Northeastern Italy Can Expand Trade with Russian Federation

Oct 11, 2021

Positive export forecasts and lower Ruble makes Russian market attractive to Italian SMEs

By Editorial Office

 

Italian exports to the Russian Federation have bounced back in the wake of the pandemic but, as forecasts show, there’s still plenty of room for growth. With the value of the ruble at its current level, even small and medium-sized companies can find excellent opportunities; however, they may need to look at longer-term scenarios and innovative approaches to make the most of this challenging market.

According to a recent report issued by SACE (an Italian export credit agency), exports from Italy to Russia still have room to expand. Topping the growth forecast list are exports of mechanical engineering goods (forecast +18.7%), metal products (+21.9%) and basic chemicals (+13.4%). In addition, thanks to lower costs due to the weakness of the ruble, this is the best time for Italian companies to invest in a physical location in Russia.

What’s the best way for small and medium-sized Italian companies to seize the opportunities offered by this market? What tools do the Regions offer?

The most recent public conference held by the Italian-Russian Chamber of Commerce, in Milan on 21 September 2021, addressed this topic: “From exports to joint ventures: the importance of collaboration between Italian and Russian companies and regions”.

During this event Massimiliano Fedriga, President of the Autonomous Region of Friuli-Venezia and of the Conference of Regions and Autonomous Provinces, expressed his opinion about the strategic importance of economic collaboration. He highlighted the strong presence of Friuli-based companies in Russia and the very favorable data in the latest SACE Report on export prospects – which puts Russia among the “Gold Medal 2021” markets together with the USA and Germany.

He also emphasized the growing collaboration between the chamber of commerce systems of the two countries, the commitment to joint action by the Italian Regions, and the need for a non-ideological approach to the question of environmental, social, and economic sustainability.

But, he also raised the question of raw materials: “Procurement is a problem for Italy and for the world. The risk is that, with the ongoing international speculation, our respective companies will find themselves damaged by the shortages and price-rises that have gone beyond all market logic. So, countries need to take joint action and find common ground to make comparisons and stem this type of phenomena.”

In the first half of 2021, the Russian share of Friuli-Venezia Giulia (FVG) exports was up by 13.2% compared to 2019. Mechanical engineering items and furniture are the main categories: in the first six months of 2021, industrial machines in particular accounted for 42.1% and furniture for 19.2%.

Russia’s capital city is also the country’s economic and decision-making hub, and the regions interested in collaborating with Italy are located within a 2000–3000 km radius of Friuli-Venezia Giulia. Therefore, within a range that makes frequent travel possible. It’s difficult for SMEs to fully service and keep track of such a complex market (and one that has changed so drastically compared to just a few years ago) when they often have only one person who visits more or less frequently.

Friuli Venezia Giulia makes use of a platform, the Sportello Unico Sprint, which has had its own headquarters in Moscow for twenty years: an integrator especially geared towards SMEs that intend to increase their participation in the Russian market.

The FVG Antenna of the Sprint Office in Russia, managed by the financial company Finest S.p.A., is a single point of contact that connects the various entities working to support the internationalization of local businesses: the Autonomous Region of Friuli Venezia Giulia, the Ministry of Economic Development, the ICE-Agency, SACE, SIMEST, Finest, Friulia, Technological Hub of Pordenone and all of the associated the Chambers of Commerce.

“Russia is an interesting market where you can make good deals, even though margins are generally lower due to the weakness of the ruble. However, in order to grow, we need to take action with the long term in mind,” observes Finest president Alessandro Minon. “It is no longer possible to think that export with spot sales will work as it has in the past: in Russia it is increasingly necessary to be present with at least a lean commercial structure on site, and Russian personnel, which directly follows customers for both commercial development and technical assistance.”

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