Doing business in Russian regions

(on the example of the Udmurt Republic)

Russia as it really is

According to Ernst & Young's European Investment Monitor, 2011, Russia was Europe’s fourth-largest FDI destination in 2010, attracting over 200 projects, up 18% on 2009.

Yet, its share of total European projects was little changed at 5% in a recovering European FDI market. The number of projects has grown in each of the past five years, and is up 130% since 2006.

Investors already present in Russia are keen to invest more. Among companies established in Russia, executives of 66% are considering increasing their operations.

The opportunity for investors is to make consumer goods and sell them to Russia’s emerging middle class.

Affordable labor and improving logistics are a strong benefit for investors.

Investors see possibilities for productivity gains in Russian operations.

Investors see a mixture of Asian and European investment appeal.

Russia as it really is

Investors who come to Russia do not venture very far inland: 49% of investment projects are in Moscow or St. Petersburg.

According to most experts, these markets are reaching their saturation point. For this reason regional diversification in business is assumed to play a crucial role in making decisions relating to business management.

The Udmurt Republic located in European Russia - about 1300km east of Moscow and west of the Ural mountains - is proposed to be one of the most promising opportunities and prospective FDI destinations.

The National Association of Innovations and IT Development (NAIR-IT) revealed the average level of investment activity in the region and the Udmurt Republic has been ranked №28 among 83 federal subjects of the Russian Federation in the “Rating of innovation activity of the Russian Regions 2010”.

The Role of Regions

Investment attractiveness profile

of the Udmurt Republic

Neighborhood with major industrial centers of the Urals; Unique natural-resources base, rich oil deposits, forestry

resources, a well developed agricultural sector with advanced technologies;

Full-fledged transportation infrastructure, easy access to major air, railway, road and river thoroughfares;

Powerful industrial complex of processing industry, metallurgy and machine-building;

Sound financial infrastructure, a wide variety of credit or leasing facilities;

Economic Incentive tools for investors, active government support for investments;

Highly qualified industrial and science-and-technology workforce, presence in the Udmurt Republic of research and education institutions, leading technical universities and scientific-and-research centers;

Steady economic growth in recent years; Decent standards of living, high effective demand for

various goods and services

Geographic Location

The Udmurt Republic is located in close proximity to major industrial centers of the Ural region – Yekaterinburg, Chelyabinsk, Perm, Ufa, etc.

Overall length of railway lines is 768 km, total network length of all public roads - 5989 km, navigable inland waterways 181 km (with direct access to the Caspian, Black and Baltic Seas).

A successful mix of over 300 medium-sized businesses and large enterprises operating in the Udmurt Republic show effectiveness and stable corporate culture with high performance. The enterprises possess a highly skilled and professional workforce that uses state-of-the-art technologies and advanced machinery and equipment.

The foundations for achievement of high standards in quality production were laid in the process of production for military orders known for strict requirements for high quality manufacturing standards worldwide.

The Udmurt Republic has a leading position in the market of Russian branded consumer goods, holds a 80% market share of Russian hunting & sporting firearms, considerable market share in the special purpose vehicle industry, well-known for its crude oil production.

Industrial Potential

The natural environment and climatic conditions allow a broad range of diverse agricultural production and food industry development in addition to providing raw materials to the agro-processing industry.

The Udmurt Republic is in top-10 of largest Russian livestock producers, enjoys full self-sufficiency in staple food for own consumption and increases the volume of its supplies to other regions annually.

The major traditional technical crop is fiber flax. The Udmurt Republic is one of the leading flax fiber manufacturers & flax fiber suppliers ranked 4th in Russia in terms of gross croppage.

Agro-complex

The Socio-economic Development Strategy of the Udmurt Republic for 2010 - 2014

1. Establishing favorable legal and organizational conditions for attraction and encouraging the inflow to the republican economy of financial resources, investments, advanced technologies, best practices and know-how resulting, among other things, in the renewal of fixed assets;

2. Successful project fundraising to innovative technologies ensured by efficient interaction between science and industry;

3. Formation of infrastructure to support innovative activities (engineering centers, venture funds, business incubators, innovation and technology centers, technology transfer centers);

4. Training of advanced manpower suited to innovation-based industries including technical specialists for successful introduction of innovations in production ;

5. Transition of the economy to an innovation-based development model by creation of integrated structures, developing “new” industries according to the List of Critical Technologies of the Udmurt Republic, etc.

State Support

The best and most effective and less costly way to

start and develop a foreign business in the Udmurt Republic and/or in any other Russian region is to engage a reliable partner with

a highly experienced team who will support

you at every stage.

Let us introduce a “no worries” partner to you – Company “European Staff RUS”.

“European Staff RUS” is an international business consulting company with over 9 yearsexperience of providing for the internationalclients the Russian market entry unique and competitive solutions ensuring fast and easy successful development of your business in the Russian regions.

Our corporate client base varies from large tosmall businesses from Europe and the CIS.

Getting your business started in the Udmurt Republic and

Russian regions

We provide you with a full range of services for your

business development in the Russian territory:

1. Market research in different industries

2. A wide spectrum of corporate services incl. organizational and legal solutions to overcome non-economic and administrative barriers, representation of interests in state agencies and authorities

3. Seeking and selection of highly-qualified specialists in different industries, fields and specialties for the needs of your business

The scheme of breaking into the challenging Russian

market

In cooperation with “ES RUS”our clients receive success inyour business development andguaranteed expansion into newmarkets in Russian Regions.

These opportunities are available

through our extensive branchand outlet network andgood working relationships

withreputable Russian

organizationsand state authorities.

Opportunities for expanding business

to the Russian regions

Contacts

EUROPEAN STAFF-RUS30 Let Pobedy street, building 2,

Izhevsk, 426033 the Udmurt Republic, Russia

E-mail: info@es-bv.ru Тel./fax: +7 (3412) 933-560

THANK YOU!