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Location of Russian Enterprises of Foreign Corporations Opened in 2012–2018

  • SPATIAL FEATURES OF SECTORAL DEVELOPMENT
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Abstract

Industrial enterprises owned by foreign corporations continue to occupy important positions in many sectors of the Russian economy, including the automotive industry, many sectors of the food industry, a number of machinery industry segments, certain segments of construction and finishing materials production, and pharmaceuticals. The study illustrates the location of new production facilities commissioned by Western corporations in Russia in 2012–2018. The openings of 261 plants were identified. Twenty federal subjects accounted for 80% of the facilities opened by foreign investors. Despite the diversity of industries and difference in countries of origin, the vast majority of new facilities are focused on a fairly narrow set of objective and subjective location factors: the proximity of suppliers and consumers, the availability of skilled labor force, guaranteed infrastructure, and visible interest of local authorities in creating normal working conditions. Although the production of consumer goods continues to grow, foreign industrial investments are increasingly concentrated in the B2B sector, with the main emphasis not on increasing output of finished products, but on the production of parts, components, additives, and outsourcing of industrial services. Although the Central Region (Moscow and neighboring oblasts, especially Kaluga, and, to a lesser extent, Tver, Tula, and Vladimir oblasts) continues to be a center of attraction for foreign industrial investments. The successes of the Republic of Tatarstan and Lipetsk, Nizhny Novgorod, Samara, and Ulyanovsk oblasts show that with due attention of local authorities, relying on a combination of various forms of special territories (special economic zones, industrial parks), a “cascade effect” takes place when foreign investors enjoy the success of previous investment projects and try to replicate it.

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Notes

  1. Due to the high prevalence of transfer of the ownership structures of Russian companies abroad, in this article, foreign corporations entail those: (1) in which the controlling stake (share of equity above 50%) is owned by foreign legal entities and/or individuals; (2) whose headquarters are located outside the Russian Federation; (3) the share of Russian sales in its global sales does not exceed 50%.

  2. As Governor of Ulyanovsk oblast S. Morozov noted at the opening of a new Japanese–German machinery enterprise in Ulyanovsk in 2015, “Of course, we had an idea of what kind of plant it would be: we were repeatedly shown different pictures and photographs. But admit it, you were also pleasantly surprised that the plant was white. When opening a new plant, we always get mostly dark colors, green, etc. In our understanding, a machinery plant is one where people walk around in grimy clothes with dirty hands. Here we entered a kind of interactive museum, an interactive workshop, because everything is so computerized that it’s even hard to imagine…” (Fragments of the opening ceremony of the machinery plant of the concern DMG MORI. https://www.youtube.com/watch?v=XuNt4LQpiHgUglov.ru, 2015).

  3. This can radically change the relation to the location of the enterprise (inland or near the border).

  4. As the technical director (now the general director) of the enterprise KNAUF GIPS Kungur K. Shevela noted in 2012, “No one expected people to learn to work here so easily and quickly” [1, p. 109].

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ACKNOWLEDGMENTS

The author is grateful to A.O. Kokorina for her invaluable help in collecting the materials that served as the basis for this article.

Funding

This study was supported by a grant from the Faculty of Business and Management, National Research University Higher School of Economics.

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  1. National Research University Higher School of Economics, 101000, Moscow, Russia

    I. B. Gurkov

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Correspondence to I. B. Gurkov.

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Gurkov, I.B. Location of Russian Enterprises of Foreign Corporations Opened in 2012–2018. Reg. Res. Russ. 10, 29–37 (2020). https://doi.org/10.1134/S2079970520010049

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