russia through a lens - deloitte us...russia through a lens russia in figures 05 inflation...

Deloitte Research Centre | Fifth issue | 4Q 2016

Russia through a lensMacroeconomic outlookKey Russian macroeconomic indicators in 4Q 2016

Page 04

CFO Survey Winter 2016 A comprehensive analysis of trends in the Russian business environment

2

Media consumptionThe results of our second comprehensive study of media consumption in Russia

Page 14

Businessmen on the banksInteraction between small and medium-sized enterprises and the banking industry

Page 20

02

Russia through a lens

Content

04Russia in figuresMacroeconomic outlook (GDP, inflation, trade indicators, currency rate, Central Bank key rate, top-pricing, etc.)

12Research Centre market analysis"CFO Survey", "Media consumption", "Innovations in agribusiness", "Companies with intangible assets", "Businessmen on the banks"

28Global windTop news about China-Russian relations

29Other useful stickers

29Useful stickers regarding innovations in Russia

26Top M&AsTop-5 deals in Russia

Page 19 6 Page 28

We are pleased to present the latest edition of Russia Through a Lens, the macroeconomic journal produced by Deloitte Research Centre in Moscow.

Established in December 2015, the journal is published quarterly and falls under the Research Centre’s monitoring activities.

In Russia Through a Lens, we focus on current key trends in the Russian economy and present our research key findings.

If you have any questions or suggestions regarding this research, please do not hesitate to contact us:[email protected]

Designed by the Deloitte Design Group, Moscow

mailto:cisresearchteam%40deloitte.ru?subject=


03

Russia through a lens | Russia in figures

04

Russia in figuresGDPGDP per year

The data for the period from 2011 includes changes related to the implementation of the international methodology for housing services evaluation, the evaluation of capital consumption taking into account its current market value, and the conformation of data on exports and imports with the data presented

in the balance of payments developed according to the methodology provided by the Sixth Edition of the Balance of Payments and International Investment Position Manual (BPM6) introduced by the International Monetary Fund.

4Q GDP

Forecasts for 2016:

Ministry of Economic Development

Central Bank

Russian Academy of Sciences Institute of Economic Forecasting (IEF RAS)

Standard & Poors

A. Kudrin, ex-Minister of Finance

Gaidar Institute

International Monetary Fund

JPMorgan

–0.5%–0.3% to –0.7%

–1.0% –1% –1% –2% –0.8% –0.6%

Additional information:

• The Ministry of Economic Development forecasts +0.2% in 2017, +0.9% in 2018, +1.2% in 2019.

• The Central Bank forecasts +0.5 to 1%, the IMF forecasts +1.1%, the EBRD forecasts +1.2% and S&P forecasts +1.4% in 2017.

• The Institute of Economic Forecasting of the Russian Academy of Sciences (IEF RAS) forecasts in 2017: +1.5% in 2018: +2.2%.

150, 000

130, 000

110, 000

90, 000

70, 000

50, 000

30, 000

10, 000

0

21,610 26,917

25%

33,248

24% 24%

41,277

–6%

38,807

19%

46,309

29%

59,698

12%

66,927

6%

71,017

10%

77,803

4%

–3.0%81,287

–0.5%–0.5%

80,881

50%

30%

10%

–10%

–30%

–50%

–70%

–90%

–110%

–130%

0.7%1.3%3.5%4.3%4.5%–7.8%

5.2%8.5%8.2%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F

GDP, bln RUB GDP growth (at current prices) GDP volume indicesSource: Rosstat, Ministry of Economic Development (forecast)

25,000

20,000

15,000

10,000

5,000

7,480

9,797 10,619 10,81613,249

16,87718,411

19,56621,515 22,016

19,670

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F*

GDP, bln RUBSource: Rosstat, Ministry of Economic Development (forecast)


05

InflationInflation, %

Forecast:

Source 2016

International Monetary Fund 5.9%

World Bank 7.1%

Gaidar Institute 6.5–7.0%

Gaidar Institute (Consumer Price Index) 7.7%

Inflation in November in 2016*: 5.8%Inflation target** in 2017: 4%

*The inflation figure is the consumer price growth rate over the corresponding month of the previous year.**The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Central Bank).

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.02006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020

9.0

13.3

8.8

8.8

6.16.6

6.5

12.9

12.2

5.44.9

4.4

4.144

5.85.6

Rosstat (Fact) Central Bank (forecast) Ministry of Economic Development (forecast)

11.911.4


06

Trade structure

Period Jan–Oct 2016

Exports of energy products to non-CIS/CIS countries (2006–January to October 2016)

• Foreign trade turnover: USD 376.2 billion (-15 percent YoY)

• Trade balance: surplus of USD 79.7 billion (-USD 58.4 billion YoY)

• Exports: USD 227.9 billion (-21.5 percent YoY)

• Imports: USD 148.3 billion (-2.6 percent YoY)

Imports from non-CIS countries (period Jan–Oct 2016):

Source: Federal Customs Service

Imports from CIS countries (period Jan–Oct 2016):

Percentage in imports from non–CIS countries

In monetary terms YoY

In physical terms YoY

Categories (in physical terms) YoY

Textiles and footwear 6.0% –4.4% –10.5%

Metal products 5.4% –6.6% –6.1% • Ferrous metals (– 4.5%)

Chemical products 19.2% –1.4% 3.6% • Varnishes and paints (–6.0%) • Medicines (–2.0%) • Pharmacuticals (–1.2%)

Machinery and auto 49.9% 3.8% N/A • Cars (–23.6%) • Trucks (–14.2%)

Food and raw materials for food production

12.3% –10.1% –9.5%

• Beef (–24.1%) • Fish (–11.7%) • Cheese and curd (–17.5%) • Citrus plants (–5.0%)

Percentage in imports from CIS countries




Energy products 4.0% –68.0% –14.5%

Metal products 13.8% –1.6% 5.3% • Pipes (31.9%) • Flat rolled products of iron

or non-alloy steel (11.0%)

Chemical products 14.5% –14.5% 2.1%

• Products of organic chemistry (22.9%) • Plastics (27.2%) • Pharmacy (12.7%) • Varnishes and paints (–46.5%)

Machinery and auto 22.8% 1.3% N/A

• Mechanical equipment (–8.8%) • Electrical equipment (–1.8%) • Optical instruments and apparatus (–22.3%) • Cars (–26.3%) • Trucks (88.1%)


23.2% N/A 9.9%

• Pork (–82.8%) • Poultry (–9.7%) • Butter (3.0%) • Cheese (14.0%) • Citrus (–41.9%)

Textiles and footwear 7.9% 25.3% 38.5%

Source: Federal Customs ServicePercentage in Exports to non-CIS countries Percentage in Exports to CIS countries

80

70

60

50

40

30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan-Oct

32.839.5

54.2

42.343.6

55.3

40.947.0

53.0

35.5

62.566.473.0

69.673.472.772.4 74.5

70.868.070.3

44.0


07

Source: Federal Customs Service

Exports to CIS countries (period Jan–Oct 2016):

Percentage in exports to CIS countries




Energy products 32.8% –34.1% –6.8%

• Oil products (–8.7%) • Coal (6.4%) • Electrical energy (–33.0%) • Natural gas (–19.1%)

Metal products 12.0% –12.8% –10.4%

• Ferrous metals (–11.0%) • Rolled iron (2.2%) • Semi–finished products

of iron or non-alloy steel (–20.3%) • Copper and copper alloys (14.1%)

Chemical products 16.1% –4.5% 25.5%

• Pharmaceuticals (14.9%) • Products of inorganic chemistry (10.9%) • Products of organic chemistry (8.1%) • Fertilizers (17.7%) • Plastics (–2.1%) • Rubber (9.5%)

Machinery and auto 15.3% –22.8% N/A • Mechanical equipment (–12.7%) • Ground transportation (–46.7%)


11.1% –4.2% –0.5%

• Milk and cream (30.6%) • Fish (11.0%) • Cheese and curd (4.1%) • Sunflower oil (14.0%)

Timber, pulp and paper products 4.6% –6.9% –8.5%

• Lumber (–19.4%) • Newsprint (–15.0%) • Cellulose (–7.3%)

Exports to non-CIS countries (period Jan–Oct 2016):

Percentage in exports to non–CIS countries




Energy products 62.5% –27.6% 3.2%

• Crude oil (7.6%) • Oil products (–9.8%) • Coal (8.6%) • Natural gas (11.7%)

Metal products 10.1% –16.3% 5.5%

• Copper and copper alloys (–9.3%) • Flat iron non-alloy steel (12.2%) • Aluminum (6.7%) • Semi–finished products of iron

or non–alloy steel (3.9%)

Chemical products 6.2% –25.8% –5.5%

• Products of inorganic chemistry (6.6%) • Fertilizers (–7.4%) • Plastics (–7.8%) • Pharmaceutical (–13.5%) • Rubber (4.6%)

Machinery and auto 6.3% –7.2% N/A

• Mechanical equipment (–32.6%) • Ground transportation (54.3%) • Electrical equipment (19.2%) • Optical instruments and apparatus (21.6%)

Food and raw materials for their production

5.2% 6.9% 14.0%

Timber, pulp and paper products 3.4% 13.7% N/A

• Lumber (22.8%) • Plywood (14.3%) • Cellulose (2.4%) • Rough wood (7.6%) • Newsprint (–2.0%)


08

EUR-RUB USD-RUB

RUB vs. EUR and USD, Jan 2014 – Dec 2016

Currency rate

USD-RUB forecasts (average per year)

EUR-RUB forecasts (average per year)


Ministry of Finance

Gaidar Institute, Ranepa and RFTA (base scenario)

Apecon (Economic Forecasting Agency)

IEF RAS

2016 RUB 67.1 RUB 67.6 RUB 64 RUB 66.1

2017 RUB 63.3 RUB 67.5 RUB 64.1 RUB 59.5 RUB 62

2018 RUB 62.1 RUB 68.7 RUB 63.4 RUB 58.7 RUB 62

2019 RUB 61.3 RUB 71.1 n/a n/a n/a

IEF RAS

2016 RUB 72.7

2017 RUB 68.2

2018 RUB 68.2

Source: Central Bank of Russia

100.00

80.00

60.00

40.00

20.00

0.00

72.39

Q4 2015 Q4 2015

66.11

December 2015

December 2015

75.7969.70

Q4 2016 Q4 2016

67.9863.10–5%–6% –14% –11%

December 2016

December 2016

65.52 62.09


1009080706050403020100

1-Ja

n-14

1-Fe

b-14

1-M

ar-1

41-

Apr

-14

1-M

ay-1

41-

Jun-

141-

Jul-1

41-

Aug-

141-

Sep-

141-

Oct

-14

1-N

ov-1

41-

Dec

-14

1-Ja

n-15

1-Fe

b-15

1-M

ar-1

51-

Apr

-15

1-M

ay-1

51-

Jun-

151-

Jul-1

51-

Aug-

151-

Sep-

151-

Oct

-15

1-N

ov-1

51-

Dec

-15

1-Ja

n-16

1-Fe

b-16

1-M

ar-1

61-

Apr

-16

1-M

ay-1

61-

Jun-

16

1-Ju

l-16

1-Au

g-16

1-Se

p-16

1-O

ct-1

61-

Nov

-16

31-D

ec-1

6

Euro US dollar


09

Central Bank of Russia key rate, %

Indexes (daily): Jan 2014 – Dec 2016

Central Bank key rate

From 1 January 2016, the Central Bank of Russia will not set a separate value for the refinancing rate of the Central Bank of Russia.

The refinancing rate is 10 percent (from 19 September 2016).

In accordance with the decision of the Board of Directors of the Bank of Russia, effective 1 January 2016, the value of the refinancing rate of the Central Bank of Russia will be equal to the key rate of the Central Bank of Russia set at the respective date.


31-Ja

n-14

28-F

eb-1

431

-Mar

-14

30-A

pr-1

431

-May

-14

30-Ju

n-14

31-Ju

l-14

31-A

ug-1

430

-Sep

-14

31-O

ct-1

430

-Nov

-14

31-D

ec-1

431

-Jan-

1528

-Feb

-15

31-M

ar-1

530

-Apr

-15

31-M

ay-1

530

-Jun-

1531

-Jul-1

531

-Aug

-15

30-S

ep-1

531

-Oct

-15

30-N

ov-1

531

-Dec

-15

31-Ja

n-16

29-F

eb-1

631

-Mar

-16

30-A

pr-1

631

-May

-16

30-Ju

n-16

31-Ju

l-16

18-A

ug-1

630

-Sep

-16

31-O

ct-1

630

-Nov

-16

31-D

ec-1

6

20.018.016.014.012.010.08.06.04.02.00

Source: Moscow ExchangeMICEX Index, RUB RTS Index, RUB

31-Ja

n-14

28-F

eb-1

431

-Mar

-14

30-A

pr-1

431

-May

-14

30-Ju

n-14

31-Ju

l-14

31-A

ug-1

430

-Sep

-14

31-O

ct-1

430

-Nov

-14

31-D

ec-1

431

-Jan-

1528

-Feb

-15

31-M

ar-1

530

-Apr

-15

31-M

ay-1

530

-Jun-

1531

-Jul-1

531

-Aug

-15

30-S

ep-1

531

-Oct

-15

30-N

ov-1

531

-Dec

-15

31-Ja

n-16

29-F

eb-1

631

-Mar

-16

30-A

pr-1

631

-May

-16

30-Ju

n-16

31-Ju

l-16

18-A

ug-1

630

-Sep

-16

31-O

ct-1

616

-Nov

-16

31-D

ec-1

6

2500

2300

2100

1900

1700

1500

1300

1100

900

700

500


10

Top-pricing (nickel, gold, aluminium)

Nickel forecast:

Source 2016 2017

Goldman Sachs USD 8,500 USD 11,000

Morgan Stanley USD 8,629 USD 9,921

World Bank USD 9,200 USD 10,029

IMF USD 8,506 USD 8,532

Source 2016 2017

Morgan Stanley USD 1,149 USD 1,300

Barclays USD 1,150 N/A

HSBC USD 1,205 N/A

World Bank USD 1,250 USD 1,219

Goldman Sachs Group USD 1,280 USD 1,250

Source 2016 2017 2018

Goldman Sachs Group USD 1,450 USD 1,600 USD 1,350

World Bank USD 1,575 USD 1,626 USD 1,679

Morgan Stanley USD 1,543 USD 1,620 USD 1,764

IMF USD 1,548 USD 1,586 USD 1,630

Gold forecasts:

Aluminium forecasts:

Jan-

14Fe

b-14

Mar

-14

Apr

-14

May

-14

Jun-

14Ju

l-14

Aug-

14Se

p-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

n-15

Jul-1

5Au

g-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5Ja

n-16

Feb-

16M

ar-1

6A

pr-1

6M

ay-1

6Ju

n-16

Jul-1

6Au

g-16

Sep-

16O

ct-1

6N

ov-1

6D

ec-1

6

Source: Finam Holdings

2,300

2,100

1,900

1,700

1,500

1,300

1,100

900

Gold and aluminium

Gold, COMEX, USD/t oz Aluminium, LME, USD/t

1,706

1,246

1,329

1,2851,289

1,251

1,3281,284

1,2881,207

1,1741,151

1,7541,784

1,8001,829

1,8911,988

2,097

1,950

2,0372,014

1,8531,864

1,8151,785

1,920

1,7401,691

1,6201,605

1,5721,481

1,449

1,5011,572

1,521

1,672

1,557

1,6261,640 1,615

1,6731,737

1,277

1,731

1,177

1,737

1,139

1,501

1,1831,284

1,2141,187

1,1821,192

1,1741,095

1,1421,114

1,142

1,0711,061

1,122

1,2451,233

1,295

1,2171,323

1,357

1,313

1,319

Maximum for the period

Minimum for the period

Nickel

21,000

19,000

17,000

15,000

13,000

11,000

9,000

7,000

Maximum for the period

12-year minimum

13,98014,677

15,911

18,325

19,25019,040

18,50518,800

16,26515,740

16,275

15,15015,165

14,095

12,395

13,95012,600

12,01511,040

10,06010,330

10,045

8,8558,820

8,6108,530

8,495

9,425

8,4659,315

10,635

9,770

10,515

Nickel, LME, USD/t Source: Finam Holdings

Jan-

14Fe

b-14

Mar

-14

Apr

-14

May

-14

Jun-

14Ju

l-14

Aug-

14Se

p-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

n-15

Jul-1

5Au

g-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5Ja

n-16

Feb-

16M

ar-1

6A

pr-1

6M

ay-1

6Ju

n-16

Jul-1

6Au

g-16

Sep-

16O

ct-1

6N

ov-1

6D

ec-1

6

10,425

11,17011,395


11

Natural gas forecasts:

Crude oil forecasts:

Source 2016 2017 2018

U.S. Energy Information Administration

USD 42.54 USD 51.58 N/A

World Bank USD 43 USD 55 USD 59.9

Central Bank of the Russian Federation

Base scenario: USD 40


USD 41.8 USD 48 USD 52

USD 42.5 USD 51.58 USD 50

IMF USD 43 USD 50.6 USD 53.1

European Central Bank USD 42.8 USD 47.4 USD 50.6

Goldman Sachs USD 43 USD 53 N/A

IEF RAS USD 44 USD 55 USD 59.3

Top-pricing (oil, gas)

Source 2016 2017 2018

World Bank USD 2.3 USD 3 USD 3.5

Standard & Poors USD 3 USD 3.25 N/A

EIU USD 2.3 USD 2.7 USD 3.3

120

110

100

90

80

70

60

50

40

30

20

10

0

6

5

4

3

2

1

Brent oil, natural gasMaximum for the period

Minimum for the period

Source: Finam Holdings Natural gas, NYMEX, USD/mmbtu Brent crude oil, ICE, USD/bbl

Jan-

14

Feb-

14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug-

15

Sep-

15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug-

16

Sep-

16

Oct

-16

Nov

-16

Dec

-16

4.9

4.6

4.4

4.84.6

4.4

3.8

4.0 4.1

3.9

4.0

2.7 2.7 2.7 2.72.5

2.3 2.3

2.4

1.7

2.7 2.62.7

2.82.9

106

2.02.1

2.3

3.0

2.92.83.0

2.2

109108 108

109112

68

53

62

55

67

6563

5248

50

4538 36 37

40

47 50 5043

49475250

5453

106103

95

86

58 3.33.5

2.9

Russia through a lens | Research Centre market analysis

12

CFO Survey

Key findings

Research Centre market analysis

FINANCIAL PROSPECTS FOR 2017

KEY FINANCIAL METRICS

UNCERTAINTY AND RISKY DECISIONS

The general mood is somewhat optimistic:

• 64 percent of the CFOs do not anticipate any positive developments

• 36 percent believe that their company’s financial prospects are likely to change for the better

The real estate sector is facing a weakened position:

• The share of pessimistic answers grew by 12 pp.

The best-performing industries are:

• Oil and gas sector (45 pp up)

• Banking sector (8 pp up)

• Manufacturing sector (40 pp up)

In the second half of 2016, the majority of respondents (55 percent) still believed that the best conditions for business can be found abroad. However, Russia has become more appealing to businesses as compared with the beginning of the year (19 pp up).

• In general, the attractiveness of the USA for business in the current economic climate is rated somewhat higher.

• The EU countries are seen as the least attractive region in terms of business outlook.

Overall, the perceptions are quite optimistic. The share of respondents expecting growth in operating profits has increased by 16 pp.

• 61 percent of the CFOs anticipate higher operating profits in 2017, and only 16 percent forecast weaker financial performance

• 78 percent expect an increase in their real income

Negative trends in human resources policies are giving way to more stability and optimism. Companies are striving to retain both the number of staff and the wage/salary levels.

• The share of respondents planning staff cuts has fallen by 10 pp

• The number of companies planning to reduce wages/salaries has fallen by 7 pp

• Almost a quarter of the CFOs (24 percent) intend to increase their staff numbers

• Almost half of the respondents (49 percent) plan to increase wages/salaries

During the second half of 2016, the aggregate level of certainty about strategic business decisions grew nearly twice, with the overall level of uncertainty falling by 42 pp.

Driven by rising certainty levels, risk appetites have grown significantly over the last six months.

• 47 percent of CFOs think that Q4 2016 is a good time to make risky decisions

• The number of respondents demonstrating a high risk appetite has gone up 33 pp since two years ago

Overall, lower uncertainty and a higher risk appetite suggest that top managers of the leading Russian companies prefer to make carefully considered decisions.

The top-five risk factors that had the greatest negative effect on business development in Russia in 2016:

• Stress in the financial system

• Weaker domestic demand

• Deterioration of cash flow

• Dwindling operating income

• Weak Russian rouble


13

STRATEGIES AND RISKS

DRIVERS AND BARRIERS

SOURCES OF FINANCING

The survey shows that 56 percent of companies have special measures in place to manage currency risks.

CFOs that consider now to be a good time to take risky decisions are more interested in strategies such as:

• On-going cost control

• Cost cutting

• Increasing cash flow

The top-three risk factors that had the highest negative effect on large business in Russia in 2016:

• Weaker foreign demand

• Cost of capital

• Russian deoffshorisation law

The top-three anti-crisis strategies in Russia in 2016:

• Cost cutting

• Reducing leverage

• Reducing financial risks (interest rates, derivatives, etc.)

Overall, 51 percent of companies participating in our survey plan to expand the geography of business relations.

In the second half of 2016, weakening domestic demand became a significant barrier to business development in Russia.

Cost minimisation strategies remain the key driver for business development in Russia. Yet the latest survey shows that strategies aimed at increasing production in Russia have become an important driver.

In 2015 and the second half of 2016, the barriers to the recovery of businesses in Russia still outnumbered the drivers.

Drivers of business development in Russia in 2016:

• Optimisation of production costs

• Increasing production in Russia

• Organic growth

Barriers to business development in Russia in 2016:

• Financial condition

• Weaker domestic demand

• Weak Russian rouble

The trend from early 2016 continued, with bank borrowing becoming more attractive

• The attractiveness of this source of financing grew by 22 percentage points

Internal financing remains the most attractive source of funding despite a drop of 11 percentage points.

Loans from companies or private individuals have become more attractive to the respondents


Foreign investments remain essentially just as attractive, with a measured positive outlook



14

Media consumption in Russia

Key findings

Overall media consumption in Russia continues to grow, however, 2016 saw a slowdown in media usage growth compared to 2015 (from 8% to 6%).

The slowest growth (by 6 to 7%) was seen in the following leisure activities:

cinema visits

reading printed books

reading printed media

video games

MEDIA USAGE TRENDS 2016

*according to the media usage index [proportion of those who indicated higher usage minus the proportion of those who indicated lower usage]

3 hours 42 minutes

4 hours 24 minutes

Compared to 2015Work day

Rest day

–18 minutes

–7 minutes

Work day

Rest day

2 hours 10 minutes

3 hours 35 minutes

Compared to 2015–7 minutes

Unchanged

TV Internet

Single Russians tend to watch less TV (7%).

St. Petersburg residents have begun to watch more TV (media usage index of 17%).

The number of people watching news programmes fell 0.4%, socio-political broadcasts – 0.2% and professional programmes – 0.2%.

Compared to 2015Work day

Rest day

26 minutes

35 minutes

Unchanged

–1 minute

Printed books

Respondents aged over 45 tend to read less printed books (media usage index of –22 to –28%).

Respondents from St. Petersburg (media usage index of 17%) and those aged 20-24 read printed books more often (media usage index – 14%).

Work day

Rest day

Compared to 20151 hour 33 minutes

1 hours 25 minutes

–3 minutes

–2 minutes

Radio

Respondents aged 20-24 and St. Petersburg residents tend to listen to the radio more (14 and 15%, respectively).

The greatest decline in interest towards radio was shown among senior respondents aged 65 and over (media usage index of 24%).

Internet activity is growing among senior respondents (media usage index of 72–73% for respondents aged over 60).

Compared to 2015, laptop and PC users’ average time spent on the Internet fell by 13 and 14 minutes, respectively.

However, smartphone users have started to spend more time on the Internet (18 minutes per day).

DURATION OF MEDIA SOURCE USAGE

In the following segments:

printed media –24%

printed books –16%

TV –8%

radio –4%

MEDIA USAGE DECLINED*

Primarily in the following segments:

Internet 62%

electronic books 31%

video games 4%

MEDIA USAGE INCREASED*


1515

ADVERTISING

General advertising tolerance in Russia is –7%, which indicates persisting negative sentiment towards advertising:

• Tolerance is lowest towards radio and TV advertising (–16 and –17%, respectively);

• Russians are more tolerant towards ads in the printed media (3%) and outdoor ads (9%).

In 2016, overall advertising effectiveness in Russia fell to 6%, indicating that the majority of Russians do not find advertising information valuable. This figure is growing.

• TV advertisement was deemed to be the most effective: the largest share of Russians claimed to have found information in TV advertisements valuable (effectiveness index at 7%).

• Internet advertising ranked second. According to respondents, Internet ad effectiveness has dropped 3-fold (from 15 to 5%)

Television is the most effective tool for advertising:

food 59%

pharmaceuticals 50%

household goods 43%

The Internet is the most effective tool for advertising:

electronics 48%

clothes 46%

appliances 41%

services 40%

The radio is the most effective tool for advertising:

services 43%

Printed media is the most effective tool for advertising:

services 43%

cosmetics/perfumery 31%

Outdoor advertising is the most effective tool for advertising:

services 32%

electronics 30%

household goods 30%

food 30%

Audience tolerance ranked by media source:

Television

Printed media

Internet

Radio

Outdoor advertising

10%

10%

2%

–3%

12%

–5%

14-15%

16%

21%

9%11%

youngsters aged 16-19

Women

People aged 30-34

55-59

Middle-aged people 35-39

youngsters aged 16-19

20-24

Women

Middle-aged people

30-39

50-54

People aged 65+

*according to the advertising tolerance index [proportion of those favouring advertising minus the proportion of those who disapprove]

TRUST IN THE MASS MEDIA

Mass media ranked by trust level:

News, analysis, official Internet websites 35%

TV 28%

Social networks and Internet blogs 13%

Opinions of others/acquaintances 8%

Newspapers/ magazines/radio from 1% to 3%

Top-3 most commonly used smartphone features*:

Mobile calls 21%

Messengers (WhatsApp, Viber and social network messengers) 15%

Social network applications 12%

SMARTPHONES

* according to the features usage index (proportion of those using a function more often minus the proportion of those using it less often)]


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Precision agriculture

Individualized nutrition

Biofuel

Advanced processing

Energy conservation

Biopesticides

Genetic data accumulation and handling

Biofertilizers Biopharmaceuticals

“Smart” farms

Innovations in Russian agribusiness

Global investor interest in the agribusiness sector has grown over the past three to five years. This is reflected in the establishment of new institutions and venture funds investing in agricultural research projects. Twenty years ago, investments were flooding into IT, and ten years ago, red biotechnology was soaking up investors’ capital. However, over the past five years the flow has shifted towards R&D in agriculture. The largest funds in Russia include Skolkovo, RBK, VEB Innovations, The Foundation for Assistance for Small Innovative Enterprises and the Internet Initiatives Development Fund.

A great deal of interest in Russian agribusiness has also been shown by private Russian and foreign investors. Foreign companies and entrepreneurs have invested in Russian companies such as RAV Agro-Pro, Sistema, Cherkizovo Group and others.

Furthermore, agricultural intensification is clearly beginning to outpace the global rate of population growth, and new technology is a key factor in this.

Factors that drive innovation:

• Innovations and reputation on the market

• Research and engineering capabilities

• Government recognition of the importance of technology uptake

• The appearance of platforms for cooperation between producers and consumers of technology

Barriers to innovation:

• The lack of a comprehensive approach towards technological development

• HR problems (the average age of agribusiness workers is 43, salaries are 58 percent of the average Russian salary)

• Problems with the quality of basic Russian equipment

• Difficulties in working with start-ups

NEEDS:

TRENDS:

RELEVANT TECHNOLOGY:

DIGITALIZATIONBIG DATA

GENTECH

ROBOTECH

BIOTECH

Amelioration Cultivation and breeding Automation


17

Companies with intangible assets

The companies’ overall level of economic confidence stands at 80 percent.

The overall outlook index amounts to 60 percent, suggesting that positive changes are expected in 2017.

70% of companies spend less than 1 percent of annual revenues on intangible assets. The remaining 30 percent report that intangible asset expenses exceed 1 percent of annual revenues. Of this 30 percent, the majority (33 percent) spend 5 percent of revenues on intangibles.

78% of companies report that the share of intangibles in the total assets is less than 1 percent, while only 22 percent of companies note a share of intangibles in the total assets that exceeds 1 percent. Among the companies with a share exceeding 1 percent, 40 percent have overall assets that consist entirely of intangibles.

The most popular sources of information on intangible assets are professional online resources and consultants specialising in intangible assets (95 percent and 76 percent respectively).

Top-five intangible assets:

• Trademark (100 percent)

• Company website (62 percent)

• Computer program (62 percent)

• Patent (52 percent)

• Know-how (48 percent)

The reason that best describes why most companies work with intangible assets (50 percent):

Intangible assets are a means to improve the company’s non-financial competitiveness (market reputation, visibility, etc.).

For an absolute majority of the companies that participated in our survey, intangible assets do not form the core business activity (82 percent). For fifty percent they are an essential component of the business and for 32 percent they constitute a company initiative to improve competitiveness.

Key findings


18

The most frequent practice in working with intangibles is obtaining rights of use from foreign companies (62 percent). Obtaining rights of use from Russian companies (52 percent) is the second most frequent practice, and in third place comes the independent creation of intangible assets with or without the subsequent transfer of rights to a Russian and/or foreign company (38 percent and 33 percent respectively).

60% of the surveyed companies face difficulties when managing intangible assets.

Companies most frequently face problems at the following stages when managing intangible assets:

• Identification and classification (47 percent)

• Determining the value of intangible assets (37 percent)

• Accounting for intangible assets (26 percent)

81% of companies report that they use their own resources to value intangible assets.

On average, 2.4 people participate in the intangible

asset valuation process, which takes an average of 2.7 months.

Top-five reason for using/registering intangible assets:

• To defend intangible assets from use by competitors

• To increase the demand for goods/services

• As part of an international initiative

• To launch a new product

• To reduce business risks

Top-five problems when working with intangible assets:

• Long process for registering rights to use intangible assets

• Lack of information about intangible asset management in Russia

• Lack of legal regulation for intangible assets in Russia

• Poor quality information on intangible asset management in Russia

• Low level of legal protection

The key problem for companies registering rights to use over intangible assets is the long registration process (75 percent):

• Number of months spent on registering rights: 14

• Number of employees engaged in the registration of rights: 4.1

The overall complexity rating of working with intangible assets stands at 3.1 out of 5, which suggests that companies experience difficulties on a fairly regular basis when working with intangible assets.

Companies use both external and internal resources to register rights of use over intangible assets:

75% of companies report that they engage experts to register rights of use over intangible assets.

65% of companies report that they have used internal resources to register rights of use over intangible assets.

The general popularity of intangible asset use in Russia (across various sectors of the economy) stands at 62 percent.


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Top-three territories for intangible asset development:

• EU (60 percent)

• Russia (53 percent)

• USA (27 percent)

Top-three territories for intangible asset registration:

• Russia (86 percent)

• EU (43 percent)

• Other CIS member states (29 percent)

95% of survey participants have never been involved in court proceedings involving intangible assets.

90% of survey participants note a positive effect from holding rights of use over intangible assets; 10 percent report that it has no influence on the company’s position.

Half of companies (50 percent) are not planning to make any changes to their accounting policies as regards expenses on intangible assets. At the same time, 28 percent note plans to increase investment in intangible assets, while 22 percent intend to reduce expenses on intangible assets.

93% of companies participating in the survey note that BEPS-related changes to the international taxation system and the government’s deoffshorisation measures have had no effect on their companies’ operations. At the same time, 7 percent of companies note a negative effect. No companies reported positive effects resulting from the introduction of these changes.


20

Statistical portrait of SMEs in Russia

In 2016 the threshold revenues for legal entities and individuals were revised: Microbusiness: <120 million roubles per annum

Small business: <800 million roubles per annum

Medium-sized business: < 2 billion roubles per annum

Key activities of SMEs (small and medium-sized enterprises) in Russia (by number of companies, excluding individual entrepreneurs):

Trade (wholesale and retail) 45%

Real estate sales, rental and services 23%

Construction 13%

Manufacturing 11%

Transport and communications 8%

The number of SMEs grew by 60% between 2010 and 2016.

5.67 million companies: the number of SMEs registered as at 1 September 2016.

95% of SMEs are microbusinesses.

41.9 trillion roubles: SMEs’ turnover (revenue) from the sale of goods (work and services) as at 1 January 2015.

Portrait

Trends

Business climate in Russia

The business climate in 2016 is largely favourable: the overall state of business index stands at 52 percent.

The least favourable business climate is reported by:

• Small businesses (by 5 pp)

• Companies in Ural and Southern Federal Districts (by 7 pp and 5 pp respectively)

• Companies in the manufacturing sector (by 6 pp)

The most favourable business climate is reported by:

• Medium-sized businesses (by 8 pp)*

• Companies in Siberian and Far Eastern Federal Districts (by 14 pp and 7 pp respectively)

• Companies in the service sector (by 5 pp)

Expectations among SMEs are positive: the overall confidence index for 2017 stands at 53 percent.

Optimism about 2017 prevails among:

• Medium-sized businesses (by 5 pp)

• Respondents who view the current condition of their business positively (by 9 pp)

• Companies in Siberian and Far-Eastern Federal Districts (by 7 pp and 13 pp respectively).

Pessimism about 2017 prevails among:

• Respondents who view the current condition of their business negatively (by 63 pp)

• Companies in Ural Federal District (by 5 pp)

Today

Tomorrow

* Subgroups comparisons are made against the average indicator for the overall sample.

Businessmen on the banks

Our research into the interaction between small and medium-sized enterprises and the banking industry

Key findings


21

62% of respondents attracted third-party capital over the past three years:

• 65 percent of them turned to banks for loans

• 27 percent of them attracted funds from private third-party investors

• 8 percent of them took loans from microfinance institutions

40% the demand for financing from banks among SMEs over the past three years. Higher demand was observed among:

• Medium-sized businesses (46 percent)

• Wholesalers and manufacturers (50 percent and 52 percent respectively)

17% the demand for financing from private investors. 5% the demand for financing from microfinance institutions. Greater interest in microfinance institutions was reported in Siberian Federal District (12 percent)

55% the potential demand for bank loans (based on company financing plans for 2017). Higher potential demand was observed among:

• Respondents in Ural and Siberian Federal Districts (65 percent and 63 percent respectively)

• Manufacturers and construction companies (64 percent)

45% the potential demand for private investment. Higher potential demand was observed in:

• Siberian Federal District (53 percent)

• The construction sector (56 percent)

17% the potential demand for loans from microfinance institutions. Higher demand was observed in Northwestern Federal District (30 percent).

15% the potential demand for crowdfunding.

90%** of respondents were satisfied with the amount of credit approved despite the fact that 41 percent of them received only part of the requested amount.

Optimism prevails in:

• Ural Federal District (94 percent)

• The real estate sector (94 percent)

10%** of respondents were unsatisfied with the amount of credit approved.

Pessimism prevails among:

• Microbusinesses (16 percent)

• Companies in Siberian Federal District (15 percent)

** Among respondents that applied for loans (62 percent of the overall sample).

SMEs and external financing

Trend

Companies whose loans were only partially approved are more likely to consider the current state of their business to be negative (by 5 pp) and/or forecast a deterioration in their business position in 2017 (by 7 pp). Despite the fact that 45 percent of respondents are not planning to attract external financing to support and grow their businesses, access to financing and financial infrastructure are important factors for SMEs both when assessing their current business conditions, and when forming economic expectations.


22

69% of companies are clients of more than one bank. A higher proportion of such companies is found among:


• Companies in Siberian, Northwestern, Volga and Ural Federal Districts (94 percent, 84 percent, 82 percent and 76 percent respectively)

• Companies in the service sector (85 percent)

26% of companies are served by a single bank. A higher proportion of such companies is found among:


• Companies in Far-Eastern and Central Federal Districts (40 percent and 35 percent respectively)

• Companies in the real estate sector and the transport and communications sector (42 percent and 39 percent respectively)

Top-10 banks serving SMEs:

• Sberbank of Russia (69 percent)

• VTB 24 (28 percent)

• Alfa Bank (21 percent)

• VTB (8 percent)

• Promsvyazbank (8 percent)

• Rosselkhozbank (8 percent)

• Raiffaisenbank (8 percent)

• Gazprombank (6 percent)

• B&N Bank (5 percent)

• Rosbank (5 percent)

86% of respondents report that the main device used for internet banking is a computer/laptop.

The use of mobile devices for internet banking is more attractive to small and medium-sized businesses.

Representatives of small businesses are more likely to use internet banking through smartphones (by 5 pp), while 31 percent of respondents from this group consider it more convenient to access internet banking services through a tablet.

Potential users of internet banking applications for smartphones and tablets are most likely to be found in:

• Northwestern Federal District

• The retail, transport and service sectors

Growth in financial services among SMEs

Technological environment for SME banking

47% of respondents have needed to switch banks over the past five years. This is most commonly observed in:

• Siberian Federal District (57 percent)

• The wholesale sector (55 percent)

69% of respondents switched banks for more favourable terms of service.

27% of respondents switched banks due to poor service quality.

13% of respondents were forced to switch banks as a result of their bank’s licence being revoked.

8% the average loyalty index among SMEs towards their current bank. Greater loyalty is reported by:


• The transport and communications sector (28 percent) and manufacturers (14 percent)

• Companies from Far-Eastern, Siberian and Ural Federal Districts (15 percent, 14 percent and 14 percent respectively)

A lower degree of loyalty is reported by:


• The construction and wholesaler sectors (–4 percent and 2 percent respectively)

• Companies from Northwestern and Southern Federal Districts (–12 percent and –15 percent respectively)

Loyalty towards banks


23

3,1 out of 5: the overall rating for banking infrastructure (which is slightly higher than average).

The most highly rated criteria were:

• The adequacy of banking products for SMEs (3.24 out of 5)

• The quality of banking products (3.24 out of 5)

• The reliability of information on banking products (3.21 out of 5)

The following criteria received the lowest quality ratings:

• The flexibility of banking products in a dynamic business environment (2.95 out of 5)

• The attractiveness of banking products for SMEs (3.04 out of 5)

• The accessibility of banking products for SMEs (as regards pricing) (3.04 out of 5)

71% of respondents report that they have experienced problems with banking services. The majority of them note that these problems arise rarely or sometimes (47 percent and 42 percent respectively). Those most likely to experience problems are:

• Companies in Siberian and Ural Federal Districts (by 11 pp and 7 pp respectively)

• Wholesalers (by 9 pp)

The main stages at which problems arise:

• Receiving loans (33 percent)

• Settlement and cash services (27 percent)

• Activating additional services (27 percent)

Top-10 problems arising during banking services for SMEs in Russia:

• Unfavourable credit proposals for SMEs in general

• Bureaucratic complications when opening current accounts

• Technical problems in Bank-Client systems (particularly in remote banking services)

• Unprofessional/incompetent banking staff

• Declined credit

• Inadequate amounts of credit approved

• Lengthy process for opening current accounts

• Revocation of the bank’s licence

• Low quality of bank consulting services on opening accounts and other issues arising for SMEs before entering into a services agreement

• Difficulties in selecting a bank (uncertainty)

SME satisfaction with interaction with banks in Russia

63% the overall level of SME satisfaction with banking services.

Respondents served by a single banks are distinguished by more comprehensive expectations of banking services than those who are served by a number of banks (the level of satisfaction is 12 pp higher).

Areas of banking service in which key deficiencies were identified:

• Access to/flexibility of credit programmes for SMEs (33 percent)

• Comprehensiveness of information in SME sections on bank websites (39 percent)

• Cost of banking services for SMEs (39 percent)

• Availability of innovative banking products for SMEs (42 percent)

• Availability of additional services for SMEs (acquiring, accounting support, payroll card programmes, etc.) (47 percent)

SME satisfaction with the banking sector


24

52% of respondents have a high degree of certainty when selecting their bank. The proportion of such respondents is higher among:

• Medium-sized businesses (by 6 pp)

• Companies in the construction sector (by 15 pp)

• Companies in Southern Federal District (by 9 pp)

48% of respondents are uncertain about their choice of bank. The proportion of such correspondents is higher among:


• Wholesalers (by 13 pp) and manufacturers (by 11 pp)

• Companies in Volga Federal District (by 16 pp)

Overall, SMEs are most likely to consider the following banks

• VTB 24 (19%)

• Alfa Bank (16%)

• Sberbank (16%)

• Gazprombank (13%)

• Rosselkhozbank (12%)

• Promsvyazbank (11%)

• VTB (11%)

• Raiffeisenbank (10%)

• Tinkoff Bank (8%)

• B&N Bank (6%)

Top-10 factors affecting SMEs’ choice of bank:

• Bank reputation

• Cost of banking services for SMEs

• Length of experience on the market

• Efficiency of services for SMEs

• Positive experience of working with the bank (including as an individual)

• Professionalism of the managers on SME issues

• Positive reviews and recommendations from colleagues, business partners and acquaintances

• Access to/flexibility of credit programmes for SMEs

• Trusted relationships with the bank/personal contacts

• Interface and convenience of internet banking

How SMEs choose a bank in Russia


25

By integrating the results for various data sets, we found that there is a certain breakdown in communications between SMEs and banks.

This problem is the result of specific infrastructural features of the market that are based on a poor understanding of the typical Russian businessman, particularly the diversity of businessmen depending on both sociodemographic processes in business and the personal characteristics of each respondent.

One way to solve this problem is the creation of an infrastructure centre (a disinterested party) to ensure effective interaction between banks and SMEs and promote smooth operations for SMEs.

Our research reveals the issues on which an infrastructure centre would be of most help to SMEs in Russia:

• Bookkeeping (92 percent)

• Tax optimisation (92 percent)

• Business planning and strategic management (91 percent)

• Security checks (89 percent)

• Marketing (89 percent)

• Financial support (88 percent)

• Legal support (88 percent)

• Banking services (88 percent)

Initial demand for intermediary services between banks and SMEs stands at 33 percent: one in three businessmen would value access to help from external experts through, for example, a central company offering businesses comprehensive support.

Top-three sources of information when choosing a bank:

• Recommendations from own accountant/lawyer (32 percent)

• Information received upon a personal visit to the bank’s office (30 percent)

• Recommendations from friends/business acquaintances (24 percent)

Key defects in online banking resources for SMEs:

• Inadequacy of information on websites (an example from a review of the Sberbank SME webpages: “The information on the website is too vague. We can’t even find out how to open an account and how much it costs”)

• Unstructured information (an example from a review of the SME Bank and Promsvyazbank webpages for SMEs: “There is a lot of information and a lot of pop-ups. Who is going to read it all?”, and on the equivalent Tinkoff Bank pages: “There is a lot of information, you click on a tab and the website takes you somewhere else… Then you have to go back up or down to understand what you’re looking at and where you are on the page”)

• Complicated presentation of information on websites (an example from a review of the pages on settlement and cash services on the VTB 24 website: “It’s very simple to open an account, but I lost a lot of time trying to work out what they were trying to say”)

• A lack of specific information on required documents and service fees

• Being required to leave personal details to receive more detailed information (the majority of respondents do not want to leave their details before making a final decision to work with a given bank)

• A lack of trust in the reliability of the information provided by bank specialists

Sources of information


26

Top M&As* Target company Industry Bidder

companySeller company Deal value

(USD, mln)Additional information

Rosneft Oil Company OAO (19.5% stake)

E&R A consortium led by Qatar Investment Authority

Rosneftegaz OAO 11270 The acquisition provides Glencore with opportunities in terms of infrastructure, logistics and global trading. The proceeds of RUB 710.8bn (EUR 10.4bn) from the disposal of the stake will be used to cover the state budget deficit. The acquisition is in line with QIA’s strategy to generate long-term financial returns and to diversify their portfolio across geographies, sectors and asset classes.

Bashneft ANK OAO (50.08% stake)

E&R Rosneft Oil Company OAO

The Federal Agency for State Property Management

6622 The decision was made by the government in the wake of falling oil prices and to generate revenue, thereby reducing its budget deficit. Rosneft was initially banned by the government to bid for the company as it would not reflect a real privatisation deal, since Rosneft is 69.5% owned by Rosimushchestvo which in turn is wholly owned by the government. In October 2016, Rosneft received approval from the government as well as its own board of directors to take part in the privatisation of Bashneft, since Rosneft and Lukoil were the only potential bidders that could afford to purchase the government’s stake in the company as well as meet the conditions set out by the ministry.

Bashneft ANK OAO (31.2% stake)

E&R Rosneft Oil Company OAO

3112 Rosneft Oil Company OAO has launched a mandatory offer to acquire a 31.2% stake in Bashneft ANK OAO from its minority shareholders.

Arkhangelskge-oldobycha OAO

E&R Otkritie Holding JSC

Lukoil OAO 1450 The transaction will allow Lukoil to effectively monetise the significant shareholder value that it has created over the past five years, by divesting this non-core asset. The transaction is a strategic investment in an attractive asset for Otkritie with potential for further development. The transaction diversifies Otkritie’s range of business interests as the largest privately-owned financial company in Russia. Post deal, Mr. Dmitry Romaev, a member of Otkritie Holding’s Board of Directors, will be responsible for the strategic management of the diamond mining company.

M.Video CB Safmar Financial & Investment Group

Alexander Tynkovan (private investor); Mikhail Tynkovan (private investor); Pavel Breev (private investor)

1206 The transaction will enable M.Video to achieve new and aspiring goals in addition to fresh investment from Safmar, which will help the company reach new levels. The transaction will enable Safmar to develop its business in the non-food retail sector. The experience and expertise of the professional management team of M.Video will benefit Safmar.

(Russian companies)

*Open information about deal value

Source: Merger Market


27


27


28

Global windTop news: China and Russia

21 November 2016Agricultural park in Penza RegionThe total investment volume will amount to CNY 1 bln (RUB 10 bln). The project will be implemented within five years. Vanyan will start the construction of the agricultural park including a drying plant, grainery, feed mill, pig-breeding complex, meat processing plant and other agricultural objects. (Source: TASS)

16 November 2016Xiaomi spoke about plans to open an office in RussiaChinese smartphone manufacturer Xiaomi is going to open an office in Russia. Lei Jun, Xiaomi President, told TASS about it on the sidelines of the Third World Internet Conference. (Source: TASS)

11 November 2016Alibaba will continue investments in its Russian business“Russia is a large and important market for us and for our AliExpress business. Russia is the first among the leading states to perform trans-border purchases from China via the AliExpress platform. We are very active in our work with local partners. And we will continue to be because the Russian people like Chinese goods and we can find very nice goods and offer them to Russian customers.” – Zhan Daniel, CEO of Alibaba Group. (Source: RIA Novosti)

11 November 2016Investors will invest USD 500 mln in Tigre de CristalInvestors of the entertainment complex Tigre de Cristal, the first object opened in the integrated entertainment zone Primorye, will invest over USD 500 mln in the second stage of the project. The Tigre de Cristal entertainment complex

became the first object opened within the territory of the integrated entertainment resort zone Primorye, one of the three gambling zones established in Russia. (Source: www.Primorsky.ru)

10 November 2016China becomes the largest buyer of Russian productsChina has become the main buyer of Russian food products in 2016, according to the data of the Federal Customs Service. From January to September China bought USD 1.13 bln worth of food products in Russia, which is 22.1 percent more than during nine months of the previous year. Thus, China’s share in Russian agricultural exports reached 10.8 percent, according to the Russian Exports Centre. Last year it was 9 percent for the same period. At that time, Turkey was the main importer of Russian foods, its share being 11 percent. Currently, Turkey covers 9.1 percent. (Source: RBC)


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Useful stickers regarding innovations in Russia

Other useful stickers

Deloitte CIS advised S7 Airlines (PJSC Siberia Airlines) on blockchain technology application, and provided legal support to the project.On 20 December, S7 Airlines and Alfa-Bank closed a deal with the use of smart contracts. Currently, many innovative companies are engaged in blockchain technology research and development. However, today we witnessed a practical application of the technology for letter of credit settlements. Only a few similar transactions have been completed globally and this is the first one in Russia.

The Russian Economy Inches Forward: Will That Suffice to Turn the Tide? The latest Russia economic report by the World Bank Group.

Russia rises in global innovations rankingRussia ranked 48th (+8 positions) in the 2016 Global Innovation Index (GII), just ahead of Chile and Costa Rica and immediately after the United Arab Emirates and Turkey.

Sberbank joins international blockchain projectUnder an agreement signed with the Linux Foundation, Sberbank is joining the Hyperledger Project.

“China and Russia: Innovation and Entrepreneurship” analytical report is published by the Skolkovo Foundation and Chinese TusPark.The report includes an analysis of the innovation systems of Russia and China, and also describes the current status of economic cooperation between the two countries. Of particular interest are the results of an information survey conducted among Russian hi-tech startups regarding cooperation with China.

Doing Business 2017: Equal Opportunity for All. Russia rose from 51st to 40th position.

https://www2.deloitte.com/content/dam/Deloitte/ru/Documents/about-deloitte/pressrelease/deloitte-cis-supports-first-russian-blockchain-letter-of-credit-transaction-en.pdf

http://www.worldbank.org/en/country/russia/publication/rer

http://marchmontnews.com/Technology-Innovation/Central-regions/21671-Russia-rises-global-innovations-ranking.html

http://www.ewdn.com/2016/10/03/russias-sberbank-joins-international-blockchain-project/

https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1

http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB17-Report.pdf


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ContactsJoe [email protected]

Marina ElovskayaSenior [email protected]

Lora ZemlyanskayaResearch Centre [email protected]

Dmitriy KasatkinResearch [email protected]

Vladimir SokolovResearch [email protected]

Artyom [email protected]

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Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 224,000 professionals are committed to becoming the standard of excellence.

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