German business looks for growth in Russia

Business leaders say German companies will continue to invest in Russia - though their approach to investment is changing.

The crisis won't scary away German firms that already invest in Russia according to the Head of the Russian-German Chamber of Commerce, Michael Harms. He says some companies even plan to buy assets on the Russian market next year.

“For example in such a sphere as retail business I expect acquisitions and not only in the food sector but also in non food retail.”

Russian retail analysts say the crisis forced companies that account for 27% of the food retail market to look for a buyer. German chains like Aldi and Liddl are reportedly searching for assets to enter the Russian market. In addition, retail chain Metro Cash and Carry, which already has a presence in Russia, plans aggressive expansion here in preference to other markets where it has cancelled growth plans.

The Association of European Business in Russia also expects German companies to make green field investment in the country next year, according to CEO, Doctor Frank Schauff.

“Foreign direct investments in terms of green field investment might come up in next few months and years. I think here are certainly, not publically, but, behind the scenes are going on interesting developments. Companies are thinking about entering the Russian market, setting up production for example. And I think this is a good sign.”

The crisis is forcing foreign investors to think differently about emerging markets, focusing on those countries – and sectors – with the best growth potential. For Russia, German business are keen to invest in consumer, car and, perhaps surprisingly, banks.