Doing Chemical Business With Russia and CIS Countries

Let us start from the point when you want to SELL something to Russia or any other CIS Country. Based on the analysis of the visitors to several chemical websites I could state that number of Russian hits is increasing steadily but not at a highest rate like hits from South America or Middle East. rare-chems

The majority of Russian and CIS visitors are coming from Moscow region and Ukraine so it might look like the most of CIS enquiries should be from the same region. But this assumption is not completely true, most of the product requests for Russian market are actually originating from Baltic states, world-arms especially Estonia. This allows us to consider some sort of “agent outsourcing” of the Russian inquiries to the more convenient EU destinations. Because of this strategy, many small and medium sized trading companies and agencies in the Baltic States are actively sourcing products from the rest of Europe for the Russian market even without having firm inquiries in hand. In some cases it could be a simple “price hunting” in order to give their Russian partners an idea of the current market price for certain compounds, legalroids but in others it is a genuine attempt to push products through. There is no easy way to distinguish between what the potential customer wants and is it a genuine inquiry or a request “just for future (sometimes quite a distant future) business”. Probably the best method would be a standard approach: more products are in the single inquiry less probably they do really plan to buy anything. So more professional the inquiry looks then more probably it is going to work for you. Without getting into much details I could say that most of the inquiries received from agents are pharmaceuticals (including APIs), naturaceuticals and some other low volume, tobabet4d-slot. but very rarely industrial or anything for the “big chemistry”.

Does it mean that the industrial chemicals market is not active is Russia? Yes and no, the market is quite active but it is either locked to the local suppliers or hangs in the mid-air in attempts to find external sources. Industrial market is mostly linked to the big chemical manufacturing companies and they are really in need of some structural reorganisation both for their purchasing and sales departments. One of the strange tendencies of the Russian market is: the bigger is the company the less prepared it to do import-export operations. The reason behind it is actually the way Russian chemical business used to operate before, metrowaterblasting where the sales and marketing arm was much weaker than the manufacturing. Even now companies are struggling to push their products through or make potential clients aware of their capacities. And this is all in a situation where giant manufacturing facilities, especially for industrial chemicals, do exist together with very strong scientific base. So your market approach should still include agencies, in most cases approved agencies, for large companies that might have access to the internal demand database. If you decide to get to the potential customer directly, then I would greatly recommend doing it with the help of someone with a native Russian language. That might make your communications much more effective and fast. yanitor

Due to recent development I would also suggest to watch carefully for any Russian government development programs. Just a business tip: pay bigger attention to pharma market including base and APIs is this one is on a rise. Selling raw material and industrial chemicals is pretty much useless as Russia is mostly self-sufficient for this market. I am not going to touch oil and gas markets as these two are completely separate issue and has almost nothing in common with a general chemical market in Russia.

Now let us discuss buying from Russia, especially in these days, when some common industrial chemicals are in a short supply, even in cases when the supply was traditionally higher than demand. Due to serious capacities of the manufacturing facilities in FSU countries like Russia and Ukraine it is logical to suggest that they will rush to “patch the holes” in this situation. But it is not happening because of the number of reasons, so let us discuss some of them:

 

  • Many Russian and Ukrainian manufacturing companies are actually linked to each other with supply and demand chains being developed in years, so the ties between them are still very strong.
  • Where this chain is broken then, in fact, instead of trying to develop new business and invade new markets, they are reducing production and suffering losses.
  • Shipping and forwarding were and are a big problem in Russia. Most of the industrial chemicals were always shipped by rail. Taking into account vast territories and knowing that many of the large manufacturers are pretty much far from the major ports, shipping is becoming a serious issue. Delays are more likely to be a rule than an exception and, if you have a deadline to adhere to, it is really becoming a headache.
  • Buying materials ex-works is not something you can consider to be easy in Russia as freight forwarders are also not the strongest point of the Russian economic space. taxi39000
  • Overselling. In many cases, especially for the high demand materials, I’ve seen an overselling technique where orders are taken above the supply level, considering that some of them might not get finalised so the rest would be fulfilled. But there are cases when all of them do finalise and it could cause delays or even a refusal to supply.
  • Packing. In case you buy directly from big manufacturer the packing could still be sub-standard. It would be wise to check all packing issues beforehand and even ask for photos of the cargo.
  • Standards. You should be very careful with this, many chemicals from Russia are of a high quality but manufacturers are still mostly adhering to the old Soviet GOST standard. The best thing is to get a comparison tables for the GOST or even better the full documentation which is available online from many Russian Internet resources.
  • Pricing. Strangely enough in many cases when you don’t receive a reply to you enquiry from a large Russian chemical manufacturer, it is simply because they can not figure out the pricing for the offer. For many years the main price references for the industry in FSU were Merck or Sigma Aldrich catalogues. But there is one thing selling grams of highest purity compounds and completely different when working out price for the bulk supply of the technical grade material. Therefore sometimes putting a target price together with your enquiry might work wonders.

 

The above was mostly related to the industrial chemicals, but at the same time, there is very interesting situation with fine organic compounds, which are usually much more expensive and supplied in small R&D quantities. This is due to a very high scientific level of many CIS R&D suppliers and manufacturers where large number of good scientists is available for the theoretical and synthesis work. Such companies could provide highest quality material at one of the best prices around and, as there is no real freight involved (almost in all cases it’s just a courier shipment), then many of the above problems simply do not exists. Such companies do successfully supply fine chemical and compounds to the biggest Western Multinationals.

 

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