The true attitude of Russians towards domestic producers. Trust but verify
In order for a manufacturer to be able to prove that a product was manufactured in , he should indicate the level of localization of production as a percentage, says a government official involved in considering issues related to the implementation of the import substitution program.
In order to help resolve this problem, the Ministry of Industry and Trade has prepared a draft document that is intended to specify the criteria by which it will be possible to confidently determine whether a particular product should be classified as a domestic product. In addition, he describes what should be considered as goods for which Russian industry does not produce analogues. This week the examination of this project will be completed, and implementation can be expected closer to mid-summer. This resolution has not yet been received by the Ministry of Economic Development, said employees of this department.
Main distinctive features There are several inherent characteristics of Russian goods. The project outlines a list of conditions and processes in Russia, the percentage of the cost of raw materials and imported components in the selling price finished product. The calculation must be made according to the value declared at customs or according to the price of their initial sale in Russia confirmed by documents; the cost of the finished product is formed taking into account transport costs.
In addition, a special clause establishes an indispensable condition that the manufacturer is obliged to carry out research and development activities, give preference to Russian citizens, etc.
The head of the Ministry of Industry and Trade, Denis Manturov, said during his speech this month that as various criteria are prepared, this document will be supplemented with other points.
Two signs are mentioned by which the fact of the absence of Russian-made analogues will be determined. This kind of product should not have identical characteristics, physical, chemical and other properties that are not related to its appearance, and at the same time affect work by more than 20%. Another sign is the selling price and the level of operating costs.
For products manufactured for the needs of the defense department, only components made in Russia are now needed, says an employee of a company working in the military-industrial complex. According to him, some devices for civilian use contain imported components that will need to be discarded in order to comply with the new rules. However, since the dollar has become more expensive, it is much more cost-effective to use Russian components.
For companies operating in the automotive industry, the criteria have been formulated and are already in effect, Sollers says. It also clearly outlines the responsibilities of such companies related to the degree of localization, specific obligations regarding the creation of various research centers on Russian soil and the mandatory organization of the full cycle of engine manufacturing.
Companies engaged in import substitution will be stimulated by subsidies.
Various representatives of the business community note that now, due to the increased attention of the authorities to the issue of import substitution, companies whose products fully meet the requirements for a Russian manufacturer can, in theory, hope for certain bonuses. However, this raises a significant question: in what format will the preference be given? Will he prefer carrots or sticks, asks a representative of the Russian Union of Industrialists and Entrepreneurs.
The government says that incentives in the form of targeted investment agreements are provided for enterprises that meet the criteria. He, in addition, indicates that it will also be possible to provide an order to only one supplier if it is a participant in a special investment contract.
The Ministry of Industry and Trade has already begun accepting applications from companies wishing to take part in such projects, according to information on its website. The conditions say that the state will provide subsidies that can be used to reimburse costs for servicing loans taken from Russian financial institutions in the period from 2014 to 2016. Russian enterprises with projects whose cost will not exceed 5 billion rubles can participate in this casting.
Parallel is being considered for admission Russian enterprises to government procurement. For this purpose, a number of documents will be developed, according to which the main criterion for admitting products to public procurement will be their production in the member countries of the Eurasian Economic Union. IN Russian government note that in order for a product to be considered Russian, all components must be produced on the territory of the EAEU.
The idea is to force foreign enterprises those wishing to take part in public procurement, over the course of several years, to build a full production cycle in Russia, has been studied by the government for more than one year. However, the requirements according to which companies or their products are considered manufactured in the Russian Federation are not sufficiently specified; this state of affairs could lead to various abuses, some foreign entrepreneurs feared.
The true attitude of Russians towards to a domestic manufacturer
The domestic manufacturer is alive. The domestic producer will live.
The results of the IOM “Anketologist” survey show that 45% of Russians give preference to domestic goods over foreign ones when purchasing, and 17%, on the contrary, are more loyal to foreign manufacturers. Let us note a rather interesting feature: the specific country of origin of a particular product is important when purchasing it for 56% of respondents, and only 15% do not pay attention to this fact. Imported manufacturers are not only gradually being forced out commodity markets, but also from the consciousness of Russians.
In general, Russian manufacturers received positive assessments from 86% of respondents (22% are absolutely positive, another 64% are somewhat positive). Another significant and very positive indicator: 29% of respondents are completely confident that domestic producers will be able to provide the country with everything necessary in the near future, another 44% are fairly confident in this.
Trust, but verify!
But the level of trust in products varies quite significantly depending on its manufacturer. 77% of respondents showed their trust in Russian goods (12% trust completely, another 65% have a partial level of trust). Foreign-made goods received 66% of trusted reviews from Russians, which already indicates a change in the basic consumer preferences of the country's population.
The largest percentage of respondents (79%) showed their trust in goods produced by Russian companies together with foreign partners as a standard of quality. Russians trust least of all goods manufactured by domestic companies, but under some foreign brand, a kind of mimicking brands.
Preferences and wishes
As the survey results showed, Russians most often try to buy domestic goods in categories such as food (84%), medicines (51%), soft drinks(50%), jewelry (42%) and hygiene products (39%). However, the volume of demand for Russian goods continues to increase. Therefore, respondents would like to see more domestic products in categories such as clothing (57%), medicines (56%), shoes (54%), food (52%) and household appliances (48%).
And the conclusion suggests itself: Russian consumers prefer to purchase goods from domestic producers and have a positive attitude towards them.
Honey gingerbread and a fly in the ointment...
Reasons for this positive attitude, as the survey showed, are as follows: the appropriate price of goods for the wallet of the average Russian (75%), the use of natural raw materials and materials (71%), as well as fairly acceptable workmanship (50%).
However, it is worth recognizing the fact that domestic manufacturers are still far from ideal.
14% of respondents noted that they have a negative attitude towards Russian companies. To substantiate their position, respondents noted the following disadvantages: rather low workmanship (90%), low product reliability (82%), its fragility (70%), overpriced (67%) and poor design (55%). Domestic manufacturers can correct the situation by improving product quality (85%), using high-quality raw materials (63%), expanding the range (60%) and reducing prices for finished products (57%).
The main associations that arise among respondents when mentioning the phrase “domestic manufacturer” are “our own, native”, “natural, environmentally friendly”, “inexpensive”. However, with such positive associations there are also negative ones: “low quality”, “backward”, “ugly”. One significant trend has been identified: in the minds of Russians, “domestic producer” is strongly associated with agriculture and the production of food products, but the negative image associated with the low quality of our automotive products is also alive.
Made in Russia
Exactly half of the respondents (50%) expressed their readiness to buy products from domestic manufacturers at a higher price, but on the condition that they are not inferior in quality and other important parameters to foreign analogues. Russians are willing to pay a slightly higher price for a product if they are sure that it is made in Russia, in the following categories: food (55%), medicines (44%), clothing (33%), shoes (32%) and household technology (27%).
At the same time, almost a third of all respondents (30%) are not at all ready to pay a higher price for a product, no matter which country produces it.
It should be noted that respondents consider Russian goods to be very common in terms of availability at various points of sale. This indicator allows us to assess where exactly consumers will go for the necessary goods. Thus, 53% of respondents are confident that most domestic products are sold through markets. Another 40% of respondents see ordinary retail stores. And 39% believe that products Russian manufacturers can be purchased at any point of sale regardless of her status.
In general, Russian products deserve positive reviews. 39% of respondents note that the quality of Russian goods is very good, but still does not reach foreign analogues. 34% of respondents believe that the quality has remained at the same, rather average, level, but in the absence of a foreign substitute product, this fact can be ignored. The most positive group (14%) is confident that domestic manufacturers have learned to produce goods more efficiently high quality than foreign analogues entering our market. But the negative group of respondents (12%) believes that the quality of products of Russian companies has remained either at a fairly low level, or, as the most depressing scenario, has become even worse.
Packaging is the face of the product
There are different ways to stimulate consumer demand for Russian goods. One option is to use information on the packaging stating that this product was manufactured by a domestic manufacturer in a modern factory and using the latest technologies. According to the survey results, such information would significantly increase the likelihood of a purchase for 58% of respondents, and for another 27% - to an average degree. We also note the fact that consumers have developed an identification of domestic goods, and the general level of trust in them has increased. Thus, 71% of respondents answered that they would most likely believe that a product was made in Russia if such a large inscription was present on its packaging. Another 20% said they would absolutely believe such information provided. To clarify, we note that 22% of respondents would purchase goods marked “Made in Russia” with a probability of 50%, 16% of respondents would do this with a probability of 90%, and another 16% with a probability of 100%.
The image on the packaging undoubtedly increases the consumer’s desire to purchase the product. According to respondents, the most suitable images for domestic goods are the GOST sign (57%), the country’s flag or other state symbols (47%), and the image of the Russian troika (14%). The remaining examples of images that are unofficial symbols of Russia received a relatively small percentage of votes: the Moscow Kremlin received 13%, the bear as a symbol of the country and its wildlife - 13%, the birch as a symbol of the Russian soul and nature received 11% of the votes, and the matryoshka doll - 10%. The samovar as a symbol of home and comfort received 6%, the image of a girl in a folk costume - 5%, a church or temple, ballet as a symbol of culture and a hockey player, personifying sporting achievements, received 4% of the votes each, and folk musical instrument balalaika - only 3%.
Also, placement on the product label of a certain additional information according to the results of the study, it will increase confidence in domestic products to a significant extent among 41% of respondents, to an average extent - by 35% of respondents, and slightly - by 18%. In order to increase the level of trust on packaging, according to respondents, it is necessary to indicate the expiration date of products (74%), as an integral attribute, a sign of quality or certification of the product (74%), the country of supply of raw materials (68%), and also - a conclusion about the harmlessness of the raw materials necessary for the manufacture of goods (63%).
In its current state, the label of domestic goods deserves the following ratings: according to the criterion of clarity of image and information, 47% of respondents gave a score of 3, and 31% gave a rating of “good”; The completeness of the product is rated mostly as satisfactory (49% of choices) or good (30%). But the readability of information on the packaging receives 3 points (41%) and 4 points (31%) respectively.
Domestic patriotic consumer
An increase in consumer demand for domestic goods can also be facilitated by a general rise in patriotism among the population. Thus, 41% of respondents indicated that they would begin to buy more Russian products in the wake of increased patriotism, and almost a fifth of respondents (22%) would absolutely do the same.
The approximate level of citizens who are patriotic to varying degrees, according to the survey, is 89% (64% absolutely agree with the statement that “you need to love your country, despite the difficulties and difficult conditions in which it is located”; another 25% partially agree with this statement). During the survey, a very interesting feature: the level of patriotism among Russians very significantly depends on the income that citizens have. Thus, the largest number of respondents (56%) who absolutely agree with the above statement assess their income at a moderate level, sufficient to purchase food and some expensive purchases. However, the group of anti-patriotic citizens consists mainly of people with moderate (43%) and average (37%) incomes sufficient to purchase durable goods. Let us note that neither age nor field of activity, namely income, is an indicator not only of the attitude towards the domestic manufacturer and its products, but also the level of patriotism in general.
The online survey was conducted from September 24 to October 8 among 514 participants from 9 Federal districts Russian Federation.
In 1961, surrealist artist Salvador Dali painted a lollipop logo for a Spanish company owned by the Bernat family. The lollipop was called ChupaChups. Dali was a recognized master of shocking, but he could not even imagine that in 2001 in Russia the production of a candy with the provocative name “Lizun-Sosun”, whose design exactly repeated the design, would be launched ChupaChups. This product owes its appearance to Ilya Averyanov, the owner of the Menshevik confectionery factory.
According to Averyanov himself, the remake ChupaChups turned out to be quite successful: in the first three months of production, Lizun-Sosun, without any advertising, took 30% of the Russian market from its Spanish twin (the company ChupaChups provides other data). There is only one catch - direct copying of a world-famous brand seems like a very dubious technique. But Averyanov has a theory on this matter that explains why he and not the Spaniards are right.
Twin products
In the Soviet Union, the word “branded” came into use, that is, produced abroad. Such a product was contrasted with the faceless, unreliable domestic “stamping”. In the early 90s, this concept devalued almost as quickly as the national currency - it turned out that not all perfumes Chanel made in France and not every pair of jeans Levi’s is related to the American company of the same name. The country was flooded with low-quality counterfeits of two types: those that looked exactly like the original or those that were very similar to it (like Walkmans Pavasonic and sneakers Reebuk). It simply did not make sense to talk about the extent of damage to the legal economy at that time - the share of counterfeits was too large.
Later the meaning appeared. For example, two years ago, the damage caused by pirates to foreign companies operating in Russia alone was estimated at $1 billion. The amount is not small, but no one argued that the market itself had become much more civilized. By that time, Russian companies had created trademarks comparable in value to Western ones (take the same “Baltika” or “Wimm-Bill-Dann”). Every more or less serious company now has a marketing department, and unscrupulous competitors who steal intellectual property are being dragged to court.
However, the stricter the market rules, the more exotic the exceptions to them. Even now, when the days of rampant piracy have passed, some companies are creatively using other people's brands. "Menshevik", which produces, in addition to the "Lizun-Sosun" candies, also "Turbo Naduv" chewing gum (very reminiscent Turbo production Turkish company Kent) And Lifeis… Life(variation on the Turkish theme Loveis...), is just one example.
Great plagiarist
Ilya Averyanov is 34 years old and a graduate of the physics department of Moscow State University. He went into business back in 1988 - together with his classmates he built villages on the shore Arctic Ocean. A month of hard work brought up to 10 thousand rubles, with this money you could buy a Volga. When Averyanov talks about what he did for the next ten years, it is almost impossible to follow his thoughts: it seems that you are being shown a clip from Parfenov’s program “The other day. 1991 – 1999.” Stock Exchange, exchange office, temporary work in Germany on an assembly line Daimler-Chrysler, instant drink Yupi, sewing curtains, stewed meat and washing powder “7/Ya”, construction of cottages on Rublyovka. However, chewing gum and lollipops run through Averyanov’s work biography, the same ChupaChups. He has been trading these goods since 1993, and by 1997, his company’s turnover reached a maximum of $170 million.
Then, as you know, there was a crisis. And then Averyanov decided to make chewing gum himself. “I went to Strasbourg, where I took industrial courses (there was no one in Russia to learn from), and in 1999, at an exhibition in Dusseldorf, I bought all the equipment for my factory,” says the entrepreneur. He loves to refer to the classics of Marxism-Leninism: “We took the newest equipment, because I remember very well from the works of, so to speak, Ulyanov (Lenin) that competitive advantage under capitalism is high labor productivity.” A total of $17 million has already been invested in the Menshevik confectionery factory.
According to Averyanov, the Russian chewing gum market bubblegum is 10.8 thousand tons, and Menshevik, whose turnover this year will be $30 million, owns 60% of this market. Independent experts give different figures. According to the Business Analytics agency, Menshevik accounts for 8.7% of the children's chewing gum market in the ten largest cities. At the same time, chewing gum Lifeis... Life occupies 2.7% of the market (Love is... - 4.2%), and Turbo Naduv - 2.7% (the Turkish Turbo has only 1.3%).
Averyanov does not hide the fact that he intentionally copied other people’s trademarks: “We shouldn’t have done own brand, there was no confidence in the quality of the product yet.” Moreover, the entrepreneur says that the company ChupaChups owes part of its success to him Russian market. “I played an important role in the creation of this brand. While engaged in imports, I invested my intellectual and other property,” says Averyanov. – At first I delivered this product to all cities and towns for free, and then the product, having become quite widespread, received advertising support, which made it possible to position it in a higher price niche, and the manufacturer to receive excess profits. At that moment, my functions in relation to this brand were exhausted. And they made me understand this. At first I received a discount of 15 - 20%, then my income dropped to 10%, and over time it ended up at the level of 3%. On open question: “Why are you doing this - because I need to develop further?” was the answer: “If you develop, you will have money, and with this money you will be able to compete with us, but we don’t need that.”
True, in the most ChupaChups We are not inclined to overestimate the role of Averyanov. "His to the company was a distributor of a Turkish companyKent, caramelChupaChups Ilya Averyanov’s company did not sell for long and in small volumes,” says Chupa Chups Rus’ response to Ko’s questions. However, the Spaniards did not sue Menshevik. But more on that below.
"Classic style"
Is it possible to simply take and copy a well-known trademark? The answer to a question formulated in this way will be clearly negative, unless you are going to start your business by breaking the law. But the problem can be put differently: how far can you go in copying? But there is no longer a clear answer to this question, since here we are plunging into the unstable matter of subjectivity. Of course, any large corporation, whose financial strength is based on quality, worth millions dollars brands will politely note that it is unethical to even think about using other people's ideas. But what to do small company, which has no money for a national advertising campaign?
There are plenty of examples of well-known Western companies convicting local manufacturers of plagiarism. Another thing is that they are not always able to stop the release of products that, from their point of view, are suspicious.
For example, cigarettes with a mouthpiece are produced in Yerevan Cigaronne. Outwardly they resemble Davidoff: beveled corners of the packaging, similar font with curls, approximately the same colors. To be fair, it is worth noting that Cigaronne a little larger in size (just because of the mouthpiece) and much more expensive (in Russia they sell for 60 rubles per pack). Karen Adonts, CEO of a Swiss-registered company Cigaronne, says that it is difficult to accuse his company of stealing ideas: “We wanted to create premium cigarettes. Taking into account the desire of respectable smokers for comfort, we equipped the cigarettes with a mouthpiece, and when choosing the design, we tried to make a design in a classic style.”
"Classic style" Cigaronne did not go unnoticed by representatives of the German company Reemstma, producing Davidoff. In April, the Germans' claim against the Swiss company was considered in Amsterdam. However, the court objected Reemstma didn't accept. “I don’t think our cigarettes are like Davidoff, says Adonts. - And the accusations Reemstma were a surprise to us. They boiled down to three points: packaging design, misleading the consumer, the possibility of generating additional profit through advertising Davidoff. All these accusations are unfounded. For example, the octagonal packaging we use also has Dunhill and other cigarettes." Did you receive Cigaronne It was not possible to find out additional profit from someone else’s advertising: Adonts does not disclose the company’s financial indicators. He only noted that for two months of 2002, compared to the same period last year, sales Cigaronne increased by 50%.
Or another case where the interests of a large Western company and a local manufacturer also intersected. A year and a half ago, the Anglo-Dutch concern Unilever sent a complaint to the MAP, demanding that the Moscow company Metelitsa stop producing the Venice cake, which looks like an ice cream cake Vienetta, Unilever products. The concern considered that the competitor was unlawfully using packaging design elements, as well as the “characteristic appearance of an ice cream cake” (more precisely, the wavy patterns on the sides and top of the cake). Rospatent experts admitted that a consumer can indeed mix the trademarks of these two cakes. However, “Venice” (as it is written on the Metelitsa website, “an original ice cream cake in the traditional Italian style”) is still produced. The fact is that the Rospatent Appeals Chamber, which the Russian company appealed to, did not agree that the two trademarks were confusingly similar. “They are similar, but not identical. So we won that dispute,” says Metelitsa lawyer Ivan Zvyagintsev. As for the appearance of the cake itself, this concern’s claim must be removed Unilever It turned out to be even easier: all manufacturers of similar products use approximately the same equipment, so they produce identical-looking cakes.
There are, of course, examples with large companies. In the pharmaceutical market, no one more than Vladimir Bryntsalov listened to accusations of copying well-known drugs. Yes, last December commercial director Hungarian company Gedeon Richter Bela Bede said that Bryntsalov's company Ferein "is engaged in cloning drugs developed and produced by [us]." As Bede told Interfax, Ferein purchased reagents from different countries and began producing its medicine, copying the original Cavinton packaging. In the same way, according to a representative of the company, Bryntsalov launched the production of drugs that copy the Hungarian drug no-shpa and insulin. Bede noted that “not only Gedeon Richter, but also a number of other foreign pharmaceutical companies are suffering from the actions of Verein.” However, CJSC Bryntsalov A, which owns trademark Ferein flatly denies that Cavinton or other “cloned” medicine comes out of the walls of its factory. The Russian company notes that it only produces drugs that have already lost patent protection (which is 20 years), and even then under its own names. That is, not no-shpu and Cavinton, but Nosh-bru and Bravinton are legally registered brands.
The law is the law
The Law “On Trademarks” states: “No one can use a trademark protected in the Russian Federation without the permission of its owner. A violation of the rights of the owner of a trademark is the unauthorized manufacture,..., sale... of a trademark or a product designated by this sign, or a designation confusingly similar to it, in relation to homogeneous goods.” This wording itself opens up the first opportunity for using other people’s marks: if you follow the letter of the law, it turns out that you can register a trademark BMW, for example, for toilet paper, since cars and hygiene products are heterogeneous products.
Of course, in reality no one will allow this. “Any Rospatent expert will refuse you registration because BMW can be considered a well-known trademark,” says patent attorney Valery Kalinovsky. The law does not provide for the concept of “well-known trademark”, but it is established international agreements, in which Russia participates. There is even an official procedure for recognizing a trademark as well-known - for this you need to submit an application to the Supreme Patent Chamber of Rospatent. She, in turn, may demand to conduct a public opinion survey, provide data on sales volumes, etc. But officially no more than five signs have gone through this procedure in Russia, so Rospatent experts have to be guided mainly by own assessments: put a logo BMW on toilet paper they won’t allow it, but, for example, they can register the “LOMO” mark for the class of meat products (the CampoMos meat processing plant did this registration). And who said that LOMO cameras are less famous than BMW?
As for trademarks that do not directly repeat registered ones, but only resemble them, there is even more room for creativity. Kalinovsky admits that it is not easy to find the line when “confusion occurs in circulation,” that is, when the consumer becomes confused due to the similarity of brands. “There is a whole theory about how to label a product, whether or not to use design elements of other people’s goods,” argues the patent attorney.
Sometimes clients come to Kalinovsky who want to register a trademark that is confusingly similar to an already known one: “Such people want to skim the cream off the market, and then they can simply go into the shadows. They may not even wait for the final registration of the trademark, being content with receiving the initial documentation. As a rule, we do not work with such customers, since this is associated with unfair competition.” In the early 1990s, Kalinovsky, for example, had to refuse entrepreneurs who wanted to register a trademark YvesRoche(exactly like that, without r at the end) according to the class of alcoholic beverages, more precisely for carbonated wine. The patent attorney was then guided by the fact that there was already a perfume brand on the market YvesRocher, and the production of “champagne” modeled after this famous brand would mislead consumers as to the origin of the product. However, the wine still went on sale. And without registering a trademark at all.
Brand type YvesRoche may be registered simply due to an oversight by Rospatent employees - they are not robots and are not able to keep in memory all the registered marks. In addition, it is known that patent office employees receive low salaries, and this opens the door to corruption.
But if a counterfeit has already hit the market, then those whose rights have been violated have to fight it. Companies can apply to Rospatent, the court or the MAP, seeking cancellation of registration, a ban on the production or sale of counterfeits. And this is not always an empty exercise. Quite often, companies manage to stop (or prevent) the production of products that mislead consumers. For example, n recently brewing companyBravoInternational(Bochkarev beer) achieved invalidation of registration trademark"Bokarev". A month ago, the Ministry of Antimonopoly Policy ordered the Menshevik company to stop producing and selling chewing gum. Lifeis… Life. The Turkish company “Dandi Sakyz”, a manufacturer, addressed the MAP with the corresponding requirementLoveis... The antimonopoly agency relied on the expert opinion of Rospatent, which found that Menshevik’s products were confusingly similar to Loveis... (True, “Menshevik” immediately filed a lawsuit in the arbitration court challenging the decision of the MAP, which automatically suspends the action of the antimonopoly authority’s order.)
But Chupa Chups Rus is not taking any legal action against Menshevik, since it believes that “a company that has chosen the tactic of copying someone else’s well-known product will not be able to exist on the market for long.”
By the way, “Menshevik” really is not going to stick to the current tactics for long. Having worked on other people's brands in production and sales, confectionery factory intends to launch its original product, $1.4 million will be invested in advertising by the end of the year. The company is keeping the name of its own brand secret until the presentation, scheduled for the end of June.
At the same time, or rather from July 1, a new version of the Administrative Code will come into force, which for the first time will address the issue of piracy. The Code provides, for example, for the confiscation of items containing an illegal reproduction of a trademark. Until now, the violator of the law was only obliged to remove the illegally used mark from the product or its packaging; no one encroached on the product itself. As noted by law firm experts Baker & McKenzie, “providing protection to a trademark within the framework of the legislation on administrative liability means the emergence of the possibility of a quick, effective, and inexpensive way to ensure rights to trademarks" But they also note that the effectiveness of the new mechanism will become clear only from the practice of its application by government agencies.
Maxim Kashulinsky, Vlad Kovalenko
Russian business increasingly prefers to make transactions under domestic law and litigate in their homeland. According to a study by Legal Insight and the Internet Initiatives Development Fund, more than 65% of Russian lawyers are ready to use domestic jurisdiction when concluding investment transactions. Experts unanimously confirmed this trend. The reasons cited are the fall in the ruble exchange rate and the “collapse” of demand; the undesirability for many state-owned companies in the current international situation to use foreign law; deoffshorization of the Russian economy announced by Putin; and finally, changes to the Civil Code with clearer rules regarding guarantees, representations of circumstances, etc.
The legal and judicial systems of Russia can celebrate a victory - Russian business increasingly prefers to make transactions under domestic law and litigate in their native courts, rather than in the UK. Although the share of transactions concluded with the so-called clause under English law is still high, there has been a clear tendency to return to Russian justice, experts interviewed by Profile note. But just a few years ago, the problem of mass migration of businesses to foreign jurisdictions was considered one of the key ones in the Russian legal community. Reform of legislation, the judicial system, deoffshorization, economic crisis, political isolation - all this led to the victory of the domestic Themis.
And yet, while this looks like one battle won, the war is far from over. And strategically, it is perhaps Great Britain who is winning in this regard - and not Russia, but the whole world, since it is simply more convenient for business to use English law than any other.
Gentleman's preferences
Although seemingly purely legal, the problem of moving to a foreign jurisdiction has a fairly clear explanation. Actually, jurisdiction is the law of the country that the two parties agree to apply for their transactions, in whose courts they will resolve disputes if they arise. That is why we witnessed high-profile “showdowns” between Russian oligarchs in the UK. Thus, in the High Court of London in 2012, Oleg Deripaska and Mikhail Cherny divided the shares of Rusal. The late Boris Berezovsky, who was claiming compensation for the shares of Rusal and Sibneft, lost to Roman Abramovich at the same time. Among the well-known “cases” there are also “VTB v. Nutritek", "YUKOS v. Rosneft", "Slutsker v. Haron Investments. Those were the times when the oligarchs divided their millions, and the media relished how British lawyers added new terms to the lexicon - kidalovo, krysha, dolya, obschak, vor-v-zakone.
But it was not only Russian business celebrities who preferred British justice. As a result, in 2012 the problem of “escape” Russian business to foreign jurisdiction was named one of the key ones. It was discussed in the State Duma and at round tables of the professional legal community. According to a study conducted at that time by the law firm “Egorov, Puginsky, Afanasiev and Partners” (EPAM), 57% of respondents either did not subject their transactions to Russian law at all, or assigned no more than 10% of them to it. Only 33% of surveyed businessmen working in Russia applied for Russian laws up to half of the transactions, and no more than 10% of companies agreed to submit most of their contracts to them.
Legal publications Legal Insight and The Lawer conducted a survey in the same year among representatives of legal departments of leading Russian companies. " This study once again confirmed the existence of a problem that has long been discussed in Russia - inconvenience domestic law for business needs,” noted the authors of the study. The consequence of this was “the widespread use of English law in certain sectors of the domestic economy (primarily in the investment business, banking, development). According to the survey results, 77% of respondents worked in companies whose activities were mostly carried out in Russia. Of these, 37% were involved in litigation in foreign countries, mainly in the UK (12%) and Cyprus (8%). In addition, 56.5% of respondents called Russian law “uncomfortable” for doing business.
Comfort in English
The company is registered, operates and enters into transactions in Russia and often with Russian partners, but with a reservation under English law. This means that lawyers write the contract in accordance with British contract law and trust the English courts to resolve any disputes that arise. Why does business do this? Because it’s more convenient for him, and comfort is the key word here.
Russians have long been skilled in this, notes YUST law firm partner Evgeniy Zhilin, and are no longer inferior to the average English lawyer. “Russian lawyers have long learned to draw up transactions in English law, and the participation of English lawyers in these transactions is not always significant,” he says. – It often happens that Russian lawyers on both sides take a deal in English law, negotiate, draw up draft documents, and then simply give them for review to an Englishman, who, for 5-15 thousand pounds sterling, says that everything is okay, or something is corrected if, for example, a new precedent appears.”
The advantage of the British system is simple, says Zhilin: “In English law, what is agreed upon works. If you don’t do it, they will force you.” “In Russia, the parties do not always understand to what extent what is written and agreed upon will be executed through the judicial system,” he compares it with the domestic system. “That moment of uncertainty about the consequences is a key deterrent.” English contract law is flexible, based on the principle of freedom of contract, adds Alexander Garmaev, head of the VEGAS LEX corporate projects group. “English law allows the parties to settle the relationship at their discretion and does not impose unreasonable restrictions,” he explains. – It is also believed that law enforcement practice in relation to provisions of English law is relatively predictable - one can predict in advance how the court will interpret the controversial provisions.”
However, other European judicial institutions also enjoy a high level of trust from Russian business, says Garmaev, for example, the courts of Stockholm and Paris. “Various offshore jurisdictions are still popular, among which Cyprus is still the largest,” continues Goltsblat BLP partner Matvey Kaploukhiy, specializing in corporate practice, mergers and acquisitions. – Among non-offshore jurisdictions, Holland is often chosen. The key aspects when choosing a jurisdiction are taxes, including the availability of a convenient double taxation agreement, as well as the cost of company administration.” For trade transactions, Zhilin notes, Swiss law is often used; it is considered quite neutral. And partner of the law firm “Egorov, Puginsky, Afanasiev and Partners” Dmitry Stepanov explains that Switzerland (like England and Austria) is chosen for business inheritance proceedings, and in trust disputes ( trust management property) are also dominated by Switzerland and England. And yet English law leads the majority commercial transactions. “Although the place may not necessarily be London, but Cyprus, Jersey, Maine, the British Virgin Islands and others,” explains Stepanov.
How things have changed
Just four years have passed and the picture has changed. According to a study conducted at the end of last year by Legal Insight and the Internet Initiatives Development Fund (IIDF), more than 65% of Russian lawyers are ready to use domestic jurisdiction when concluding investment transactions. In total, more than 500 lawyers from large companies and law firms. Of these, 23% consider it acceptable to use Russian law for a transaction amount of up to 120 million rubles, 13% – up to 60 million rubles. And 80% of companies that are ready to use domestic jurisdiction for transactions over 2 billion rubles. and above, according to the survey, already have experience working with Russian law. Zhilin from YUST gives approximately the same assessment. If earlier, according to him, the number of transactions in English jurisdiction and in Russian was in the ratio of 90% and 10%, now it is “approximately 80% to 20% or 75% to 25%.”
Experts unanimously confirmed the presence of a trend towards the return of business to domestic jurisdiction. “The number of transactions concluded within Russian jurisdiction is growing. “Clients are increasingly turning to just such attitudes: we will make a transaction under Russian law,” says Zhilin. – I think that in the future the number of Russian transactions will gradually increase. Including foreign partners, if the main vector (areas of activity) is Russian, if the company is located in Russia, they often already recognize that the shareholders’ agreement must be subject to Russian law. This year we have already supported several such large transactions of leading Russian companies. But, as a rule, we are talking about creating joint ventures, and not about buying and selling a business in the classical form.”
Researchers from Legal Insight and IIDF say that “today more and more companies are ‘looking’ towards Russian law in the face of a falling ruble exchange rate and a ‘collapse’ of demand.” This factor was also noted by Garmaev: “The sharp change in exchange rates has led to the fact that the services of foreign lawyers to support transactions and litigation have become significantly more expensive.” However, Zhilin considers the impact of the fall of the ruble to be unimportant. “If we are talking about large transactions, amounting to at least tens of millions of dollars, then the costs of lawyers against this background are insignificant,” he says. – This can be a defining moment only for micro-deals – up to $10 million, where we are talking about startups or small companies. There, it can really be expensive to pay lawyers 100-200 thousand pounds sterling. Of course, the cost of services of Russian lawyers is somewhat, and sometimes noticeably lower.” At the same time, he recalls that Russian lawyers with English law have long been on first name terms.
The second reason is political. “For many public sector companies, the use of foreign law has become undesirable given the current international situation,” stated Garmaev. “The degree of government intervention is seriously increasing, more and more companies with state participation are appearing, including in highly sensitive sectors of the economy,” agrees Zhilin. “Therefore, in a number of cases, the choice of Russian law is dictated by what is called aspirational aspirations - to apply Russian law in an indicative manner, to hang an order on one’s chest.”
The third reason is of a legislative nature: the deoffshorization of the Russian economy, initiated by President Putin. “More and more deals are being concluded under Russian law, and this is largely due to policies that make the use of offshore companies extremely burdensome,” says Kaploukhiy of Golsblatt BLP. And Garmaev explains that as a result of what happened tax changes During deoffshorization, “conducting transactions using foreign structures became impractical from the point of view of tax issues.”
But the changes made to the Russian jurisdiction were decisive for the return of companies to Russian jurisdiction. Civil code. In recent years, it has been supplemented with new rules regulating legal relations that are important for business. “Now in Russian law, transactions on joint ventures (joint ventures), sales of businesses and individual assets, shareholder agreements, options to buy or sell shares, shares, irrevocable powers of attorney for voting are easily concluded,” lists Stepanov from EPAM. Russian law has improved - certain instruments have appeared that did not exist before, Zhilin confirms: “These are more detailed and understandable rules regarding shareholder agreements, conditional transactions, the so-called escrow (deposits that ensure execution of transactions). More clear rules have appeared regarding guarantees, assurances about circumstances, and so on,” he also gives an example.
British fashion
But the largest transactions, says Zhilin, are still not concluded in Russian law, and disputes regarding these transactions are not resolved in Russian arbitration courts. “It’s probably too early to say that Russian law is on the same level as English law in terms of convenience and flexibility in regulating contractual relations,” says the lawyer.
And there are reasons for that too. The first is the dubious quality of Russian justice, which all experts talk about. Two years ago, the Russian Themis was seriously reformed. The Supreme Arbitration Court (SAC) was liquidated, and its functions were taken over by economic board Supreme Court. “Now the first results are being summed up: how effectively and successfully the economic board operates,” says Zhilin. – The general message is that this was done in vain. Rather, the judicial system lost from this than it gained.” “The liquidation of YOU can rather be called a step in a different direction,” agrees Kaploukhiy. – And the reform of legislation on arbitration courts is controversial, since it is designed to restore order with arbitration courts, but at the same time it has actually closed corporate disputes on Russian arbitration courts and the International Commercial arbitration court at the Chamber of Commerce of the Russian Federation." Gamaev, in turn, notes that business has “certain doubts regarding the transparency of the Russian judicial system.” Without the institution of law enforcement, only “on paper,” even the most progressive norms will not work, Stepanov sums up. “It is necessary to create an authoritative arbitration - a non-state arbitration court for the consideration of commercial disputes, where Russian commercial law would be applied and, more importantly, developed,” he is confident.
Legislatively, too, much would still need to be improved, lawyers say. “We need to create mechanisms for transferring the business to heirs, but without fragmenting the business, as happens in ordinary inheritance, but with keeping the business “on the move,” says Stepanov. – Because the captains of Russian business are getting old and wondering who and how to transfer their assets. It is necessary to introduce into our law some analogue of a trust (in continental law, and not just in English, it exists and works great), otherwise many complex corporate structures and will further structure holding companies outside the Russian Federation."
But the actual differences between the two systems of law – precedent Anglo-Saxon (England and the USA) and continental (Europe, Russia) – are the main reason for business moving to British jurisdiction. We, Russians, Europeans, unlike the British, simply have a different basic model of legal consciousness, says Zhilin. “We are not used to writing two-hundred-page contracts, because we have a Civil Code, which itself is quite detailed and large, clearly regulating many relations,” he explains. – That’s why contracts are often written on two or three pages, the rest can be found in the Civil Code. Not so in England. Everything you agreed on should be in the contract, they don’t have any Civil Code, and no one will help you. That is why the contracts are so large, long, and detailed. To the uninitiated reader they may even seem funny in their casuistry and details, but nevertheless this is exactly how they work.”
And the codification of legislation - the desire to reduce disparate norms into codes - characteristic of countries of the continental legal system, has become a problem not only for Russian business - everyone prefers Britain. “You will not find a single normal credit transaction for which foreign banks would give money and which would not be concluded under English law,” says Zhilin. – This simply doesn’t happen. It is clear that here one thing leads to another. Many banks have roots in England and have historically pulled their own lawyers forward. But even German banks now very often carry out loan transactions under English law. That is, this is not typical Russian problem, this is a problem in so many jurisdictions, and everyone is essentially learning from more advanced legal systems.”
The Russian legal system has one advantage. After the collapse of the USSR, our country, although it largely adopted the legal traditions of continental Europe, also learned from the Anglo-Saxon system. There is potential for further improvement, Zhilin believes. “I am more than sure that Russian law has a fairly high adaptive capacity, because it absorbs not only the institutions of continental law, but also Anglo-Saxon law,” he says. “They don’t exactly get along well, but it works.” All that’s left to do is to realize this potential.
Already this summer, the government may adopt criteria for classifying products as Russian. Products that meet all requirements will be given priority in government procurement
Buy Russian
It’s easy to prove that your product is made in Russia by “simulating” the percentage of the localization level, says a high-ranking government official participating in the discussion of import substitution issues: “Everything is calculated at customs value, it is underestimated, overhead costs and expenses that are made at procurement of components in the country. It turns out that we are creating a Russian product, which in fact is not one. We would like different conditions."
To solve the problem, the Ministry of Industry and Trade has developed a draft resolution that should clearly regulate the criteria for classifying products as Russian, and describes what should be classified as products whose analogues are not produced in the country (such equipment is not subject to VAT when imported). An assessment of the regulatory impact of the document should be completed this week; a resolution could be issued before the end of June, says a RBC source. The project has not yet been received by the Ministry of Economic Development, a ministry representative told RBC.
There are several criteria for Russian products. The document (the project is posted on regulation.gov.ru) specifies a list of conditions and operations in Russia, the percentage share of the cost of materials and components from abroad in the price of the final product. It must be calculated at the customs value upon import or at the documented price of their first sale in Russia; the cost of industrial products is determined taking into account the costs of delivery from the factory.
Also stipulated prerequisite that the manufacturer must carry out research and development work, involve Russian citizens in the work, etc.
Separate indicators are established for each industry. The document contains them for eight industries - medical equipment, pharmaceuticals, electronics and microelectronics, machine tool industry, automotive industry, special mechanical engineering, photonics and lighting engineering, electrical engineering and power engineering. The appendices contain several dozen product names for which separate conditions are offered (see examples in the sidebar).
Minister of Industry and Trade Denis Manturov said in an interview in a thematic supplement to Kommersant in May of this year that as criteria for other goods are developed, “ The resolution will be expanded and supplemented with new positions.” RBC's source in the government says that work is underway on 13 industry regulations.
There are two criteria for classifying industrial products that have no analogues in Russia. P Products should not have the same technical and operational characteristics, physical, chemical and other properties not related solely to its appearance, which affect its operation by more than 20%. The second criterion is price and operating costs. For of a product that is produced in Russia, a difference of more than 20% in cost or operating costs is taken into account.
The list of such products will be adjusted, says a government source. It is assumed that the CCI and Russian Foundation technological development, follows from the document.
Business is waiting for clarification
“For now, calls for localization of drugs and substances remain only political calls, but criteria alone cannot solve this problem. Now there are not only criteria, but also no clear confirmation procedure. For example, to name your company as a manufacturer of local products, you just need to check the box when filling out an application on the government procurement website - and you will immediately receive 15 percent preferences,” complains Zakhar Golant, head of the industry department for pharmaceuticals and biotechnology at Delovaya Rossiya.
In pharmaceuticals there are completely non-obvious criteria that need to be taken into account, he adds: “There are many medicines, the locality criteria in which are not the same even in separate category- for example, tablets or liquid: the cost of medicinal substances for drugs in ampoules can reach 80%, and in tablets it is an order of magnitude less. How to calculate?
For the products that the company produces and supplies, for example, to the Ministry of Defense, 100% domestic components are already required, says an employee of one of the companies producing photodetectors. According to him, some devices for the civilian sector contain foreign components, which will have to be abandoned in order to comply with the new standards (according to the criteria developed by the Ministry of Industry and Trade, the share of foreign components in manufactured goods in this segment should not exceed 30% by 2019). But due to the high dollar exchange rate, it is now more profitable to use domestic components, RBC’s interlocutor noted.
For representatives of the automotive industry, the criteria are spelled out in the already existing government decree No. 166, recalls a representative of Ford Sollers. It also spells out the obligations of automakers, including the level of localization, obligations to organize a research and development center in Russia and the creation of engine production.
Carrot or stick
Representatives of the business community interviewed by RBC say that now, given the state’s increased attention to import substitution programs, companies that meet the criteria of a manufacturer of a “Russian product” could count on preferences. “But the global question here is whether it will be in a stick format or a carrot format. What is this - a bonus for those who meet the criteria, or a restriction for those who do not fall under these criteria,” says a source close to the RUIE board bureau.
“We will tie the implementation of special investment contracts to the resolution,” says a government official. He adds that it is also possible to place an order with a single supplier if the executor of such an order is a participant in a special investment contract.
The Ministry of Industry and Trade began accepting applications for participation in special investment projects in April of this year, according to a message on the department’s website. As part of the projects, the state provides subsidies to compensate for part of the costs of paying interest on loans received in Russian banks in 2014-2016 for projects in the field civil industry under the state program “Development of industry and increasing its competitiveness.” Companies with projects worth up to 5 billion rubles can participate in the selection. Subsidies are provided for loans for a period of at least three years, 0.7 of the Central Bank key rate under the loan agreement is subsidized.
It is expected that other preferences will be offered to companies that meet the criteria, says First Deputy Chairman of the Public Council under the Ministry of Industry and Trade Anton Danilov-Danilyan. "If you are truly complete Russian company and produce a product according to these criteria, it is much easier to get help in state institutions development,” he says. “Companies will be able to count on assistance in expanding production and insurance to enter export markets.”
The admission of companies to government procurement is also being discussed separately. It is planned to develop draft resolutions, according to which the condition for the admission of goods to government procurement will be their production in countries included in the Eurasian economic union, follows from documents of the Ministry of Industry and Trade. “To be a Russian product, the components must be from EAEU countries, including Russia. This is mandatory,” a government official tells RBC.
The idea of obliging foreign companies who wish to participate in government procurement, to localize production in Russia within a few years, has been discussed in the government for several years. But the criteria by which companies or their products are recognized as localized are not described in sufficient detail; this could lead to abuse, concerns were expressed at the beginning of this year by the Association of European Businesses, according to a presentation by the organization.
