Firms with foreign ownership cutting back operations in Russia

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/40

Large and mid-sized firms with at least some share of foreign ownership reduced their personnel more than other firms over the past year-and-a-half by a few per cent to the 2011 level. Firms with foreign participation employ about 5 % of the Russian workforce, and nearly 15 % of workers in manufacturing industries.

The turnover of large and medium-sized firms with foreign ownership have fallen in real terms for several years. Nominal growth in sales has been lower than for purely domestic firms, with their share of total corporate sales falling to just over 20 %. When small firms are included, the 2015 share rises to over 35 %, and to 45 % in manufacturing. Some 35–40 % of the turnover of firms with foreign participation comes from the retail and wholesale trade, and a third from manufacturing, which have a high ratio of sales per worker.

Firms with foreign participation have accounted for 14 % of Russia’s total fixed investment in recent years. In the manufacturing sector, they account for 28 % of investment and in the trade sector for about a quarter. Majority foreign-owned firms accounted for over 7 % of the country’s total fixed investment. These firms have cut back sharply on investment since the 2011–12 boom.

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