From Russia, without love
Two years ago, investors were falling over themselves to invest in Russian businesses. Russia’s economy was booming, luxury brands were developing super high end products explicitly for the Russian market, and Moscow boasted more millionaires than any other city in the world, barring New York.
How times have changed. All the talk is now of India and China, and Russia’s businesses, as reported in the FT here , choked of capital, are looking to non-Russian markets for funding.
The problem is what one analyst has described as “the Russian risk factor.” While probably not widespread, much of the word on the street in London last year was that Russian businesses were arrogant and secretive, and that it was commonplace for armed guards to be there as much to intimidate investors as to protect the personal security of the oligarch class.
It would be wrong, of course, to label all Russian businesses as crooked, but they will need to work extra hard to overcome the prejudice that has been formed in recent years. For instance, plenty of them still wear the clothing of Soviet-era enterprise, so presenting a fresh face would help. However, beyond that Russian businesses need to demonstrate both transparency in their operations and a clear sense of sustainability, given that many of the businesses looking to list are mining or chemical groups.
Comparing Alrosa to De Beers, for example, shows just how far Russian heavy industrial businesses have to travel. De Beers’ ‘A diamond is forever’ campaign was brilliant, and showed a keen understanding of how influencing perceptions throughout the supply chain can enhance the value of its business. De Beers also understands how much scrutiny its mining activities are under from international investors concerned about the long-term impact of mining on communities in Africa.
On its website, Alrosa’s historic highlights end in the year 2001 and its photo arhive [sic] is empty, both of which hardly bode well for the company.
This is a classic corporate brand issue. Russian businesses need to consider how they need to be seen the marketplace and what their corporate brands need to stand for to make the most of their fundraising initiatives in the coming months.