Companies in Russia Cautiously Optimistic After Trump Election

Dec 1, 2016

The election of Donald Trump as the next U.S. president has raised hopes in Russia for improved relations that could help investment and trade, especially if Western sanctions imposed over Ukraine are eased. U.S. and Russian companies at Moscow government-supported industrial park Technopolis are cautiously optimistic about prospects for business.

If Western sanctions are eased, this fast-growing Russian startup(TEXEL) says its 3-D scanning software business will get a boost in the domestic market.

"There would be more funding available for the companies and they would be able to spend more on the new technologies, and they would be able to take a higher risk with new technologies like ours, and therefore there would be an increase in sales," said TEXEL's business development director, Sergei Klimentyev.

Currency's impact

On the other hand, if the Russian currency, the ruble, recovers, then exports could be hurt. "That would mean that the cost of our product would increase and it will make us less competitive, for example, with Chinese companies," Klimentyev said.

A small turnout at the Technopolis second Russian Export and Investment Fair did not dampen optimism.

U.S. company NeoPhotonics partners with Russian state nanotechnology corporation Rusnano to make products for high-speed communications networks.

Despite sanctions and a shrinking economy, they are confident business in Russia is changing for the better, and are considering expanding.

"Cooperation and business activity on [the] Russian market — it's a huge benefit for international companies," said manufacturing director Dmitry Morgun — and not just for U.S. firms, but for those in European Union nations as well.

Gradual process

Even if Western sanctions against Russia are lifted, say analysts, it would be a gradual process requiring the Kremlin to improve relations with Ukraine.

Meanwhile, Russia's economy depend on exports of raw materials, is vulnerable to low oil prices.

"That's why serious reforms are needed," said Mikhail Subbotin of the Russian Academy of Science's Institute of International Relations and World Economy. "And that's where the problem lies. The reforms should be of a double character, both political and economic."

A lack of political will and tensions with the West mean continued or even stronger sanctions are more likely.