Italian Business on the Rise

ENEL

Italian business in Russia spans a large number of areas from what some may see as the traditional spheres associated with Italy — fashion and food — to energy giants Enel and Eni, high-tech projects such as the SuperJet 100 and manufacturing areas like household appliances major Indesit.

The huge number of businesses working in and with Russia has helped make Italy Russia's second biggest trade partner in Europe after Germany.

"Italy traditionally has a strong presence in Russia, historically since the 1960s when Fiat came here," said First Counsellor, Head of Economic and Trade Section of the Italian Embassy, Leonardo Bencini. "We have always been present in Russia in many sectors since then."

Most famously Fiat in particular helped create the Russian car company AvtoVAZ, which produced Ladas based on a Fiat design. The town where AvtoVAZ is located was renamed Tolyatti in honor of the Italian communist Palmiro Togliatti after his death in 1964.

Fiat was one of many Italian businesses that had success in the Soviet Union, which explains why the Italian Chamber of Commerce is one of the oldest of its type in Russia at 47 years old. Trade turnover between the two countries reached $37.3 billion in 2010, according to the Russian Customs Service.

This was made up of $10 billion of Italian exports to Russia and $27.3 billion of exports to Italy, mainly gas, energy products and minerals.

It represented a respectable recovery after trade turnover dropped to $25 billion in 2009 after the financial crisis.

"We are the second country in trade in Europe, and we believe that we can grow further," Bencini said. Much of the trade is made up of the three F's: food, fashion and furniture, he said.

"Russians love these products of Italian lifestyle," Bencini said. For example, Crocus City hosts a huge expo of Italian furniture each year.

One of the biggest areas of cooperation is in energy with Enel and Eni, two Italian energy giants that have huge investments in Russia.

Rich Russians' love for designer products has been very beneficial for Italian businesses: Anyone who walks through the center of Moscow can see Dolce & Gabbana near Armani and Salvatore Ferragamo.

The Italian Embassy celebrated the 150th anniversary of Italian unification on March 17 with Domenico Dolce and Stefano Gabbana, by now regular visitors to Russia, as well as actress Monica Belucci. Another successful Italian company in Russia, Martini, was also involved in the event. Belucci is the face of Martini's D&G Gold.

One of the biggest areas of cooperation is in energy with Enel and Eni, two Italian energy giants that have huge investments in Russia.

Enel, the second-largest electricity operator in Europe, is deeply involved in the Russian electricity sector that is in the middle of a planned liberalization program. The company has a controlling stake in the power generation company OGK-5, which was one of the first companies to attract private investment.

Enel's commitment to Russia was seen this year when it said it would invest close to 1 billion euros ($1.4 billion) in the next four years in Russia. "The Russian economy is expected to continue growing, and its market fundamentals look promising," Enel said in a statement. "That is why Enel will strengthen its strategic role in the country."

Enel is also involved in the nuclear industry in Russia with a possible project for a nuclear plant in Kaliningrad. Prime Ministers Silvio Berlusconi and Vladimir Putin oversaw the signing of an accord in April 2010 that would make Enel the first foreign owners of shares in a Russian nuclear plant. A final decision is expected in July.

The company also has an agreement with Russian energy company Inter RAO UES for cooperation in the nuclear field, especially in the field of technical innovation.

"By all our activities we are showing that Russia is a strategic market for our company. Enel is looking at Russia long-term, and is developing our vertically integrated presence," said Enrico Viale, chief operating officer Russia. "With† power generation as our main asset, but also with a focus on upstream gas (to feed our power plants) and electricity retail to grant supply to final customers. We are also ready to contribute with our experience and expertise in power distribution to help increasing energy efficiency in Russia."

Eni has a strategic agreement with Gazprom so that it will receive gas up to 2035, making it Gazprom's most important client. It is also a partner in the proposed South Stream gas pipeline, and the two work in their respective countries and together in other countries.

Italy, like many countries, is eager to help Russia as it tries to update its aging infrastructure and help Russia with modernization and innovation, the key buzzwords of President Dmitry Medvedev's term.

"We can cooperate with Russia. They want to make progress, and we have the know-how," Bencini said.

With Russia updating its aging railway stock, Alstom has supplied four tilting Pendolino trains to Russian Railways for the Helsinki-St. Petersburg high-speed route.

Other areas of cooperation include the financial sector with two Italian banks: UniCredit, which has been in Russia for more than 20 years, and Intesa San Paolo, the leading banking group in Italy, which has a framework agreement with Vneshekonombank to provide support of trade between Russia and Italy by supporting small and medium enterprises.

Italian businesses are leaders in recycling and waste disposal, both technologies that are of great interest to Russia, he said.

Fiat, which helped — along with other companies — start Italian investment in the Soviet Union, continues to play a big role in the car industry in Russia. Fiat is considering plans to build a plant to produce as many as 300,000 cars a year, the manufacturer said in a statement earlier this year.

Italian companies have spread out far into the regions. Perfetti Van Melle has a chewing gum and candy factory in Novgorod, while Ferrero has a 200 million euro investment in a facility in the Vladimir region. The vast Parmalat Group, famed for milk, dairy products and fruit-based beverages, has two plants in Belgorod and Yekaterinburg as well as a logistics center in Podolsk.

Marazzi, a top international player in the ceramic tiles sphere, has two regional bases: ceramic production in the Oryol region and porcelain in Malino in the Moscow region through its affiliate Kerama Marazzi Group. Candy, famous for its washing machines and other household appliances, has a factory in the Kirov region.†††


Russia - Italy 2011
Russia - Italy 2011
This color publication is devoted to the Year of Italy in Russia, which will see a host of cultural exchanges in 2011, as well as to Italian businesses working in Russia.
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