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Russian Machine Tool Market Opportunities And Challenges Coexist In Urgent Need Of Strategic Restructuring
Jan 16, 2018

In recent years, Russia's economy has been severely challenged internally and externally. External sanctions imposed by the West for the crisis in the Crimea in 2014 left the three core economic sectors - energy, finance and defense, at a blow. Russian state-owned banks and enterprises were restricted to EU capital markets and banned U.S. banks from providing loans to large Russian banks, energy sources and defense companies with maturities over 90 days.  
   
  Urgently Needed For Strategic Transformation 
   
  In recent years, Russia's economy has been severely challenged internally and externally. External sanctions imposed by the West for the crisis in the Crimea in 2014 left the three core economic sectors - energy, finance and defense, at a blow. Russian state-owned banks and enterprises were restricted to EU capital markets and banned U.S. banks from providing loans to large Russian banks, energy sources and defense companies with maturities over 90 days. Meanwhile, the sharp drop in international oil prices has also had a huge impact on the Russian economy, the ruble continued to fall. However, the industrial structure that is internally trapped in long-term accumulation is irrational and the development of light and heavy industries is unbalanced. It relies too heavily on the economic pull of heavy industries such as military and energy industries. Its domestic infrastructure lags behind and its logistics network lags behind. Its economic development relies heavily on exports of resources and is overwhelmed by many factors. The economy of Russia is in urgent need of strategic restructuring.Tooling Steel CNC Machining Parts Manufacturer   
  In 2015, Russia's industrial production index continued its negative growth, which was about 3% lower than in previous years. Into 2016 Despite some signs of improvement in the industrial production situation, investment is still a weakness of the Russian economy, accounting for only 20% of GDP. Take the traditional user machine tool industry as an example. According to statistics from the Russian Bureau of Statistics, from January to October 2015, Russia's light-duty vehicles produced 1.1 million sets with a year-on-year decrease of 23.2%; total production of trucks was 103,000 units, with a year-on-year decrease of 18.3%; bus production totaled 29,000 units, Down 16.6% from a year earlier. In October, the sales volume of new cars in Russia was 130,000 units, down 38.5% from the same period of previous year. The cumulative sales decline in January-October was 33.6%, which has been the decline in 21 consecutive months. Visible car market is still struggling to glide channel.Steel Casting Parts Manufacturer    
  According to the report by GARDNER in the United States, the Russian machine tool market consumed $ 2.030 billion in 2014, ranking the 7th in the global machine tool consumer market with an import volume of 1.869 billion U.S. dollars, making it the fourth largest machine tool importer in the world while the domestic machine tool only produced 234 million U.S. dollars. Among the 27 major machine tool producers, it is ranked 20th with a self-sufficiency rate of only 10%. The Russian network reported slightly different: in 2015 its dependence on imported machine tools dropped from 88% in 2014 to 80%. In any case, the Russian machine tool industry is still weak, mainly dependent on imports, the high degree of dependence on foreign countries is indeed a fact. Its market demand presents multi-level, high-end demand potential is larger, but also the industry consensus.

 Issued A Number Of Industrial Policies
   
Russia's machine tool industry at this stage weaker capacity, the market consumes large, mainly dependent on imports. In order to change the status quo, the Russian Federal Government introduced a number of measures:

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(1) Promulgation of the Industrial Policy Law (approved on December 31, 2014). The law is the basic document for the reform and development of all industrial fields in Russia in the future.CNC Casting Aluminium Manufacturer Emphasis will be given to establishing industrial development funds, providing low interest rate loans to domestic industrial enterprises, giving priority to the purchase of domestic industrial products by government procurement, and promoting the development of the national defense industry system, including Improve the industrial infrastructure, the formation of military products price mechanism, as well as the external distribution of national defense orders mechanism; to encourage scientific research to production and application transformation.

(2) Formulate a tax reduction plan for industrial enterprises and amend the tax law. Tax relief after the Russian federal fiscal should be levied profits tax exemption of industrial enterprises, local relief 60%.

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(3) Introduce financial subsidies. About 296 million U.S. dollars have been allocated to 85 regions for the promotion of SME development.

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(4) The establishment of import substitution committee. The committee consists of a civilian economic subcommittee and a defense industrial complex subcommittee to promote the substitution of import and assembly industries by the civilian industry for import substitution.
(5) Financial support to key industries. In 2016, Russia will support 50 billion rubles (about US $ 770 million) to support the automotive industry; and introduce a new freight subsidy policy for cars manufactured by automobile companies in the Far Eastern Federal District and shipped to other parts of Russia. In aviation manufacturing, Russia will provide its own aircraft manufacturers with a subsidy of 4.4 million U.S. dollars. CNC Casting Machining Parts Manufacturer    
  The Future Needs Of High-End, Large-Scale, Special Equipment 
   
  Russia is the largest market in the "One Belt and One Road" strategy and is also an important founding member of the AIIB. It occupies an important position in the "Belt and Road Initiative." The "Far East Development" strategy of pushing the center of Putin's development eastward is consistent with the "Belt and Road" "Strategic focus fit, sparked a new market space for China-Russia economic cooperation.
   
  Russia's largest market demand for machine tools, comes from the military, energy, infrastructure construction and other fields. In 2011, the Russian government set investment plans in these key areas. For example, it invested 300 billion U.S. dollars in construction of power facilities and nuclear power plants in five years and 900 billion U.S. dollars in 10 years to build military equipment. In May this year, Putin approved the military development plan for the next four years. During the second phase of its "Far East Development" strategy, 2016-2020, it will implement large-scale energy projects to expand passenger and cargo transport traffic and build a network of transportation routes including railways, highways, airports and terminals and increase the proportion of deep processing of raw materials.Aluminium Automotive Machining Parts Manufacturer

   
  The recovery of the Russian market concerned by the industry is constrained by multiple international and domestic political and economic factors. At present, the uncertain variables remain uncertain. Some experts think that if the international oil price can stabilize at more than 50 US dollars / barrel, the Russian economy is likely to turn around in 2017.

Chinese Machine Tool Enterprises To Enter The Russian Market, Practical Experience

   
  As the Russian machine tool market is strongly influenced by the government's own autonomy, especially since the implementation of the Industrial Policy Act in 2015, more than 10% of the equipment procured by government procurement and military enterprises must be value added in the production in Russia, and this The proportion is still increasing by 10% per year, so foreign brands entering the Russian market will encounter high threshold. 
   
  Dalian Machine Tool Practice: Fitting a joint venture to build a factory to deal with Russia's stricter government procurement policies. Dalian Machine Tool Group two years ago with China Poly Group, the Russian state technology group tripartite negotiation of joint investment in Russia set up a CNC machine tool manufacturing company. The joint-venture company's products will be manufactured in Dalian, the Russian assembly. As a result of localized production can participate in the tender, coupled with the reduction of logistics costs and after-sales service improvement, profit is expected to increase. Previously, Dalian Machine Tool has been operating in Russia for many years, has a mature sales channels and market development experience of employees, at the same time in cross-border mergers and acquisitions, joint ventures and cooperation, also have accumulated rich experience. Beijing Cage approach: long-term cooperation in depth, adhere to the principle of win-win situation. Beijing Cage CNC Equipment Co., Ltd. High Precision CNC Machining Aluminum Manufacturer. has been cultivated in the Russian market for more than 20 years. Shortly after the dissolution of the Soviet Union, Cage joined hands with Shenyang High-Precision and Russia in the establishment of the Russian company Baltic Systems, which opened long-term and deep cooperation in the field of numerical control systems. The software system was mainly developed by Russia and the copyright belongs to Russia. Hardware Equipment developed by the Cage company. The system is one of two local brands of Russian numerical control system, the installed capacity of the local machine tool in Russia reached 70%. 
   
  Shows that the Russian machine tool market has greater room for growth and strategic potential, but there are also various obstacles and risks. Wherever the domestic enterprises are established, after all long-term management, to make arduous efforts. China's more machine tool companies should take advantage of the current favorable opportunity to open up the Russian machine tool market. At the same time, attention should be paid to guard against various risks, including risks of financial risks, currency settlement risks and policy changes. Also need to consider the issue of language communication, the current popularity of English in Russia is far less than China, and our country is also less Russian talent.Aluminum CNC Turning Manufacturer



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