Johan Vanderplaetse: ''I dream the centre in Innopolis will become a global centre in the oil and gas sector''

Over $1bn in Russia

Mr Vanderplaetse, the last time we met you had just occupied the post of the company's president in Russia and CIS countries. What have you managed to achieve for this time? How has your life changed?

We have done a big job in the Russian market and continue investing in development of Schneider Electric. We keep up to date: we actively develop digitalisation technologies and the Internet of Things for more efficient energy and industrial automation management. We were just beginning three years ago, while now we have many projects, we see growing interest of clients in innovative solutions. It's a result of the big job. Schneider Electric has made serious steps forward. For instance, we have five factories on the territory of Russia where production of more sought-after equipment is localised. And Schneider Electric keeps working in this area.

In Tatarstan, we focus on development of technologies in the oil and gas and petrochemical sectors

Moreover, we've opened two R & D centres. One of them is located in Skolkovo. Schneider Electric develops Smart Grid there. We have very active cooperation with Rosseti company in this area. The second centre opened in Tatarstan, in Innopolis. Here we focus on development of technologies in the oil and gas and petrochemical sectors, industrial automation and cybersecurity. I dream the centre in Innopolis will become not only a competence of the Russian market but also a big global centre in the oil and gas sector.

It's important to note our developing cooperation with educational establishments too. Lack of qualified staff is a huge problem not only for Russia but the whole world. This is why Schneider Electric develops cooperation programmes with Russian universities. Over 20 biggest universities are our partners. Kazan State Power Engineering University is one of them, for instance. We create university laboratories with the latest equipment, give classes, create education programmes.

Then you set a task of increasing the localisation level in Russia. Have you managed to perform it?

Yes, I will tell with examples. We had been using metal from Germany in our of our factories to manufacture transformers for long. Then, within our strategy, we signed an agreement with a local supplier and now we are buying the feedstock from them.

Schneider Electric's factory in Kozmodemyansk is the second example. We signed an agreement with TAIF Group of Companies to supply polymers. The holding will become one of the feedstock suppliers. It turns out that again we managed to increase the localisation level. Unfortunately, some components are absent in Russia, and then we focus on global markets.

As for investments in Russia, given the current economic situation, does the company continue investing at a previous level or are there any changes?

Schneider Electric has been working in Russia since the late 19 ^th century, since the tsarist era. And all we do here is for along term. Of course, we adapt to geopolitical nuances. But our business development strategy in Russia in general hasn't changed. So the company has invested over $1bn in local factories in the last 6 years. I've already mentioned five Schneider Electric factories in Russia. Apart from them, we license our partners. We also plan to expand our own production capacities further on.

The company has invested over $1bn in local factories in the last 6 years

What's the share of Russian business in the total volume of the company's income in 2018?

Russia is still in the top 5 markets for Schneider Electric where China is unchangeably first, the USA is second, France is third. Russia ranks fifth.

How does the cooperation of Schneider Electric with Tatarstan develop?

Development paces of Tatarstan are much higher than average development paces across the country. It's a fact. I'm also the president of the Association of European Businesses. We've recently gone to Alabuga, and I am glad that I have seen all the factories located there. As it's said in Russia: ''It's better to see something once than hear about it a hundred times.'' But to become competitive, these factories should reduce their operational costs, that's to say, upgrade. Schneider Electric makes its contribution to upgrade industrial companies in Tatarstan either directly or via local partners who implement our solutions under licence. Our R & D centre works in Tatarstan, which I already talked about.

Initially, we invested 5m rubles in the skills centre at KSPEU. But we plan to invest it in further

In addition, we are very proud of the cooperation with the republic's universities. For instance, Kazan State Power Engineering University has a new Schneider Electric skills centre. We invest in it because the enterprise's success depends on intellectual capital. Like all global companies, we have a headache – a lack of engineers. This is why the focus is important.

As I already said, we develop cooperation with TAIF Group of Companies in feedstock supply for Schneider Electric factories. Besides, we discuss different projects on automation and upgrade as well as construction of a smart office in the new TAIF media complex. All TAIF projects are large-scale, and we offer solutions. We're working hard.

Petrochemistry as priority

Could you assess the volume of investments in training the Tatarstan staff?

It's hard to say. For instance, initially, we invested 5m rubles in the skills centre at KSPEU. But we plan to invest in it further because the skills centre should be a living subject. Technologies change so fast, and if we don't make additional investments, this centre might turn into an energy museum in five years. It doesn't have to be this way.

You work on Smart Grid in Skolkovo. Do you plan to work in this area with Tatarstan?

We are in touch with Grid Company in Tatarstan. They know about our proposals. We hope we will start implementing projects together in the short run.

We will probably supply pressure sensors from Kazakhstan to Russia

What do you consider as the most promising niche for your products in Tatarstan? Which products of the company are in higher demand in Tatarstan?

First of all, it's enterprises of the oil and gas and petrochemical sector. There is big demand for solutions for smart energy distribution and automation of production processes to reconstruct or construct new enterprises. Here we can add quite a new area – information security of process control systems. But Tatarstan isn't only petrochemistry, of course. It's also mechanical engineering, civil engineering, food industry enterprises.

Do you have any implemented projects in information security?

Any process control system project includes information security. It's impossible otherwise.

''Hundred per cent localisation isn't our design''

Late last year, KazMunayGas from Kazakhstan launched an assembly line to manufacture industrial pressure sensors. It's a joint project with Schneider Electric. Could you tell about the factory in detail?

We have a joint enterprise with KazMunayGas, which has been existing for several years. It deals with the technical maintenance of the company's facilities. Now we've reached a new stage and start to manufacture pressure sensors for KazMunayGas's subsidiaries because we perfectly understand the importance of localisation in every country of operation. We will probably supply pressure sensors from Kazakhstan to Russia in the future.

100% localisation isn't our design. Some technologies won't be competitive enough if they are made in the local market

Schneider Electric takes parts in Smart City project that the Russian Ministry of Construction launched. What's the role of the company?

If we ask two experts what a smart city is, we can get three answers. I look at a smart city like a restaurant menu that has different recipes and I need to choose what I like. The same thing happens here, one should understand the point. We have a dialogue on this topic not only in Russia but also in the world. One should always talk with the administration of a specific city to understand tasks correctly. There may be a water supply problem, somebody prioritises safety, energy efficiency or traffic management. This is all about a smart city.

Schneider Electric seriously works on this project in Kazakhstan and Russia. We hope we will manage to join projects in the republic too.

What are your business development plans in Russia?

First of all, we focus on Industry 4.0. It's a world race, a very important area of renewable energy. It's developed in China, Europe, the USA. And at the moment its presence in Russia is little. Though this can be explained: conventional energy sources are cheaper here. Despite this, wind and solar energy are beginning to gain popularity in Russia.

In 2017, Schneider Electric purchased a controlling interest of Aveva software developer from Britain. Thanks to it, we managed to adopt new digital technologies. Digital twin became one of the important ones – a virtual prototype of a physical object. If earlier a project was first made up on paper, then construction began and it was commissioned, now it's possible to visualise how a facility will look like in development. This enables to considerably reduce the construction period. We also want to develop digital twin technologies in Russia.

Localisation is another priority in Russia. But Russian consumers almost don't purchase foreign technologies. This is why to meet the needs of enterprises, we try to expand our localisation. Meanwhile, hundred per cent % localisation isn't our design. Some technologies won't be competitive enough if they are made in the local market. For instance, there is specific equipment, 20 units of which we sell a year. It's around the world, one sample is in Russia. This is why localisation should be reasonable.