Temat: A HK company's strategy for success in Russia

A HK company's strategy for success in Russia (02/01/2008)

Director-general Tejinder Singh Lamba. Mr So was visiting Russia to learn, first-hand, about investment opportunities there
Russia offers excellent business opportunities for Hong Kong traders, said Hong Kong Trade Development Council (HKTDC) Chairman Jack So during a recent visit to Binatone (Russia) Ltd, a Hong Kong electronics company based in Moscow. Mr So was visiting Russia to learn, first-hand, about investment opportunities there.

Bilateral trade between Russia and Hong Kong has been growing steadily, surging 27 per cent in the first ten months of 2007. "Russia’s strong economy drives income growth which, in turn, supports the country’s booming domestic consumption," Mr So pointed out. In the first ten months of 2007, Hong Kong exports to Russia increased 58 per cent to about US$699 million.

Buoyed by confidence in the booming Russian market, the HKTDC had earlier organised Style Hong Kong in Moscow (September 25-28). At this, the first major exposition of Hong Kong lifestyle products in the Russian capital, more than 200 Hong Kong companies exhibited a wide variety of brand merchandise to attract buyers looking for style and innovation.

Mr So was received by Binatone (Russia) Ltd Director-general Tejinder Singh Lamba. He explained his company’s successful foray into the Russian market and specialisation in the manufacture and distribution of quality and affordable small domestic appliances: "We want to make sure our consumers feel that these appliances are created for them, created to meet their personalities and satisfy their daily needs."

Binatone, started in 1958 by brothers Partap and Gulu Lalvani, was one of the first Hong Kong companies to recognise Russia’s potential. It set up an office in Moscow in 1994, followed by offices in St Petersburg, Ekaterinburg and Rostov-on Don, and established representatives in nearly every city in Russia with a population of more than one million. Binatone also has offices in Kiev, Ukraine, and Alma-Aty, Kazakhstan.

With its first mover advantage in Russia, Binatone is a model Hong Kong enterprise with a thriving business. Companies entering the retail scene in Russia today, however, must be able to cope with the enormous changes in the country. Russia has morphed from a trader’s market in the mid-1990s, with a focus on price and product availability, to the present, where such global players as the United Kingdom’s Tesco, the United States’ Walmart, France’s Carrefour and Hong Kong’s Dickson Concepts are carving a piece of the vast Russian pie.

Secrets of Success

To be successful in Russia, Hong Kong companies should have several pieces in place, said Mr Lamba. "You must have a well-defined strategy, a well-known and trusted brand and a well-developed distribution network." Binatone has more than 100 network service centres across the country to provide customer support to its customers and distributors. "The main sales channels in Russia now are distributors and chains, and their role and importance grow daily."

Mr Lamba added that, while Russia is an exciting market, with many opportunities, anyone entering it must be ready to conduct due diligence, examine the country’s retail structure and brand segmentation, and find the right partner.

"The right partners are there but you must be ready to invest the time, money and effort to look for them," said Sunil Lalvani, Director-General of Binatone, at a seminar held in Hong Kong, in May 2007, for SMEs interested in tapping the Russian consumer electronics market. "It’s worth it. We are successful, and we see a bright future ahead."

Related link
Binatone

http://www.hktrader.net/200801/lead/lead-Binatone20080...