Russian-French business and cultural ties receive a boost in National Year celebrations

The year 2010 has been declared the Year of Russia in France and the Year of France in Russia. Consequently, both countries are holding numerous events at different levels aimed at further deepening their bilateral relations. In this interview, Philippe Pegorier, the trade counselor at the French Embassy in Russia, shared his views on the current business relations between Russia and France and what businesses and governments of both countries need to do to reach new heights in their bilateral ties. 

How would you, as the embassy’s top official keeping tab on the business ties between Russia and France, assess today’s cooperation between these countries? 

The relations between Russia and France have significantly improved in recent years and, more importantly, this has happened very quickly. The changes have affected both politics and economy. If you have a look at the calendar of our leaders’ visits, you will see how packed it has been. For instance, Russian President Dmitry Medvedev officially visited France this March, and in June, Prime Minister Vladimir Putin was in Paris to open Russia’s National Exhibition in Grand Palais. Furthermore, Economic Development Minister Elvira Nabiullina is scheduled to visit France in mid-December. From our side, President Nicolas Sarkozy was the guest speaker at the St. Petersburg International Economic Forum in June, while Economy, Industry and Employment Minister Christine Lagarde, who also visited Russia in June, will be back again in October to attend a meeting of the Russian-French Joint Commission for Economic Development in the Kaluga Region. Also, French Prime Minister Francois Fillon will visit Russia in December. Therefore, as you can see, we have very frequent meetings at the highest levels, mind you, here, I’m not talking about those at the ministerial levels. All these are proofs that the green light is burning brightly for our relations, including those in the business sector. Besides, I would like to note that our businesses have been feeling this positive tide in our relationships now for several years. 

Indeed, the representatives of Russia and France often meet at different forums, and once can really see that the relations between them have greatly improved. How have these high-level contacts impacted on the scope of economic cooperation?

These contacts contribute greatly to our productive economic cooperation. For example, our annual trade turnover has grown to 15bln euros, a figure that is five times higher that was the case five years ago. Of this amount, French exports accounted for about 5bln euros, while imports from Russia accounted for the rest. Today, France, with an aggregate volume of direct investments of 6bln euros, is the ninth largest investor in terms of gross investments committed to Russia, and third among EC countries, after Germany and Italy. Undoubtedly, we would like to have more, but this is where we stand today. But it goes, without saying, that even now France still remains one of Russia’s key foreign trade partners. With regard to French businesses in Russia, there are presently about 500 of our companies operating in different Russian industries. Key among them the banking sector, where we have Societe Generale Vostok, BNP Paribas Vostok, and insurance companies such as Score and Axa. Others include retail companies such as Auchan, Decathlon, Leroy Merlin, oil and gas companies such as Total; an auto companies such as Renault and Peugeot. Some of the ongoing major projects include constructions of the Renault and Peugeot-Citroen plants in the Kaluga Region. There are also other interesting projects in the space sector, such as the plans to purchase Russian rockets. 

What French goods and services enjoy the highest consumer demand in Russia? 

French exports to Russia are highly diversified. Naturally, French wines, cosmetics, perfumes, clothes, pharmaceuticals, etc. are the traditional classical ones. But the really most important ones remain the banks, industry, airplanes, transport, oil and gas.

“Today, France, with direct investments of 6bln euros, is the ninth largest investor in terms of gross investments in Russia, and third among EC countries, after Germany and Italy.”

France has made large investments into Russia, evident in major Russian-French projects. What is Russia doing in return? 

Unfortunately, Russian investments in France are much lower. This is because most Russians tend to see France primarily through the prism of shopping and tourism or investments into real estate such as buying elite apartments and houses in Paris or villas on the Cote d’Azur. They do not see France from the point of doing business. As a result, the total volume of Russian investments in France currently stands at most at about one billion euros. In all, there are about 15 Russian companies executing different investment projects in France today. The most promising of these projects are those of New Hermitage, which is developing several skyscraper office buildings in the Paris’ business quarter. Other companies, such as JSFC Sistema, also have several projects in France, but these, unfortunately, are only ‘pinpoint strikes.’

What, in your opinion, should be done to overcome this rather negative trend for Russia, so as to attract more Russian companies and private investors to France?

First of all, Russians should learn more about France. Certainly, the Year of France in Russia and Year of Russia in France are expected to play a huge role in resolving this issue as France is the world’s third largest country in terms of attracting foreign investments, after the US and UK. If we look at the private sector today, you will see that every third French citizen of employable age is working in a foreign company. In this respect, France is a very open country.

What else, in your opinion, should the Russian government do to attract more French companies to the local market?

First of all, a special attention should be paid to the propaganda of learning the Russian language in France. Unfortunately, very few French citizens know it. Indeed, most actually know very little about Russia as a whole, and most of what they know is mainly from the mass media, which, definitely, is not enough. Second, there are very few French tourists in Russia today. This stems from the rather highly expensive nature of traveling to and getting accommodation in hotels in Russia for French tourists. The strangest thing is that Russia had more French tourists during the ‘Iron Curtain’ years than today, when the curtain is gone and the borders are wide open. Indeed, I only see one or two French tourists on the Red Square today. This is a pity because Russia has many interesting tourist attractions that are really worth visiting. With regard to business, I would like to draw your attention to what President Medvedev said earlier this year at a meeting with foreign countries’ ambassadors that Russia particularly needs to deepen its cooperation with Western European countries. Today, the Russian leaders have made modernization of their country a top priority, an opportunity that can be used by France to boost its bilateral cooperation initiatives. It goes, without saying, that the global economy crisis had necessitated some adjustments in governments and companies’ plans, including the optimization of their budgets. But in order to support French exports abroad, our government has done a lot to ensure that its subsidies for companies remains unchanged. Russia has, apparently, exited the crisis, but France is still suffering from its negative fallouts. However, we have both the willingness and opportunities to direct our efforts into the realization of Russia’s major investment projects such as the Sochi Olympics in 2014, Skolkovo and Shtokman projects.

What, in your opinion, are the main difficulties that are most frequently encountered by French business representatives in Russia?

The first issue that puts most investors off is the visa problem. It is neither easy to obtain a Russian nor French visa. The second is the near insurmountable administrative barriers, etc. Russia, as you know, is a very specific country. For one, since it is not a WTO member, there are special rules that investors need to know in order to understand how businesses are done in this country. However, our Embassy tries to help French business representatives that want to come to Russia by organizing expo, workshops and other business events where they can get a better idea of the Russian market and better understanding of the specifics of the local business and establish necessary contacts with potential partners.

How does the rampant corruption, the most agonizing problem for businesses in Russia, affect French investors and their operations in this country?

Corruption is both a serious problem, and at the same time, not a problem at all for French investors and their operations in this country. It is a problem because everyone knows that it exists and hurts businesses in the country, but it is not a problem because French corporations and private investors do not pay nor give bribes to anyone anywhere, including in Russia. This is our principle.

How do their Russian partners see this principle, in other words, is it acceptable to them?

Yes. If you take a look at the areas, where French companies operate, you will realize that our Russian partners have accepted this principle very well. I need to specifically stress here that all French companies are willing to pay all taxes, are prepared to play by the rules of law, but will never give nor accept bribes in the course of doing businesses in Russia. This is our mentality. 

This interview will be published in September, when some preliminary results of the National Year celebrations will have been made. Do you think these events have met their expectations?

It was, definitely, a very satisfying year, as we have been working hard and have really achieved a lot. I should note here that our Russian friends have helped a lot because our successes also mean their success and vice-versa. As for business, some of the most important events are still scheduled for the later part of the year. The three of these key these events that will be held with the Embassy’s support include the exhibition, 'Art de Vivre a la Francaise organized with Maison & Objet, or the ‘Art of living in France, in the Manezh Expo Center in early October and the Exhibition of French Wines in November. The latter is very important, as it will help improve the conditions for importing wines into Russia, which are currently very unfavorable. The third event, the French-Russian Business Forum, to be held in December in a B2B format, will provide a vital platform for the Russian and French business circles to meet and discuss issues of mutual importance to them. Therefore, the final assessment of the results of the National Year celebrations in our countries will be done in early 2011.

If you were to address Russian businesses directly with the aim of highlighting France as an attractive destination for their investments, what would you place the biggest emphasis on?

First of all, that they are all welcome to France, that France is not only a very beautiful country for tourism and shopping, but also a land for working and investments. That we have excellent infrastructure, and most importantly, that we do not pay or accept bribes, while full tax payments are obligatory. And, finally, I would tell them that they only simply need to know our laws and abide by them. This is the basis of democracy.