Preparing for localization

Preparing for localization: which method to choose?

Taking into account the current trends in the development of import substitution in Russia, the localization of production can be an attractive direction for business expansion for companies with a development strategy.

If a company has decided to localize its products in the Russian Federation, then there are several ways.

  1. Creation of our own production — «greenfield» — construction of our own production, which is managed by a subsidiary of an international company.
  2. Joint ventures — created for strategic cooperation, which are independent business entities for further development.
  3. Contract manufacturing — own production without own capacities, organized by other companies under a contract. Company — customer — trademark, name and idea, promotion of goods, works or services;
The localization method depends on the type of product, the amount of investment, the financial model of the business, the target market — customers, the period of reaching the required level of local production.
There is another alternative to the so-called «Brownfield»: special economic zones, which offer special benefits to residents.
The Russian government today aims to provide comprehensive support to those enterprises that localize unique technologies and production, including special investment contracts, subsidies and other forms of government support, such as tax and customs benefits provided to companies-residents of special economic zones. In addition, the relatively low cost of labor resources, as one of the consequences of fluctuations in the ruble exchange rate, has a positive effect on the cost of production. Those enterprises whose localized products are exported are also in an advantageous position. Another plus of the presence of local production is the ability to participate in tenders for the purchase of products.
An obvious plus of the localization of production is the complete coincidence of localization activities with the goals formulated at the highest state level, namely, with the import substitution policy.
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Market analysis of Russian shipbuilding as of 2021​​
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