Business set-up

From outstaffing to local company:
A successful start on the Russian market

Challenge

Entering a new market can be a daunting task for any company going into unfamiliar territory. It may not always be clear what the best approach is, and companies must choose between many possible methods of market entry. In Russia and the CIS region, companies are generally confronted with significant barriers to entry in terms of bureaucracy and investment of time and resources, often deterring foreign investors from entering the market and making the most of the many investment opportunities.
Having analyzed the potential of the Russian market for a few years, MANKENBERG, a German manufacturer of industrial valves based in Lübeck, decided in 2011 to enter this market step by step. Aware of the difficulties and risks related to market entry, the company decided to turn to a trustworthy partner.

Solution

SCHNEIDER GROUP has been supporting MANKENBERG since the very beginning of the company’s activity in the Russian market. In 2011, MANKENBERG started with one outstaffer, before taking on a second outstaffer in 2013. Acting as our client’s outsourcing company, we hired MANKENBERG’s employee on their behalf, providing a professional workplace, secretarial support, administrative support (HR, payroll, etc.), and the use of our comprehensive office infrastructure. This outstaffing approach enabled the German label to try out the local market and benefitted from a fully established local presence and full import capabilities, but without the need to register a legal entity in Russia or make any large investments.

Result

This project had a profound impact on MANKENBERG’s business on the Russian market: for over five years, the German brand has been successfully operating in Russia. Having started its activity with one employee, the company quickly grew and, in 2014, MANKENBERG registered its own LLC with the support of SCHNEIDER GROUP. Today, this company has a Russian subsidiary with four employees conducting their own full-cycle projects and maintaining steady business. In fact, they are still our neighbours, renting our office premises while we support them with their accounting, taxes, and payroll so that they can fully concentrate on their key business. 2016 was a milestone year for MANKENBERG, when the company broke even. The German label is planning to continue increasing its turnover and to address new industry sectors in Russia.

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About MANKENBERG

MANKENBERG is a German manufacturer of industrial valves, supplying to various industries worldwide headquartered in Lübeck.
Since 1885, the name of family-owned medium-sized company MANKENBERG has been synonymous with expertise and technical know-how in providing optimal solutions to its customers. Today, the company is active in the development and production of self-operated pressure control valves and bleeding valves for technological, transport, and storage systems of industrial plants. Significant part of the company business relates to individually designed and produced products. Safe operation and long life expectancy of MANKENBERG products begins with an individual consultation, product calculation, and finding the optimal solution for specific application. The implementation of this solution includes modern and reliable manufacturing processes and extensive testing of products for multiple parameters.