Nikos Group
Country |
Russia |
Year of entry |
1961, chemical plant “Caustic” was build in the city of Volgograd |
Industry/ business area |
caustic soda and polyvinylchloride producer |
Entry mode |
production facilities of OAO Caustic and OAO Plastcard are located next to each other in the city of Volgograd and have close technological ties. |
Motives |
|
Firm specific advantages used on the foreign market |
|
First mover or follower |
N/A |
Type of state involvement in the process of internationalization |
Difficult to say because it was in 1961. |
Evaluation of the success of the internationalization |
In the end of 2005 the installed capacity for production of caustic soda (main product) at OAO Caustic was utilized at 99.95% indicating a significant need for capital expenditures to achieve any further increase in production. 15 Now:
|
Conclusion
First of all, due to the extremely high importance of the resources in petrochemical industry, most companies prefer to have their production in Russia and export through sales partners or subsidiaries. A very similar internationalization strategy is the acquiring of an already established wholesaler in Europe to reach the European and further markets (e.g. Sibur's aquisition of the Austrian CITCO Waren-Handelsgesellschaft in 2009) This is because the necessary resources are available in Russia and transporting them somewhere in order to further process them would be too cost intensive. Therefore, if investment in production plants are made, this is in a country close to Russia (e.g. Eurochem: Lithuania's Lifosa phosphate plant, Nokian Tyres from Finland).
Continuing this Idea, we can say that many Russian companies due to their plants are close to resources, don’t do any foreign investment. They just export their products (Minudobreniya). The industry is of strategic importance for the Russian Federation, however, as the internationalization processes mostly includes export, there was hardly ever an obvious state influence on the process. But we can see high dependents on government policies like taxed. Often this is the key factor of internalization to Russia.
Thirdly, underling the role of the government in the process of internalization, we can say about three most important factors:
Government support plays key role for greenfield strategies. Because without it takes years to complete all formalities
Many Russian MNE use the opportunities of cross nations agreements between Russia, Ukraine, Kazakhstan and other friends from Soviet Union. That is why it is the first direction of their internationalization.
Government can influence on the process of internationalization by different restriction on international trade.
Finally, we need to say about the reasons for international players to build plants here. Russian market (auto, agro and etc.) shows high growth. That is why anyway some of foreign players tries to find opportunities in lower saturated market, like Russia. Especially if this market is littered with row materials, which are so important for petrochemical industry.
1 http://www.uralchem.com/eng/about/
2 http://ar2011.uralchem.ru/eng/risks/
3 http://www.henkel.ru/about-henkel-85.htm
4 http://www.kazanorgsintez.ru/index.php?lang_id=2
5 Annual report 2011
6 http://www.titan-omsk.ru/en/gruppa_kompaniy/istoriya_kompanii.php
7 http://www.titan-omsk.ru/en/gruppa_kompaniy/istoriya_kompanii.php
8 http://www.titan-omsk.ru/gruppa_kompaniy/missiya_i_strategiya.php
9 http://www.titan-omsk.ru/en/gruppa_kompaniy/istoriya_kompanii.php
10 http://www.kuazot.ru/index.php?lang=eng
11 https://www.nokiantyres.ru/operating-in-russia-ru
12 Company report 2011
13 http://www.autoconsulting.com.ua/article.php?sid=188
14 http://www.rb.ru/article/michelin-udvoit-moshhnosti-shinnogo-zavoda-v-rossii/6165157.html
15 http://www.uralsibcap.ru/fixedincome/issue/file-download/Nikochem%20-%20stability%20and%20growth.pdf?parentId=475&langId=ru&fileNo=4