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Russia ICT ConnectorMatti MäkiExpriencies and possibilities for Finnish companies: 

Russia ICT Connector Matti Mäki Expriencies and possibilities for Finnish companies

Market Trends in Russia: 

Market Trends in Russia 1) Mobile networks growth 2) Possibilities to locate electronics production improve 3) Russian home market in growth phase 4) Software production & companies evolution

Russian Cellular Market Watch  September 2004 : 

Russian Cellular Market Watch September 2004 Sources: J’son & Partners mobile penetration in Russia reached 41,1% with 59,25 million mobile users Moscow Licensed Area: 87,9% Additions: Gross additions in September 2004 accounted for 3,05 million subscribers as compared with August 2004. The overall number of subscribers increased with 5,4%. Top 5 Cellular Operators Operator Total Subs YTD Growth (%) Moscow Subs as of May 31 1. MTS 20.842.000 55% 6.738.000 2. VimpelCom 19.516.000 73% 6.620.000 3. MegaFon 11.459.353 81% 1.448.832 4. Uralsvyazinform * 1.832.200 53% 5. SMARTS 1.590.000 39% *Consolidated all regions and standards (GSM, TDMA/AMPS, NMT-450, IS-95)

Comparision in production location: 

Comparision in production location Estonia: Electronics Production (Source: Invest in Estonia)

Why not in Russia?: 

Why not in Russia? Foreign companies have contributed considerably to the expansion of the electronics industry. The know-how and technology of foreign companies -combined with the cost-effective and skilled Estonian labour force - has been a winning combination making them the fastest growing companies within the industry. (Invest in Estonia)

Labour cost comparision: 

Labour cost comparision

Amount of production companies: 

Amount of production companies About 250 companies with production located in Estonia 2 Finnish companies located in Russia with production: PKC Group & Elcoteq Elcoteq Russia expected to grow from 200 persons to 1500 persons (year 2006) Elcoteq Estonia is growing to 3700 persons PKC expected to grow from 730 to over 1000 persons this year EU – a common base for procedures in Estonia & Finland

Reasons for a low number: 

Reasons for a low number For smaler companies difficulties with customs and bureaucracy Customs ”Green corridor” in Russia expected to help, but only selected companies Russian Custom tarif for materials is higher than ready product -> products can not be sold in Russia, they have to be exported

Russian home market in growth phase: 

Russian home market in growth phase Source: Infobusiness (Russia), ordered by Ministry of trade and economical development Value of SW market varies between 300 – 1500 mUSD. Infobusiness believes in 590 mUSD in year 2002

Split in SW segments: 

Split in SW segments Applications 62 %, Infrastructure SW 21 %, Group ware 12 %, Middle ware 4 %, Development tools 1%

SW Export from Russia: 

SW Export from Russia Out of 590 mUSD export is 150 mUSD in 2003 At the same time Market Visio: year 2001 export from Russia: 213 mUSD Explanation given is rather high amount of grey export

Software export from Russia: 

Software export from Russia

One more official view: 

One more official view Russia's information technology market could grow to as much as $40 billion by 2010 almost six times the number for 2003, director of the Communications Ministry's information community strategy department Oleg Byakhov (State Council's IT development working group) IT exports could reach $10 billion by that time, against the $500 million for 2003 and forecast $1 billion for 2004 (Byakhov)

Issues with outsourcing SW: 

Issues with outsourcing SW Data base on Russian SW companies Different level of development: 400 companies out of 500 are less than 100 persons More than half of companies are younger than 10 years There is abt. 100 companies with foreign clients (more than 50 % cashflow)

A view for future: 

A view for future