Exports to China: ''SMEs will fit the price range if they make an industrial revolution''

Tamle, a Tatarstan manufacturer of confectionery products, is anticipating signing a contract with China

Tamle factory, accompanied by the Tatarstan Export Corporation, can arrange the supply of sweets to China by the end of the year. About 90 different enterprises are going to enter the Asian export markets, said Artur Gaynov, the representative of the ministry of economy of the Republic of Tatarstan, at the export development forum on 17 April. Tatarstan farmers are in a hurry to open up the Chinese market, but do not know what products are in demand among Asian buyers, they complained. Anyway, the main obstacle is the other thing — technological backwardness, lack of recognizable brands and price uncompetitiveness.

Farmers are uniting in cooperatives

The forum on export development of agricultural products for small farmers, organized by the Ministry of Economy of the Republic of Tatarstan and the Kazan Cooperative Institute, was held with a large audience of agrarians and farmers. They are seriously interested in the prospects of export of agricultural products to the countries of Southeast Asia, China and India, which are gradually beginning to be opened up by Russian producers.

Alsu Nabieva, the moderator of the forum, rector of the Kazan Cooperative Institute, reminded that within the framework of national projects this business area will enjoy state support. According to her, in the framework of the national project ''International Cooperation and Export'' there will appear regional programmes to support small and medium-sized businesses. At the end of 2018, the export of agricultural products from Tatarstan amounted to $180 million, and by 2024 the republic has committed to double it to $360 million (export of all types of goods – editor's note). At the same time, she considers the products certified by Halal standards to be the point of export growth in agriculture. However, while it is produced in small volumes, up to 4,5 billion rubles, said representative of the ministry of agriculture Dmitry Yashin.

According to Alsu Nabieva, there will appear regional programmes to support small and medium-sized businesses within the national project ''International Cooperation and Export''

Nabieva emphasized the importance of enterprises' union in production cooperatives a mandatory condition of entry into foreign markets. Only in this way the villagers will be able to guarantee stable volumes of exports. ''How can we gain volume? Only by uniting rural producers into cooperatives,'' she explained the purpose of cooperatives. And in this she was supported by Dmitry Yashin.

Second to last place by non-oil exports to China

But most of all, farmers were concerned about the question of what types of food are in demand among Chinese consumers. ''Before the forum began, we gave the cooperators an opportunity to ask their questions,'' said Alsu Nabieva. ''And it turned out that they want to know which groups of goods are best for export. Is there an analyst of the ministry of agriculture of the Republic of Tatarstan about what products are in demand, what they want to buy?'' she asked the representatives of the ministry of agriculture and the ministry of economy acting as speakers.

Irina Miloserdnaya (pictured right) listed five major commodity groups from year to year are exported from Russia to China

Looking ahead, we will tell that this simple peasant question could be answered very specifically not by Tatarstan officials, but by businessmen from St. Petersburg. Deputy Director of Vyborg-Terminal Severo-Zapad Irina Miloserdnaya on the move listed five major commodity groups from year to year are exported from Russia to China. There is no doubt in the reliability of this information, as the company itself is engaged in the transshipment of export goods through the sea terminal owned by them in Vyborg. However, she didn't create a sensation.

According to Miloserdnaya, the first place is taken by the export of oil and fat products (this position is taken by Nefis Group), the second — fish and seafood, the third — confectionery, chocolate, ice cream. However, the leaders among the exporting regions, as it is easy to guess, are Irkutsk Oblast and Sverdlovsk Oblast and Primorsky Krai. They are practically neighbours of China.

As it followed from the slide of the company Vyborg-Terminal Severo-Zapad, at the end of January 2019 the total volume of non-oil exports from Russia to China amounted to more than $550 million. Among 15 regions-exporters, Tatarstan occupies the penultimate 14th place with sales volume of $13,5 million. Only Samara Oblast is in worse position — $11,6 million. From the next slide, it was clear that the share of agriculture in non-oil exports to China is just scanty — 0,5%, and even then it is feed. The lion's share of exports is fuel, rubber and plastics.

Artur Gaynov said that by the end of the year 90 enterprises across the country, including agricultural ones, are planned to develop for exports

In short, there is room to grow. The representative of the ministry of economy, Artur Gaynov, said that by the end of the year 90 enterprises throughout the country, including agricultural ones, are planned to be developed for exports. To support future exporters and minimize their costs associated with entering foreign markets, the authorities are ready to subsidize up to 80% of the costs of obtaining an international certificate, to compensate 50% of logistics costs, to conduct training seminars on foreign economic activity, he said. Especially for entrepreneurs, Artur Gaynov listed international exhibitions, for participation in which farmers are invited. At the end of May, Shanghai hosts the food exhibition FMA China, in early November, in Kazakhstan — the International Central Asian exhibition Agro World and, finally, the famous exhibition Halal Expo in Istanbul.

Can I go to China without a brand? No!

The Tatarstan confectionery manufacturer company Tamle is trying to conquer China. It is accompanied by Tatarstan Export Corporation JSC. A trial batch has been recently supplied, and the company itself is anticipating signing a contract. Director General of the corporation Dmitry Sirotin named the main reasons that prevent SMEs from entering China. The first and foremost is that farmers and small private households ''do not fit the price range''.

''If we talk about the markets of Southeast Asia and China, our food products cannot compete in price with Far Eastern producers,'' Dmitry Sirotin said. According to him, SMEs will be able to fit the price range if they ''make an industrial revolution''.

Dmitry Sirotin (pictured — second from left) noted that the main reason that prevents SMEs from entering China is that farmers and small private farms ''do not fit the price range''

Technological backwardness is the second obstacle that needs to be overcome to enter China. In his opinion, our manufacturers work using outdated equipment and therefore cannot compete with foreign colleagues. ''We are faced with that Turkish investors have offered the production of bone meal and reached the price that is highly competitive even with our large manufacturers. And this is only due to that they work using more modern equipment. If our entrepreneurs are ready to make a technological revolution, they can enter abroad,'' he explained.

Third, small producers do not have promoted brands, without which the entrance to the foreign market is impossible. Specialists of the export corporation faced this problem while promoting a Tatarstan company (the name is kept secret for ethical reasons). ''This company is not small, but does not have a normal presentation product,'' Dmitry Sirotin sighed. ''To put in order your site, product catalogues, it took about two months. And only after they put in order the advertising and presentation material, the work began to move forward.'' In conclusion, the participants of the forum agreed to create a roadmap for entering foreign markets.

By Luiza Ignatyeva. Photo: provided by Kazan Cooperative Institute