Presentation of experience in developing Russian-Chinese relations at SPIEF 2018

The Government of Omsk Oblast and KRIF leadership presented Omsk's experience in developing Russian-Chinese business relations at the St. Petersburg International Economic Forum.

The forum in Russia's northern capital brought together young economists, businesspeople, and politicians from more than 70 countries at the Expoforum Congress and Exhibition Center. At the International Youth Economic Forum, held on May 26 as part of SPIEF-2018, the head of Omsk Oblast, Alexander Burkov, spoke about the work of the Russian-Chinese business incubator, which Foreign Minister Sergey Lavrov called a promising project at the 31st meeting of the Council of Heads of Constituent Entities of the Russian Federation under the Ministry of Foreign Affairs. Aspiring businesspeople were given a unique opportunity to discuss economic and political issues with government officials, leaders of international and Russian business, and leading international experts and scholars.

In 2017, Omsk Oblast took part in a federal pilot project for the first time. The regional head shared Omsk's experience in establishing the Russian-Chinese business incubator. The incubator's first residents were 15 entrepreneurs from Omsk and 12 enterprises from the Chinese city of Qingdao. The work was launched by the International Forum of Young Leaders of SCO Countries, held in Omsk in September 2016.

"The People's Republic of China is a strategic foreign economic partner. Trade turnover between our economies stands at $77 million, with a positive growth trend observed over the past two years. It is certainly important to us how relations with the Chinese side develop going forward. The value of the business incubator lies in the fact that the process of building relationships today takes place among young businesspeople at an early stage in their development as managers, entrepreneurs, and executives. This is very important. I consider this a key point, because young people today have a high degree of flexibility in their thinking and no communication barriers, which is why we are relying precisely on the younger generation of Russian and Chinese businesspeople," emphasized Acting Governor Alexander Burkov.

Residents were trained in innovation management at one of the region's universities, and around two dozen meetings were held with representatives of the region's industrial enterprises, government bodies, and organizations that support young entrepreneurs. Chinese partners organized similar activities during the Omsk residents' visit to China.

"The first very important thing was training the residents in innovation management. The second was familiarizing them with the infrastructure, industrial, educational, and government institutions in both Qingdao and Omsk. And the third, key point, was informal communication among young people, which helped remove the barriers arising from differences in business mentality and business approaches between the Russian and Chinese sides. All the residents say that, in addition to formal events, informal communication is necessary to smooth out differences in mentality," noted Acting Governor Alexander Burkov.

The regional head spoke about the Omsk residents, who operate their businesses in IT, woodworking, agriculture, food production, education, and social and cultural engagement.

"The Omsk company 'Budushchee Segodnya' [Future Today] ran into a translation barrier at the very first stage of its relations with the Chinese side. The team developed its own online service, which is operational and has a large number of users. Through this online platform, one can submit a request, pay, and receive a high-quality translation, carried out by professional Chinese translators, which raises the quality of translation beyond what can be achieved on existing internet platforms, where translation is done automatically," noted Alexander Burkov.

"The company 'Budushchee Segodnya' is in the process of launching the 'Smart Glass' project, based on electrochromic glass tinting. The Chinese technology is built on genuinely modern, innovative components. It is important that the Chinese side is now ready to supply this technology to Omsk Oblast, while the Omsk company will finalize the manufacturing process and produce the finished product. And the third thing this company, 'Budushchee Segodnya,' is doing today: they have launched two of their own projects with the Chinese side and effectively serve as a conduit bringing Russian business projects based on Russian technologies to the Chinese market. They have brought a small company from Perm Krai to the point of signing contracts with the world's largest company, Haier, headquartered in China. The total value of the four contracts will be $1.5 billion. This is a rather interesting technology — the reprogramming of industrial robots."

Alexander Burkov noted a number of other successful business projects: "The primary processing of round timber is only at its initial stage. Here, semi-finished products will be produced in Omsk Oblast and supplied to China for the production of finished goods. At the same time, in light industry we have another example, in which raw materials are supplied by the Chinese side, while the final textile product is manufactured in Omsk at our company Kosta Company."

The Russian-Chinese business incubator has spurred the development of existing joint ventures, of which there are already 55 in the Omsk region, and has also created conditions for the establishment of at least 10 new projects. The next stages of the Omsk youth business incubator will take place from September 2 to 15 in Qingdao, China, and from September 16 to 29 in Omsk.

"The first thing we already have today is inter-university cooperation between the two sides. On the Chinese side, this involves Qingdao University of Science and Technology and China University of Petroleum; on the Russian side, Omsk State Technical University and Omsk State Pedagogical University. Contracts have been signed for the educational training of students and the retraining of faculty. And, most importantly in my view — let me give you two figures to illustrate: over the entire period of Omsk-China relations, 55 Russian-Chinese joint ventures have been established in Omsk Oblast. Yet in less than a year of the business incubator's operation, more than a dozen Russian-Chinese enterprises are in the process of registration, already have their own business projects, and have already begun operating. In that span of time we have made a breakthrough leap in relations between Chinese and Russian business. The key point is that the business incubator builds trust — the essential quality that business and any state need today, and which Russian President Vladimir Putin spoke about yesterday at the main panel discussion. That is what we see as the outcome of this work: trust among businesses on the Chinese side and on the Russian side. This is the key point."

The head of Omsk Oblast, Alexander Burkov, outlined a number of steps that would improve the work of the business incubator. The first is developing a venture financing mechanism for residents' projects. The second is establishing a business mentorship institution involving major companies, both Chinese and Russian, which will be the next step in developing business relations between our two countries.

Today, the head of the Omsk region is also taking part in the plenary session of the International Youth Economic Forum, "Russia's Youth Economic Agenda for 2018–2024." The topic under discussion is realizing the potential of young people under Russian economic conditions. Participants will examine ways to improve the effectiveness of social mobility mechanisms, the challenge of youth self-realization in single-industry towns, and the actions of government bodies and business in supporting the professional development of young people in Russia.