Positive and negative factors of the Russian market

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Positive and negative factors of the Russian market
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Director General of Construction.ru Alexander Gusev talks to the CEOs of the Saint-Gobain company, the largest producer of construction materials in the world. Senior Vice-President and Head of Global Sector “Construction production” Claude Imauven and Scientific Research and Innovations Director Didier Roux answer the questions of our magazine

A.G.: — First of all I want to thank you, Mr. Imauven and Mr. Roux, for meeting with us, and let me congratulate you on the occasion of the company’s anniversary.
Saint-Gobain is an international company with a long and rich history. It invests in Russia and other countries. Which country is a priority now? Where have you invested most of all for the last couple of years?

— I would rather speak on the region, not restricting to countries. For the last two years the most active investments have been in South-Eastern Asia. But there are special territories, developing gigantically from the point of view of the market dynamics. I mean North America. You know, there was a deep crisis that seriously touched the construction industry, and now the North American market is developing rapidly.
Before the crisis the number of houses under construction surpassed 2 million, during the crisis for the first time in the 50-year-long history of the construction market in North America this number decreased lower than a million, and at the peak of the crisis it reached about 600,000 new construction projects started during the year. Now, according to the analysts’ data, about a million construction projects a year are initiated in the region, and we plan that in 2015 this index will reach 1 100 000 projects.
It doesn’t take any additional investments because production facilities have already been localized.

A.G.: — Thank you. The second question has become rather traditional: do you feel any pressure from French authorities as far as your active business development in Russia is concerned?
C.I: — No pressure at all. We work in the local market, our clients are the local distributors, local builders. We do not feel any kind of pressure from the state authorities.

A.G.: — When you invest in a country – we do not speak only about Russia – do you use borrowed money or your own assets?
C.I.: — We use both sources, naturally. It is the basis of economic theory: to use both finance sources to make capital investments more efficient. In the Russian market we work with the European Bank of Reconstruction and Development, which helps us in investments, and we use our own assets which, as you may know, are significant in our world-leading companies.

A.G: — And the last question. You have visited many countries of the world: in South-Eastern Asia, North America, Europe, of course… What makes the Russian market differ from others, say, in South-Eastern Asia? Are there any peculiarities of the market?
C.I.: I travel a lot. And the most evident thing, to my mind, is that it is rather cold in Russia. It is important for us to understand it, because we actively develop heat insulation materials production. There are some low temperature zones in China, but when we speak about South-Eastern Asia we mean a warmer climate. That’s why the first production line introduced by Saint-Gobain in Russia was insulating materials.
And if we compare the markets of Russia and South-Eastern Asia, I would first mention the negative feature characteristic of the Russian market: the demographic situation. But the positive factor is that the market starts from an already existing solid foundation. I mean the excellent educational system. We have no difficulty in finding highly professional specialists – both engineers and scientific researchers and investigators. It is very important for such a large industrial group as Saint-Gobain.
The potential power for market growth and development is great in Russia. It is determined by a discrepancy between a large amount of dwelling and its quality. There are a lot of housing areas in Russia but they do not correspond to the norms in energy consumption, environmental friendliness, noise insulation and other norms. The Russian Government shares this opinion, and takes measures to update norms and standards.
If all market players, all interested parties could combine their efforts in the necessary direction and provide the necessary synergy, the deep and developed scientific research potential of the country would result in the creation of new effectual standards in the field of construction. We place considerable stake on the innovative technologies development and enter the market from the highest the most expensive segment, as we are sure that Russia must become the market of high-level segment.

A.G.: — It is surprising for me that you think our construction education to be of a high level, as there are a lot of complaints about our higher institution graduates. Are you really satisfied with education quality?
C.I.: — I’d rather let Didier speak on this point because he deals with universities.

D.R.: — Traditionally education in the field of science and technology is very strong in Russia. Of course, there were some difficulties connected with historical changes in the country, but for the last 5-6 years we have noticed significant efforts in education quality improvement. Considerable investments are made at the local level and we see the results. The main partnership programs are initiated with the advanced construction universities, which managed to preserve their potential. So we work seriously in Russia and at present we have no problem with hiring highly qualified specialists. Of course, we see the necessity to train specialists, to organize additional training for operators, builders who will practically use our technologies and materials, and we are ready to such work. Now we are present in Saint-Gobain Academy, the main aim of which is to train builders in their profession.

A.G.: — Thank you.
A.G.: — And in the end of the interview a very short question. You’ve been to Russia several times. What do you like here besides business?
C.I.: — First of all, I adore Russian culture. I like Russian music. You know, Russia is alittle-known country in Western Europe. For the first time I visited Russia as a tourist in 1981. I was in Leningrad, in Moscow, in Suzdal, and I was deeply impressed. And I’m very glad to have the opportunity to visit Russia again.

A.G.: — Thank you for the interview and we wish you success in your business.