''Trade turnover falls by a third every year, Czechs are angry, but not Russians came up with sanctions!''

Denis Manturov to Czechs: are you ready to localize in Russia?

The final day of the 18th international exhibition ''Mechanical Engineering. Metalworking. Kazan'' in the Kazan Fair could be called the day of the Czech Republic — it was completely devoted to business cooperation with Czech engineering companies, which began to ''cut a window'' to the East. For the first time since the introduction of international sanctions against Russia, the Czech Republic has turned face to Tatarstan.

In the morning, the exhibition opened a business forum ''Tatarstan-Czech Republic'', which was attended by a business landing of the 25 largest production companies in the Czech Republic. Among them — the mechanical engineering holding ALTA, engineering company Favea (creation of pharmaceutical productions), developer of Flow Tech equipment, representatives of state companies that support export and trade (EGAP insurance company, Czech export bank, CzechTrade agency). The serious status of the delegation is simply explained: it was headed by Minister of Industry and Trade of the Czech Republic Marta Nováková, who was appointed to this post after the election of the new government of the Czech Republic in June this year.

Denis Manturov first visited the joint exposition of Czech manufacturers of machine tools at the forum

Denis Manturov, the minister of industry and trade of the Russian Federation, first visited the joint exposition of Czech manufacturers of machine tools at the forum. He asked whether they were ready to localize in Russia. ''Yes,'' managers nodded to him. ''Someone wants in Tatarstan, someone — in Ulyanovsk.'' Then Manturov met the heads of the aircraft manufacturing enterprises — Kazan Helicopters and Kazan Aircraft Production Association — and listened to the report on the progress of reconstruction of the Kazan aircraft plant from Boris Tikhomirov, the head of Kazan GIPRONIIAVIAPROM JSC. Following this, the Russian and Czech teams went to the meeting of the working group of the intergovernmental commission in Korston.

Marta Nováková: business is still tenacious

Even before the arrival of the head of the Russian ministry of industry and trade, the Czech minister, speaking at the forum ''Tatarstan — Czech Republic'', made it clear that she stands ready to business and concrete relations ''from scratch''.

''Big-league politics should not interfere with businesses: no matter how top officials change, business is still tenacious,'' she said, speaking about the reason for the resumption of relations with Russia. ''Sanctions do not please entrepreneurs on both sides, they only complicate doing business.'' According to Novakova, it is very important for the Czech side to have the platform for meetings with Russian business such as the Czech-Russian intergovernmental commission. ''It is at such meetings where specific contracts are often discussed and there is an opportunity to solve a number of issues related to new business projects,'' she said. ''I have been visiting the Czech Republic since the late '90s, and over this time the rate of the koruna to the dollar has not changed,'' said the head of the Chamber of Commerce and Industry (CCI) of Tatarstan Shamil Ageev. ''That's how the Czech industry works!''

Tatarstan Prime Minister Alexey Pesoshin focused on the long-standing economic ties between Tatarstan and the Czech Republic, reminding that, despite the sanctions, the republic maintained contacts with the industrial region of the Czech Republic — the South Moravian Region. Moreover, in October 2017 Tatarstan took part in the 59th international machine-building exhibition in Brno. At the end of 2017, the foreign trade turnover between Tatarstan and the Czech Republic amounted to $447,4 million. ''Look, our turnover has not increased by 500 per cent with any other country,'' the head of Investment Developemnt Agency Taliya Minullina exclaimed later. ''Of course, you can create productions and open businesses in Moscow. But it is very expensive. In the regions, labour, land, rental of premises and everything related to doing business are objectively cheaper, and therefore it is more profitable to work there,'' she hinted subtly.

The main theme of the working group within the commission is the localization of Czech production in Russia, Shamil Ageev explained later

To amend the law on industrial assembly

The main theme of the working group within the commission was the localization of Czech production facilities in Russia, Shamil Ageev explained later. His colleague, Executive Director of the Czech Chamber of Commerce and Industry for the CIS countries František Masopust explained that there are now many relevant examples in different industries. For example, in the field of mechanical engineering the companies such as Hestego, Trimill, Brisk Tábor, Brano Group, Tos Varnsdorf have localized their production facilities. A striking example is the Czech Škoda, which is part of German Volkswagen Group. According to Ageev, there are certain obstacles that need to be eliminated within the framework of the intergovernmental commission. ''Joint productions are necessary, but steps towards have to be done by both parties,'' he noted. ''There is a law on localization, but how to make a machine on it? All components cannot be produced there, on the spot, there should be a reasonable balance. Some things are prescribed by the law so that it is impossible to run a joint venture at such a time. These issues are to be discussed by the working group of the intergovernmental commission.''

We are talking about specifying the depth of localization of foreign equipment production within the joint venture. František Masopust explained to Realnoe Vremya that it is difficult to find a partner for the localization of individual components within Russia for two years. ''For the first two years, the level of localization of production should be 40 per cent. That is, there should be a Russian partner ready to master part of the equipment. But where to find him?'' he wonders. ''And if it is not, then we have to build a plant with the production of these components.''

Masopust also said that every year he visits different regions of Russia and sees that the place of the Czech Republic in them is occupied by Koreans, Chinese and Japanese. ''Since 2014, the trade turnover has fallen by 30-35 per cent, and the Czechs are angry. I tell them: it wasn't the Russians who came up with sanctions. Localization is the way that can help solve this problem. Probably, they will make important decisions for us from the top today,'' he hopes. Among the applicants for the placement of Czech productions, he called SEZ Alabuga.

Unnoticed confusion

The meeting of the working group was held behind closed doors, but for the first time Tatarstan President Rustam Minnikhanov took part in it as a host. Coming to the press, the guests found an embarrassment: among the four state flags in the background there was no Czech one (all were Russian), but they did not speak out loud about it — just looked at each other. However, Marta Novakova moved the cloth — apparently in the hope of finding still their flag (it is known to the same colours as the Russian). The situation was saved by Minnikhanov, who skillfully turned Nováková in the opposite direction from the flagpoles and persuaded her to stand between him and Denis Manturov.

Coming to the press, the guests found an embarrassment: among the four state flags in the background there was no Czech one

''We have decided to combine the useful with the pleasant: to visit the exhibition and support the Czech manufacturers who have arrived,'' the latter said with satisfaction. And he cited the latest data on the growth of trade turnover between Russia and the Czech Republic: $6,8 billion in the first 10 months of this year — plus 17% compared to last year. The minister did not go into the details of the agenda of the working group, telling only general words. ''The most important thing we have agreed on is to develop trilateral areas of international cooperation in order to develop foreign markets together, while increasing the participation of our companies from Russia and the Czech Republic,'' he said. Marta Nováková, in turn, said that this is her first visit to Tatarstan and that the working group discussed the possibility of investing Czech companies in Tatarstan and vice versa — Tatarstan companies in the Czech Republic.

Anyway, the conclusions of the working group are preliminary, and the final decisions will be announced at the intergovernmental commission. Denis Manturov and Marta Nováková said that its meeting is to be held in March 2019. As it turned out, this date is timed to the opening in the Czech Republic of the flexible packaging plant Danaflex worth 40 million euros, the first foreign project of the company. ''I am very pleased that in the near future we are going to open a Tatarstan enterprise in the Czech Republic,'' said Novakova diplomatically.

Denis Manturov also touched upon the federal agenda. Answering the question about the possibility of participation of Russian companies in Czech tenders, he expressed the hope that the Czech Republic would invite Russian specialists to build a new power unit at one of the two Czech nuclear power plants. Nováková confirmed that the construction of new facilities in the field of nuclear energy will be carried out by the private-state company ČEZ. According to her, negotiations between the government and the company on preparation of tender documentation are underway. ''We assume that the decision to announce the tender will be made within the next year,'' she said, adding that the government and the company are negotiating with all potential technology suppliers and ''transparent conditions'' will be created for them all.