Subcontracting to Support SME Development

29 june 2018

An expert meeting titled "Subcontracting as a Small Business Development Mechanism" was held at the Analytical Center to discuss existing barriers and state measures to support the industry and consider options for establishing a monitoring system to estimate subcontracting volume in Russia.

The Senior Advisor to the Department for Competition Policy of the Analytical Center Anton Volkov has indicated that subcontracting is one of the forms of industrial outsourcing used by production facilities to optimize production activities. "The definition partially overlaps with that of contract work as stated in the Civil Code of the Russian Federation; subcontracting, however, includes the provision of services and is limited to the industrial sector. At the same time, there is no statistical observation of subcontracting, making it difficult to assess," pointed out the expert.

He named two subcontracting models: the Japanese type and the American one. The first model describes a long-term multi-level contractor-subcontractor relationship, while the second one involves subcontracting of specific orders.

Among the Russian digital platforms that deal with subcontracting, the expert named the National Portal of Subcontracting (innokam.pro), the Subcontracting Information System (subcontracting.ru), the Eurasian network of industrial cooperation and subcontracting, and the State Industrial Information System of the Ministry of Industry and Trade.

According to the President of the National Partnership for Subcontracting Development Alexander Fedorov, subcontracting is a tool to develop small and medium-sized businesses. "We need to develop an industrial policy on the use of subcontracting, which will be supervised by the Ministry of Industry and Trade," he said. "It is also important to offer preferences for large industrial companies that subcontract small businesses, including the formation of regional orders." According to Fedorov, state corporations, monopoly businesses, as well as industry unions and associations should be tasked with subcontracting development.

The participants were introduced to the case of the largest machine-building cluster in Russia, located in the Republic of Tatarstan. "Our main goal is the development of interregional and international cooperation to create innovative products," said Sergey Mayorov, Chairman of the Board of the machine-building cluster of the Republic of Tatarstan. "The objectives consist in supporting the cluster members in the establishment of new companies and promotion of their products abroad, as well as in attracting investments, subsidies, and preferential financing to projects running on the territory of Tatarstan."