Russian conference is big business showcase

Marketplace Contributor Jun 20, 2012

Russian conference is big business showcase

Marketplace Contributor Jun 20, 2012

Kai Ryssdal: Businessmen and women from Russia and beyond will gather tomorrow in St. Petersburg. It’s the city’s 16th annual economic forum. Russia’s once and future president Vladimir Putin will give his first major pitch to global investors since he returned to power six weeks ago.

Peter Van Dyk reports.

Peter van Dyk: Applause is guaranteed whenever Vladimir Putin speaks to big investors. He can expect the same reception tomorrow as he opens the St. Petersburg International Economic Forum. That’s because Putin’s Russia is good for big business.

Not everyone is so enthusiastic. Many small business owners are among the protesters who’ve hit the streets in their thousands over the past half year. Often, they’re educated young Russians who have made their own way in business. People like Yevgenia Fedorovskaya.

Yevgenia Fedorovskaya: This is a Russian designer. She’s making dresses.

Fedorovskaya runs an online women’s clothing store with a friend. They set up Click Boutique after the economic crisis of 2008 put their employer out of business. But the welter of Russian regulations has not made it easy.

Fedorovskaya: When we were starting we thought that we would be like white and clean and everything will be perfect so we can sleep well.

The biggest problem for all small clothing retailers, Fedorovskaya says, is the expense of importing clothes to sell.

Fedorovskaya: The customs tax is very big.

Those costs are passed on to customers. When the middle class women who shop at Click Boutique go on vacation in Europe, they see the same brands, but cheaper. This is the bureaucratic cost of doing business in Russia. The government knows it has to do something about it.

Kirill Dmitriev: To reduce bureaucracy in different sectors is definitely a very important step.

Kirill Dmitriev is the head of the government’s Russian Direct Investment Fund. He is at the forefront of Russia’s drive to modernize its economy — with $10 billion to invest in the country along with foreign partners. Dmitriev admits there are problems with bureaucracy, and corruption, and the rule of law. But he says they can be exaggerated.

Dmitriev: What many investors actually see who invest in Russia and who think about concrete opportunities is actually an opportunity for economic growth that they actually cannot find too much in other markets.

Those opportunities will be part of Putin’s message to international investors in St. Petersburg. They come in part from Russia’s booming middle class. By some estimates it has tripled in five years, and it has certainly helped Fedorovskaya’s business get going. But does she expect the state to make things easier?

Fedorovskaya: No, no, no, I don’t think so. Most entrepreneurs in Russia, they don’t wait for help, they just want nobody to touch them.

Small business owners the world over want to be left alone to make money. But here, with Putin’s ruling United Russia party championing big business, small businesses are often left to fend for themselves.

In Moscow, I’m Peter van Dyk for Marketplace.

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