Despite economic turbulence and political tensions, Russia and the CIS area will continue to be an important growth market in the future. Driven by the enormous wealth of natural resources in the region, companies with a sustainable and carefully tailored business model are able to profit from a Russian domestic market of 144m people (CIS: 236 Mio). Furthermore, the region is characterized by an increasingly upwardly mobile and consumption-oriented middle-class and a considerable need for modernization in industry, as well as in large state projects and government development programs.
Despite the primacy of politics over business (often over-emphasized in the media), Russia’s membership of the WTO (2012), a high level of involvement in world trade and the increasing economic integration of the Eurasian Economic Union provide a stable business environment – in particular for foreign companies. The last few years have seen a considerable improvement in the World Bank’s “Doing Business” index. Furthermore, increased competition between the individual regions of the country has led to a marked improvement in investment conditions.
As diversification is proceeding slowly, the energy and mining sectors remain the deciding factors for economic growth in the region, resulting in economic volatility. While in boom times above-average margins can be achieved, a sustainable and long-term business model and careful weighing of opportunities and risks are among the decisive factors for success when operating in the market.
EAC has been active in Russia and the CIS since the mid-’90s and since 2013 has had its own office in Moscow to handle the region. EAC’s reference list includes major global players and leading Mittelstand companies (‘hidden champions’) that have been successfully advised in the fields of Strategy, M&A, and Operational Excellence.
Market, customer and competition analyses to derive strategic options, location analyses, evaluation of the optimum level of localization as well as the development of reliable supplier networks, in addition to business planning and feasibility studies, are just some of the many projects EAC Russia and CIS has carried out.
In the field of M&A, EAC provides support in the region with the identification of suitable candidates and downstream due-diligence processes as well as with project direction. In particular, corporate acquisition has played an increasingly important role as a strategic option for market entry and expanding or defending a position in the Russian market.
A further focus is the EAC Operational Excellence Practice. Particularly in times when growth is leveling off and there is economic volatility, strategic and operational adjustments to the business model are necessary. Here EAC provides support in the areas of holistic restructuring, re-organization, cost optimization and shared-service concepts.