Participants in the ‘Franchising for Regional Development. Franchising for Single-Company Towns. Investing in Infrastructure Improvements. Regional Brands. New Directions for Development. Designing the Future’ panel session that took place as part of the World Franchise Forum on 31 May discussed their experience developing and promoting franchises in the various regions of the Russian Federation and about the particulars of working with brands in small towns.
Representatives of business were the first to speak. President of the Penetron Russia Group Igor Chernogolov spoke about the history of his company and about how the economic crisis had doubled growth for his business. “Before 1998, several different companies were importing to Russia what was at the time still American Penetron material, and in 1998 we bought a container, after which the dollar grew sixfold. So we went out to negotiate with the Americans and proposed concluding an exclusive agreement with us, and anyway there weren’t any customers left because of the rouble exchange rate. We got an exclusive contract for the CIS, and in 2004 we built our own production facilities,” Igor Chernogolov said. Penetron-Russia now has 300 representatives in Russia and the CIS, and “it’s all successful small business”.
Yulia Bogushevskaya, General Director of Perm-based Franchising Intellect, noted that there was still a lot of gaps in small and medium-sized business that required filling, especially in franchising, underlining further the importance of large international forums like the World Franchise Forum. She also noted that initially franchising had developed in the two capital cities of Moscow and St. Petersburg, where foreign franchises came and regional brands were started. “Now the trend has changed, and it is the regions that are creating the best Russian franchises, and foreign partners are seeking out master franchisees in Russia’s regions,” Yulia Bogushevskaya said. She added that entrepreneurs who are just getting started lack competent support and education. Moreover, there are 940 programs in Russia that exist to provide support to entrepreneurs, while businessmen know of only about four, and even these they don’t make use of. “Today’s forum should create some impetus for improving and applying the support that’s out there,” Yulia Bogushevskaya added.
She also announced that a platform providing users with “a very high-quality educational product and access to the practical knowledge everyone needs” would be presented in September.
Head of the Project Office of the Agency for the Development of Human Capital in Russia’s Far East, Konstantin Polyakov, presented the Hectare Online platform of which he is General Director. The product provides entrepreneurs with a full range of services such as opening your own store, making purchases online, selling the product to the end user without intermediaries, and aggregating the product offering among others.
Panellists also touched on developing franchising in small towns. President of the Union of Small Cities and Towns of the Russian Federation Evgeny Markov noted that the demand for franchises was “locally specific”. “Each region has its own mentality, characteristics, and way of life. It would be difficult for global brands to compete with local customs, so adaptation is very important,” Evgeny Markov said.
Andrei Botsu, Director of the Department for the Development and Support of Single-Company Towns of Vnesheconombank noted how the ‘Comprehensive Development of Single-Company Towns’ programme was presently being carried out and that unique managerial competencies had been created especially for the programme. Authorities were being specially trained in management teams. “Now any business person can talk to these people in a way they understand because they know what it means to defend projects and they are able to understand their effectiveness.” He added that one of Vnesheconombank’s activities had been to create real tools to support entrepreneurship so that businessmen could use them and get down to work. As for single-company towns, Andrei Botsu urged people not to forget about advanced development zones, which provided significant tax benefits.
“It is specifically Russian franchises that are popular and enjoy the greatest success in single-company towns. We need to hold regular business events and invite representatives of associations with the best practices to help popularize the tendency,” Andrei Botsu concluded.
The World Franchise Forum and Moscow Franchise Expo are being held under the auspices of Moscow Entrepreneurship Week. The event is being organized by the Russian Franchise Association with the support of the Roscongress Foundation, the Moscow Government, the Ministry of Industry and Trade of the Russian Federation, the Ministry of Economic Development of the Russian Federation, and the Chamber of Commerce and Industry of the Russian Federation.