Moscow Times
October 11, 2007
After Putin's Speech, Foreign Executives Wait
By Max Delany and Miriam Elder
Staff Writers
Some foreign executives on Wednesday brushed off President Vladimir Putin's call for fewer foreigners in Russian companies as pre-election rhetoric, while others stressed that sharing expertise was the only way to keep competitive.
Either way, expatriates were keeping a close eye on what effect, if any, Putin's remarks would have on a business environment increasingly dependent on him for stability.
Putin, speaking to the Federation Council on Tuesday, urged Russian businesses to rely more on Russian managers.
"It's necessary to start with personnel, with people, because everything depends on them," Putin said in remarks on state television.
He expressed satisfaction that more Russians were rising to the top in companies.
But "in our big, leading and today already global companies, mostly in the raw materials sector, you know that the thin layer of top management is mostly made up of foreign specialists," he said.
Kremlin spokesman Dmitry Peskov offered assurances Wednesday that no jobs were at risk. "It doesn't mean that Russians are more preferable, but the process by which they are becoming compatible and competitive with their foreign colleagues is very satisfying," he said.
But some foreigners in the investment community noted that no comment from Putin could be very well written off. "At this stage, it's a suggestion to industry, but a suggestion by Putin carries enough weight on its own," said Roland Nash, chief strategist at investment bank Renaissance Capital.
Nash said Putin was playing up "pre-election patriotism" and reiterating his nationalist stance toward the natural resources sector. "For a long time it's been pretty clear that in certain strategic industries, the focus has to be on Russia for Russians," he said.
Putin's remarks were probably aimed at companies in natural resources like oil, gas and metals, not investment banks, he said. Five percent of the staff at Renaissance Capital's Moscow headquarters is foreign.
Companies working in natural resources said foreign employees were often needed for expertise and experience.
Peter Henshaw, vice president at British-Russian joint venture TNK-BP, said foreign managers were key to making the company competitive in a globalized market. "The shareholders made a commitment to the Russian government when the company was being formed that one thing the management would do is help internationalize best practices and technology," Henshaw said.
"There is a purpose to having international cadres here," he said.
TNK-BP employs 71,000 people, of whom 100 are permanent foreign managers and around 135 are seconded from BP.
Luc Jones, a partner at executive recruitment firm Antal International, said companies were now overwhelmingly looking to hire Russians but that foreigners still formed an integral part of the system.
"In an ideal world it would be fantastic to hire just Russians, but the reality of the situation is that the market is growing more quickly than candidates themselves are developing," Jones said.
Jones said expatriates were often brought on board by Russian companies to simplify relations with foreign firms and attract investment from abroad.
In some sectors, particularly the financial services sector, foreigners offer expertise and experience that Russians lack, Jones said.
Andrew Somers, president of the American Chamber of Commerce in Russia, said Putin's comments were most likely aimed at Russian companies rather than expatriate employees.
"I don't take it as hostile to foreign management but a challenge to the Russian business community to accelerate the education of their top managers so they are not too dependent on foreign workers," Somers said.
"Russia needs to redouble its efforts to train its top managers," he said.
Any effort to replace foreigners, however, would go against an increasing trend in personnel globalization, where companies in developing economies are increasingly importing foreign management, Somers said.
Speaking on the sidelines of the Russo-British Chamber of Commerce's annual investment forum Wednesday, British Trade and Industry Minister Lord Digby Jones said the employment of top foreign managers in Russia was only beneficial for the economy.
Britain is open to foreign managers irrespective of the color of their skin, religion or "even if we can't pronounce their names," Digby said.
The government has long been concerned that a shortage of managers would hit the country's economic growth. In September 2006, the government helped set up the Skolkovo business school to bolster the country's management stratum and tackle this shortage. The institute, billed as a Harvard Business School for the East, is under construction and will open in 2009.
In the speech to the Federation Council, Putin said he would be happy to see foreigners recruited to teach at such business schools.
Staff Writer Tai Adelaja contributed to this report.