Igor Chaika tries to arrange sales of Russian products to China

The younger son of the Russian Prosecutor General Igor Chaika is trying to sell Russian products to China.
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For several years, the image of China throughout the world and in Russia has changed. If before the country was perceived as a producer and supplier of cheap equipment and consumer goods, now China is spoken of as the main buyer of innovations and a huge consumer market. In Russia there are high technologies and a growing agro-industrial complex, and the government is ready to support non-primary exports to the Middle Kingdom. Announced more than 70 joint projects with China for $ 100 billion, but only a few have been successfully implemented so far. How does the Russian business turn east?

Crystal growth

In October 2013, Alexei Borodin, the system administrator of the Stavropol plant "Monocrystal", copying the technology of growing artificial sapphires on a flash drive from an office computer, completed a criminal operation that began a few months earlier at the request of one of the Chinese companies. "Monocrystal" - the world's largest producer of artificial sapphires - operates in the mode of commercial secrecy. Nearly everywhere cameras are installed at the enterprise, carriers of commercial secrets are regularly tested on a polygraph, the functions of workers are strictly segmented, and to understand the technology by which the plant grows sapphires by $ 100 million a year, a minimum of five specialists are required. This was not firsthanded by Andrey Shamin, the purchasing director of the Monocrystal, who agreed to sell the secrets of the Stavropol sapphire company to Chinese competitors. In February 2013, he began to bribe existing and former employees of the plant, including the deputy chief of the mechanical workshop, who transferred the technology of using ceramic screens for the cultivation of sapphires, and Alexei Borodin, who managed to take a flash drive with valuable information from the company's territory. Five people were involved in the scam on the Monocrystal, they received $ 130,000 from the Chinese, and three years later, on the basis of the FSB investigation, the Stavropol Regional Court found them guilty of divulging trade secrets. Organizer Andrei Shamin went for 2.5 years to the colony-settlement, the rest received conditional terms and were released from punishment under an amnesty.

"Monocrystal" accounts for about 50% of the world sapphire production, the main competitors of the enterprise are Chinese companies. "Monocrystal" is a member of "Energomera Concern", its founder Vladimir Polyakov engaged in the cultivation and sale of sapphires in the late 1990s, after the purchase of the Stavropol plant of electronic instruments and materials "Analog". Of the several directions developed by the enterprise, two survived: the production of synthetic sapphires and metallization pastes for solar batteries. Now, several hundred third-generation growth plants are working on Monocrystal, where at a temperature of about 2000 ° C for several weeks, aluminum oxide turns into a sapphire weighing 350 g. "Growing a large crystal is not the hardest thing to produce," Polyakov said in an interview with Forbes . "It is important to do it qualitatively and cheaper than all."

The first consumers of Stavropol sapphires were Swiss watchmakers, who installed sapphire glass on their products. The real success for "Monocrystal" came with the development of the LED industry: a sapphire substrate - an indispensable element of any LED - is about 10% of its cost. In 2005, in China, the production of LEDs was included in the list of priority areas, and since then, according to Polyakov, the cost of sapphires fell by 10 times. "Only those who managed to cut costs or use state support, like in China, stayed afloat," he said. The level of state support of priority industries in China, Polyakov felt on himself in 2012. "Monocrystal" then opened in China a plant for the production of metallization pastes, and representatives of one of the Chinese economic zones proposed to begin their construction of a sapphire plant. "They made me an offer, which was difficult to refuse," Polyakov confesses. "For the construction of a factory for growing sapphires in China, I was given free land and a building with communications, tax exemption and 50% return of investment."

Polyakov invested $ 20 million in the Chinese enterprise for the production of pastes for solar energy. According to the entrepreneur, the attention to foreign investors in China is exceptional: "To our company for the production of pastes free of charge roads, electricity, the plant was built in just two years, after the start the director was awarded the title of "honorary citizen of the city." Nevertheless, Polyakov declined the offer to build a plant in China to grow sapphires "because of the difficulties of preserving technology." The Chinese competitors started from the same growth installations as the "Monocrystal". In the Soviet Union there were several enterprises for the cultivation of sapphires, the Chinese in the early 2000s bought and removed part of the installations in China, where they were expecting an LED boom. While "Monocrystal" can keep its share in the market, but every year it becomes increasingly difficult.

"Business in China is very difficult," argues Polyakov. "Chinese companies can work with zero margins for a long time, they are centennial oriented, and the market share for them is more important than profits." "Monocrystal" now provides more than 40% of supplies of sapphires for the production of LEDs in China.

Intellectual freedom

In May 2017, the United Aircraft Corporation and the Chinese corporation COMAC established a joint venture China-Russia Commercial Aircraft International Corporation (CRAIC) (a memorandum of cooperation was signed by the parties in 2012). In 2025, the company must bring to market a wide-body long-haul aircraft CR929, capable of competing with Boeing and Airbus. From 2023 to 2045, according to the forecasts of UAC-COMAC, the world aviation will need 7,200 such airliners and 1080 to Chinese airlines (the volume of the world market in the next 20 years is estimated at $ 2.3 trillion).

Now the $ 20 billion project is at the GATE-3 stage, where research will be conducted in the field of aerodynamics, materials are selected, suppliers of key systems and equipment are selected, and the shape of the aircraft is determined. In Russia, the consoles and mechanization of the wing, the center wing, the pylons of the engine attachment will be developed. In China, make a fuselage, horizontal and vertical plumage, fairing. The final assembly of the aircraft will take place in China.

Will China be able to make such a plane on its own using technology, knowledge and skills obtained from Russian partners? According to the chief designer on the Russian side, Maxim Litvinov, Russian works are a high-tech part of the program. "To remove parameters, physical and mechanical properties from such a complex unit as a wing, for example, is quite difficult," the designer considers. - You can copy and collect, but in this case the percentage of errors is very large, because it remains unknown why these or other technical decisions were made. "

Captain of the team of masters "What? Where? When? ", Director of the Trinity Innovation Cluster Victor Sidnev is sure that today China is the best market in the world for innovative products. "It used to be that it is cheap to make goods in China and sell it expensive outside the country, and now there are salaries higher than in Russia and a population of 1.5 billion people," Sidnev, co-chairman of the Russian-Chinese Technology Transfer Center, argues. He spent four months a year in the Chinese province of Guangdong, where the Technological Park "Lake Songshan" and the office of the Russian-Chinese Center are located. The center was set up with money from Dongguan City in partnership with Qinhua University after visiting the Dongguan Mayor of the Trinity Innovation Cluster. Having familiarized himself with the cluster's projects, the mayor suggested Sydnev to transfer Russian innovative solutions to China for their further introduction into production.

To create a new structure, $ 1.5 million has been allocated. How technology transfer works, you can show by the example of an individual laser perforator for blood collection. The Center has found a Chinese investor for the project, which allocated more than $ 1 million to rework the device, and has already certified it for the Chinese market. According to Sidnev, the mass production of the device will begin in 2019. Its volume is limited by the number of lasers (the main detail), since in Troitsk they can do no more than 10,000 per year. Lasers will continue to be produced only in Russia, and this is the best guarantee against copying. "In China, electronics and the body will do very well, but the most knowledge-intensive part will remain with us," Sidnev said. The Center is already looking for partners, registering patents, preparing documents for three more projects.

China is known for its free treatment of intellectual property. In the airspace of China, copies of Soviet and Russian military aircraft and helicopters fly, in space, the taikonauts are sent to copies of the Soyuz spacecraft, Chinese-made cars that are externally indistinguishable from the products of Western auto giants are traveling along the roads.

"If there is a possibility to copy something, the Chinese will copy it," says Vladimir Marchenko, co-owner of the LOGICOM Logistics forwarding company. In 2009, he got acquainted with the work of one of the Chinese research institutes, the largest one was a marketing department of 150 people, 100 of them went to world exhibitions and collected samples of modern materials. Then the imported polymers were disassembled into molecules, reproduced, and then passed on to technology producers. "Therefore, the goods turned out cheap - the state took the costs of R & D," Marchenko said.

He himself came to China in 2007 to represent the interests of one of the largest customs brokers in Russia - the Transsphere. Then Marchenko opened his own business in China to forward local goods to Russia. His forwarding company had to render unusual services: it is in the interests of Russian customers to control the production of Chinese factories. "If you do not follow, they will do" something similar "or" almost as it should ", - smiles Marchenko. "To cheat a carefree partner is not deception for them, but commercial valor."

"Do not try to outwit the Chinese. They are very negative about various forms of manipulation, deception and pressure, "adds Sergey Nazarov, the founder of Interskol, which opened a plant in China in 2008 for the production of power tools. In 2014, the company launched a plant in Russia, where it moved production with a high proportion of the intellectual component. "After all, our developments could remain with Chinese manufacturers, and they will change the wrapper in a month or two and offer similar products," Nazarov explains.

Russian food

At the end of 2015, a delegation from China arrived in the Chelyabinsk region, its representatives suggested that local authorities create a zone of high agricultural technologies and a joint venture to sell Chelyabinsk food to China. The project was entrusted to the head of the Chelyabinsk Region Food Corporation Irina Novikova. She spent three days with the guests: she showed the land (the region was ready to allocate 20,000 hectares for the project), acquainted with local agricultural production, arranged meetings with the regional authorities. The Chinese nodded their heads, smiled and said that they were ready to invest 6 billion yuan (almost 60 billion rubles) in the project. "They have already come three times, but not a single question for two years has not been resolved," Novikova says irritably. "And I lose them with them every three days." Some kind of gastroturism is obtained, not business. "

In 2017, China ranked 34th in terms of volumes in Chelyabinsk exports ($ 20 million, and all exports - $ 5 billion). The authorities of the region are confident that they can significantly increase sales in China. "Now, without the Chinese, I'm registering a trading house that will help our producers sell their goods in China," Novikova said.

In the region there are examples of successful entry into the Chinese market. Recognized brand in China was the manufacturer of macaroni "McFa", its products are already forging: in 2016, representatives of the company together with a Chinese distributor closed two underground shops for packing flour under the brand "Makfa". According to Svetlana Kolesnikova, the head of the Indochina division, in 2016, McFa reduced the pool of distributors, returned the status of the owner of the trademark Makfa on the territory of the PRC and applied for registration of its hieroglyphic writing. Over the past two years, the company sold 26,000 tons of products in China, China's share in the company's exports to non-CIS countries is about 70%.

According to the Russian Export Center, in 2017, Russia exported goods to China for $ 38.9 billion (40% growth), 64% of the supplies fell on raw materials. The most notable food products of Russian exports to China were fish and seafood ($ 1 billion, an increase of 5.6%) and fat and oil products ($ 240 million, an increase of 41.8%).

"China is the world's largest food importer, but it's a fairly closed market, which is difficult to get out of," says Yevgeny Lyashenko, general director of the Efco group of companies. "The requirements of the Chinese partners for quality and safety of products are considered to be among the most stringent in the world." Efco began shipping bottled oil to China in 2015, and in 2016 - specialized fats and margarines. Now China sells 640,000 tons of bottled sunflower oil, and this figure grows by 10-15% annually. Lyashenko admits that Russian supplies against this background still look like a "drop in the ocean."

The younger son of the Russian Prosecutor General Igor Chaika is trying to sell Russian products to China. He partnered with Russian Export and First Russian Cross-Border International Trading (FRC) in March 2016 to export Russian food products to China. The first company began to purchase Russian products for their shipment to China, and the second - their sale in China.

As Igor Chaika explained in an interview with Forbes, the idea of ​​creating a new business was born on the background of the growing demand of the solvent part of the PRC population for high-quality food products and the attractiveness of Russian products in terms of price / quality ratio. A certain role, he said, is played by the historically formed positive attitude of the Chinese towards Russia and its products.

By July-August, 2016, the company received all licenses for the sale of food products to the PRC, including the sale of alcohol. The first batch of several pallets with confectionery and snacks was sent to China in September 2016, in March 2017 regular container shipments began. By the spring of 2018, the company certified 800 items for sale in China, concluded about 30 contracts with networks and 50 - with distributors controlling 16,000 Chinese stores of different formats. Now the product is present in more than 1000 stores in two dozen provinces of China. Online products are sold through branded stores on six electronic trading platforms, including Alibaba.com, JD.com and Taobao.com.

The assortment does not yet have the products of well-known Russian manufacturers. "Small businesses are more flexible, they are ready to work on packaging, which in China should be ideal, change the composition of products. Here, for example, sweets made with regard to the taste preferences of the Chinese "- Igor Chaika suggests trying candy from the brand package of the brand Dakaitaowa. New products are tested on the Chinese employees of the company, and this method works: out of four products in China, three coexist. Russian companies buy and export Russian goods, but in the coming years plans to significantly increase the share of commission trade, buying to their balance for export only products under its own brand Dakaitaowa, which is already being promoted by popular Chinese video bloggers.

The main part of the way has already been passed, Igor Chaika is sure: "The Chinese can very long lead a dialogue with you, spend a lot of time, even sign documents, but do nothing. This is their way of doing business. But as soon as they saw the profit, they start moving quickly and in the right direction. "