New downturn in more developed economy offers different opportunities
While Russia’s economy is contracting at the fastest pace in 15 years, the slowdown may actually provide a window of opportunity for both existing and new businesses.
The current crisis is not his Alex Shifrin’s first. Already in Moscow in 1998, he witnessed the collapse of the banking system and rouble losing two-thirds of its value over night. However Shifrin, the Head of TC Factory, says the 2009 crisis seems to be less fair, mostly hurting the smaller players.
“The reality of the crisis is that – and the difference with the 98 is that – this time it is more about protecting the corporate profits. If last time around everyone was in the same boat, the banks were closing, the Rouble was significantly devaluating, this time around jobs are being cut, marketing and advertising budgets being reduced to save corporate profits.”
Record oil prices saw a decade of expansion, with growth exceeding 8% a year, as companies provided goods and services that were entirely new to the market. For Chris Weafer, Chief Strategist at Uralsib, that’s bought about a different economy to weather the current downturn.
“In the 90’s we did not have an economy. The opportunities that were available then were more basic. It was the start of building an economy and entrepreneurs were able to take advantage of that. It was a green field situation. Today it s not the case.”
Finding a niche and hitting certain consumer target groups is essential for entering Russia now. The 2009 crisis offers a unique opportunity for entrepreneurs who missed the speeding train of Russia’s development.
Jet Republic offers consumers the chance to use a private jet whenever they need – through fractional ownership.
Placing an order for more than 100 business jets is cheaper in a crisis. They've even secured free redesigning of the cabin. And buying just 1/16th of a jet is appealing when even Russia’s billionaires have to tighten their belts, according to Jonathan Breeze, CEO of Jet Republic.
“We anticipate that Russia will account for 10-15% of our business. Russia is a massive market, huge population, massive number of entrepreneurs and many of them see opportunity in this crisis.”
Businessmen seem to be more positive about Russia’s future than economists, who forecast a slower recovery for an oil based economy.