As late as 2014, the Russian ICT market was facing hard times: the Russian currency, the ruble, was experiencing massive losses and prices for hardware and software were going up. This led to a temporary recession in the computer market. For this reason, the Russians started producing software products in their own country and then exporting them, and this production and support from multiple parties gave the ICT sector a new boost.
Since then, the market in Russia has grown. There are around 7,000 companies in the IT sector, most of which are located in Moscow and St. Petersburg, and the sales of the Russian top ten have reached 1 billion US dollars.
Local business provides Swiss SMEs with new opportunities
Russian IT companies are also getting larger and stronger in the global market, including in the US, Germany, Brazil, China, India and Switzerland. They are gaining attention with products such as information security software, individually adapted software and IT services. At the beginning of 2017, at least 20 Russian companies were working with Swiss customers. That is a relatively small amount compared to other European countries.
On the other hand, at least seven Swiss companies were doing business in Russia and had their offices there at the same time, while many other IT companies worked from Switzerland with Russian customers and exported their products.
When Swiss SMEs decide to employ a representative in the Russian market, they have to consider the following:
- Representatives are not involved in the promotion process, which is generally the responsibility of the foreign enterprise. However, the representatives are often willing to undertake the promotion of the product for a fee.
- It is better for foreign manufacturers to register their trademarks in Russia themselves rather than leaving it to Russian partners.
- It is important to translate product information and marketing material into Russian in cooperation with the Russian representative.
One good market opportunity in Russia is public contracts. To get involved in this market, it is advantageous to establish a local company, since Russian producers receive preferential treatment to some extent and are thus able to produce IT products and services for public authorities and enterprises.
A good place to open a company in Russia is the Skolkovo Innovation Center, located 30 kilometers to the west of Moscow. Companies there can take advantage of different incentives and a minimal administrative burden, but even in larger Russian cities such as Moscow, St. Petersburg and Yekaterinburg, there are good opportunities for ICT companies.
You can find more information on the ICT market in Russia in the report in the download section.
For questions about Russia contact our consultant or the Swiss Business Hub Russia.