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Good morning. Before we start this session I just want
to express our great satisfaction not only for the presence of such a strong Russian
delegation - yesterday the Prime Minister, the President, today the Deputy Prime
Minister Mr Shuvalov and a strong group of business leaders, members of the Cabinet -
but I want to use this opportunity to underline the strong cooperation which the
Forum has with the St Petersburg International Economic Forum. We have
worked together during the last years and this session here is a co-branded session,
co-branded between the St Petersburg International Economic Forum and the World
Economic Forum and I want to thank you for the spirit of cooperation and we are
determined to continue this type of partnership also in the future.
So, I turn the microphone to you, Tom. Great, because I think we have a video
that's going to run first before we introduce the panel.
Well, thank you. Welcome, everybody.
Russia's Next Steps to Modernization. We have a great panel this morning.
We're certainly sorry the President isn't with us, but we're really pleased to have
the Deputy Prime Minister Igor Shuvalov with us.
Next to Igor is Indra Nooyi, the CEO of Pepsi. We've got Patrick Kron,
the Chairman and Chief Executive of Alstom and, last but certainly not least,
Jim Albaugh, President and Chief Executive of Boeing Commercial Airplanes.
I just want to begin and ask all four panellists the same broad question
and each of you can take your own slice on it from your own direction and, Deputy Prime
Minister, we'll certainly start with you. Russia's a unique country in many ways,
but in one way in particular it's a country enormously rich in natural
resources, but that's enormously rich in human resources.
It's a country with a long history and tradition of science and mathematic
learning and institutes to promote that and yet a country blessed and, in some
ways, burdened also by having so many natural resources that sometimes you don't
develop those other muscles. Deputy Prime Minister, how do you see that
challenge of balancing these two now, because it's very easy to fall back on
your natural resources and not tap your human resources?
How is that a challenge for the Government in this broader question of how do we take
Russia into the knowledge economy?
Thank you. Good morning, everybody, and first I would
start with one of the four ‘Is' you've just seen in the video.
One is very important for us now, is investment and I spoke with the head of
Federal Antimonopoly Committee this morning and I can congratulate PepsiCo
with the consent they received yesterday to finalize all the formalities with
Wimm-Bill-Dann to take over the company. I think this is one of the greatest deals
in the country and it shows that the investment climate is changing and best
regards from everybody from the economic side from the government and I think this
is a very good opportunity for us. Thank you.
Thank you, Mr Shuvalov. Thank you.
By the way, PepsiCo has been in my country since ‘50s and is a well known,
popular, well respected company and well presented in the market and we hope that with this
purchase, with this takeover you will show how you will cooperate with Russian
investors, with Russian people, who are major consumers of the product, and I wish
all the best. Thank you.
And then we're here with a group of people. Actually, we represent different
institutions and a colleague of mine and a friend, Elvira Nabiullina, who is the
Minister for Economic Development and previous Minister for Economic Development
and now the President for the biggest bank in Russia, Sberbank, Herman Gref,
and another big bank which is very well known in the world, VTB, Andrei Kostin,
and heads of the regions and other institutions. Actually, we represent
different institutions but we are the same, we one team and we work under the
strong political leadership in order to bring our country to an absolutely
different stage of development.
We all work hard in order to achieve which is called ‘new Russia' and we understand
that by 2020, which was outlined in 2008, we need to achieve and to develop Russia
as one of the most comfortable countries to live in, where human beings could be
well accepted by all the institutions and where you can develop all your talents
and where future generations would like to live and invest.
I can talk about my country endless, because I love my country and with all the
difficulties we face and with all the difficulties we have I believe and we
believe, our team believe, that we are a unique country in all respects.
You mentioned mineral resources, you mentioned human resources.
My personal belief is that we are a very rich country, but mostly the real wealth
Herman Gref, for instance, is always complaining that the labour skills are not
very good and we need to do a lot in order to improve it.
But at the same time you can imagine that everybody in our country all get good
education at schools and a lot of people get higher education.
Nowadays it's very modern to get even second high education and that concept
which is called ‘long life learning' is well accepted in the country and we have
many people who always try to modernise their skills.
And I believe that with all our history, with all our culture, with all our skills,
even nowadays skills, we are a very talented nation and we have shown many
times in different aspects - in space, in chemistry, in metal industry,
car producing, whatever - we have very good examples, we have bad examples,
sometimes mistakes, but we are human beings. But if you look at the country and if you
read the history thoroughly you will understand that in many aspects Russia was
able to show that we can achieve if we want, if we can combine all our efforts
and if we all see the final aim we dream of and if we have enough resources, we can
achieve. Let me ask a specific question.
If you think about it, Google is a half-Russian company - Sergey Brin came
from a Russian family. To our great advantage, the United States,
though, his innovation was hatched and harvested in the United States, but I'm
sure there are many others like him in Russia today.
What would make - entice - the next Sergey Brin, who's sitting out there in one of
your institutes or schools or whatever, not to come to Stanford and Palo Alto,
but to stay in Russia now and launch his new company?
I don't see any problem if people leave the country and get education somewhere,
including the States. I think it's even for better of my country.
The more people we send abroad for their education and if they return - and we have
many people who got education in Stanford. For instance, I see Xenia now, who works
for Sberbank and she studied at Harvard University, MIT, am I right?
Many people now are coming back and they believe in the future, they trust and they
feel they are Russians, but I don't see any problem if people decide for their
residence other countries. It's okay, it's modern life, people should
choose their permanent residence and we don't see any problem with that.
It's not old Soviet time when we thought that all talented people should stay 100%
within the country and there were some limits even for going abroad.
Nowadays nothing of that exists. And carry on with people, can you imagine
the size of the territory? You can fly almost 10 hours from
Kaliningrad, which is based on the shores of the Baltic Sea, to the Pacific, it's 10
hours' flight and it's still the same continent and the same country.
And the Pacific side, if you fly from the north to the south it's approximately 5.5
hours to fly and it's just Russia. And to the east our immediate neighbour is the
United States and we are separated by the Bering Strait and our natural neighbour,
Americans. Always when the people say something about America and Americans we
always turn to the West and Americans always to the East, but vice versa,
our natural neighbourhood is East. Our Governor in Alaska said she could
actually see you. Welcome. So this huge territory with
different climate zones, with very comfortable climate zones, with very cruel
where people maybe cannot live permanently. We have Siberia, we have
Western Siberia, Eastern Siberia. We have the Black Sea side and the Baltic Sea -
different, different areas. Moscow, St Petersburg the most developed
towns and we have other towns which are not maybe very popular amongst people in
the West and investors, but we have towns like Kazan and I see the head of the
Tartarstan, the region along the Volga River and other towns which are very big,
the population is over one million people and where you can find a very modern
atmosphere for youth, for students, good university, hospitals and so on and so
forth. And with 145 well educated people, with all the people speaking one language
- for instance even in England, in London, just in London you can find people
speaking one language but not be able to understand each other, because if you have
someone with the Queen's language and Cockney people will not understand each
other - with all the dialects and all the accents in the country all speak the same
language and it's understandable and I think this is very good for future and
is unique. Great, thank you very much.
And - just a minute - at the same time, we have 180 other nationalities and over 100
different languages and old people speak Tartars, other languages, Finnish
and others and they all accept Russian as the native language.
Different cultures, different religions. Again, if I come back to the point of
Kazan, in the heart of the town Kazan, just in the Kremlin you see the mosque
and the orthodox church just standing next to each other and people who are serving in
the mosque and the orthodox church they are just friends.
They communicate even though they belong to different churches and different
religions. And along with that we have, as you
mentioned, natural resources. We have everything.
If you want to produce something in the country you can just explore the soil.
Russian soil is very rich, not only with oil and gas, anything you need for any
other industries you will get in Russia. Great, well, let's hear from the others,
okay? I'm sold; I would like to buy something right now,
but I - But I would like to carry on.
Indra, Pepsi, global, in so many product lines, you can buy companies anywhere yet
you've gone through a big effort here to buy a big consumer products company in
Russia. Why and what have you learned from that experience?
I'm going to be sounding like I'm just picking up where Minister Shuvalov left
off, but we love Russia. We love doing business in Russia, we love what Russia
We've been there for 50 years and the last 10 years we've invested more than $3
billion in Russia and we will invest another billion dollars by the end of this
year and this does not include the almost $4 billion we spent on Wimm-Bill-Dann,
$3.8 to be precise. So we've invested a lot in Russia.
Tell us about that company. What does it do?
Wimm-Bill-Dann is Russia's number one food and beverage company in the business of
dairy and juice.
Extremely well run company, great products, it's going to be a great
platform for us to grow dairy globally. Why do we like Russia so much?
First, we believe the location of Russia is very strategic.
It can be the centre to serve Central and Eastern Europe and the CIS countries.
If you take those countries together, that's 400 million people, so it's a great
strategic location. Second, we like the fact that it's got
a stable economic policy and the political situation is stable, so we can do business
easily in Russia. Three, the people in Russia, the workforce
is very, very good. It's a hardworking group of people.
We have technical talent. We can get good workers in Russia, so when
we invest in Russia and put on the ground factories, manufacturing assets we can
actually get a return on that investment. It's a market that's becoming increasingly
consumer-centric, so global brands are becoming much loved in Russia and so you
can actually make a very good living in Russia.
And I think above all the thing that we like the most about Russia is the fact
that the government of Russia is actually doing everything possible to encourage
foreign investment. I tell you the unprecedented access that
they give investors to the government officials is unbelievable.
Just to speak about the Wimm-Bill-Dann acquisition where I was closely involved,
to make a request to the Russian government to ask for a meeting with Prime
Minister Putin to say we'd like to buy Wim-Bill-Dann and to get that request
granted in a matter of hours I think is phenomenal. That was just before Christmas
and then for them to approve the deal in such a record time, less than six weeks,
I think is a tremendous testimony to the fact that Russia is welcoming of foreign
investment and wants to make it work in Russia.
So we, as a company, like doing business in Russia. We think Russia's got it right
that they've got to expand beyond oil and gas and natural resources.
They are putting in place the right technical innovation and infrastructure,
but most importantly they are making it easy for foreign companies to do business
in Russia and that's the reason we like it.
You're not concerned about the rule of law issues and security issues that have come
up over the years? Look, the recent bombing in the airport
is something that distresses us enormously; our condolences to the Russian people.
This is not something that any country should accept and I'm sure that President
Medvedev and his team will do everything possible to address the security issues,
but when you're dealing with any developing and emerging market there are
going to be issues, Tom, and we multinationals just have to learn to do
business in each country with the governments to advance our interest in
Are we worried? Of course we're worried about all of these
issues all the time, but there's some worry or the other in some country, but as
long as we - we are not there as a temporary player in Russia. In Russia
we're Russian and we intend to grow with the country and thrive with the country
and as long as you go into that country with that perspective you work through all
of the issues that happen in the country.
Look, we've had a good record in Russia, we like it and we feel very Russian in
Russia and we'd like to keep it that way. How do you say ‘Pepsi' in Russia? ‘Pepsi?'
‘Pepsi.' That's what I thought.
Tom, with a smile. Patrick, you're in a hard and very
competitive space, the energy space. What's been your experience, what are the
challenges and where are the directions you'd advise or like to see Russia go to
make it easier for foreign companies like yourselves to operate there?
Thank you. Just a couple of words about what we are
doing, as we may be a bit less famous than my predecessor when she talked about
Pepsi. We are in infrastructure.
We are selling power generation equipment, transmission equipment and trains,
high speed trains, metros and mass transit equipment. We have installed 25% of the
world capacity in power generation. We have one metro out of four, one tram
out of three, half of the high speed trains in the world,
etc. So we are in many countries. We are quite recent in Russia, but I think
our experience in the country is quite interesting. We have started to seriously
address the opportunities in Russia when it was clear that the government has
decided to put a strong push on the development of infrastructure as it's
a bottleneck for economic development, social welfare, environment protection,
so it's a key priority as regularly expressed by the Russian government.
And the way we have addressed the opportunities in the country is through
partnerships. We started a few years ago.
We made a joint venture with Rosatom in order to participate in the development of
the nuclear programme in Russia, which, by the way, in a sensitive area shows the
openness of the decision makers, because it's not that easy to ask a foreign
company to participate in such a sensitive area such as nuclear development.
We have also established a partnership with Transmash Holding for the development
of the railways network, which is also an area in which there is a strong need of
modernisation and expansion and in December we have broadened these
partnership networks in a number of new areas, such as hydroelectricity,
thermal power, transmission and grid management, smart grid areas,
etc. So we are starting, but it's moving very fast and it just establishes - you know
the image that we sign a memorandum of understanding and it never happens.
This is not what happens. Actually, we have been able through this
strategic agreement to start doing serious business, it has turned into contracts in
the country and, interesting, starting outside of the country - in partnership
with Transmash Holding we are starting an operation also together in Kazakhstan,
so it's broadening. So I'm very encouraged and although it's
an original step and we are in the initial ramp up, we are encouraged by what's
happening, strong support by the government, obviously.
With all those good trends, if you were advising the Deputy Prime Minister,
is there anything you'd say, ‘Gosh, if you guys would just do this it would really
help, it would really take it to a new level'?
No, I think this is moving nice, so I'm not going to give lectures or lessons.
In our industry what we need is visibility, so we need to have a long-term
view. We are a long-term player. Infrastructure has a long-term
development, so we need to have the visibility and stability in the decisions
which are taken within this global view. Okay, thank you.
Jim, not many Americans know that the planes they're flying on the wings were
designed partly in Moscow. Tell us a little about your own partnership with
Russia, how it's worked and where do you see it going in the future?
Thank you, Tom. Maybe I could just tell a short story first and then I'll talk about
what we're doing there in Moscow at our design centre.
I remember the first time that I got involved with Russian engineers was 1998;
it was the International Space Station. We had elements of it, Russia had elements of
it and we had the first element launch from Baikonur in November of 1998 and we
launched the second element from Cape Kennedy and we did that in December.
And we had two spacecraft; they hadn't ever been within 5,000 miles
of each other and they were travelling at 22,000 feet per second 250 miles above the
earth and we docked these two spacecraft. We bolted them together, we threw the
switch and it worked perfectly. I don't know if American and Russian
politicians or economists speak the same language, but I can tell you that Russian
and American engineers do and we have had a great experience there over the last 20
years working in Russia. In Tom's book he wrote about a design
centre that we have in Moscow. In 1998 we hired some 12 engineers and we've grown
that now to about 2,000 - 1,600 engineers, about 400 programmers - and these people
have designed elements of the 777, of the 47 and they've designed about 30% of the
structure on the new 787 Dreamliner. Well educated, hardworking, not expensive to
hire. It allows us to do design 24 hours a day and they do it very well.
And based on that experience we've done more. When we decided to do the Dreamliner
we needed to have an assured source of titanium; about 20 tonnes of titanium goes
into every 787 that we build. And we found a company called VSMPO,
I think one of the world's largest titanium manufacturers and we will invest some $18
billion with them over the next 20 years and we've put together a joint venture to
work on developing various titanium alloys that we'll own the IP for and they will
also own it and we'll use it to support the businesses that we have.
I look at this country as one that has great natural resources but,
more importantly, human resources and if I go back to that design centre, while we have
exported to the United States a lot of great designs we've also exported to the
United States a lot of good engineers. In fact, the engineer that's setting up
our production facilities in India was one that we took from Moscow. And as we go
forward our view is you need to take the best ideas and the best capabilities
wherever they might be in the world. Now, clearly, in aerospace with the rich
heritage they've had and the capabilities that they've developed we think we'll
continue to be there for years to come. Jim, you're not in the advertising or
branding business and I know because I've been to your centre, when I hear the
Deputy Prime Minister speak and Indra and Patrick, is Russia under-branded as an
innovation centre? Do they have a bad rap when, in fact,
there's a lot more going on, a lot more potential there than people realise?
I think you're right. We don't tend to talk about that a lot.
We look at Boeing as a global company. We have research centres around the world.
We look at them as just part of the team. We're not out there promoting where we do
work necessarily. Just as some of the other speakers have
talked about, we want to be Russian when we're in Russia and that's the way we look
at it as well.
We have such a knowledgeable audience here let's open the floor for a few questions,
we'll work this around. I think there are people with microphones
around and if you'd raise your hand right here and identify yourselves.
Thank you. Esther Dyson, an investor in a variety of
You asked what is the one thing you could ask for the government to do and I would
like to suggest that in the Skolkovo project you add transparency top to
bottom. I really would love the Skolkovo project to be successful, so would the
government - Can you tell us a little bit about that
project? It's the project for modernisation;
it was in the slide show. The idea is to have a centre for
entrepreneurship, not just innovation, but the commercialisation of innovation.
My friends in Russia are all very sceptical about this project.
They say, ‘Oh just another one of those real estate projects for people to steal'.
I don't want it to be that. For the Russian government to make this
work, for Russian mothers to say, ‘I don't want my son to work at Sberbank. I want my
son to go to Skolkovo and become an entrepreneur'. This thing, it needs to be
- What's missing right now, from your point
of view? What's missing is transparency around all
the contracts that are being made with Russian and American companies.
Unfortunately, the American companies are also saying, ‘We'll just sign the
contract; it's the cost of doing business in Russia'. Make it as transparent top to
bottom, make the contracts transparent. It's proper for people to make money;
it should be visible how they make money. And you will have a huge success
and change - Why does that matter to you as a venture
capitalist and then we'll let the Deputy, but I just want to understand from your
perspective. Okay, honestly, as a VC my little
companies are doing fine without Skolkovo. They're good enough, they get the
resources, they get the support, but there's no critical mass and this is for
Russia, not for my particular companies. The whole attitude needs to change towards
business. It's not easy to do. To do it on scale you need the kind of
transparency I'm talking about so that those good values can actually happen
instead of the same old cynicism. Thank you.
Okay, first, transparency. We understand that this maybe task number
one for all the government and for all the institutions we need to work on it is our
real home task. And when we, just yesterday, we all got
together - I mean all the Russian team - and we discussed what can we say to the
existing and possible investors why should we - how can we attract new investors
and what's the real evidence that everything is changing in the country.
And we all came to the conclusion that providing more and more transparency in
all the institutions will show that Russia is changing.
But with Skolkovo I disagree. Here, I believe Mr Vekselberg, because I
have seen him, he is here, who is the head of the special fund set up for those
purposes and the head of the Council for Skolkovo Fund, President of Russia and he
had appointed two people from the Russian government in his administration in order
to provide all the transparency, in order to get a transparent way how to select the
project and so on and so forth. If you consider that that process is not
transparent enough, I would like to understand in which way, because when I
speak with other people who are working with Skolkovo now they say they like
Vekselberg, they like the way how he works with investors, what terms we provide with
issuing new law, because we adopted a new law last year, as you know, relating to
Skolkovo itself and with all the tariffs and special taxation and so on and so
forth. So we believe that we have - and I
understand that we have many sceptics about Skolkovo and people were complaining
that there are other existing already innovative centres in the country and the
Russian government should invest in existing ones rather than build a new one.
But the idea was to build something completely new which would be able to show
the example how to make business in a new way with Western partners in cooperation
with big innovative companies and so on and so forth.
This is our ambition. So if you can tell us exactly in which way
you can see that we work there not transparently we would be only grateful
and Viktor Vekselberg is working with all the investors and so on and so forth.
And I like that you said youngsters would rather work in Skolkovo than in Sberbank,
sounds good, but Sberbank is trying to be innovative as well.
But we don't want that project Skolkovo that will consume just federal funds,
money, land, money for infrastructure, that money will be distributed and it'll
be another development project. We are not developing real estate there;
we are developing know-how, innovative business and how the result of innovative
business then connects with real industries.
Let's take some more questions. John Chambers from Cisco,
please. Right here in the first row.
First of all, I want to congratulate the leadership in Russia with being about as
transparent as I've ever seen in terms of candid questions.
It's a willingness to get feedback that I think other countries, whether you're in
China, India, even the US, we would not see in this type of forum.
I think you are at a tipping point in Russia and I think the odds on the tipping
point going very well are very high. I think you've prepared for several
decades to achieve this tipping point. The willingness to have one vision toward
that. None of us are perfect and when we look at transitions in China, India,
even the US, it took us a much longer time to get there.
We're all in, in Skolkovo. We're going to invest $1 billion.
We are investing our brand. We're working with Viktor and others.
Is it going to be challenging? The answer is, of course, yes,
because this has never been done on this scale anywhere in the world other than Silicon
Valley, which grew almost naturally on it. I do agree that the biggest asset in
Russia is the people and the intellectual capability and so we're going to invest in
R&D in terms of our second emerging markets territory $100 million in venture
capital. I've found the group's very open to really be able to say here's what works
and to bring it to their attention across the board in terms of the direction.
And the last point I would make is you learn more about leaders, a country,
individuals under stress.
If you watch the way that the leadership has handled the terrible events, you watch
how classy it was, how open, how they identified with everyone in the world,
I think this is an opportunity for a new beginning. So I'd encourage us to say
let's put the past behind us. Let's talk about how together we go
forward to a modern Russia and I think we can actually take a terrible crisis
and take it up one level. So we're all in, very comfortable with the
investments, know the risk involved and don't minimise those, but I would
encourage us to have that kind of dialogue.
Great, thanks, John. We'll go over right here.
We know each other well. This is a question for you, Igor.
You showed some great videos, you've got some wonderful people up on your panel who are
all saying very nice things about Russia. My own experience has been different.
For those of you who don't know me, I was the largest portfolio investor in Russia.
I had $4.5 billion invested in the country and I was investing in a number of Russian
companies where I encountered corruption. I complained about the corruption and as
a result of complaining about the corruption I was expelled from the country.
My visa was permanently cancelled and I was declared a threat to national
security. Shortly thereafter, the police raided my
offices in Moscow and they took away all of our corporate documents and we
discovered a few months later that we no longer owned our corporation.
It had been fraudulently re-registered out of our name into a convicted murderer
who'd been released from jail early to put his name on these documents.
We hired seven lawyers to represent us; they discovered that not only had our
companies been stolen but the people who stole our companies stole $230 million of
taxes that we paid from the Russian government.
We filed criminal complaints, our lawyer was arrested - one of our lawyers was
arrested, six of them fled the country. The one who was arrested was then tortured
and killed in prison by the Interior Ministry. This is a worldwide story.
The President of the country called for an investigation into the people who killed
my lawyer. One year after the investigation the
people who killed the lawyer have been promoted and honoured with state honours.
Now, my question for you, Igor, is what's going to prevent all of these reputable
companies, particularly Pepsi, who's just gone in, from having the same experience
and why should anybody, after my experience and after nothing has been
done, consider investing in Russia? First, I have to acknowledge that we have
both sides of the coin. We have people who are very successful
and earned a lot of money in Russia and we have unsuccessful stories and people who
lost and, unfortunately, as you just mentioned, some people died and so on
and so forth. And we know this case very well and you
just mentioned promotion of the people who were involved.
I'm not familiar with this, but I know that the reaction of my President was
immediate when Mr Magnitsky was found dead that around 20 people were fired
immediately and 20 people were under certain proceedings within the Ministry of
Interior. So it was not just the case which everybody forgot the next day
and the President was instructing authorities himself. He was very pushy.
He wanted that this case should be as much transparent as possible and,
unfortunately, I don't know the result and whether the criminal proceedings are now
finalised and the materials were transmitted to the court.
I have no idea. But a year ago it was very loud
and everybody believed that President Medvedev was personally involved and he was
involved in such a way in order to try to find the truth.
But your question was about the future, I think, not about the past.
The past is very important, not always the happy past, but in future I think we need
to concentrate on the positive trends we have now in my country and the trust to
the people you work with. You have different people, of course,
in Russia and you have different people involved in different bodies and agencies,
but you have the President of the country, you have the Prime Minister, who is the
leader of united Russia and you have the members of the Russian government
and everybody who is here, including regional authorities and we all, we all want to
change the country, as you know, we spoke about this.
I cannot change and even all of us we cannot change the country overnight,
but we can provide the change. If you ask the question can you see the
change, I think you have to acknowledge that the country is changing in a positive
way. We have a lot of things we need to change, a lot of things we don't like,
a lot of things we cannot adopt, we think it is something which is not for our future,
but we need to provide change, this is my job. If every day and every year we can
say we provided that for Russian people, we provided that for domestic and foreign
investors, the situation is changing, rule of law is becoming better, not perfect but
better, then I think I'm doing my job. If not, if you think - and all of you who
visited my country and know my country, because sometimes people argue about
Russia are not even visiting my country, but everybody who visited the country
and who invests in the country, if you look back to 1999 or 1998 and the year 2000
when Putin became the President and now, and yesterday it was, I think, a very good
speech made by President Medvedev, I think it was a huge way we pursued and we are
very persistent to convert the country with all the difficulties in something
new. We talked about the territory,
human resources and I believe that we are a unique country in any sense.
The problem is we didn't convert all these unique things into a unique model.
That's why we need to work all together with all the partners.
We cannot do it ourselves. We need to create partnerships.
We need to create partnerships with PepsiCo, Alstom and other countries
and then we will be able to create something new. The problem for us now, the session
is called ‘Other steps for modernisation', which is the immediate step to do this
and many of us believe in order to achieve the further developing of modernisation we
need to work out a new way how to make the role of state, including state property,
less - not less effective, but in order to shrink it, because we now understand it's
too big. In order to grow further, in order to
develop the country further on we need to shrink the state ownership and we need to
learn how to manage things differently. Not only I mean now state craft.
We need to learn how to manage corporations in a new way,
municipalities, regions, federal bodies. In order to do this we will attract new
people, new generations of managers and so on and so forth.
So we understand exactly what to do. We have a very precise agenda.
We are very persistent and in order to do this we need just to work every day.
But what you have said, first, I'm sorry, I regret, but in order to provide a better
future I think my answer would be we will need to work all together in very close
cooperation. Once we work and do the job in cooperation we will avoid situations
like you had. Thanks for your question. Right here.
We're also very glad to doing very good business in Russia and we're also
investing to the Skolkovo project and we like both Skolkovo and Viktor Vekselberg,
so that's very good. But even listening to this panel I have
the following conclusion: that companies who are deeply in Russia they understand
all benefits and are doing really good business. And, by the way, even comparing
with China, everybody investing in China but nobody is making real money.
In Russia, less companies are investing but everybody is feeling very good.
But the problem is that transparency of all observation and number of company
is still limited, so I would like to come back to this question of rebranding Russia
and promoting Russia, because, to be frank, there are a few exceptions and the
gentleman over there having one of the few exceptions. There are a few really not
good stories in Russia, but there are few. It's many positive story, so how to
rebrand it, how to promote it more to make sure that all international community
knows about Russia, understand that it's a strong BRIC country to invest.
I think that's our challenge and opportunity for Russia, so that's the
question. Tom, if I may just add to what you're
saying. You asked a question earlier on what can Russia do to promote itself even
more and I think there's a little bit of a job to be done there, because companies
like ours have been there for 50 years, we understand Russia very well.
But I think in today's BRICs world, the CIVETS world or whatever acronym you want
to give to it, Russia is competing for capital and I think people still look at
Russia and say the demographics are working against Russia because your
population is not growing rapidly. People look at it as a cold country.
People do ask questions about corporate governance within Russia. So I think it
might be useful for Russia to embark on some sort of a campaign which talks about
the fact that don't focus just on the population in Russia, but it's the gateway
to Central Europe, East Europe and the CIS countries and taken together it's a big
market of 400 million people with scale in Russia, which is incredibly positive.
Second, on the corporate governance standards, if there can be some visible
proof that stuff is changing. We see lots of positive movement.
If it can be made much more visible, I think it will help Russia. And I think the
FIAC, the Foreign Investment Advisory Council that's chaired by Prime Minister
Putin is not a ceremonial committee. He comes to these meetings, he listens to
what everybody has to say and he actually goes off and acts on it.
I think it's highly unusual for any country to have a Foreign Investment
Advisory Council chaired by somebody as powerful as the Prime Minister and I think
publicising some of those things would actually help Russia and help the world
understand that Russia's open for business, understands that it's competing
with the other BRICs and really wants to make a difference.
Change in developing and emerging markets does not happen overnight;
we have to just recognise that and work with the countries.
There's a few more questions. Please, right here.
I work for Unilever and we share some of the better experiences that people have
spoken about. We have a great business in Russia.
In fact, we not only have some of our Unilever brands there, but we acquired an
ice cream business, Inmarko. I'm happy to say it's doing brilliantly;
a lot of people eat a lot of ice cream and that's good for us.
We also acquired a local iconic brand of sauces, Baltimore, and our experience
actually has been also that you can have a great business in Russia, great talent,
you've got a lot of investment on the ground, we are a big contributor to the
exchequer. I think it's less about transparency,
it's more about simplification. One of the requests I have is that we need
to simplify a lot of the administrative barriers and technical regulations,
regulatory environment. There is a lot of that and, in fact,
there is a lot of that that's at the centre, in some of the states and so on and so forth
and I know that there is now a working group of the Foreign Investment Advisory
Council where I'm happy to say that Unilever is very much part of that
and leading that. My request would be that if foreign
companies can play a more active role in terms of helping the industry regulatory
environment I think that will lead to, if you like, quote-unquote ‘transparency'.
It is less about transparency, it's more about simplicity.
That's number one. The second is a point about talent.
I do believe that Russia has tremendous technological talent, but I think what it
needs is business and management talent and allowing free movement of people,
easy access for people to come and work in Russia and I'm now talking about mundane
stuff but important stuff. Being able to get quick work permits to be
able to go in and out of country I think will also help build local talent.
So these are the two comments I had. Thank you.
More questions please. Is there someone at the back there?
I'm sorry, I didn't see. At the end, back row,
please. I actually want to touch on something that all of you have brought up, but it is
a bit of an elephant in the room, which was the fact of the shrinking population of
Russia. You are having 700,000 people a year reduction over the next 20, 30 years.
In the architectural field, many of the great architects are trained in Russia but
they leave and how does Russia keep its talent but also grow its population,
because the issues are not in the next five years, but in the next 50 years
and how do we treat Russia differently with a much reduced population?
Okay, I think your conclusion is based on old data.
Last year was a critical year for the population, our population became growing.
And I have to admit that it's not a very good situation with our population,
but Russian families now have more and more kids. We launched the programme five years
ago and both President Medvedev and Prime Minister Putin they are very active,
believing that giving some subsidies and benefits to the families, including free
residence and some subsidies based on the monthly payments and so on could help
people just have more kids and including school education, kindergartens,
because in Russian culture it's very important in order to let mums work very soon after
their delivery. So it's changing now and I wouldn't say
that we're in a perfect world and we have now three or four kids in each family,
that's not the case, but now it's becoming more fashionable to have kids.
I think it's like maybe 15, 20 years ago in the United States when you could see on
the buses and everywhere ‘get pregnant' and so on and so forth.
It's not that obvious in my country because the culture is different, but now,
just travelling around the country, in the small cities and the big cities,
fortunately, you see pregnant women and you see a lot of women with babies and so
on and so forth. So this is changing and now we have not
bad figures. Our death data is much better now than
five years ago. Because of alcohol consumption we had
a lot of death every year. Many people were dead in the traffic
accidents. So in all that aspect we are working and we have better and better
results. Maybe I'm wrong, but I think last year in traffic accidents we got 50,000
people less death than the previous year, so it's becoming better and better.
Still people don't want to fasten seat belts, they drink sometimes and we had to
adopt new laws. Before, we adopted European rules letting
people have some alcohol in the blood while driving.
Now we cancelled it, because we think it doesn't work.
So it's changing, slowly, but changing, but how we keep deterrent?
Since we are coming to a close, why don't you sum up whatever you'd like to say here
to close the panel, with the issue of talent and just generally what you have
taken away from this session? Okay. This issue again, talented people
leaving the country and coming back. My personal belief the more people leave
the country for education is very good for Russia, because the majority of them will
return. The more people will leave the country for seeking for better places
where they can live and their family, again it's very good, because they will
find better places where they can spend their lives.
But we have many people who return to the country from science, biology,
chemistry and so on, who left the country, who emigrated even the country, they changed
the citizenship and they now return to Russia and they want to work in Russia
and stay in the country. And in order to finalize all of this,
I heard today many positive things and we attend many sessions in different formats
and what I can hear now that the voices of positive are becoming stronger
and stronger. That's good, but it doesn't help to change the image, that's the problem.
We have strong supporters of Russian modernisation, we have strong supporters
for Russian investors, investments, but still if you switch on, turn on the TV
screen somewhere in Great Britain or in the States or you read the major papers
you read all awful stories about bad Russia, which is not true.
I think what you get there is not about nowadays Russia and not about modern
Russia. We need to correct this picture in order to reflect reality.
I don't want to present the picture as a perfect world, we are not perfect, but we
are not that bad.
So trust us, we can deliver. Stay with us and we will gain together.
Thank you. Thank you all for coming and thanks to our
panel. Thank you.