/Pogled.info/ In the past year, the Russian market has recovered from the consequences of the sanctions and the coronavirus, business representatives are confident. According to the survey, 60% of entrepreneurs note increased competition. Starting a business from scratch is now easier, there are fewer barriers. Who do companies have to compete with and what benefits can consumers benefit from?
Things got better
A survey by the organization of small and medium-sized businesses “Support of Russia” showed an improvement in the competitive environment based on last year’s results. The business climate was assessed by 713 respondents, including company managers, individual entrepreneurs and the self-employed.
The share of respondents who believe that competition has increased increased by 8.7% and reached 60%. The representatives of the education, consulting and trade sectors report the greatest pressure. A decrease in the number of players is noted in the real estate, manufacturing and energy sectors.
56% cite competitor growth in quantitative terms, up 15.3% from 2022. The decline is just 11%, down 4.5% from the 2022 level.
55% of respondents still consider the competition to be high or very high.
Small entrepreneurs mainly compete with each other (36% of participants stated this) and with large companies (31%). 21% of respondents talk about the shadow sector. Self-employed competitors strengthened their positions from 8.9% in 2022 to 11% in 2023.
84% of respondents positively assess the state of their business. A high rate of development was noted by 26% (8.5% more than the previous year), an average rate of 58%. 12% of entrepreneurs reported problems, but this figure decreased by 6.5%.
General climate
In addition, the general background slightly improved. Thanks to government support, as well as the departure of Western companies, more opportunities appeared. Large factories that came under Russian control now have the opportunity to develop their own brands. Thus, the Chernogolovka group of companies will produce baby food instead of Kraft Heinz. Auto companies are gradually increasing the localization of production and promoting local brands.
The changes also affected small businesses. It became easier to manage an existing business (plus 9.5%) and to start a new one (plus 9.9%). Government procurement also became more accessible (plus 5.1%), the number of participants satisfied with the work of the Federal Antimonopoly Service increased by 15% – now there are 35%.
However, the share of participants citing administrative obstacles is still high: 46%. Overcoming the difficulties requires significant costs, entrepreneurs say. In general, there are fewer problems now, but new ones have appeared.
The most common names cited are loss of staff and departure of key professionals (53%). The worst situation is in consulting, education and construction. They also complain about high taxes (41%), instability of legislation (35%), loss of suppliers and difficulties in purchasing foreign raw materials (25% each). However, the latest figures are slightly lower than a year earlier. But access to infrastructure has worsened: 14% of respondents had problems (in 2022, 11.7% had difficulties). Only seven percent believe that there are no such barriers in their industries.
Virtual world
As experts note, the local IT industry is developing quite actively. According to the analytical company “Jason & Partners”, the Russian software market grew from 56.9 to 64 billion rubles last year. Additionally, more than half (55%) are in the corporate segment and 41% in the government segment. The overall share of native software is 21% in 2023 (versus 15% in 2022 and 12% in 2021).
“Corporate communications include video conferencing, messengers, mail, telephony. Russian solutions will be able to occupy more than 90% already in 2028,” says Stanislav Yodkovski, CEO of IVA Tech. According to him, now local developers form the main competition in the market and it is only growing.
The factor of competition, he notes, stimulates market participants to constantly improve the quality of solutions. “Ultimately, the perception of Russian services is changing: users see that the quality and safety are no worse than foreign counterparts, and sometimes even superior, so new communication products constantly appear in the registry and find their users,” explains Yodkovsky .
The artificial vacuum played in her favor: there were practically no competing Western solutions left in Russia.
The real world
The situation in the commodity market is slightly different. New players are actively entering, and the old ones are in no hurry to leave the country and maintain their presence through parallel imports. “By the end of 2023, more than 340 brands of large household appliances were introduced in Russia, more than 70 of them were new,” says Alexey Belyakov, general director of the VARD household appliance brand.
According to the expert, inefficient projects will die, and the rapid growth of supply will decrease in the next two years.
Now it is growing mainly thanks to young local projects dealing with custom-made products in the basic and middle price segment, Belyakov points out. In addition, the sellers themselves (markets, federated networks and online players) are actively creating trademarks, and foreign manufacturers from China and India are trying to introduce their own brands to the market.
The analyst explains: competition has not yet had a noticeable impact on prices, since in an unstable situation pricing is more dependent on political and economic factors. And before them, all market participants are more or less equal.
Translation: V. Sergeev
Tags: Artificial vacuum Wests plan Russia unexpected effect
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