Experts name effective tool of import substitution in Russia

Amid the sanctions and withdrawal of foreign brands from the country, Russian companies have to adopt the import substitution strategy, including making new business contacts, building supply chains and launching production based on the domestic resources. The support of import substitution remains a priority, from adjusting regulations to targeted support measures for businesses. Exhibition activities can give a boost to import substitution: forums and congresses will become platforms for launching new projects, and later on for transition of the economy to import substitution. Participants in the 5pEXPO-2022 7th International Forum of Exhibition Industry discussed the future of the congress and exhibition sector and the priority measures to support the industry. The forum also featured a joint plenary meeting of the Committee for Exhibition, Fair and Congress Activity of the Russian Chamber of Commerce and Industry, the 5pEXPO Forum and the Russian Union of Exhibitions and Fairs.

In the multivector mode

The exhibition industry is ready to become a driver of restoring the economy amid sanction restrictions because it is not only a tool of promotion, but also a mechanism of restoring logistics chains and connections. According to the President of the Russian Chamber of Commerce and Industry Sergei Katyrin, today’s priority is to boost work in new geographical directions where the exhibition activity has been minimal. Today, it can become a bridge to the new markets for Russian players, from Africa to Latin America.

“It is always difficult to enter other regions. In includes competing with foreign companies and dealing with a different attitude, but it is still possible to achieve a lot, especially given the support from the state, redistribution of personnel and financing,” Sergei Katyrin believes.

Exhibitions and fairs will help to boost investments in Russian breakthrough projects and startups. This will be another relevant area of work for the industry.

The maintaining of connections with foreign markets remains important. According to Sergei Katyrin, sooner or later it will be necessary to restore the ties with foreign companies, and businesses should be ready for that.

Rising to the occasion

It would have been easier to provide support for the transformation of the Russian economy for exhibition sector participants if Russia had a status of a most favored nation. Especially as the congress and exhibition business has had to take one blow after another, from the COVID-19 pandemic to the global economic crisis and sanctions.

Since March 2019, almost two thirds of players suffered great losses, over 60% of them had to cut down the staff, and 10% had to shut down, says Expocentre General Director Alexei Vyalkin. The current developments will also definitely affect the situation in the sector.

“Many foreign companies, operators and exhibition participants have either left the Russian market or suspended operations,” Alexei Vyalkin said.

Previously, during tough economic periods, the industry managed to adapt to the challenges on its own – while the current situation is different and support is essentially required, Expocentre First Deputy General Director Sergei Selivanov agrees.

Providing maximum support

Industry participants have already drawn up a list of support measures, which is currently under consideration by the Russian Ministry of Industry and Trade, said Yelena Ubliyeva, Executive Director of the Russian Union of Exhibitions and Fairs. The document includes 18 measures, including efforts to reduce the tax burden. Approval of industry-specific legislation remains essential.

Direct measures to support the sector could also become a priority today, including direct subsidies for market participants, notes Natalya Rogotskaya, President of the Union “Chamber of Commerce and Industry of the Yaroslavl Region.” Such mechanisms have already been implemented in St. Petersburg, and extending them to other regions would be reasonable as well. Such support seems more efficient as compared to concessional loans. It would also be beneficial to provide assistance in setting up congress and exhibition venues in regions.

“There is an utter need for government support and systemic measures that would save the industry,” Natalya Rogotskaya emphasizes.

Participants in exhibition activities, who often bear a substantial financial burden, need support as well. Redistribution of finances allocated to support businesses’ involvement in exhibitions abroad could be an option, with participants in domestic events receiving them through co-financing, Sergei Katyrin notes. Efforts to support Russian companies’ business operations could also include increasing the amount of financing, which should be scaled up for a maximum number of market participants.

A government order for exhibitions could also serve to support the industry, says Andrei Usenko, president of the Union “Vyatka Chamber of Commerce and Industry.” This could include organizing major federal-level events with due regard for unique competencies and local specifics, such as festivals, congresses and fairs. This would have a multiplier effect on the regions, Usenko believes.

Focusing on proactive import substitution

Boostingcongress and exhibition activities will serve as a substantial support for domestic companies that are switching to import substitution.

Currently, a total of 96 commodity items are allowed for parallel import alone; each of them may include up to 1,000 product items – and production of a similar volume of products has to be developed domestically, President of the Russian Union of Exhibitions and Fairs Sergei Voronkov emphasizes. The initial stage of the process of making the country’s economy import-independent requires some 2 mio negotiations, with one deal involving at least ten meetings.

“Congresses and exhibitions are the events that open a unique opportunity for implementing the program of import substitution and proactive import substitution in the country,” Sergei Voronkov notes.

Without such ‘exhibition resources,’ the process could drag on for a decade.

“Amidst the global economic transformation, the congress and exhibition industry serves to help companies survive and overcome economic challenges,” Alexei Vyalkin concludes.

By Olga Blinova

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