The view from St Petersburg: Andrew Cranston

With business and economic leaders gathering for the St. Petersburg International Economic Forum Business RT spoke with Andrew Cranston, Senior Partner, KPMG in Russia and CIS, about profile of Russia as an emerging economy and its S&M sector.

RT: Russia is pushing the companies to implement international accounting standards. Do you think, this all will make foreign investors happier? Do you think, this all will bring more money in?

AC: “It’s definitely a positive step, because it’s a part of being modern, transparent economy. And that’s what investors would expect. By itself it’s not going to change the picture overnight, but it’s one of the steps you need. When you take them all together, you will get the investment climate people are talking about and really want.”

RT: Developed market companies are seeking acquisitions in the emerging world and Russia is a popular target. What do you think this is and do you think this trend is going to continue at all?

AC: “As you say the developed countries are looking at the emerging markets, as the growth is there.But I think, they have to consider all the options, not just one or the other, but to look at all them, and they all are different, The thing though that stands out with Russia, if you look over the past 10 years or so, it’s not only huge growth, it’s a really high profitability. This is a kind of magic, so, this is a very attractive market despite all of the problems and issues that we hear about.”

RT: There’s a lot of hope for small and medium sized businesses to further economic growth in China. That’s up in the President highlighted. He said in his address that private businesses need to be the spur and engine of the Russian market. What role do you think those small and medium size businesses will play and do you think they’ll continue to grow?

AC: “It’s really important for Russia’s further growth that this sector expand quite dramatically and it’s an area, I think, where there are still quite a lot of concerns, because it’s easier to operate in Russia if you are a big company, you can get your voice heard. If you are smaller, it’s not so easy. But if we look at some specific examples, innovation is a sector where typically a lot of bright ideas are driven by smaller and middle size companies. But also, I think, if you look at the modern automotive factories that are being built in Russia, as you build a big factory, you get a lot of spinoff effects on the economy, where you need a lot of services, material and that’s often room for small and medium sized businesses.”