Tver - the center of Russia's supplier industry

A promising new partnership with Steinbeis

Steinbeis has launched a partnership with the government of the Tver region in Russia. One of the collaboration’s key aims is to encourage the development of the local automotive supplier industry. Although still primarily focused on assembly, foreign automobile manufacturers in Russia are set to increase their level of localization – meaning they need local suppliers. As domestic suppliers are barely able to meet the industry’s high demands, this leaves tremendous scope for German suppliers to step in. Steinbeis hopes to capitalize on this by cooperating with Tver’s regional government.

Russia is rapidly becoming the largest market for the European automotive industry. Though the effect of the economic crisis on the industry means projections should not be overly optimistic, Russia continues to have a high demand for cars – one which cannot be satisfied by domestic manufacturers alone. But the Russian government has stipulated that in future, 80 per cent of vehicles sold in Russia should be domestically produced. And although it’s hard to predict whether this highly ambitious target will ever be reached, the direction is clear: Russia is stepping up its vehicle production. Manufacturing in close proximity to the customer generally has a wide range of benefits – particularly in Russia, as demonstrated by the many industrial projects planned and executed by German firms there. Currently, the government demands a localization level of around 30 per cent, meaning that almost a third of the parts in each domestically produced vehicle must have been produced in Russia. If not, manufacturers incur customs and tax penalties. This presents automobile producers with a problem: the parts they need for production are extremely difficult to find in Russia. German suppliers can tap into this attractive and growing market by opening production sites in the country.

Tver is strategically located on the main highway between Moscow and St. Petersburg – close enough to key locations in the Russian automotive industry, but at a sufficient distance from expensive areas like Moscow and the high-priced supplier centers currently springing up. Establishing new production sites in Tver should ensure the region enjoys sustainable success in the Russian market. Tver also meets the key expectations of German investors: the industrial region is well established, with excellent infrastructure and a pool of specialized workers ready to be tapped into. Not only that, a range of incentives await investors, and Tver’s local government has committed to providing organizational support. Investors keen to learn more can get in touch with the Steinbeis Transfer Center for East-West Joint Ventures, which provides easy access to information on the region as well as the chance to contact potential partners and key decision makers. As the center has been active in Russia since its foundation in 1994, the Steinbeis experts understand the ins and outs of the regional market and know exactly how to handle partnerships with Russian firms.

As a university town with internationally recognized teaching and research facilities, Tver also offers significant potential for cooperation in other areas. Russian R&D is set to become increasingly important as the automotive and automotive supplier industries grow. Steinbeis aims to help develop this potential and open it up to German investors.

Back in Germany, Nürtingen-Geislingen University is also closely involved in the partnership. Economics students have the chance to learn about professional project management and put these skills into practice. Eight student workgroups play an active role, conducting research, surveying companies and running analyses – making a vital contribution to the project’s success. Supervised by Jürgen Raizner, head of the Steinbeis Transfer Center for East-West Joint Ventures, the students are encouraged to develop concepts to support German investors.

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