Business: Leading U.S.- Russian Engagement

Is there anything common between Rassvet [1] township in Tula Region (Russia) and Houston city, Texas (USA)? In fact not much, but if you would look closer, you could have found that Rassvet was a home for a JSC "Krasnobor" a poultry farm that came to existence in 2000 due to the direct U.S. investment. At present the farm produces stable dividends and its products are well known far beyond the region borders.

 

How stories like this become successful, why it is worth to invest in Russia and how to make this possible, these and other vital questions were covered during U.S.- Russia Business Council (USRBC) Annual Meeting on October 28-30, 2013 at Houston.

The more than 200 business and government leaders from U.S. and Russia who participated in the meeting arrived in Houston with the akin task: review the crucial role business is playing and will continue to play in U.S.-Russia relations through increased trade and investment.

Houston was not an accidental choice for the 21st USRBC Annual Meeting venue. Indeed, over 400 companies located in Houston are doing business in Russia, and number of Russian companies having operations in Houston gradually grows. As the energy hub of the world, Houston has become a natural venue for Russian energy companies operations. However, since Houston is also home to the NASA Johnson’s Space Center, the Port of Houston, the Houston George Bush Intercontinental Airport, Houston’s appeal goes beyond energy.

Throughout the meeting in eight sessions and numerous private conversations, participants discussed the various aspects of U.S. – Russian business engagement and importance of strategic agility. The discussion included but were not limited to the evolving energy landscape and implications for continued U.S.-Russia cooperation, Russia's global integration including the status of its implementation of its WTO commitments, the workings of the Eurasian Economic Commission, infrastructure development, and prospects for collaboration in innovation and healthcare.

 

The meeting takeaway: Entrepreneur leaders in both countries should nurture the capacity to take calculated risks when doing so might produce meaningful profits and worthwhile incentives.

 

Business engagement involves tackling immediate problems and long-term challenges at the same time. In the session on Russia’s Investment Brand Denis Tikhonov, Deputy Chairman of Tula Region Government, described how, confronted by comparatively remoteness from the capital of the country, his government had to attract investors while also taking steps that would improve the regions’ economy competitiveness over time.

 

Aiming for successful business engagement goes hand in hand with the never-ending mission to achieve sustainability and competitiveness. This was one of the messages of a keynote speech by Sergey Belyakov, Deputy Minister of Economic Development of the Russian Federation.

 

In particular, Mr. Belyakov emphasized that “Russia’s rising position in The World Bank rating proves that we are moving in the right direction, and we expect more positive changes this year”. Not only Deputy Minister, but it seems, everyone at the meeting was encouraged by Russia's upgrade in the latest “Doing Business” rating [2], published by World Bank in the end of October 2013.

 

                                                                                                                                                                 The meeting takeaway: Countries must restructure at home so they can cooperate with each other and compete with the world.

 

The Meeting became a venue for signing of the two partnership agreements. The first partnership deal was signed between the Houston Technology Center and Skolkovo Technopark. It will provide for an exchange of team-members from start-ups across the energy, life sciences, space, and IT sectors, as well as fundraising and marketing support for start-up initiatives.

Another agreement brought together the U.S.–Russia Business Council and the Russian Compliance Alliance, a newly-launched initiative in Russia that provides global corporations and their local partners with a framework to combat "supply chain risk." The council will lend support for a voluntary enforcement system for private companies in the alliance, through educational and promotional efforts with its member companies, a statement from the council said.                                                                                                                                                                  U.S. Ambassdor to Russia Michael McFaul and Russian Ambassador to the U.S. Sergey I.Kislyak made key notes and supported the key message of the meeting - the business engagement is butter to the bread of bilateral relations of the two superpowers.

 

Ambassador Michael McFaul and Ambassador Sergey I. Kislyak with the winner arts of the Fort Ross Foundation's International Children's Art Contest at the conclusion of the 1st day of the USRBC Annual Meeting.  

U.S. direct investment in Russia stands at approximately $10 billion, and Russian direct investment in the United States has reached close to $7.5 billion. Among the successful business projects are PepsiCo’ acquisition of Russian food and beverage producer Wimm-Bill-Dann for $3.8 billion, as well as the agreement between Rosneft public corporation and ExxonMobil to explore the Black Sea and Arctic shelves proving for $1 billion of investments into drilling. Russian Technologies State Corporation stroke $3.7 billion deal with Boeing on purchase of 50 airplanes. VSMPO-Avisma continues to supply Russian titanium for aircraft production.

 

Russian business, in its turn, actively develops the U.S.market. Severstal Company has invested $400 million in a factory that produces automobile steel in Michigan. TMK has doubled the production output of a pipe plant in Ohio and Texas. The Novolipetsk Metallurgical Complex acquired Steel Invest and Finance for $600 million, JSC Atomredmetzoloto purchased Uranium One’s uranium mines in Wyoming, Mail.ru e-mail service provider bought ICQ instant messaging service, while Mikhail Prokhorov acquired the New Jersey Nets basketball team. Russian Digital Sky Technologies Corporation accumulated 10% of shares of Facebook. These examples prove the fact that investment cooperation between the two countries grows stronger[3].

 

The 21st U.S.-Russia Business Council Annual Meeting’s theme perfectly captured the tenor of the United States-Russian relations: despite the geopolitical turbulences business does keep going on.