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Riko Boss: Slovenia Can Succeed in Russia as Niche Player (interview)

Ljubljana, 29 January (STA) - Janez Škrabec, CEO of engineering company Riko, sees the post-Soviet market as the best opportunity for Slovenia, which he says can succeed in Russia as a niche player. The upcoming Olympic Games in Sochi are an opportunity for Slovenia to increase its recognition, he has told an interview with the STA.

Riko, one of the most successful Slovenian companies in Russia and the broader post-Soviet market, has won a EUR 2.5m deal to build eight holiday bungalows in Sochi, which Škrabec says is "nothing enviable" but is unfortunately the biggest project for a Slovenian company in Sochi.

But even other foreign companies did not win any major contracts in Sochi, with the exception of Austrians, Škrabec has told the STA, maintaining that Austria must have sent a political and business delegation there a decade ago to prepare the ground.

"You really need the support of the state for such major projects, but we woke up too late," the businessman says, hopeful that Slovenian companies would be able to "cut a bigger slice of the pie" in the 2018 Football World Cup in Russia. Riko has been preparing to build a hotel in Luzhniki.

The role of the state is especially important in establishing business ties with that part of the world, and Škrabec would like for Slovenia to establish bilateral trade commissions like the one it has with Russia across the post-Soviet region.

"I believe that the markets of the former Soviet Union are our natural ally. Among the BRIC countries (Brazil, Russia, India and China), Russia offers the only major potential for us, because elsewhere we don't have such advantages that we have built in the past 50 years."

Škrabec points to the many cultural links between the two nations, including the language, respectful attitude to Russia's history, the frequent political contacts and traditional meetings, especially the one at the Russian Chapel in Slovenia, and the absence of any controversial issues.

He approves of Foreign Minister Karl Erjavec's recent position in Brussels that a solution can be found to reconcile the South Stream pipeline project with the EU rules like a solution had been found for the Nord Stream project. He believes Slovenia can contribute to a solution, which Russia would appreciate.

The businessman also praised the Russian Embassy in Ljubljana and Ambassador Doku Zavgayev in particular, for their support for the Slovenian economy, while he would also like if Slovenia enhanced its embassy in Moscow, and opened diplomatic offices in the post-Soviet region.

"We need to bear in mind that there will be no growth in western Europe, while we can place big hopes in east European countries or rather former Soviet republics," says Škrabec, who believes Slovenia should get specialised and focused on a single promising market, with the former Soviet Union as its best bet.

But he also says that Russia is not a formula for a quick success. "Looking at the companies which are successful in the Russian market, we see they have been present there for 20 years based on 20 years before. Lek, Krka, Iskratel, Helios, Gorenje and Riko have been active there for several decades."

The Russian economy continues to rely heavily on energy resources, although President Vladimir Putin is trying to step up industrial development, which Škrabec says is a challenge for Slovenia. He also believes that the Slovenian automotive industry should get more involved in Russia.

He believes Slovenia's opportunity is in competing as a niche player in Russia. As an example he cites Riko's cooperation with furniture maker Stilles to supply top-end outfit for hotels, such as the Moscow hotel Peter I or the Kempinski in Minsk.

Riko links Slovenian companies to work on bigger projects. Last year it posted a record growth, owing to deals in the post-Soviet region. The company is currently building a new plant for Zvezda St Petersburg to manufacture diesel engines for ships and will also supply the entire technological equipment.

Similarly, Riko has built a truck engine manufacturing plant and supplied the technology for Avtodizel, and hopes to start planning a new textile plant in Ivanovo, technology included, while also counting on new opportunities in the energy sector.

Škrabec does not see any major obstacles to doing business in Russia, except that it requires one to adapt to the system. He also disapproves of the criticism against Russian President Putin and the allegations of corruption at the Sochi games, drawing parallels with the Athens Olympics a decade ago.

He does not remember any criticism voiced against Athens then, despite corruption. "And where is Greece today? We are paying for these games, and would like to give lessons to a country that has doubled its GDP in a decade, is opening new jobs and improving social position. This is happening under Putin's rule."

Škrabec is not so optimistic about the situation in Ukraine, also because the country is divided between the more developed pro-Russian part and the poorer nationalistic pro-EU part. He is critical of the EU for liking the country's closer ties with the bloc too much to the problem of former PM Yulia Timoshenko.

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