Having spent several years sizing up the Russian market, US auction web site eBay is to roll out a Russian-language version that will enable users to buy and sell goods in rubles. Users will be able to pay using credit cards linked to PayPal accounts when the system becomes operational next month, eBay CEO John Donahoe announced during a visit to Moscow this week as part of a US high-tech delegation.

“Opening a Russian-language site for e-commerce is a step in the direction” of creating ebay.ru, Donahoe told reporters in Moscow on Thursday, a day after holding talks with Kremlin officials. Donahoe said that the value of Russia’s e-commerce market could soon quadruple to $20 billion a year.

 The new European platform will focus only on fixed-price goods rather than auctions, as eBay looks to change the format of the company into a more conventional online store. Analysts predicted success for eBay’s move, given the undeveloped state of the e-commerce market in Russia. “eBay has a range of advantages that would help it [take market share],” said Boris Kim, chairman on the Committee on Payment systems of the National Association of E-Commerce.

 eBay’s will be competing against an established Russian rival: online auction web site Molotok.ru, which had a total of 30 million users in 2009. Igor Karpachyov, Molotok.ru’s CEO, was sanguine, saying eBay’s entry into the market was an indication of “good prospects” for the sector. “The appearance of a new international player is always useful for the market as it boosts its development,” Karpachyov said.

The Russian stock market was the most attractive of the BRIC countries in the first half of January.

According to Emerging Portfolio Fund Research, only during the last week, $245m was invested in overseas funds in Russia or the CIS - the highest amount since last autumn and the second-highest since May 2008, when Russian stock indexes reached a historical maximum.

Over the same period, $107m was invested in the Indian stock market, and $37m in Brazil's. $290m left the Chinese stock market.

A source at UFG Wealth Management commented that Russia is benefiting from its relatively low level of external debt and the healthy state of internal finance, compared to other BRIC nations.

Foreign investment in St. Petersburg’s regional economy in the first quarter of 2009 reached $538 million, a threefold leap against the same period last year, according to data released by the regional administration’s press service. The region is proving especially popular with companies from the United States, which have invested approximately $400 million, or 74% of the total. A further $48 million has come from Finland, $34 million from Austria, and $25 million from the Netherlands. Analysts suggest that the rise mirrors completion of investment projects having being started 2-3 years earlier and expect a slight slowdown for the next two years. “Foreign investors still express their interest in Russian economy,” says Marina Chernobrovkina, CEO of American Chamber of Commerce in St-Petersburg, “and now they are watching the anti-crisis actions and investors supporting programs being implemented by the Federal government”. (By the materials of www.kommersant.ru)

According to Standard & Poor’s , Moody's and Fitch's ratings , St. Petersburg ranks among Russia’s best industrially developed regions with a high diversification potential.

Hence, the investment in St. Petersburg during 2008 boasts to have increased 4.2% in comparison with 2007. Meantime the FDI share has grown from 11.8% to 18.4%. “The volume proves that foreign investors are interested in manufacturing products and rendering services in St. Petersburg. Their interest in tangible assets, in its turn, demonstrates that they have long-term plans to do business in the city,” says Sergey Fiveysky, First Deputy Chair of St. Petersburg Committee for Economic Development, Industrial Policy and Trade.

The European Tech Tour Association (ETT), an independent organization committed to the development of emerging technology companies in Europe, announced its plans to organize the second Tech Tour visit to the Russian high tech sector.

The Russian IT industry attracts foreign investments despite the turmoil in the financial markets since it is one the most promising sectors with the annual growth rate of 25%.

The first Tech Tour in Russia resulted in investments into the domestic tech Yandex, Parallels, Acronis and SJ Labs. And as mentioned in Tech Tour announcement, the past few years brought to light a number of technology start-ups in application development, internet services and fables design which urge for the new visit.

This time the projects will be selected in areas of new materials and processes, electronics equipment, software applications, voice and data transmission, value-added services and wireless solutions.

A new technology joint venture was planted in St.Petersburg last week. Foxconn Technology Group teamed up with Hewlett-Packard to build the computer factory, which will be producing personal computers under HP brand. Foxconn Technology is the provider of joint-design, joint-development, manufacturing, assembly and after-sales services to global Computer, Communication and Consumer-electronics leaders.

The spiraling demand for high-tech products has been a trend in the Russian ICT market for the last few years and two technology manufacturers are eager to capitalize on this demand.

“This place will become a huge techno-park, producing high-tech electronics and computers to satisfy growing industrial, scientific, and educational needs throughout Russia…”

Valentina Matviyenko, St. Petersburg Governor

The venture to build a $50 million technology plant on the outskirts of St. Petersburg is supported by the government of St.Petersburg. The city authorities which has proved its interest towards making information technology an inherent part of the city life. Last year their efforts brought two MNCs' technology centers to St.Petersburg - Hewlett-Packard Labs and EMC.

In March the international rating agency Standard & Poor's revised Russia's rating outlook to Positive (A-) due to the continuous growth. The upgrade reflects the agency's expectations of the future progress of Russia, forecasted for the budget and external reserves of the country, which have recently revealed rapid growth.

Russia's GDP grew by 8,1% in 2007 according to the estimates from the Ministry of Economic Development and Trade. Last year has also seen the surge in investments which soared by 21% in comparison to 2006. The increase in capital flows and the growing purchasing power are among other distinctive trends in the Russian economy.

According to the analytical unit of Nordea, Denmark's largest bank, Russia's GDP is estimated to grow 7.5 % in 2007 and keep it stable in 2008. The latest Economic Outlook, published by Nordea analysts this autumn, the current year is claimed to be among the most prosperous and promising in terms of GDP growth in Russia.

The outlook is bright and risks to our forecasts are mainly on the upside. 2007 is likely to be the strongest year of growth since 2000, and 2008 will probably not lag very much behind either.

The analysts point out to the outright investment boom which in their opinion reacts to the overall boom in the economy. Investment was boosted by the strong capital inflow in H1 2007. FDI reached its highest peak in H1 2007 with a little less than USD 25bn gross. Other distinctive trends in the Russian economy are the increase in capital flows and the ever growing purchasing power.

 

Late July has seen Frost and Sullivan press-release their stance on the future of Russian IT outsourcing exports and Russian ICT Industry - The Russian information and communications technology (ICT) is going from strength to strength on the back of robust economic growth, greater political stability, expanding consumer base, and increasing foreign investments.

The forecast reads that the Russian ICT Industry has especially pronounced opportunities in the fields of offshore software development, broadband technologies and equipment, managed network security, IP telephony, packaged software, communication value-added services (VAS), 3G networks, as well as in fixed line telephony. 

Among the ICT-supporting strengths of the country, Frost and Sullivan drew attention to the usual: strong governmental support in the form the E-Government program and special economic zones (SEZs) and techno-parks, Russia's vast pool of human resources and low labor costs, ‘reinforced' by a competent education system, as well as increasing amount of venture capital coming to Russia, and the constantly rising national spending in IT.

To top it all off, Russia continues to be an attractive market for the world and has plans to turn into one of top three global outsourcing destinations by 2010.

EMC, the world’s leading provider of products (like Documentum), services, and solutions for information management and storage, has announced the opening of a new research and development (R&D) center in St. Petersburg, Russia. With this, EMC follows examples of Alcatel, Hewlett-Packard, Motorola, Sun Microsystems and Intel, the companies already benefiting from St. Petersburg software engineering talent.

St. Petersburg share in Russian IT exports volume is estimated to be 30% and the city presents a lucrative location for European and American enterprises willing to access the vast talent pool and benefit the strong cost advantage. The local government has been positive in assisting the IT companies in the region and strives to cooperate with the IT community in the city.