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Every year more and more countries buy goods from Moscow: what is the secret of Russian export success

Moscow is one of the most dynamically developing capitals in the world. At the end of 2020, the city entered the ranking of the top 10 megalopolises in Europe, climbed 26 points in the ranking of global financial centers, took the second place among the largest cities in the world in investment promotion strategies, and also got into the top 25 global cities of the future attractive for foreign investors. Industrial production is growing steadily in the city, and more and more foreign countries buy goods from Moscow factories every day. Alexander Prokhorov, head of the Moscow City Investment and Industrial Policy Department, spoke in more detail about the economic successes of the capital.

Alexander Prokhorov. Photo from personal archive

Tell us about the current state of the metropolitan industry. What innovations are there in enterprises?

Moscow industry is not just the most important sector of the capital's economy. This is one of the foundations of the well-being of the city and its inhabitants, therefore its support is a priority of the Moscow government. Tax and property incentives, targeted subsidies and other measures help enterprises to increase capacity, launch new production lines and expand the market for their products. Today, capital companies not only offer their innovative developments to the market, but also introduce new production technologies - at the moment, about 75% of industrial enterprises in the capital are already using various digital solutions and are planning their further development.

This, of course, contributes to an increase in the volume of products: industrial production in Moscow in 2020 increased by 12,2%, while in the country it decreased by 2,6%. Last year, the production of rubber and plastic products doubled, the production of pharmaceuticals increased by 71%, the production of paper and paper products, as well as household chemicals: antiseptics, perfumes and cosmetics increased. This year, positive dynamics persist: in the first half of 2021, the volume of industrial production in Moscow increased by 13,9% compared to the same period last year.

We are doing a lot of work in attracting investors to the city who open new businesses and invest in infrastructure. In recent years, it has been possible to significantly facilitate doing business in Moscow and reduce administrative barriers. Therefore, over 10 years, the volume of investments in fixed assets in the capital has almost tripled. In the first quarter of this year alone, investments exceeded 540 billion rubles, which is almost 17% more than in the same period last year. The interest of foreign companies in the Russian market is also growing. Most often, investments come from European countries: Germany, France, Austria, Finland. Significant volumes of investments are also observed from Asia and the USA.

How do you assess the foreign economic activity of Moscow companies?

The main indicator is, of course, the positive dynamics of non-resource non-energy exports. In the first half of 2021, it increased by 31,5% compared to the same period last year. And over the past two years, Moscow exporters have managed to increase their indicators by one and a half times: from USD 10,82 billion in the first half of 2019 to USD 15,38 billion in the first half of 2021. I would like to add that the capital today is the leader among Russian regions in terms of non-resource non-energy exports of Russia - it accounts for 18,5% of the total volume of Russian NOE.

Of course, the pandemic has become a challenge for Moscow companies, but at the same time we see that, despite the closed borders and other difficulties, both the export itself and the volume of goods supplied abroad are growing. The main trade partners of the capital today are the neighboring countries, the European Union, as well as China, the USA and Japan. Exports to these countries are distinguished by a wide range of goods - from food products, chocolate and ice cream to sophisticated high-tech products of Moscow enterprises.

A significant share of supplies to these countries is occupied by industrial goods: mechanical equipment, electronics and components for them, the automotive industry, products of chemical enterprises (for example, polypropylene and polyethylene), as well as communication equipment. In this list, I would especially like to highlight the export of polyethylene and polypropylene, whose supplies last year increased 5,5 and 3 times, respectively.

And what about Moscow's agricultural exports?

The export of the agro-industrial complex of Moscow manufacturers is represented primarily by the food industry - food products from Moscow are in high demand abroad. These are, first of all, the capital's chocolate and ice cream - in 2020, their deliveries amounted to USD 120 million. These products, by the way, are in demand all over the world, from China to North America. Russian experts explain this interest with high-quality ingredients and a product known abroad.

If we talk about the export of the food industry in general, then the leaders in terms of volume are flour confectionery, meat and dairy products - at the end of the last year, these industries showed an increase of 17,6% and 19%, respectively. Although Belarus, Kazakhstan, Turkey and China became the main importers of the capital's agricultural products, the capital's agricultural products are in demand in America as well. For example, shipments to the United States, Canada and Mexico last year amounted to $ 49,85 million, which is 7,5% higher than in 2019.

Alexander Prokhorov. Photo from personal archive

What are the main barriers Moscow companies face when entering foreign markets? How do you help them overcome them?

There are a lot of barriers to entering foreign markets, and this is not hearsay known to many Moscow companies. In addition to the obvious ones related to logistics and documentation, there are also hidden barriers associated with the cultural characteristics of countries, especially in the export of food products.

To help businesses overcome such barriers, we have the Mosprom Export Support and Development Center. Experts analyze target regions for product demand, look for foreign trade partners and verify counterparties, help with the adaptation of marketing materials for the subsequent presentation of the product to the counterparty. Already at the stage of applying for support measures to the Mosprom Center, specialists try to assess the export potential of the company, to understand exactly where and with what it can be in demand. After the promising market for the company is determined, the stage of searching for foreign buyers interested in the capital's products begins. At the final stage, Mosprom verifies buyers, organizes negotiations between them and Moscow companies.

The COVID-19 pandemic has severely disrupted the global economy, but Moscow has managed to maintain its position in many respects. How can you explain this?

As for export indicators, this is primarily the merit of the companies themselves, which quickly adapted to the new realities. But I want to note that the Moscow government did not abandon exporters in a difficult situation - we tried to provide them with maximum assistance, including by providing non-financial support. In particular, Moscow suppliers have received and continue to receive assistance in entering foreign markets and searching for potential customers from the Mosprom Export Support Center. In 2020, our specialists organized 20 online business missions for metropolitan companies to the countries of the Middle East, Europe, North Africa, Latin America and the CIS.

The growth in investment in Moscow even during a pandemic is not accidental, because we offer many options for cooperation with the city to both Russian and foreign investors, we help to lease land to locate production without bidding or localize on an existing site, we give various tax incentives - all this We have been doing it for a long time, and in times of crisis our support mechanisms turned out to be very useful.

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