Distributors see growth opportunities for Chemical Trade with Russia
The European Association of Chemical Distributors (Fecc) and EuroCommerce welcomed over forty participants to a high-level meeting on Chemical Trade with Russia and beyond, held in Brussels on 14 November. The meeting, jointly organised by the Brussels-based associations, presented an overview of the current and future business opportunities in Russia and the surrounding region, relevant to the chemicals industry and trade.
Speakers included experts on the Russian market from the European Commission, the Association of European Businesses (AEB) in the Russian Federation and ICB Deutschland. Leading chemical distributors and manufacturers also shared their experience on the Eastern markets with the participants.
The meeting gave an overview of business opportunities in Russia and the status of EU - Russia trade relations. The speakers elaborated on trade and investment flows, the state of bilateral relations and the status of the Customs Union. The size of the Russian market, the strong domestic demand and the projected growth make Russia an attractive destination for chemicals business. Major Russian chemical industry segments include basic inorganic chemicals and fertilizers as compared to the EU where petrochemicals and plastics dominate chemicals production. These segments along with polymers, specialties and consumer chemicals, offer new trading opportunities for EU companies. To take advantage of these opportunities, investing in local know how and building networks is crucial.
Russia offers good prospects for distributors, but at the same time entering this market poses some challenges. Companies must be prepared to face growing competition, increased costs, mergers and acquisitions in the downstream sector and regulatory challenges. In recent years, a new wave of infrastructure investment and industrialisation offers access to a large unsaturated market. Russia's location as the only large BRIC (Brazil, Russia, India & China) country next to the EU could, in turn, make reaching other areas such as Belarus and Kazakhstan easier.
"The growth outlook for Russia is positive, offering opportunities to further develop trade relations between Russia and the EU. The ambitious removal of trade barriers is the key to exploiting this potential fully," said Christian Verschueren, EuroCommerce Director-General.
Russia's attractiveness as an investment and business destination has doubled as a result of the continued modernisation and development of the economy. Although investors remain cautious, given the global economic crisis, investment projects have begun to flow again. Industrial sectors that have attracted investment include the manufacturing of mineral products, the food industry, and the chemicals, logistics and equipment sectors. The Russian market is expected to grow further, due to its vast natural resources, skilled workforce, growing consumer base and high demand for updated equipment.
The growing end user application industries such as automotive, oil and gas, personal care and construction are expected to increase the demand for specialty chemicals in the country. This increased demand is expected to outgrow domestic production, allowing European chemical distributors the opportunity to fulfil this demand.
"Markets such as Russia, play an increasingly important role for the industry and offer various opportunities to increase business potential for chemical distributors. It is important for distributors to tailor and customise their product portfolios to meet the requirements of the Russian and regional market, which have potentially different consumer needs and preferences, competitive dynamics, and economic returns," added Uta Jensen-Korte, Fecc Director-General.