investment by APM Terminals in Russia notwithstanding, he points out that more than one joint venture in Eastern Europe and Russia has foundered on different attitudes. “Occasionally it’s just naivety that leads the local partner to see the investment as a way to milk a cash cow,” he says.

Mr Mackie says despite growth, there will be negligible risk that everyone will have the capability, or even the will, to hop on the bandwagon. Further, he adds Russia has “a credibility issue” to solve now, demonstrating that it is open for business in a transparent way, to international standards. “Despite its political ‘differences’, China has made it easy for foreign investment… However, people don’t have the confidence in the Russian system – at present – the way they have in China,” he concludes.