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Main | Archive | Issue 2/2008

Formative Stages of the Russian-German Chamber of Foreign Trade
Column: Under The Sign Of Mercury

An article contributed by Jorg Hetsch, head of the Russian-German Chamber of Foreign Trade, for Diplomat.

At the beginning, there were hardly a dozen of entrepreneurs and one idea, namely, to set up a strong organization of its own that would unite the German companies operating in Russia and represent their common interests. The year 1993 saw the establishment of a German Business Representative Office in the Russian Federation that issued from the so-called Working Group of Representatives of German Companies in Moscow, which represented all the business activities of the German economy. The goal of the new organization was, first of all, to represent companies, act as an intermediary and to engage in lobbying with regard to agencies, institutions and government bodies. At the moment of its inception, the Representative Office was unable to create a structure of its own that would be a single platform for private interests of the German firms based in Russia.

The process was launched on March 15, 1995 when 11 (!) entrepreneurs headed for the Registration Chamber to establish a German Business Association (GBA) in the Russian Federation. Throughout all those years, a base has been created that included information on all sectors of trade and economics, which was reflected in numerous publications, booklets, on electronic data carriers, in manuals, documents, and short info surveys. That was a highly entertaining reading stuff! Those documents help trace the Associations evolution back to its initial steps when nothing but trade was conducted. Later on, individual representative offices began to open and subsequently, new companies were established in accordance with Russian legislation. Next, production capacities were launched from scratch. By the early 1990s, the entrepreneurs-trailblazers dared make their first cautious steps in Russia, which often were accompanied by all kinds of adventures as Russia had just begun to familiarize itself with capitalism. On the whole, the road from the socialist planned economy to the free play of market forces, Western style, was stony, rarely straight and, on top of it, it was protracted and full of potholes. The 1998 financial crisis when many Russians lost their fortunes and savings for the second time after the failed privatization was the most unpleasant development. The crisis also affected German companies that nevertheless remained in the country and began using the chances that offered themselves later on, and those companies used the chances much more consistently than other foreign companies did.

By the beginning of the new millennium, many factors that were beneficial for Russia produced a sustained long-term upswing of its economy, from which German entrepreneurs benefited as well. More and more firms moved to Russia. Today, they number over 4,600. In this process, the Association played a major role while promoting economic cooperation with Russia among policy-making circles.

In a rapidly changing country, such as Russia, relevant and accurate information is a valuable product that helps stand firm in the economic environment. The Association always positioned itself as an organization that provided information services. From its very inception, the presence and the efforts of working groups and committees enabling representatives of different branches to exchange information and develop a common stance was one of the Associations strongest assets.

The growing number of questions addressed to us and regarding everything related to Russias economic situation points to the great and constant interest in this country. On the one hand, people ask about the changes in Russia that have a direct impact on the business activity of German companies and representative offices. On the other hand, inquires come in from German firms that are just eager to come to Russia.

Under the Charter changes introduced in 2000, companies from Russia and other countries were also eligible to join the German Business Association (GBA). These countries are mainly interested in more detailed information about the German market. This development reveals a specific feature that was adopted by the Chamber of Foreign Trade in connection with the Associations transformation. This feature is parity that is already reflected in the very name: Russian-German Chamber of Foreign Trade, or (RG CFT). As a result of the agreement of its members and with the support of the governments of both countries, a bilateral Russian-German Chamber of Foreign Trade issued from the German Business Association in Russia. It provides an equal representation of the interests and is the spokesman and partner of both German and Russian companies. It is exactly this point that underscores more distinctly than earlier the Chambers function as a builder of bridges between the two countries.

The setting up of the Chamber mirrors the genesis of Germanys trade and economic activities in Russia and is a logical step to a still greater professionalism and significance of this structure. The necessary function of lobbying on instructions and in the interests of companies has been stepped up considerably and the influence on policy makers has been increased. The Russian-German Chamber of Foreign Trade is yet another private and public partnership that was translated into reality.

The fact that German and Russian ministries and governmental economic agencies were actively involved in founding the CFT not only points to an increase in its economic but political weight, too. This increase is not only made possible by a permanent increase in the Chambers membership but also by the fact that Germany has been Russias most important trade partner over the last decades: in 2007, the bilateral trade volume may reach 60 billion. German exports account for about 10 percent of the total Russian imports. It is only natural that in order to give interaction with Russia a boost, the German economy needed a body that would voice its wishes and requirements and ensure its strong representation. The Chamber has become exactly such a body.

Today, the German-Russian Chamber of Foreign Trade made up of about 520 member companies is one of the largest and most influential foreign economic organizations. The transformation of the Association into the CFT signified a new chapter in German-Russian economic relations.


-, 2006