From Employer of record to company incorporation

Industry:Production| Country:Russia
10/06/2016

MANKENBERG aimed to expand to the Russian and CIS markets. To give MANKENBERG the opportunity to test the market without significant investment, we hired an employee on behalf of the company. The employee was provided with a fully-equipped workspace in our office with secretarial and administrative support.

Customer

MANKENBERG is a German company that designs and manufactures direct-acting pressure regulators, air dampers and other pipe fittings that are used in a variety of industries across the world. The company's headquarters is in Lübeck.

The challengeThe solutionThe result

The challenge

Expanding to a new market is always a challenge. Businesses must decide how they will be working, whether that means registering their own legal entity, opening a branch or representative office or fully relying on distribution partners. When it comes to Russia and the CIS, businesses typically face significant bureaucratic barriers. This often deters foreign investors from entering the market and prevents them from taking advantage of the vast majority of investment opportunities available.
MANKENBERG has opted to enter the Russian market slowly but steadily after reviewing its prospects over the last few years. It sought the support of SCHNEIDER GROUP as a trusted partner who understands the challenges and risks of entering the Russian market.

The solution

SCHNEIDER GROUP guided MANKENBERG through the whole process of expanding into the Russian market.
We provided one employee for MANKENBERG using the Employee of Record scheme in 2011 and added a second employee in 2013. We found suitable candidates and then employed them for the customer. Both employees benefited from full use of our office infrastructure and support, enabling them to simply start working straight away. This approach allowed the company to explore the local market, taking advantage of a local presence and import opportunities, but without having to incorporate a legal entity in Russia or make any major investments.

The result

This project was important for MANKENBERG's expansion into the Russian market: the company has now been successfully operating in Russia for more than five years.
Having started with just one employee, the company went on to become a limited liability company in 2014 with the help of SCHNEIDER GROUP. By then, MANKENBERG was confident in the prospects offered by the Russian market.
This company currently has a profit-rich Russian subsidiary with five staff that runs a full cycle of projects independently. It remains SCHNEIDER GROUP’s next-door neighbour, renting our office space while we handle their accounting, tax and payroll so that the company can focus entirely on business development.
2016 was a watershed moment for MANKENBERG, as the Russian business entity became profitable. The Russian subsidiary intends to grow its income and explore new opportunities to extend its presence in the CIS in the future.

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