Foreign investors find Russia attractive due to its rather weak currency, low-price assets, huge and cheap human resources market, impressive consumer market (which is great in number), and profitable conditions of working in this country.

USA is the world’s leader in the activity of making of investments in Russia. The Great Britain wins the second place. 

Companies opening a business in Russia decrease the expenses by hiring this country’s cheaper human resources, get rid of transportation fees (if they are targeting the Russian market), solve the problems with the raw materials supply, and get a range of other benefits.

Currently, the sectoral division of foreign investment in Russia approximately reflects the GDP division. The most successful investment projects in Russia were put into practice in the oil and gas industry, automobile industry, metallurgy, and agriculture, but the area of investments in Russia is not limited by this. Thus, for example, two large American companies, Boeing and PepsiCo, have recently claimed that they are launching production facilities in Russia.

The most powerful areas of industry in Russia are fuel and energy minerals extraction, pulp and paper industry, publishing and printing activities, metallurgy, production and distribution of electricity, gas and water.

Investors show great activity on the market of minerals extraction. As Russia’s Prime Minister Vladimir Putin has noted, private investors (both Russian and foreign) invest 8-9 times more than the State into this area. Putin says that the minerals’ extraction is ‘the goose that lays the golden eggs’ for Russia, and mentions that uniting the efforts of both the State and the private companies will help develop the area, make the business here smoother, and bring down the expenses.

A particular fact about the pulp and paper industry is that the investments here are repaid in a fairly long time compared to the other areas – up to 15 years, and therefore the share of foreign investments here is lower than, for example, in the minerals extraction area. Still, the country’s pulp and paper production area is attracting the businessmen due to a combination of factors: Russia has strong manufacturing facilities and experience in this industry; it is a key importer of a wide range of pulp and paper products to the world market. A number of the products imported by Russia cannot be produced by domestic plants with the quality high enough to be presented on the world market. Besides, it is worth to remind that Russia is the owner of 20% of the forest resources in the world.

The other powerful industries of Russia are attractive to investors as well. One of the interesting attraction points for businessmen is the Russian segment of Internet – the boom of investments into this area started 8-9 years ago.

Some experts are skeptical about investing money into Russia. Mark Mobius said, ‘Investing in Russia [is] like entering a rich gold field studded with land mines: laced with veins of rich treasure, and riddled with pockets of pure poison.’ One is always taking risks when investing into the developing economy. While talking about the ‘land mines’, experts usually give one and the same example of the unsuccessful investments in Russia – the Yukos company case.

Yukos was Russia’s largest oil company in 2003, and in 2004, investors lost their money there. The company management was avoiding taxes and profiting from the off-shore schemes, which was found out by the Russian government. The company was finally closed and became the glowing example and reminder for the Russian authorities, who now keep a close eye on the companies. Every off-shore or tax avoiding case is now called ‘resembling the Yukos case’. For example, Russian metallurgic company Mechel was made criminally liable and was fined for ‘resembling the Yukos case’- that is, not paying the taxes and formally stealing funds from the State. This was not only the act of law, but also a showcase to all the other Russian companies. As one can see, the government is taking care of the unreliable management issue, and nowadays, 5 years after the Yukos case, the situation has changed greatly.

Today, many investors trust Russia, including the world’s largest companies: for example, as it was already mentioned, PepsiCo made $1 billion investment in Russia this year. The company management is planning to expand and develop this business in Russia in the next 3 years. ‘Russia is a very attractive growth market," Eric Foss, the chairman-CEO of Pepsi Bottling Group says. "The investments we’re making in our Russia business are creating new jobs, providing us with the flexibility to produce a wider range of beverage offerings for consumers and enabling us to better serve our valued retail partners.’ A number of other large companies, such as Renault, Unilever, Coca-Cola etc., are Russia’s long-term partners and business investors. Henkel, Nestle, Johnson and Johnson, Procter and Gamble are actively invested into and have a solid position on the Russian consumer market.

Nowadays, thanks to the State interest in this area, there is a clear mechanism of investing the funds to business in Russia. Russia’s authorities continue taking steps for making the country’s economical climate more attractive to investors, and although there is yet a lot of work to be done here, economists thinks that the flow of foreign investments in Russia is going to grow within the next few years.