ekaterinburg and sverdlovsk region - Marchmont Capital Partners

A message from MARCHMONT <strong>Capital</strong> <strong>Partners</strong> A L<strong>and</strong> of Wealth <strong>and</strong> Creativity Welcome to the second Regional Profile of our <strong>Marchmont</strong> Investment Guide to Russia, dedicated to the capital of the Sverdlovsk <strong>region</strong>, Ekaterinburg. While the first covered Nizhny Novgorod, we look now to Ekaterinburg <strong>and</strong> the Sverdlovsk <strong>region</strong>, one of Russia’s richest in rare minerals, iron ore, gold, copper, nickel, oil, gas <strong>and</strong> precious <strong>and</strong> semi-precious stones. But its natural resources prowess does not come at the expense of intellectual potential; local people have long proved inventive <strong>and</strong> enterprising both in the extraction <strong>and</strong> creative application of these resources. One of our goals is to explore the <strong>region</strong>’s economy <strong>and</strong> introduce you to those bidding to make their <strong>region</strong> one of Russia’s richest <strong>and</strong> most creative. With the third highest percapita income in Russia, Sverdlovsk is not only a key ferrous <strong>and</strong> non-ferrous metallurgic <strong>region</strong>, it is a general industrial heavyweight where much of Russia’s industrial hardware is produced. Ekaterinburg’s mix of natural resources, skilled workforce, industrial potential <strong>and</strong> relatively remote location has long made it a defence <strong>and</strong> production research center – the legacy from which its strong educational <strong>and</strong> scientific base, capable of creating <strong>and</strong> commercializing world-class technology, has risen. The <strong>region</strong> has shown too its ability to adapt to current global business trends <strong>and</strong> st<strong>and</strong>ards; steps taken by <strong>region</strong>al officials to help commercialize local technology projects by establishing business incubators <strong>and</strong> technoparks is a case in point. Surprisingly to some, the <strong>region</strong> has become one of Russia’s top IT producers with hundreds of firms <strong>and</strong> entrepreneurs working on advanced software <strong>and</strong> systems. These are in constant dem<strong>and</strong> by local <strong>and</strong> national firms, keen to upgrade <strong>and</strong> prepare for the domestic <strong>and</strong> global competition that Russia’s entry into the WTO will entail. The innovative <strong>and</strong> hi-tech climate is supported by a comprehensive university system – with three separate MBA programs, – which combined includes over 210,000 students, producing over 35,000 specialist graduates each year. This, with the local rise of venture capital investment, is the foundation on which a new generation of entrepreneurs will flourish. I first visited Ekaterinburg in 2004 as a guest speaker at the local Elite Club of Corporate Conduct. I spoke on western corporate governance <strong>and</strong> how local firms could secure expansion capital <strong>and</strong> foreign partnerships. I have since visited more than a dozen times <strong>and</strong> always come away impressed by the ingenuity <strong>and</strong> initiative of local entrepreneurs. “Communism failed, so let’s embrace capitalism <strong>and</strong>, when we’ve mastered it, exp<strong>and</strong> our businesses not only in Russia <strong>and</strong> Europe but also establish international market share” - that is their take. Now they want more than to just sell raw materials; they strive for the new, such as lighter <strong>and</strong> harder steel <strong>and</strong> other innovative building material products. They are increasingly gaining the skills needed to turn these resources into new products, for new uses, <strong>and</strong> which can be marketed internationally. At <strong>Marchmont</strong> we see investment into the commercialization of new technology <strong>and</strong> the innovative maximization of the country’s natural resources to be the next big thing in Russia - <strong>and</strong> in both respects Ekaterinburg <strong>and</strong> the Sverdlovsk <strong>region</strong> might be considered the end of the rainbow. I have always looked at Russia as being about more than just Moscow <strong>and</strong> St Petersburg, <strong>and</strong> the economic renaissance of cities like Ekaterinburg demonstrates why. It’s my hope that in publishing this journal others will arrive at this view. Kendrick White Managing Principal, MARCHMONT <strong>Capital</strong> <strong>Partners</strong>, LLC MARCHMONT Investment Guide to Russia 2007, vol. I, #2 7