Interview with Leo Kostylev IAPP Russia 1/2
The Russian promotional market is as young as the commonly Russian market economyand currently the most dynamically developing market around Europe
Here are some interesting information if you want to expand on the russian market.
International Association of Presentational Products was founded in 1999 in St.-Petersburg. IAPP is the biggest by the number of its members. It is a noncommercial organization and it includes Russian and foreign companies.
The purpose of activities of the Association is the coordination of entrepreneur activities of its members in distribution sphere of advertising, presentation and souvenir products. IAPP assists in business cooperation, organization of joint commercial and non-commercial programs. Protection of the market from unfair competition and communication establishment between producers of services and end-users are important for IAPP too.
We don’t really have clients. We are a non-commercial entity and can only talk about members. We provide some really important services to our members and what we try is to have an opportunity to talk to promotional companies and tell them about us. We know the market very well and could be of help for European companies, interested in the Russian market. We know people in and around, we have members, who are interested in looking for new suppliers and we can recommend them to each other. Our members have the possibility to start a new project without big investments. We are not making money in IAPP, we just try to help our members to make it.
We have a number of European companies as our members. We have a big experience in helping European companies with their relations with Russian companies. We even solved some cases for companies that weren’t our members and we observe our mission as organization helping its members to feel comfortable on the Russian market.
IAPP doesn’t arrange its own Fair but instead it has a big publishing program with regular magazines for both promotional companies and end-users. “Professional” is a magazine for companies, involved in promotional business; “Leader” – a magazine about business gifts and stationary business for end-users. we also have an issue “Russian Promotional Market”, which we publish in English for European promotional companies, who are interested in doing business in Russia. The newest projects of IAPP are internet portals “BaZar”- blog-like database for buying and selling promotional products; “IAPP Classics” – banner-style classified database of promotional products; “BlaZa” – the database of promotional articles for end-users.
The Russian promotional market is as young as the commonly Russian market economy. Only 15 years ago promotional articles were taken as a kind of odd foreign things and very few knew how to use them properly. However only several years later a lot of promotional companies were launched. For example first Russian PSI members appeared in the 90s.
Today more than 2500 companies in Russia claim promotional articles as the main part of their business. The scale of these companies is really wide: from big importers and stock-keepers, located mainly in Moscow and St.-Petersburg, with profiling only in promotional branch and turnovers in millions of Euros, to small advertising companies in regional cities making money on all creative advertising scale including business gifts. The value of business gifts increases by advanced competition between companies: end-users are beginning to understand the commercial efficiency of gifts and they start regularly acquire souvenirs.
I think that there are about 25 companies in Russia with annual turnovers above 5 millions Euro and at least 5 of them have turnovers above 10 millions each. In our opinion there are approximately 100 companies with turnovers around 2 millions Euro and the rest 2500 companies have sales volume under 1 million. I must underline once more that it is not official statistics but our vision based on our experience.
However the Russian promotional market is well structured and everyone plays its particular role in it. There are numerous companies who import goods and keep stocks. They are not involved in sales on end-users market anymore but all of them have built their own successful (more or less) dealer’s network. It can be added that all these companies have started from the same line and have a lot of experience in sales to end-users in the past. That is why almost every considerable importer also owns a shade company for direct dealing with end-users.
The evolution of the Russian market directly depends on country’s economic growth. The Russian market is the most dynamically developing market around Europe at the moment. According to the Central Chamber of Commerce (Finland), “the Business Barometer publisher”, in 2007 Russia economic growth reached a high record for the second successive year. Turnovers and investments of Russian enterprises grew slightly more than the previous year. The agreement of joining WTO is almost achieved now and Russia might become its member in 2008. Half of Russian business executives believe that WTO membership will improve their possibilities and business activity.
For example the “Business Barometer’s” report says that nearly every third North-West Russian business executive considered closer cooperation between EU and Russia beneficial to their enterprises. So rather constant growth of Russian promotional market could be expected.
There is a tendency towards demand increasing for more expensive types of business gift products. This segment includes the so-called corporate and VIP gifts. The number of suggested souvenirs is much higher than the demand for them. But the choice is not big enough because of standardized overly proposal. Russian producers of souvenirs are trying to close the lack of exclusive business gifts. Unfortunately, domestic companies can’t compete with industrial mass produced souvenirs import. Basically, they produce souvenirs in small lots and in most cases in Russia only personalization or customer’s logo are made in Russia.
All relations between Western Europe and US advertising markets are going to be increased in our country. Most actively working European promotional companies have already opened their offices in Russia. Midoceanbrands Company had its representative in Moscow for many years and it worth of it. They are still biggest importer of promotional products to Russia. PF Concept has launched representative office in Moscow with capital show-room in the beginning of 2007 and had 4 employers working there by the end of the year. Prodir also established representative office in Moscow last year. They were actively participating in various business fairs around Russia in 2007. After 10 years of successful sales on our market Senator decided to establish its own company in Moscow to operate locally in Russia. There are more examples of similar activities but even the four names above leave no doubt that the Russian market is the right place to be nowadays.
For more information concerning IAPP: www.iapp.ru
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