Export support in 2018
The increase in non-resource non-energy exports in Russia in 2018 indicates a general upward trend and positive dynamics in various industries and areas.
In 2018, NRE reached a new historical maximum of $150.6 billion. The volumes of supply of the most products showed a positive trend. Food and timber products exports is growing the second consecutive year.
While providing a wide range of financial and non-financial services as a single institution, the REC Group continues to supplement and improve the market offers to maximize the potential of Russian exports, which, of course, contributes a lot to the development of domestic export. According to the results of 2018, the REC Group managed both to strengthen its position as a key export development institution and demonstrate positive financial performance.
The total exports secured by the measures of REC Group provided within the framework of a single institution amounted to $18.8 billion, which exceeded the planned figures by 17% and by 30% as compared to 2017. The demand for the services provided by the REC Group to Russian exporters continues to grow. The number of exporters who received support in 2018 amounted to 164% of the target value, having almost twice exceeded the same indicator for the past year.
According to the results of 2018, 567 exporters from various industries received financial, in particular, insurance, credit and guarantee support from the REC Group.
Engineering, metallurgy, and chemical products were the main goods exported with the financial support measures.
Non-financial services mainly included online and educational services. Moreover, the REC Group successfully acted as an agent of the Government of the Russian Federation in the allocation of the budget funds. In 2018, a large number of Russian export-oriented companies participated in congresses, exhibitions and business missions held globally at the expense of the allocated subsidy.
According to the results of 2018, export support measures allowed to market various goods on all continents.
SME exporters support
Small and medium-sized enterprises are very important for national economic growth. The REC Group pays great attention to the support measures provided to SME exporters.
In 2018, SMEs accounted for 72% of the total number of companies who enjoyed export support measures.
SME exporters demonstrated high demand for online services, educational services, agent support services (participation in exhibitions and intellectual property rights registration), partner search services, Analytical Market Center research services.
The key export destinations were
- 45% – Asia
- 29% – the CIS countries
- 10% – Latin America
- 5% – Western and Eastern Europe
The volume of SME export, secured by the REC Group’s support measures (provided within the framework of a single institution), reached $713.9 million in 2018.
In 2018, it was decided to expand the product line for export-oriented SMEs in order to simplify their access to the financial support instruments.
Insurance support (EXIAR JSC)
Russian banks demonstrated a keen interest in export factoring insurance in 2018
EXIAR JSC (hereinafter the “Agency”) offers specialized insurance products that meet the specifics and needs of the participants of export activities. The agency cooperates with companies of various sizes and business profiles, including SMEs, major corporations, state-supported companies.
By the end of 2018, EXIAR’s product line included a wide range of products for Russian exporters, investors, banks and financial organizations. According to the results 2018, the most popular products were short-term receivables insurance and buyer’s credit insurance.
In 2018, the total volume of insurance support provided by EXIAR JSC amounted to $17.1 bln, which was 14% higher than the target value for the year
Russian banks demonstrated a keen interest in export factoring insurance in 2018. Several new credit organizations requested for export factoring insurance in 2018. Insurance contracts were concluded with the agents for the new calendar year. The first export factoring insurance contract was concluded with EXIMBANK OF RUSSIA.
EXIAR JSC pays great attention to the quality of services provided and customer satisfaction. The cumulative customer satisfaction index of 84 points remained high.
Support was provided to 348 exporters from 55 constituent entities of the Russian Federation, as well as 16 Russian trading houses abroad
The geography of exporters supported by the Agency speaks for wide territorial and sectoral coverage. Support was provided to 348 exporters from 55 constituent entities of the Russian Federation, as well as 16 Russian trading houses abroad, 40% of which were represented by SMEs. The Agency helped to export various goods and services, including civil aircraft, railway machines, gas and oil production equipment, agricultural products and other goods to almost all continents.
Support of export-oriented SMEs swill remains the preferred area of activities for the Agency in 2019. The Agency has been tasked with developing a new insurance product called “Portfolio Credit Insurance”, which main parameters will be outlined jointly with the potential banks-insurers by the end of 2019.
Interaction with foreign ECAs within international platforms
Active member of 4 international cooperation platforms:
- ▪ The Berne Union;
- ▪ The Paris Club;
- ▪ The BRIGS ECAs Forum;
- ▪ The EAEC ECAs Forum.
The REC Group actively cooperates with foreign partners, especially by participating in various international platforms, which serve for multilateral experience and business practices sharing.
The Berne Union is among these platforms. The Union is the oldest international non-profit association representing the interests of companies specializing in credit and investment insurance. It has been established in 1934 and currently includes 84 members and 5 observers. The main mission of the Union is to provide active support to participants in international trade through the harmonization and implementation of the best business practices in the credit and investment insurance market.
From 2012, EXIAR JSC is a member of the Prague Club that unites "young" ECAs. The Club discusses the general issues related to the development of the product lines, current business trends, economic and geopolitical landscape, and specialized issues related to risk management, credit analysis and claim settlement.
On January 1, 2018, EXIAR JSC has been included in the committees whose members specialize in providing insurance support to short-term, medium-term and long-term foreign trade projects. This expansion is a result of the stable growth of the Agency’s key performance indicators and the accumulation of relevant business competencies. EXIAR’s membership in the Union puts it on a par with the world's leading export support institutions and opens up new opportunities for participation in discussions and agenda formulation. Such regular meetings allow to get quick access to information on the main market trends, as well as lay the foundations for peer-to-peer interaction and implementation of joint export projects.
Besides, the Agency actively develops interactions with other ECAs behind the scene. Within the framework of the Memorandum of Understanding and Cooperation between the BRICS ECAs signed in Fortaleza (Brazil), EXIAR proposed to create a new interaction format called the BRICS ECAs forum . The forum provides for annual meetings both at the level of ECA executives and at the expert level. Besides, it allows to discuss urgent tasks and issues throughout the year, including joint promising projects, claim settlement issues and other technical aspects of export credit insurance.
EXIAR JSC continues to promote the official export support in the Eurasian space. The ECAs of Russia, Kazakhstan, Belarus and Armenia reached and executed the agreement on the creation of a platform for interaction based on quadripartite Memorandum of Cooperation. The platform implies the organization of regular meetings at the level of management and experts, which will allow national ECAs to harmonize their product lines and export support instruments. Ultimately, the cooperation within the EAEU ECAs platform shall ensure the growth of cooperation projects within the framework of the Eurasian Economic Union.
In addition to multilateral cooperation formats, EXIAR regularly organizes bilateral seminars both to share the experience with the leading ECAs and commercial insurers and present a joint product offer to national exporters.
Credit support (EXIMBANK OF RUSSIA)
EXIMBANK OF RUSSIA (hereinafter the “Bank”), being an important element of the REC Group, provides Russian exporters with banking support instruments, including lending, bond issue participation, guarantee provision, documentary operations. The Bank’s services are available to the Russian exporters of goods, works or services, Russian manufacturers who export products through their foreign trade houses or agents, foreign buyers of Russian goods, foreign financial institutions to finance contracts for the purchase of Russian goods (works or services).
- 2,061 bln rubles of financing (lending, investment in exporter bonds, guarantee support) provided in 2018.
- 2061 bln rubles of net profit. It is 43 % as high as that of the target value.
In 2018, the Bank’s product line included a set of financial instruments highly sought by the participants of export transactions. Those instruments included new guarantee and support products and export factoring.
According to the results of 2018, the Bank demonstrated a positive growth of the volume of export support and improved financial performance indicators in a number of areas:
- The volume of financing (lending, investment in exporter bonds, guarantee support) within export support for the year of 2018 amounted to 81.1 billion rubles, significantly exceeding both the target indicators and the results of the previous year.
- The Bank’s net profit demonstrates positive dynamics over the past years. According to the results of 2018, the net profit amounted to 2,061 million rubles, exceeding the target value by 43%.
- The Bank expanded its post-export financing products. It approved a new product called “Non-recourse export factoring with EXIAR JSC coverage”. Thanks to EXIAR JSC participation, which provides the Bank with insurance coverage, the factoring transaction is implemented without recourse to the exporter, allowing it to completely cover the risks associated with a foreign debtor’s default.
- The Bank ensured a margin of safety and liquidity sufficient to support export support against the background of volatile financial markets and sanctions.
- 223 financing agreements.
- 79.2 billion rubles as of 1 January 2019, which is by 37% more as compared to 1 January 2018
In 2018, the Bank concluded 223 financing agreements and provided exporters with the financial support of $1.7 billion, in particular, through the use insurance coverage provided by EXIAR JSC.
The Bank’s export credit portfolio amounted to 79.2 billion rubles as of 1 January 2019, which is by 37% more than that at the beginning of the year (as of 1 January 2018, the portfolio amounted to 58.0 billion rubles).
In 2018, the Bank has expanded the base of its customers who use guarantee instruments. The Bank provided guarantees for both SME and major exporters.
The Bank’s portfolio of exporters who have received support includes export-oriented businesses from different segments. The major export-oriented industries were engineering, metallurgy and chemical industry.
The Bank successfully achieved the goals that had been developed and approved for 2018 as evidenced by the high level of customer satisfaction. This allowed the Bank to set new, more ambitious goals for the further promotion of financial support for Russian non-resource exports in 2019.
As part of its efforts on the improvement of the quality of services, the Bank analyzes the customer demand for the products, as well as the availability of similar products from foreign export-import banks.
To fulfill the objectives set in 2019, the Bank is going to promote the products approved in late 2018 and develop new ones for the SME segment as part of credit and guarantee support for exporters.
The main goal of the innovations is to improve the support measures provided to small and medium-sized exporting manufacturers through the development of a flexible product line and targeted standardized solutions.
Taking into account the growing demand of Russian exporting manufacturers for the modernization of fixed assets and the expansion of capacities, the Bank plans to develop a new product aimed at providing financing for the creation of export-oriented industries and their modernization.
The exporters who have received support are largely interested in non-financial services. In 2018, the exporters submitted more than 50,000 applications for non-financial support.
The customers often applied for online and educational services.
Besides, they frequently apply for partner searching, front office consultations, certification, etc.
Non-financial support was provided to 12,115 exporters from various Russian regions. Most of the exporters who have used the REC’s non-financial services are located in the Central Federal District.
The non-financial support measures include “Organization of Export Activities of Russian Enterprises” educational program (hereinafter the “Program”). The Program was intended for potential and existing exporters and supported by ANO DPO School of Export by REC (hereinafter the “REC School of Export).
In 2018, the REC School of Export updated 11 training courses of the basic extended professional educational program (advanced training) for SMEs called “Organization of Export Activities of Russian Enterprises”.
178 representatives from 24 companies participated in the pilot Export Growth Accelerator educational program.
Another important achievement was the development of the Export Growth Accelerator educational program, which was approved by the pedagogical council of the REC School of Export and tested with two pilot groups - jointly with the Ministry of Economic Development of Russia in Moscow (as part of the “Labor Productivity and Employment Support” National project) and the Government of the Udmurt Republic in Izhevsk. The educational pilots gathered 178 representatives from 24 companies, to whom 178 training certificates were issued.
Developing cooperation with universities, in 2018, the REC School of Export concluded the agreements on cooperation with 3 leading Russian universities.
During the reporting period, the REC School of Export organized practical cooperation with the Russian Presidential Academy of the National Economy and Public Administration, Plekhanov Russian University of Economics, Kazan Federal University, Moscow State University of Foreign Affairs, the Russian Academy of Foreign Trade under the Ministry of Economic Development of Russia, Tomsk State University within the existing and previously concluded agreements.
Promotion of high-tech products in foreign markets
Russian export-oriented companies in 104 events participated in 104 events thanks to Group’s efforts:
- 74 international exhibitions;
- 17 business missions;
- 13 international events in Russia (4 forums and 9 exhibitions).
According to Decree of the Government of the Russian Federation dated 24 April 2017 No. 488, REC acts as an agent allocating subsidies to finance part of the costs associated with the promotion of high-tech, innovative and other products and services in foreign markets.
Using the subsidy, the REC Group engaged the Russian export-oriented companies in 104 events (including 74 foreign trade shows, 17 business missions and 13 international events in Russia, including 4 forums and 9 exhibitions). In particular, the participation in 18 events was financed from the subsidy of 2017, and in 86 – from the subsidy of 2018.
The number of events held with financial support from REC increased from 90 in 2017 to 104 in 2018. Another 148 events are scheduled for 2019.
To improve REC’s activities in supporting exporters and strengthen cooperation with federal executive bodies and industry associations, the Interdepartmental Working Group on REC’s Congress and Exhibition Activities was established by Order No. 73 dated June 20, 2018.
REC supports the participation in exhibition events held all over the world, namely in Western Europe, Eastern Europe, North America, Latin America, East Asia, Southeast Asia, South Asia, Middle East, North Africa, and Sub-Saharan Africa.
Russian exporters participate in various exhibitions held globally in the field of pharmaceuticals and health care, automotive, agricultural and railway engineering industries, consumer goods, information and computer technologies, etc., having successfully expanded their geographical presence as compared to the previous period.
Business missions form the grounds for the development of Russian export and the promotion of individual companies in specific markets. By participating in the exhibitions, Russian participants get the opportunity to comprehensively assess the potential of the targeted country, as well as quickly establish contacts with potential buyers and partners.
Business missions are carried out taking into account a priority of destination points for Russian non-resource exports, as well as the needs of the business community.
In 2018, there were organized business missions of Russian export-oriented companies to the CIS countries (Uzbekistan), European countries (Austria), Asia (Thailand, Vietnam, Mongolia, India, China), Africa (Egypt, Morocco, Kenya, Uganda, Nigeria ) and Latin America (Mexico).
REC systematically cooperates with foreign countries within the framework of the intergovernmental dialogue (intergovernmental commissions, commissions and high-level groups, specialized working groups). The REC Group develops its position on key export issues (trade barriers, mutual settlements, debt, interbank cooperation, etc.) and also assists in promoting priority foreign economic projects of Russian companies.
Special formats for promoting Russian products in foreign markets
5 specialized business missions were organized in 2018 (as part of the promotion of Russian products to foreign markets):
- ▪ Seoul (Korea);
- ▪ Munich, Germany);
- ▪ Jakarta (Indonesia);
- ▪ Astana (Kazakhstan);
- ▪ Ho Chi Minh (Vietnam).
In 2018, three specialized Russian Gastro Week business missions (hereinafter the “RGW”) were held as part of the international promotion of Russian products. The RGW in Seoul (Korea) was attended by 20 Russian suppliers and 130 Korean companies. The participants signed the contracts amounted to $800 thousand. The RGW in Munich (Germany) was about the presentation of Russian manufacturers of food and B2B contacts exchange. During the RGW in Jakarta (Indonesia) 5 Russian food manufacturing companies were presented and targeted B2B meetings of exporters with Indonesian importers and distributors were held.
In September 2018, a specialized Russian Fashion Brands business mission was held in Astana (Kazakhstan). It was aimed at promoting Russian commodity goods (textile, sewing, leather, fur products and accessories). In December 2018, the representatives of 5 manufacturing companies engaged in the production of high-quality cosmetics introduced their products to potential partners from Vietnam. The exhibition was held within the framework of the Russian FMCG Brands business mission in Ho Chi Minh. Besides, in December 2018, targeted B2B meetings of exporters and manufacturers from the construction and energy industries with Arab importers and distributors were organized to promote the Russian export products in the United Arab Emirates.
Aside from the business missions and specialized projects, in the reporting year, the REC Group performed the global search for potential buyers of Russian products and held negotiations to support Russian exporters to sign the contracts.
Promotion of agricultural products in foreign markets
To promote agricultural products in foreign markets, three demonstration and tasting pavilions with Russian food products were organized in the UAE (Dubai), China (Shanghai) and Vietnam (Ho Chi Minh City).
6 tasting and demonstration events (in Europe, China and Russia):
- 61 Russian companies exhibited their products;
- Over 500 meetings and contacts were concluded with foreign counterparties.
Pavilions are an instrument for the effective promotion of Russian companies. They are the points of presence of Russian manufacturers in the target market that use the public infrastructure.
In 2018, to implement Decree of the Government of the Russian Federation No. 776 dated 29 June 2017 “On Approval of the Rules for the Provision of Subsidies from the Federal Budget to Russian Export Center JSC to Finance Part of the Costs for Promotion of Agricultural Products in Foreign Markets Except for with the Exhibition and Fair Activities”, six tasting and demonstration events were held in Europe, China and Russia. 61 Russian companies were presented. The participation of foreign and Russian world-famous chefs made it possible to widely present modern Russian gastronomy, cuisine and winemaking in the European and Asian regions. More than 500 meetings and contacts with foreign counterparties have been held, which will serve as the basis for the further development of partnership relations between Russia and other countries in the field of trade and gastronomic culture.
Made in Russia
- 9 regional Made in Russia tracks were held with the participation of 1,250 unique exporters;
- More than 400 applications for certification were registered;
- 236 companies passed the first voluntary certification round, 91 companies passed the second voluntary certification round
Made in Russia voluntary certification system was introduced to increase exports and improve the competitiveness of Russian manufacturing exporters. Independent and qualified assessment of the conformity of Russian export products and Russian manufacturing exporters with the standards was carried out within the framework of the system.
The system provides a unified and objective approach to assessing the conformity of manufacturers, allowing to identify bona fide potential exporters.
As one of the drivers of sales growth, ecommerce is an effective way to start exporting and one of the most promising areas of modern business.
The REC Group actively uses online channels to create additional mechanisms for promoting Russian products.
In 2018, the following activities were held:
- An agreement with the Tmall marketplace (Alibaba Group) has been signed, within the framework of which joint work is being conducted to increase the number of Russian online traders;
- An agreement on assistance in introducing Russian B2B manufacturers to the export market was signed with MD-Insight LLC, the official partner of Alibaba.com;
- An agreement on cooperation with Otkritie FC Bank Company was signed to develop the infrastructure for export electronic trading through marketplaces;
- An agreement on establishing long-term partnership relations between Innosoft LLC and REC for the development of Yorso-based Russian IT platform for wholesale export sales was signed.
REC Group’s partnership programs with the largest online platforms is one of the most effective export promotion mechanisms.
Since e-commerce channels allow entrepreneurs to approach new export markets with minimum expenses, the creation of partnership programs with the largest online platforms seems to be one of the most effective mechanisms for promoting exports. Therefore, the REC Group implemented a number of projects in 2018:
- A project to bring Russian products to the PRC market through the Alibaba Group’s platform was launched. The first batch of products was purchased from Russian suppliers and sold through Alibaba Group’s platform in China;
- A joint project was developed with SAP international IT company to export domestic products through the Ariba platform;
- A web resource was developed in cooperation with PayPal to analyze the export potential of online country markets.
International product customization, conformity assessment and patent protection
REC helps to receive the documents necessary to launch Russian products in international markets, confirming that the products meet the requirements of foreign legislative acts and international standards.
REC consults on the requirements of foreign markets, which Russian products have to be complied with. Those requirements include voluntary requirements, the fulfillment of which is necessary to conclude foreign trade contracts. Besides, REC consults on conformity assessment procedures.
In 2018 , REC issued 872 free sales certificates and supported 234 exporters. The volume of export products sold with REC’s support totaled $ 39 million.
REC provides information about international conformity assessment bodies, including certification bodies and testing laboratories accredited (in some cases, “notified”) in foreign countries, operating within the framework of international and regional organizations and certification systems, through which one can get the necessary documents on conformity assessment (declarations of conformity, certificates, test reports, etc.) to release Russian products to foreign markets. In 2018, REC concluded agreements of understanding with Vinacontrol Group, Vietnamese certification body, Turkish TSE Standards Institute, Slovak TSU Piestany notified certification body, German DIBt certification body, as well as with the Association of accredited and authorized organizations in the Czech Republic.
REC issues a free sales certificate to Russian exporters in accordance with legislative acts of foreign countries.
REC provides any company planning export activities with an opportunity to receive qualified free consultations on a wide range of issues in the field of intellectual property, including:
- Valid analytical materials on intellectual property;
- Recommendations on patent protection;
- Information about possible procedures for legal protection of patent rights and trademarks abroad;
- Recommendations on choosing a legal protection procedure based on information about registered trademarks, objects of patent rights and target countries of products/technology export;
- Services for the preparation of a list of necessary documents and calculation of estimated costs for the registration of patent rights and trademarks abroad;
- Assistance in preparing a license agreement with foreign partners, etc.
Customs and logistics support
The REC Group provides non-financial export support within the framework of customs, tax and currency administration.
In 2018, the group continued to scale up the project for the development of high-speed export corridors. Already operating route from Vorsino to the People’s Republic of China was completed by a new export railway route from the Krasnodar Krai. Also, the project of the Southern Export-Import Hub in the Krasnodar Krai is being discussed.
The REC Group implemented two major projects on assisting with the obtaining of the permits for processing in the customs territory. This provide export support in the amount of more than $ 615 million.
The concept of the export route from Novosibirsk/Krasnoyarsk to the PRC has been developed as well. The project has had to be launched in 2019 with the participation of FESKO and Rail Cargo Logistics RUS. The North-South international transport corridor (ITC), connecting the Russian Federation with India, Azerbaijan and Iran, is under the development.
In 2018, the REC Group implemented two major projects on assisting with the obtaining of the permits for processing in the customs territory. These permits allowed exporters to build a successful financial model for their export projects and the REC Group with an opportunity to provide export support in the amount of more than $ 615 million.