YOU JUST CAN'T IGNORE RUSSIA

Russia is a tough market but a good one. By 2020, Russia will rank higher than Germany in the top ten economies of the world in terms of GDP measured at Purchasing Power Parity (PPP) terms and become the fifth largest economy behind China, USA, India and Japan. Russia is set to become the largest consumer market within ten years. That means no global consumer-foods, financial, auto or food company can really afford to ignore it.  The evidence is everywhere: from U.S. drinks giant PepsiCo Inc. buying a 66% stake in Russia's leading dairy and juice group Wimm-Bill Dann Foods for $ 3.8 billion, to French yogurt firm Danone SA that has teamed up with local dairy company Unimilk creating a group that captures more than one fifth of the Russian market, to Italian bank UniCredit recently vowing to add hundreds of branches in the country, to UK travel specialist Thomas Cook PLC entering the growing tourism market with a 50.1% stake in local expert Intourist, to Barclays PLC that has set its goal to become Russia's top foreign investment bank. The financial sector is particularly attractive to foreign firms as the opportunities are big, especially in the nascent mortgage sector. Industrial ties with Italy and Germany have gotten stronger, benefiting the likes of Finmeccanica SpA and Siemens AG. With the realization that it must look beyond oil, Russia has also started to adopt a more welcoming stance toward foreign investors. Admittedly one of the main issues plaguing Russia is corruption, both real and perceived, but there is hope the government will start tackling the issue as Russia turns increasingly outward.  Domesticaly, the political focus is already on the next presidential elections, in 2012, but observers believe that whether Mr. Putin runs or not matters little as the same elite will keep ruling the country. What is key is a smooth transition and a steadfast approach to foreign investment. It is likely that the big strategic investors will likely come after the elections, when they're confident of Russia's direction.