This marks our last blog post and thus our last day in Russia. I have to say that it was the most interesting day of our experience in Russia. Just a reminder, we are in Yekaterinburg – the meeting point of Asia and Europe, close to Kazakhstan, most important city of Shanghaï Cooperation Organization (SCO).
In the morning, we visited the offices of Ural Atlantic, an organization that promotes international and territorial economic development in the Ural Region. With the support of the Russian government, this organization works in partnership with French companies to help them penetrate the Russian Ural region. The main goals are to help develop small towns of France and help bring technological innovations to large Russian cities. They are mainly present in the military industry helping France sell weapons in Russia.
Ural Atlantic also does work in heavy industries and machinery and strive to find Russian partners for Joint-Ventures and modernization plans. We were made aware that corporate communication is weak in Russia and that Russian factories are in dire need of streamlining. Once again, it was stressed that relationships are key in Russia and that the only way to successfully penetrate the Russia and make a name of yourself is to forge strategic relationships, stay humble, and have persistence. Funny enough, we were told that the best thing to do is not to listen to any adviser in Russia and to follow your gut instead. Everything is done on a prepayment basis – cash cash cash! Oh, and be punctual!
We had several questions about the military industrial complex in Russia, but unfortunately most of the information we wanted was of course classified…pfff!
The afternoon was even more exciting. We went out of town to the headquarters of KIT, a transport and logistics company. We were kindly hosted by a fantastic crew and were shown around the premises. However, the afternoon began with a brief presentation of the company. With 8 years of experience in the field and around 2000 employees, KIT offers delivery services to most of Russia and the CIS area. it is experiencing an impressive 100% growth every year. Most of their business (95%) is focused on the B2B market, 78% of which is Freight. Their main competitive advantage is time of delivery and price; they can deliver a package from Yekaterinburg to Moscow in 40 hours for $10. It is important to not that KIT did not suffer much from the 2008 crisis; their number of clients remained the same, however the client made fewer orders.
Their Express Delivery scheme is a simple model that enable them to capture much of the market share. It consist of a two-driver truck with rotating shifts that ensures continuous transport of lorries and short delivery timing. Today, KIT enjoys between 20% and 30% market share in the Ural Region and around 10% in Russia.
KIT plans to focus on the North of Russia to satisfy to increasing demand for consumer goods and oil/gas in the region. The Kazakh region is also an important area as with the new customs union signed with Russia and the increasing flow of Chinese goods in the territory. In the next few years, KIT plans to expand to the Far East to cover the area of Vladivostok and reach out to all cities with more than 50,000 inhabitants. KIT proves to be a great success story of local Russian businesses.
Back to Grenoble! On behalf of the Business Development class of GGSB, we want to take this opportunity to thank Ural Atlantic and KIT, as well as all the other companies we met during this trip, for their wonderful presentations and warm welcome. We couldn’t get enough of this trip as we feel there were many things we wanted to discover. Most of us will be coming back someday to do business, or perhaps to continue our education. Russia is a land of opportunity..could it be the new Oriental Dream?