The Russian market remains subject to fluctuating oil prices, a harsh reality in a global economy. While the economic recession made its mark, Russia is seeing renewed market activity in the public and private sectors, attracting players from all over the world.
Russia is the largest country in the world, covering more than an eighth of Earth’s inhabited land mass. The vast nation attracts global players with its strong growth opportunities, natural resources and untapped potential. Russia enjoyed nine straight years of growth, from 2000 to 2008, as part of the BRIC bloc with Brazil, India and China.
The Russian market remains subject to fluctuating oil prices, a harsh reality in a global economy. While the economic recession made its mark, Russia is seeing renewed market activity in the public and private sectors, attracting players from all over the world.
Russia is the largest country in the world, covering more than an eighth of Earth's inhabited land mass. The vast nation attracts global players with its strong growth opportunities, natural resources and untapped potential. Russia enjoyed nine straight years of growth, from 2000 to 2008, as part of the BRIC bloc with Brazil, India and China.
The economic crisis dealt a crippling blow to growth. “Revenue dropped in 2009 for the whole market,” said Maria Satunovskaya, Head of CCTV Department for Vidau Systems, a distributor for EverFocus Electronics. “People think the Russian market did not drop much officially, but we are sure the Russian market lost around 30 percent.”
Others reported even steeper drops of 50 percent in 2009, said Kubysheva Ekaterina, Business Development Director of Grandprix, a distributor. However, growth went up in 2010 and should continue into 2011.
Many projects were delayed in 2009, but were back online in 2010. “We have business we didn't get in 2009 because many government projects were frozen for the financial situation,” said Stanislav Guchia, General Director of Axis Communications. “This year, we had a terror attack at the airport, which was terrible. Many different organizations decided to improve security.” Demand continues for security solutions, albeit more affordable ones. “The Russian market now is about the same size as before the recession, or about equal to 2008 levels,” said Andrei Subbotin, Deputy Director of Sales and Marketing for Skyros, a VMS provider. “Demand is increasing not only for cheaper products but for middle- and high-priced products as well.”
However, returning to prerecession sales may be a long way off for the whole Russian economy. “With the general tendency for market recovery, it will be two or four years before the market completely recovers,” Satunovskaya said.
MARKET DRIVEN BY OIL
Oil prices remain a key benchmark of growth for Russia, which translates into an optimistic economic outlook. “The Russian economic situation directly reflects the oil price,” said Hiroaki Yamauchi, Chief Representative of CBC. “The oil price is going up to more than US$100 a barrel.” Threats also drive security uptake. “People invest in security because the crime rate is getting higher,” said Alexey Uretskiy, Commercial Director of Akvilona, a distributor for Samyung and Nuvico.
GROWTH VERTICALS
Moscow is undeniably Russia's locus of power. “Nearly 90 percent of the money is concentrated in Moscow's central government or corporate offices,” said Vadim Makarov, CCTV Products Supervisor, B&I Department for CJSC Sony Electronic. “Even if the project is in Siberia, the money goes to Moscow.”
Even Russia's second-largest city, St. Petersburg, is dwarfed in comparison. “The St. Petersburg market is about 40 to 50 percent the size of Moscow's,” Subbotin said. “Moscow has 10 million people, while St. Petersburg has 4.5 million people. Moscow is the capital and the economic center.”
However, the capital's strategic location makes it vulnerable to threats. January's suicide bombing at the Moscow airport left 35 dead and 100 wounded. In response to the attack, more government spending has been allocated for public transportation. “An urgent matter in Russia is to provide safety and security on public transport after the terrorist acts,” Satunovskaya said. This includes mobile DVRs onboard buses and police vehicles.
Transportation is Russia's top market,according to Guchia. Along with public transportation such as railways, airports are also deploying more video surveillance.
CITY SURVEILLANCE
Public monitoring is increasing as part of the response to terrorism. Bloomberg reported a possible Moscow surveillance project, covering 95 percent of apartment buildings and 75 percent of infrastructure by 2016. The project would be worth $11.7 billion, including online services for residents. While the project has yet to be finalized, it represents a significant boost for video surveillance spending. Along with Moscow, neighboring Ukraine is also implementing city surveillance, Guchia said. ITV, best known for its AxxonSoft VMS, has established a firm presence in Russian city surveillance. “Our biggest project to date is 175,000 cameras in one system with 10,000 servers,” said Evgenia Ostrovskaya, Global Business Development Director of ITV. The project started in 2003, growing from 5,000 cameras to many times that amount. As more projects are slated, public monitoring represents a booming market segment for Russian security.