Kremlin urges Germany to build factories in Russia

Russia expects to expand cooperation with German businesses and establish joint production of high value-added products in Russian territory, stated Russian Minister of Trade and Industry Denis Manturov during the online conference "Russia and the World in 2021", organized by the Russian-German Chamber of Commerce.

According to the Minister, Germans could begin construction of factories for the auto industry, aviation industry, railway engineering and energy.

German companies were pioneers in bringing their production facilities to Russia, which helped linking Russia to global trade chains, Manturov said, noting that Volkswagen supplies cars and bodywork from Russian factories to the Czech Republic, Slovakia and Mexico, Siemens produces household appliances in Russia for the Baltics and CIS countries, and Bosch - power tools that are shipped to international markets including Western and Eastern Europe.

"The Russian government is taking on many ambitious goals: accelerating the growth of the economy to a rate above the world rate, implementing large-scale national projects that create a huge domestic demand for almost all industries. Overall, according to preliminary estimates, it will amount to more than 90 billion euros," Manturov was quoted as saying by Rossiyskaya Gazeta.

According to the minister, Russia could replace China as a platform of high-tech production facilities. The dependence of global chains on one supplier, and in particular, Germany's dependence on China became apparent during the coronavirus crisis, Manturov stressed.

"The combination of Russian and German knowledge in smart production technologies will allow us to increase the stability of our production processes despite external influences," he explained, recalling that 40 billion rubles for the production of components will be allocated from the budget of the Russian government.

According to the Russian Central Bank, direct investments from Germany to Russia, including capital investments in the real sector, have not grown much for the last 6 years. As of January 1, 2020, they amounted to 21.126 billion dollars against 19.177 billion dollars at the beginning of 2014.

According to the German Chamber of Commerce, in the six years since the annexation of Crimea and the sharp cooling of relations with the West, almost two thousand German enterprises have left the Russian market. At the end of 2019, 4,274 companies with German capital were operating in Russia, compared to 6,200 for 2014.

Last year their number decreased by another 8%, or 370 companies.

  Kremlin, Russia, Germany