42% Respondents Believe Competition Is Good For Business

6 july 2015

Experts of the Analytical Center have prepared a second annual analytical report on the competitive environment in Russia. A survey of 650 representatives of Russian business about the general state competition and competitive environment was conducted jointly by the Analytical Center and the Russian Chamber of Commerce and Industry from March 3 through April 15, 2015

The survey found that on average Russian businesses perceive the level of competition in the Russian economy as moderate: 53% of the respondents say there is moderate amount of competition, which is significantly less than last year when 70% of the respondents said there was moderate competition. In addition the share of those who believe there is little competition or no competition at all has gone up from 5% in 2014 to 21% in 2015.

42% of the respondents believe competition is good for business. “It’s interesting that competition is viewed as something positive primarily by businesses that compete hard in their sectors. Nevertheless, 18% of the respondents believe competition has a negative impact on business,” experts write. According to them, the sectors with the largest amount of competition are retail, services, construction and food production while only limited competition exists in agriculture, metal production, and manufacturing of machines and equipment.

The survey also found that competition has declined and businesses believe that the main reason for that is the government intervention: 58% of the respondents cited some anti-competition actions by government agencies while 53% pointed to the negative impact of new regulations. Experts note that all respondents attribute the decline in competition in the food industry to the departure of foreign players from the market. This same reason was cited by representatives of the metal production sector (33%), mechanical engineering (60%), retail (10%) and services (11%). Experts believe that these findings reflect the main trends in state policies seen last year, namely, import substitution and food security.

A key barrier to business development is lack of access to financial resources. It was cited by 52% of the respondents while over 40% said they either constantly or from time to time feel anticompetitive pressure from the dominant market player.

“Fewer companies want to expand their business now: the share of those that have no plans of breaking into new markets has gone up to 27% from 21% last year,’ the authors of the report write. At the same time, metal producers are the most active group in terms of business development and new market penetration plans: up to 90% of them have plans to introduce their products in new markets. Service companies are now less interested in expanding their business: the share of those with no plans to expand has gone up from 19% in 2014 to 30% in 2015. Agricultural businesses are noticeably more confident regarding their ability to secure sales: 42% envision no problems with sales this year even if grocery prices go up 10-15%.

“Even though there is a clear trend towards less competition, 95% of the respondents have used at least one way to make their offering more competitive in the past 3 years. 7% of the respondents restricted their activities to cost cutting measures,” experts note. The share of businesses that have not done anything to remain competitive has gone down from 14% in 2015 to 5% in 2015. The agricultural sector was the one where companies have been the least interested in securing a competitive advantage: 26% have done nothing at all while the average in the entire sample for companies that have done nothing to remain competitive is just 5%.’

For more see Assessment of the Competitive Environment in Russia report .

2014 Report .