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Global Online Marketing Profile 2010 Forecast - Russia

xmarti

Market Opportunity 

With a population of 142 million, Russia is the greatest country on earth and ninth largest by population. Because the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have strengthened economic growth. A write-up by RIA Novosti states it has got the world's eighth largest GDP of $1.757 trillion. Russia ended 2008 with GDP growth of 6.0%, following ten straight years of growth averaging 7% annually since 1998. However, the drop in oil prices of oil has affected growth at the time of late. The purchasing power parity per capita is $15,800.

In the past decade, poverty and unemployment declined steadily and the middle-income group continued to expand. The unemployment and inflation rate is currently 6.2% and 13.9%, respectively (CIA Factbook). MSN cites that the typical salary in Russia was $640 per month in early 2008, up from $80 in 2000. At this time, Russia has the greatest disposable income among emerging markets - around 87% of per capita income (PBN).

Russia's currency may be the Ruble which will be now equal to 0.031578 USD (x-rates.com). Analysts from Forex News do not believe that the ruble may return to appreciation as the oil prices decline. The existing price levels happen to be critical, and they will certainly continue to press on the Russian currency. The Bank of Russia continues to invest the national foreign reserves to help keep the currency from depreciating too quickly, meanwhile, gradually lowering its benchmark rate.

Best Industry Segments

Encarta Encyclopedia labels Russia as an energy superpower because it has got the world's largest natural gas reserves, the 2nd largest coal reserves, and the seventh largest oil reserves. CIA Factbook cites that oil, natural gas, metals, and timber take into account significantly more than 80% of Russian exports abroad. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP. The federal government predicts this will drop to 3.7% by 2011 reports RIA Novosti. Other exports from Russia are transportation and communications equipment, agricultural machinery, electric power generating and transmitting equipment, medical and scientific instruments, and textiles.

Russia has extensive business connections around the globe, importing from: Germany 13.3%, China 12.2%, Ukraine 6.7%, Japan 6.4%, US 4.8%, Belarus 4.4%, South Korea 4.4%, and Italy 4.3% according to the US Department of State. Pertaining to exports, the nation sells to global partners: Netherlands 12.2%, Italy 7.8%, Germany 7.5%, Turkey 5.2%, Belarus 5%, Ukraine 4.7%, and China 4.5%.

Russia aims to become a major energy sup¬plier and provider of raw materials to countries of the Asia-Pacific region, including China, Japan, South Korea, and the United States. This kind of goal, if accomplished, will greatly enhance Russian lever¬age in the Pacific Rim.

Regulatory and Tariff Landscape

Virtually all foreign investment faces hurdles, especially in overcoming the trade regulations. Costs are heavily influenced by the Russian government while non-tariff barriers significantly add to the cost of trade. Statistics from the Heritage Foundation show that Russia's weighted average tariff rate was 9.6% in 2005. It features a low income tax rate of 13% and a reasonable corporate tax rate of 24%.

No product could be imported into Russia without first undergoing product certification in Russia. Gosstandart's mark of conformity must be placed on each imported product in order to confirm it was properly certified. The total amount of companies hoping to obtain products in to the Russian market is growing daily, but how many authorized testing facilities is limited.

Two major government structures currently oversee regulation of medical equipment and devices: the Russian Ministry of Health and the State Committee for Standardization, Metrology and Certification (Gosstandart). The Ministry of Health works to ensure clinical safety and efficiency of drugs.

Online Marketing

Russia has got the fastest growing Internet population in Europe, followed closely by France and Spain. Centered on statistics from internetworldstats.com, there are now 38,000,800 Internet users in Russia yet only 27% penetration, allowing much room for growth. The Netherlands is ranked 4th among the top internet countries in Europe. Over the span of eight years (2000-2008), user growth stands at 1,125.8%. Although just a quarter of Russians are online, high-speed connections are starting to achieve smaller cities. Broadband penetration, currently 10%, is forecast to triple by 2010 according to Spiegel Online.

Online Language Preferences

Of Russia's population, over 81% speak the state language of Russian as their first language. There are over a hundred minority languages spoken in Russia today, including Tartar, Ukrainian, Chuvash, Bashir, Mordvin and Chechen. For business purposes, written materials should be available in both English and Russian. Yet, like every other country, internet users prefer to locate inside their native language, Russian.

Search Engine Profile

Yandex may be the Google of Russia's Internet World. This Russian se giant provides a typical umbrella for lots of services like se, social networking, news updates and online payment among others. Studies by ComScore show Yandex while the leading search property with 47.4% of the share of searches. Google sites are second at 31.2%, Rambler Media third at 9.7%, and Mail.Ru sites fourth at 7%.

Summary

In the 21st century, all eyes are on the exploding consumer market in Russia. For Web companies seeking to expand abroad, Russia must be at the top of the set of markets to enter. The Russian Federation, one of the BRIC countries, Buy High Quality Pbns is a market that promises continued growth and is packed with opportunities for United States exporters. Yet, its infrastructure requires large investments and must be replaced or modernized if the nation is to attain economic growth, and it needs to expand its exports from just raw materials. Furthermore, the prevalent corruption in the federal government impedes its capability to conduct business with the world. For such reasons, Global eMarketer gives Russia a Tier I ranking for global online marketing opportunity.