With an open mind towards future markets
Ulf Schneider, the owner of SCHNEIDER GROUP and market expert for Eastern Europe and Central Asia, talks about repositioning in foreign trade and future prospective markets for SMEs.
Until 24 February 2022, my answer would have been more certain. Russia and Belarus have achieved a lot economically over the last 20 years; Central Asia has become a more important trading partner. In the new reality it remains to be seen whether Russia's reorientation towards China will prove successful. For example, there are a lot of Chinese cars in Moscow. It remains to be seen whether companies from China will be actively producing in Russia as German companies once did.
In the negotiations on economic policy in Central Asia, I notice a clear effort to cooperate with the EU. As a committed European who marched in the streets for European integration 35 years ago, I am happy about this. The region has the potential to build on the successes of the 'new Asian tigers', i.e. South Korea, Taiwan, etc. However, this requires further reforms of the economic and financial systems, as well as effective promotion of small and medium-sized enterprises. Together with the countries of the South Caucasus, i.e. Armenia, Georgia and Azerbaijan, Central Asia can develop into an attractive cluster. The extension of the "Middle Corridor" of the New Silk Road plays an important role in this.
Companies around the world have been in permanent crisis mode for three years now. What do you hear in conversations with business owners who want to continue opening up new markets in the East, especially in these times?
During the COVID-19 crisis, globalization gave way to challenges in production and supply chain management. Since February 2022, German SMEs have been looking more closely at Central Asia and the South Caucasus. Many of these companies have continued to work in Russia.
Current interest in the new region reminds me of the days 20 years ago, when small and medium-sized companies set up subsidiaries in Russia and profited from their early presence in the market after a few years. Those who enter the Caspian region now will be rewarded in the coming years.
Due to the war in Ukraine and the reassessment of relations with China, many companies have had to restructure their relationships with customers and suppliers. Which strategies are promising, in your opinion?
From a business perspective, I welcome the discussion of cluster risks and diversification of the production chain. So many companies with production in China are looking at Vietnam and Thailand. This strategic radius for consideration should also include Kazakhstan and Uzbekistan. There are two factors in favour: both countries together have more than 50 million consumers and provide supply routes to China, the EU and the Eurasian Economic Union, or the EAEU for short. We are starting to work on such common concepts for European companies.
In addition to Asia, Serbia and Northern Macedonia should be considered as near-term localisation sites. Ukraine's recovery programme also offers new opportunities for growth.
As the owner of a company with 500 employees in 13 countries, you have a direct experience of the current geopolitical challenges. How do you manage to balance the various interests in your business?
First of all, I am very happy that all of the employees in our Kiev office are healthy. To enable them to survive the winter, we provided each of them with an electricity generator. Colleagues have been able to keep all clients, and there are now the first requests under the 'Rebuild Ukraine' initiative.
Indeed, Western people often perceive the post-Soviet space as too homogeneous. However, even neighbours have different mentalities, so I emphasise the importance of face-to-face meetings and being on the ground often. I also see this as a social task.
Many years ago, you managed to convince German companies to join the specially created Lisbon-Vladivostok business initiative. What topics could still bring companies from East and West together today?
As a committed European, I am very sad to see the idea of such an economic space sidelined, on top of all the terrible suffering in Ukraine. I remain committed to the vision of a greater economic community and believe that we must do everything to stop further mutual isolation.
The expression “From Hamburg to the world” applies to you as a native Hamburger. What have you brought with you from Hamburg to the world?
I still feel like a real Hanseatic*: open to the world, energetic, uniting people. I’m also trying to implement the basic idea of the Hanseatic League, which united different countries through trade interests despite wars.
Ulf Schneider, born in 1967, is the president and founder of international consulting company SCHNEIDER GROUP. After graduating in economics from Christian Albrecht University in Kiel and studying at the University of Illinois (USA), he worked for five years in financial management at Procter & Gamble throughout Germany and in Belgium (Brussels). Before founding his own company in 2003, he worked as CFO in the Moscow office of Allianz Insurance Group. In 2015, he founded a business initiative to create a single economic space from Lisbon to Vladivostok. Ulf Schneider has been president of the Malteser Aid Service in Moscow since 2020.He advises international companies in the fields of law, taxation, accounting, IT&ERP, HR and is a speaker on business developments in Eastern Europe, Central Asia and the South Caucasus, as well as global trends in foreign trade.
About SCHNEIDER GROUP
SCHNEIDER GROUP is represented in 13 countries with more than 500 specialists in almost all of the former Soviet Union as well as in Germany, Poland and Austria. Last year new offices were opened in Azerbaijan, Georgia, Kyrgyzstan and Lithuania. SCHNEIDER GROUP is currently supporting medium-sized companies and corporations in the transformation processes in Russia and Belarus, business expansion in Central Asia and the South Caucasus, as well as preparing to participate in the 'Rebuild Ukraine' initiative.
*Hanseatic - belonging to the Hanseatic League. The Hanseatic League was a major political and economic union of the trading cities of North-Western Europe, established in the middle of XII century. It existed until the mid-XVII century. The Hanseatic League encompassed 130 towns, about 100 of them were port cities, and up to three thousand towns were under its influence.
Author: Ali Garaev, BVMW e.V.