Russia’s Elevator industry since 1991

OTIS

Huge potential in USSR. Demand: 40 000 elevators/year; in US only 27 000 elevators/year.

Demand for passenger elevators in apartment buildings.

Otis Elevator Company

Otis is world’s largest manufacturer, installer and servicer of elevators, escalators, moving walkways and other horizontal transportation systems.

Otis’ management considers servicing elevators as one of the keys to success. Other factors:

· Reliability: stringent quality control

· Service agreement options: from full service to service provided on call

· Preventive maintains agreements

· Quality service: latest technology

· Global orientation: operates all over the world

· Job satisfaction: various incentives for job satisfaction

· R&D: significant investments

· Speed: fast reaction to customer needs

Russia. An economy in transition.

1990s hyperinflation => 1997-1998 Financial bubble => 1998 Banking collapse => fears of foreign businesses of operating there.

· Fall of communism in 1991. Russia is unmanageably vast and has little experience in the rule of law, private property or public participation

· Collapse of Russia’s economy in 1998. Massive devaluation of ruble.

But the market is too big to ignore.

Collapse of ruble => Most Russians could ill afford imports => MNE’s are forced to consider localization.

Change in Russia is a matter of time? Under the presidency of Putin Russia is going in all three directions: regeneration, stagnation and decay.

Changes:

· Recentralization of government

· Tycoon-politicians are clamped down on to curb fraud and embezzlement

· Political consolidation

But the economy is still not transparent.

Russia’s business culture is still poor and heavily influenced by totalitarian roots (mistrust).

3different business cultures:

· Traditional (successful companies that are run by state system)

· Predatory (cheating on the state, on the partners, on consumers; profiteering and growth at any price)

· Socially responsible (business that is trying to build loyalty and support of customers and employees)

Russia’s Elevator industry

Russia is among top 10 elevator markets in the world)

During Soviet period, several government agencies handled all aspects of the elevator business independently (i.e. industry wasn’t integrated):

1. Elevator production was managed and supervised by Liftmash, Mosstroikomitet, Lenstroikomitet, Ministry of Heavy Machine Building. (Leading enterprise – Liftmash; Liftstroikomitet – a major producer of various construction materials of which elevator production accounted for 20% of its revenues)

2. Elevator installation was handled by MosliftMosliftmontage, Spyuzliftmontage, Liftmontage-I-Naladka, Trest # 27.

3. Elevator Service was provided by Rosliftremont, Spyuzliftmontage etc.

At present time only companies in Moscow are still in business.

Russia’s Elevator industry since 1991

Since the fall of USSR In 1991, there has been significant consolidation in Russia’s elevator industry. Several elevator manufacturing companies have either collapsed or merged/acquired by others. In addition, in the service sector there has been some vertical integration (some fully, some partly). With the entry of foreign companies into Russuia, the level of competition has also increased. Only 2 domestic elevator manufacturers are significant players in Rus market: Scherbinsky (20% of the market) and Karacharovsky. Among foreign there were Schindler, Kone and Otis (15% of the market). Scherbinsky is one of the leaders due to its price competitiveness.

Liftremont is a competitor to Otis in maintenance and repair.

Schindler supplies to banks and offices.

Дата добавления: 2015-10-30