Russian Lighting Market Policy, Capital Flow, Logistics

- Aug 19, 2019-

“Uncertainty” has always been the most worrying factor for companies to enter new markets. Projects such as regulations, capital flows and logistics are absolutely necessary for a foreign company to understand.


In addition to the language barrier (because Russians do not speak English), the Russian lighting market now lists the most worrying elements of the company and further analyzes its impact:


Policy:


The Russian government has adopted a high degree of support for the “green energy” industry. Several key projects include “Strategy 2020”. The Ministry of Economic Development released “Document No. 229” and “Document No. 155” in 2014, all clearly indicating that LED products are “ National or municipal construction must have a certain proportion. In addition, the Russian government has completely banned incandescent lamps since 2014, which will speed up the replacement of LED products. As for the regulations, Russian lighting products mainly follow the international standard IEC and the national standard GOST R. The regulations are mainly derived from the international regulations, and there are no special requirements for products. In terms of policies and regulations, there is no such thing as uncertainty in the Russian market. Instead, there is more support from the government.


Logistics:


In the transportation channel part, in addition to direct access to the Russian market through general orthodox logistics, there are many “consulting companies” in Russia to assist foreign companies or products to distribute goods in Russia, but in fact it is another type of logistics company. . These consultants usually hold orders from sources to assist Russian local channel companies in finding solutions. When consultants find solutions abroad, they make local purchases and ship the products directly back to Russia. It can therefore be seen as another form of dealer.


After the visit, it was also found that many "consulting companies" in the market have a Chinese-funded background. The Russian local office is only a head company, and it is also a special situation in the Russian market.


In summary, products entering Russia will not encounter too high a threshold, mainly to find an order counterpart. As for the import tariffs, since the entry into the WTO in 2012, import tariffs have been declining year by year. After September 2015, LED components will enter the “zero tariff” era, and finished goods tariffs will fall between 12% and 15%.


  Cash flow:


Part of the capital flow is not regulated in the “Entering the Market” section, mainly because the establishment of a company in the local area will have a difference in the minimum capital amount depending on the form of the company.


As for the "finance of funds" part, the Russian government has not clearly defined the "foreign exchange control" clause, that is to say, as long as the local profitable manufacturers in Russia, the funds will be remitted back to the country, there will be no amount control. Although the Russian market seems to be closed, it is actually relatively freer than other Asian countries in terms of funds being dispatched on departure clauses.


Based on the above information, Russia is actually very friendly in the face of foreign companies. There is no restriction on policies, regulations, financial flows and logistics. Therefore, it provides more flexibility for foreign companies to set up companies and establish business models. The point is still how companies can make value, find local partners, and build long-term relationships to increase sales.