GERMANY-RUSSIA BILATERAL RELATIONS

ShellThe way in which the Germans circumvent the economic sanctions introduced by the EU  and the Russian embargo on food from Europe, are FDIs in Russia. In 2016 German exports to Russia amounted to EUR 21.5bn. The volume of trade is currently at EUR 48bn.

At the end of February the German-Russian Chamber of Commerce (AHK) and the German Committee on Eastern European Economic Relations (Ost-Ausschuss der Deutschen Wirtschaft) published a survey conducted among German companies operating in Russia. It included 190 enterprises, whose total turnover in Russia amounts to EUR 29bn and which employ more than 120 thousand people in Russia  These were primarily companies from the machinery, consulting, food and trade industries. Half of the surveyed companies called for the immediate lifting of the sanctions against Russia, and 42 per cent wanted their gradual reduction.

According to forecasts of German experts, this year the Russian economy should grow by 1.5 to 2 per cent, and the entrepreneurs from Germany want to participate in the fruits of this economic upturn. For some companies from Germany, the way to overcome the sanctions and embargoes are FDIs in Russia.

In 2016 German companies invested EUR1.95bn in Russia, which is about EUR 170m more than in 2015.

Germany is among the most active investors in Russia. According to the E&Y report presented during last year’s investment forum in Moscow, there were 106 projects carried out in Russia by investors from Western Europe in 2015, the highest in a decade. German companies were involved in 36 projects (mostly in industrial production), which gave them the leading position among all foreign investors in this respect.

According to German companies present on the Russian market, agriculture and food industry are the most attractive sectors for investors in Russia. They were indicated by as many as two-thirds of those surveyed by the AHK Chamber and the German Committee on Eastern European Economic Relations. The manufacture of machinery and equipment and the energy and chemical sectors received half as many indications.

Despite the crisis, some 5200 companies with German capital investment have stayed in Russia and are preparing for the economy to pick up again. Many companies have remained in Russia in the hope of recouping the losses they made due to the crisis.

FDI Inflow in Russia (2015)

Million $

1. France: 1,686
2. Germany: 1,483
3. United Kingdom: 1,104
4. Ireland: 623

The above countries despite the sanctions are still among the main investors in the Russian economy.

FDI Outflow in Russia (2015)

1. Cyprus: (7,057)
2. Luxembourg: (5,770)
3. Hungary (452)
4. Finland (272)
5. Netherlands (249)
6. Norway: (93)

Major Foreign Investors in Russia (EU Countries)

France

1. Danone
2. Michelin
3. Actaris
4. Alcatel-Lucent
5. Citroen
6. Daher
7. Fisher-Rosemount
8. Lafarge
9. Peugeot
10. Total

Germany

1. Mercedes Benz
2. Siemens
3. Deutsche Bank
4. Volkswagen

Finland 

1. Nokia
2. Fortum
3. Neste
4. Finnair
5. Atria
6. Stockmann
7. Nokian Tyres
8. Stora Enso
9. UMP

Netherlands

1. Ikiea
2. Agrico
3. Apexmed International
4. Akzo Nobel NV
5. Bausch & Lomb
6. Chemtura
7. Grasso
8. Heineken Export Group
9. Hewlett Packard Europe
10. Kenwood Electronics Europe
11. Salym Petroleum
12. Toshiba Medical Systems

United Kingdom

1. Shell
2. SMD
3. Land Rover
4. Rover
5. Jaguar