Currently, many western companies attempt to investigate Siberian opportunities. For the most part, however, the market still remains a terra incognita.

General Information

The most economically developed Siberian regions include Krasnoyarsk, Irkutsk, Novosibirsk, Kemerovo, Tomsk, Omsk and Altai. The largest cities are Novosibirsk (over 1,400,000 inhabitants), Omsk (1,100,000), Krasnoyarsk (875,000), Barnaul (650,000), Tomsk (600,000), Irkutsk (580,000), Novokuznetsk (550,000) and Kemerovo (500,000). The southern part of the Siberian Federal District is considerably more densely populated than the northern areas.

Siberia produces the bulk of Russia’s natural resources, including: 85% of tin, platinum and gas; 80% of coal and molybdenum; 77% of oil; 71% of nickel; 69% of copper; 44% of silver; 40% of gold. Siberia is vast and many of its treasures are still waiting to be explored and effectively extracted. Enormous deposits of iron ore - 20 to 30 billion tons - were recently discovered in Tomsk region. This stock alone can provide enough raw material supplies to operate the large metallurgical complexes of Kemerovo region. The realization of the first stages of the project requires USD 200 million. Russian company Evrazholding already expressed interest in financing the project, as the investments will be paid back in approximately 7 years. Extraction of the ore and construction of the ore mill and corresponding logistics infrastructure may provide broad opportunities to U.S. companies. Oil, coal and gold deposits are often put up for auction where foreign participants are also welcomed.

Economic Development

Siberia’s total annual industrial production is estimated at USD 40 billion, 27.6% of which is produced in Krasnoyarsk, 21.9% in Kemerovo, and 16.3% in Irkutsk region.

The economies of Siberia’s regions are usually based on only a few major industries. Krasnoyarsk region's industrial output is based on non-ferrous metallurgy, which contributes over 70% to the region’s GDP. A number of local monopolies play a vital role in the regions’ economy: over 80% of the total production output is done by the five largest enterprises:

Krasnoyarskenergo JSC, Norilsk Mining Company JSC, Krasnoyarsk Aluminum Plant JSC, Krasnoyarsk Non-ferrous Metals Plant JSC, and Achinsk Bauxite Plant JSC. The volume of the region's exports is influenced by ferrous and non-ferrous metallurgical products, which contribute 75.5% of the total export amount; aluminum contributes to 23%, nickel to 35%, and copper to 16%.

Kemerovo region, or Kuzbass, has one of the largest deposits of coal in the world, making the region Russia's main "foundry." The Kuzbass economy is dependent on coal mining, metallurgy, chemical processing and machine-tool building. Many large coal mining and metallurgical companies operate effectively and make considerable profits there. Active investment and newly enacted technical re-equipment policies have improved the economy and make these sectors especially attractive to investors.

Irkutsk region also has an abundance of natural resources; electric energy is cheap there. Approximately 60% of Irkutsk region’s industrial output is based on energy-consuming non-ferrous metallurgy. Timber harvesting and processing, pulp and paper industry, machine building and metalworking are also developed sectors in Irkutsk ("Irkut" corporation recently signed a USD 200 million contract with Airbus for production of spare parts for A320 planes). Baikal Lake, the largest fresh water reservoir in the world and attractive tourist resort with quickly developing infrastructure is situated in Irkutsk region.

Novosibirsk is Russia’s third largest city and represents one of the most important commercial centers outside European Russia. Much of Novosibirsk’s importance is due to the fact that it serves as the processing center for much of the resources from the surrounding regions. While Novosibirsk does not have the vast natural resources of its neighbors, it serves as the processing and distribution center for those goods. Novosibirsk region is known for its manufacturing, logistical, as well as research and development capabilities. Novosibirsk is also home to the Siberian Branch of the Russian Academy of Sciences.  

The economy of Tomsk region is dependent on oil and gas production, chemical processing and petrochemistry, metalworking, engineering, and timber processing. The region is most known as an education and science center. There are six universities in the region's capital, including the Tomsk Scientific Center of the Siberian Branch of the Russian Academy of Sciences. There are also several dozen S&R institutions. A number of former defense factories accumulated many advanced developments and preserved the high intellectual capacity; both are now in high demand of private business. Apart from several large chemical, petrochemical, and engineering enterprises, a number of small and mid-size innovation-oriented companies use the most up-to-date technologies and, as a result, often gain an excellent reputation worldwide.

Altai is one of the most agriculturally developed regions in Siberia. The Region is one of the largest agricultural producers in the eastern part of Russia. It is the fourth largest grain producer in Russia, the only producer of sunflowers, sugar and soybean in all of Siberia and Russian Far East, and a major producer of meat and cheese. The Region’s mechanical engineering industry contributes to over 20% of the GDP.

Consumer Market

Similarly to the rapid development of regional industry, the consumer market and the services sphere are evolving quickly throughout Siberia. Almost any Siberian city can be considered a promising consumer market with over 100,000 potential clients. The densely populated Kemerovo region with its 3 million inhabitants and highly developed transportation provides 17% of retail trade turnover in Siberia.

It is necessary to note that although average incomes in Siberia are a bit higher than in other regions of Russia, the mean salary does not exceed USD 250 a month. Inhabitants of remote settlements in sub-arctic Siberian territories, who are usually engaged in mining and oil and gas producing sectors, have considerably higher incomes, but such markets are relatively small and transporting bulky cargo there would considerably increase the price. Like elsewhere in Russia, active development of small entrepreneurship and the emergence of a middle class can be clearly observed in Siberian cities. A few people in management positions do earn USD 1,000 and more a month, but this is still an exception. Nonetheless, such items as PCs, modern video and audio facilities, electronic house appliances, and expensive furniture have already become common. Generally  people prefer cars in the USD 4,000 – 10,000 price range (new and used Russian cars, second hand Japanese and European), but many individuals can already afford luxurious vehicles at USD 20,000 – 50,000 or more (U.S. cars are almost not present on Siberian market). The same applies to the real estate market - there is a shortage of living space. Dwelling prices are high. Living condition improvements are usually considered challenging but the demand for luxurious condos costing from USD 50,000 is growing. The current evolution of mortgage and bank loan systems anticipates further change for these markets and is already steadily associated with purchases of expensive household items, cars, and residences.

Numerous small booths trading in food products were an attribute of Russian cities just several years ago. Today, the hyper- and superstore networks are expanding, providing a greater variety of commodities and lower prices. In the near future a group of companies based in Novosibirsk is planning to invest about USD 10 million in developing a "Holiday Classic" network in Tomsk. Sweden’s IKEA has been seriously considering construction of hypermarkets in Novosibirsk and Omsk.

Siberia's Foreign Trade

According to customs statistics, in 2003 the foreign trade turnover in Siberia constituted USD 16 billion. This figure has increased by 22.5% compared to the previous year, and demonstrated 34% growth from January-October 2004. All Siberian regions are export-oriented; exports in some of them exceed imports by up to 10 times. The total volume of imports in Siberia totaled USD 1.894 billion in 2002. It increased by almost 13% to reach USD 2.134 billion in 2003 and demonstrated at least a 45% growth from January to October 2004. Most demanded commodities delivered from other countries to Siberia include chemical products (about 47% of total imports), machines, equipment and means of transportation (roughly 27%), agriculture products and foodstuffs (12%), mineral products and fuel energy products (about 5 % each), metal products (4%); the rest is attributed to imports in small volumes of textiles, pulp and paper and some other products. A steady increase in the volume of imported food products can be observed within the last several years. There was also a drastic increase (about 5% in 2004) of imported technological equipment and machinery, with a simultaneous decrease in imported chemical products.

The geographic position of Siberia and its distance from the West play in the United States’ relatively small role in Siberia's foreign trade. Siberia historically imports more supplies from Western Europe (Germany, France, Italy, Finland) and Asia (China, India, Guinea) than from the United States. Traditions of industrial cooperation between large enterprises located in different republics of the former USSR are the reasons for Siberia’s importing 40% of foreign supplies from Kazakhstan and Ukraine.

Nonetheless, the U.S. is considered one of Siberia’s main foreign trade partners, with a 6% share in its foreign trade turnover. At present the U.S. share equals to about 3% of Siberia's total imports: the volume of supplies from the U.S. made up only USD 39.2 million in 2003. Although the figure appears small, it was 73% higher compared to 2002.

This trend was strengthened again in 2004, when, within the first 10 months, the volume of imports from the U.S. increased by 240% and reached USD 68 million. This substantial increase can be attributed to Siberia’s importing sophisticated machinery and high-tech equipment from the United States.