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Cleantech opportunities for Swiss SMEs in the Russian Market

What do you have to keep in mind, when doing business in Russia as an SME? How important for the cleantech sector is Aquatherm in Moscow and which factors are not to be underestimated when entering the Russian market? We asked a successful Swiss SME to answer our questions.

pipes

Cleantech can be found in many different places, even where you wouldn't expect it at first glance. In other areas, however, it is far more obvious, for example with heating technology, ventilation, air-conditioning, sanitary and environmental technology. For those examples, the largest and most important Russian trade fair takes place in Moscow, from 2nd to 5th February 2021: Aquatherm.

Market growth and opportunities for Swiss SMEs

As Russia is Europe’s 4th biggest market in that field and it has grown by 22% in the last 5 years, we want to offer you a closer look. This is why we asked a Swiss SME, Brugg Pipes, to answer a few questions about being successful in the Russian cleantech sector and their experience with the largest exhibition for HVAC, heating, water supply, plumbing.

What was the main reason for Brugg Pipes choose the Russian market?
Jarek Lach: Well, Russia has the largest district heating network in the world, in terms of total length of pipes it is bigger than the rest of Europe combined. Also, Moscow and St. Petersburg are the largest municipal district heating networks worldwide. In addition to its sheer size, the infrastructure is not in an excellent condition and much needs to be replaced or refurbished.

How did S-GE support you in the internationalization process in Russia? 
S-GE has supported us from the start in 2015. First, with seminars and general information, then with finding partners in Moscow. As you may recall, the Crimea Crisis was an intense phase back then, so it was not the easiest moment to start. However, S-GE and the Swiss Business Hub in Moscow supported us very well. I would like to thank you once again for going the extra mile for us, it is very much appreciated.

What market sectors do you cover, what products do you offer?
At Brugg Pipes we produce and deliver wide range of solutions for heating, cooling and industry. Many are used in renewable energy installations, such as biogas or solar thermal systems; in clean energy, such as LNG, hydrogen or energy saving systems; as well as in district heating and cooling. The latter is our main focus in Russia and those are the pipe systems we will present at Aquatherm. 

What kind of value do you think the event has for SMEs coming from abroad?
We have been presenting our products at Aquatherm since the very beginning in 2015. It is the most important national event to get connected with installers, designers, individual investors as well as house owners. It is the largest exhibition in Russia for HVAC, heating, water supply, plumbing. Also, it is the time and place to show that you are active in Russia, meet potential customers or partners and get to know the competition. 

Are there special needs of the local market that you have encountered?

We had to develop an additional, special product line for the Russian market, there are different requirements regarding performance and product range.

Also, and this is quite interesting, we can’t think in our usual European way, when it comes to technolgical advantages or selling points. Take energy savings for example: When we talk about those, we always tell that you can save money with it. However, this may not be that important in Russia, because the prices for gas and oil are so low. On the other hand, there are technolgies or materials that have been abandoned in Europe but that are still in use in Russia. We had to reinvent our products to a certain extent in order to be successfull

What about regulations, authorizations, or cultural factors, what was your experience? 
Well, customs are difficult, expensive and time consuming. And then authorizations and cultural factors go together, I would say. Oftentimes, certifications are unclear, they focus less on the product performance but rather on the people in charge or your network. Therefore, connections are crucial, also because decision making is concentrated at the very top of organizations. And the top brass rarely speaks a foreign language. Younger people do, so it is improving as they move more and more into the higher ranks. But you still need to know the local culture and language, you need to have local partners who understand the mentality, the culture and business practices. Otherwise it is not going to work. Also, most Russians are very friendly people and many of them are well educated. You will find good engineers and managers.
 
What are the three things you would tell a Swiss SME that wants to set up shop in Russia?

  • It takes time, do not expect quick returns - good preparation is half the success
  • Use the competence and support of S-GE, you will save time and avoid many mistakes
  • There is no single Russia, it is a huge country with many different facets  

Can you give us an example of a success you have had? 

  • We have found good local partners - distributors of some of our products, with whom we supply individual customers.
  • We established a sales office in Moscow just few weeks ago, with an experienced local management
  • We have successfully delivered and installed our first industrial project, our gateway to our most important market of municipal heating networks. Even under the lock-down restrictions. 
  • We are well positioned for the launch of new products next year, some of them especially developed for the Russian market. 

Want to learn more?

Don't hesitate to get in contact with our Head of Cleantech, David Avery

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