Despite virus and sanctions (daily newspaper Junge Welt)

German companies are also benefiting from the modernization of Russian agriculture. Here the Claas factory in Krasnodar (May 25, 2020)

German companies operating in Russia are largely satisfied with the state of their business there. This is the result of a survey published in December that the German Chamber of Foreign Trade carried out in Moscow among its 1,000 member companies. Accordingly, 52 percent described their Russia business as “satisfactory”, 28 percent as “good” and nine percent as “very good”. 29 percent of the companies surveyed said they were planning further investments in Russia in the near future.

The Chamber of Commerce referred to three cases separately. The agricultural machinery manufacturer Claas is expanding its production in Krasnodar in southern Russia, the building materials manufacturer Knauf is doing the same in the St. Petersburg area, and the retailer Globus opened a new logistics center near Moscow in September – with Federal Economics Minister Peter Altmaier (CDU) and his Russian colleague Denis Manturow as guests of honor.

The managing director of the Foreign Trade Chamber in Moscow, Rainer Seele, spoke of a “consumer-friendly” population that inspires the expectations of German companies. Specifically, the head of the Russian BMW branch, Stefan Teuchert, reported that his company’s sales in the so-called premium segment had even increased significantly despite the corona pandemic. Luxurious vehicles represented a capital investment for the customers of the Munich group, especially in times of crisis. Of course, the BMW manager complained that sales in the so-called mass segment were poor. Therefore, the group has given up plans for its own production facility in Russia. This is only worthwhile if 50,000 cars are sold per year, and BMW does not currently reach this number.

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In total, German companies invested 1.3 billion euros in Russia in the first three quarters of this year, wrote the Chamber of Commerce in Moscow, citing data from the Bundesbank – a “surprising” good figure that has already offset the slump in the second quarter. To a large extent, the growth in direct investment in Russia is a logical consequence of the crisis in the country. To the extent that the ruble loses value against the US dollar and the euro – and at around 90 rubles per euro, the current rate is historically at a long-term low – imports become more expensive, while productions that are also in rubles calculated fixed and wage costs are processed, become cheaper and re-exported products from Russia insofar as they are even winners in devaluation.

This can be seen, for example, in the Claas combine harvester investment in the southern Russian grain belt in the foothills of the Caucasus. It was a reaction to the fact that Russia had used the years of sanctions to modernize its own agriculture and to keep foreign competitors at bay with its own sanctions. Success proves the government right: Russia is now exporting grain; Gone are the days when the country had to source wheat from the United States or Canada to feed its people. And a Westphalian agricultural machinery manufacturer benefits from it.

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