RZD Russian Railways

State influence:

RZD is 100% state-owned with strong government support since its creation in 2003 and engages in full-service freight transportation, locomotive traction, infrastructure operations, rolling stock repair and maintenance, long-haul and suburban passenger transportation, container transportation and logistics and engineering, research and construction, as well as in a number of other activities[1].

The Russian Federation is the only shareholder of the Company and delegates shareholder control to the Government. The Ministry of Railways retains control of regulation and government policy on railway transport, while Russian Railways manages the Company’s economic operations[2].

Main business areas:

· Freight transport;

· Long-distance passenger transport;

· Suburban passenger transport;

· Provide infrastructure services;

· Provide locomotive traction;

· Repair rolling stock;

· Construct infrastructure facilities;

· R&D

Internationalization [3]:

Country	RZD participates in cross-border railway joint ventures and railway construction and management projects in Armenia, China, Finland, Germany, Iran, Libya, Mongolia and North Korea.
Year of entry (and goal)	· Germany: Trans Eurasia Logistics (TEL) was founded in 2008 as a joint venture with Deutsche Bahn. The goal of the joint venture is to boost transport volumes by improving service quality and creating a unified end-to-end service for freight transportation. Moreover, partnership with Siemens AG was carried out (creation of the Sapsan high-speed electric train). · Finland: ContainerTransScandinavia was set up as a joint venture in 2007 by TransContainer and VR Group Ltd (Finnish Railways). The countries’ railways have all the necessary conditions for effective work: in 2010, Russia and Finland are maintaining exclusive tariff terms for transportation of containers, coal, petrochemicals, and a range of other cargoes. · China: Container Transport Corp. (CRCT), a joint venture set up in October 2009 between TransContainer and China Railway, is working to provide the full range of transport-logistics services for container freight on China-Russia and China-Europe rail routes. · Japan: Russian Railways subsidiaries TransContainer and Russkaya Troika signed agent agreements with major Japanese forwarding agents, to promote their services on the Japanese market. In view of the positive reception from Japanese businesses to the demonstration of the Trans-Siberian Railway’s potential, we believe there to be good prospects for attracting Japanese freight. · Spain: 1) The signing in October 2007 of a cooperation agreement between Russian Railways and ADIF – Spain’s Railway Infrastructure Administration – was an important stage in the development of links between the two countries’ railway companies. The parties agreed to exchange information in the field of staff training and to exchange groups of specialists, as well as to provide technical assistance and conduct joint feasibility studies and research on enhancing the rail network. 2) Russian Railways, JSC High-Speed Railways and the Spanish infrastructure company INECO SA signed a contract in 2008 to facilitate cooperation on the development of rail transport infrastructure in Russia. According to the contract, INECO will provide consulting services in the design, construction and operation of high-speed railway lines, conduct research into the construction of high-speed rail infrastructure and carry out feasibility studies. · France: 1) French, German and Russian railways signed a cooperation agreement to develop further passenger traffic between European capitals in December 2011. 2)The French company Altstom won a tender to supply high-speed trains for the St Petersburg – Helsinki service. Allegro trains have been operating between the two cities since 12 December 2010. 3) Geismar supplies Russia’s railways with a variety of different machines and equipment. On 28 April 2008, Russian Railways and Geismar signed an agreement to create a joint venture. In October 2008, it was decided to manufacture jointly small tools and equipment at the Metallist-Remputmash Experimental Factory in the town of Sovetsk in Russia’s Kaliningrad region. In 2009, a contract was signed with the Remputmash Kaluga Plant to supply 750 items of track tools manufactured under a joint venture. In 2010, a track tool produced by the Remputmash Kaluga Plant was acquired together with Geismar, and PEM-LEM complexes were purchased to replace track switches. Further cooperation with Geismar is under consideration.
Industry/ business area	RZD used different entry methods that related mostly to the following RZD’s business areas: · Freight transport; • Long-distance passenger transport; · Provide infrastructure services; · Construct infrastructure facilities; · R&D Those areas represent the main ones. They have a strategic importance and bring the highest profit.
Entry mode	Joint ventures (as with German companies, Finnish, Chinese, French ones), partnerships (as with German companies), agent agreements (as with Japanese organizations), cooperation agreements (as with Spanish organizations, French and German ones),
Motives	Pull factors for internationalization (i.e. growth opportunities).   The issue of increasing the role of international rail transportation between Europe and Asia has recently been growing in significance. The Asia-Pacific region, especially China, is still growing despite the global recession, so great potential for boosting foreign trade remains, including with the European Union. Russia can play an important role in this trade as a natural transport bridge linking Europe and Asia. One of the main goals set out in the Strategy for Developing Rail Transport in Russia up to 2030 is therefore deep integration into the Eurasian transport system.   So, joint ventures with Chinese and Japanese organizations play a big role in establishing strong presence in Asian market, while partnerships with most powerful European organizations help in boosting transportation of freight and people from Russia to Europe and back.   Thus, the main motives for internationalization of RZD are market seeking motive – motive to get access to the new markets and motive of sales potential offered by foreign markets, another motive (for ex., Spain case) is the access to local knowledge and expertise.
Firm specific advantagesused on the foreign market	- It should be emphasized that the company does not actually fully compete in the foreign markets, it just provides transportation services from Russia to abroad and back, it doesn’t compete with, for example, Chinese companies on providing transportation services within China. However, company uses its knowledge and competencies in making partnerships and joint ventures, and it is the only
First mover or follower	- First-mover (but it is almost the only rail player right now)
Type of state involvementin the process of internationalization	As RZD is the national railway company, its strategy and development is fully controlled by the government. For example, when Russia won the bid for the 2018 World soccer championship, the government took upon itself the obligation to build proper transportation infrastructure, including high speed rail lines to all cities hosting the championship. RZD now, with state funding, has to realize this directive. Funding for the strategic development of general rail transport comes from the national budget, regional budgets and private investors, including RZD itself. So, firstly state partly sponsors international activities, secondly, state representatives are the Board members who decide upon all most important company decisions.
Evaluationof the success of the internationalization	Internationalization is not over, but so far it is successful, company follows its strategic plan reaching one goal after the other. It has many successful international cooperations, and Russian Railways is a member of the Organisation for Railway Cooperation (OSJD) and the International Union of Railways (UIC).

Transneft

State influence:

JSC Transneft is a subject of natural monopolies, 100% of voting stocks are in federal property, so state has complete control.

The Oil Transporting Joint Stock Company "Transneft" was established according to the Decree #1403 of the President of The Russian Federation dated 17 November 1992 and by the Decision #810 of the Government of Russian Federation dated 14 August 1993. The constitutor is the Government of the Russian Federation. JSC “Transneft” was registered by Moscow Registration Chamber on 26 August 1993, certificate # 026.800[4].

Main activities are transport, coordination and management of oil and oil products of domestic and international consumption; repair and maintenance of oil pipelines, coordination of complex development of the pipeline network and oil transport facilities and interaction with foreign oil transporting enterprises[5].

Internationalization:

Country	China, Greece, Bulgaria, Venezuela,
Year of entry	see below
Industry/ business area	· Rendering the service of oil and oil products transportation via the system of trunk pipelines; · Participation in solving the problems of scientific, technological and innovational development in pipeline transport, as well as introduction of new equipment, technologies and materials
Entry mode (and goal)	· China: “Skovorodino – China’s border” project that is being realized according to the Intergovernmental agreement of cooperation in the oil sphere between Russian Federation and People’s Republic of China, dated 21.04.2009. The oil pipeline Skovorodino – China’s border is the branch of the pipeline system ESPO, it is meant for transporting the export oil to PRC. · Venezuela: in 2009 Memorandum on mutual understanding was signed between the companies JSC “Transneft” and Venezuelan State Oil and Gas Company PDVSA. This Memorandum is aimed at organizing further actions of the parties on evaluation of the possibility of formation of a consortium for realizing the planning and construction works of infrastructure for transportation, storage and transfer of raw oil from the Oil Belt of Orinoco, the possibility of creation of a joint enterprise for exploitation and maintenance of the mentioned infrastructure or other forms of cooperation. In 2010 an Agreement on non-disclosure of information was signed. · Kazahstan: Caspian Pipeline Consortium (CPC) is a major international crude oil transportation project with the participation of Russia, Kazakhstan and leading international oil and gas companies (such as Chevron, Shell, ExxonMobil, Eni, British Gas, Rosneft, Lukoil), created for construction and operation of a trunk pipeline more than1.5 thousand kilometers long[6]. Construction of the crude pipeline system commenced on May 12, 1999. On October 13, 2001 CPC loaded its first tanker at the Marine Terminal near Novorossiysk.   Perspective project (currently stopped) with: · Greece, Bulgaria: Project of the oil pipeline “Burgas – Alexandroupolis”, the basis of which is the Agreement among the Government of the Russian Federation, the Government of the Republic of Bulgaria and the Government of the Hellenic Republic on cooperation in the process of construction and exploitation of oil pipeline “Burgas – Alexandroupolis”, signed on March, 15 2007 in Athens. Realization of the project of oil pipeline “Burgas – Alexandroupolis” is aimed at creation of a new route, which will allow to transport the oil form the ports of Black Sea to the port of Burgas (Bulgaria) in tankers, and further, via the oil pipeline, to the port of Alexandroupolis (Greece) with further transfer to the tankers and transportation to the European and world markets, which will serve the enforcement of the energy safety of Europe and will allow to decrease the volumes of oil transportation in tankers through the overloaded straits of Bosphorus and Dardanelles.   So, partly brownfield strategy was used, as the construction of pipelines happens from scratch. There were huge FDI.
Motives	Pull factors for internationalization (i.e. growth opportunities). The reasons are certainly to expand the market by being able to transport oil to other countries, thus earning both the company and the country (Russia) money. China was chosen for the creation of joint pipeline project as China lacks its own oil and it was a great potential customer of Russian oil. As for the Kazahstan, it is important player in the oil industry. It has a good geographic location. CPC is one of the most economic and reliable routes for crude oil transportation from the Caspian and Black Sea Region to world markets[7]
Firm specific advantagesused on the foreign market	The total market power in Russia, readiness to innovate
First mover or follower	- (the only player)
Type of state involvementin the process of internationalization	JSC Transneft is a subject of natural monopolies, (it is a monopoly in Russian oil transportation via pipelines), 100% of voting stocks are in federal property. JSC Transneft has also a strategic importance for Russian government and Russia which is one of the biggest natural resources exporter. However, the financing of the construction of new oil pipeline is realized without using the budget (State) assets, due to the rational combination of the resources belonging to the company and those coming from the outside. But Russian Government is very interested in the company’s operations since company generates a relatively big share of GDP. JSC “Transneft” does an intensive work of diversity of the directions of the deliveries of the energy resources and of the creation of highly efficient export routes. This enhances Russia’s role in the providing of international energy security.
Evaluationof the success of the internationalization	Internationalization is not completed; there are still many considered projects. However, those projects that were launched (i.e. the one in China) are successful.

Aeroflot

State influence: via ownership or other type? If ownership, please identify the share (calculate if the ownership is indirect) and name the public authority. If other type, please describe.

Aeroflot is Russia’s de facto National carrier and largest Airline. It was founded on March 17, 1923, and it is among the world’s oldest airlines and one of Russia’s most recognized brands[8].

Following the dissolution of the USSR, the carrier has been transformed from a state-run enterprise into a semi-privatised company which ranks amongst the most profitable in the world. The government has had up to 51 % of shares and, thus, is able to control the decisions of the company and its strategy. Moreover, state “backs-up” the company, provides funds if they are needed, etc. The company, however, is not under complete control of the government, because, first of all, it serves a lot of international customers, and, secondly, is subject to international agreements such as Skyteam.

Internationalization:

Country	In April 2006, Aeroflot became a full member of SkyTeam[9], the second-largest airline alliance in the world. Since 2011 also a member of Sky Team Cargo. Through its combined vast network, SkyTeam provides service to 1,000 destinations in 187 countries. Aeroflot operates code-sharing agreements* with 30 Russian and around foreign airline companies. Aeroflot currently has about 200 interline agreements** with Russian and foreign airlines. * A code-sharing agreement is an agreement between two or more air carriers, whereby the carrier operating a given flight allows one or more other carriers to market this flight and issue tickets for it as if they were operating the flight themselves ** An interline agreement is a form of mutual acceptance of travel documentation.
Year of entry	In 1956 the first international flight of Aeroflot took place. In 1976 Aeroflot carried its 100 millionth passenger. Its flights were mainly concentrated around the Soviet Union, but the airline also had an international network covering five continents: North and South America, Europe, Africa and Asia. The network included countries such as the United States, Canada, United Kingdom, Spain, Cuba, Mexico and the People's Republic of China. Since the 1970s some transatlantic flights were flown using Shannon Airport in Ireland as an intermediate stop, as it was the westernmost non-NATO airport in Europe. On 14 April 2006 Aeroflot became the first air carrier in the former Soviet Union to join a global alliance, SkyTeam. It registered the Aeroflot-Cargo trademark in 2006.
Industry/ business area	Domestic and international passenger and freight services.
Entry mode	Cooperation via agreements with special air space agencies, other airline companies
Motives	Airline is almost always born to be global, it should be present in many markets. In addition, as Russia’s de facto national carrier it has to serve all the major world capitals.
Firm specific advantagesused on the foreign market	Large fleet, highly specialized labor, best pilots, strong brand, extensive network of code-sharing agreements
First mover or follower	It is the first mover. It was the first Russian airline company to go abroad, and it is the first air company to enter into the international air alliance. Aeroflot was the first Russian airline company to join the International Air Transport Association (IATA) in 1989.
Type of state involvementin the process of internationalization	The Russian Government owns 51 per cent of Aeroflot. Legal entities and individuals own the remaining 49 per cent stake. In February 2010, the Russian government announced that all regional airlines owned by the state through the holding company Rostechnologii would be consolidated with the national carrier Aeroflot in order to increase the airlines' financial viability, that also helped Aeroflot to become even more attractive in the eyes of foreign partners. Russian government provides also some subsidies to Aeroflot.
Evaluationof the success of the internationalization	Very successful. Aeroflot - winner of the "Absolute brand - 2012" for the most expensive aviabrend worth over a billion dollars. Aeroflot brand - one of the most famous, not only in Russia but also abroad, and is in the top 20 most valuable brands in the world's airlines.

Freight 1

State influence:

Joint Stock Company "Freight One" (Freight One) is the leading freight railway operator in Russia. The Freight One is a railway business formed in Russia during reforms by Russian Railways (RZD).

Nowadays Freight One is a subsidiary of UCL Rail, the railway division of Universal Cargo Logistics Holding (UCL Holding), an international transport group.

The Company was founded in July 2007 as a result of reorganization of "Russian Railways" (at that time thus the state involvement was absolut), and in November the same year began to manage its railcar fleet. The structure of Freight One includes 14 branches offering client service covering the railway network in all regions of Russia[10]. The company provides full-scale cargo transportation services inside Russia and by the International routes. Freight One is represented in 14 cities of Russia as well as in the Ukraine and Finland[11].

Primary activities:

· freight transportation using private rolling stock;

· forwarding;

· freight transportation using third party rolling stock.

Even though it is a private company, government still influences its activities due to the specifics of this industry segment (for example, by setting railway line tariffs)

Internationalization:

Country	Ukraine, Finland
Year of entry and goal	In Ukraine and Finland the interests of the Company are represented by Freight One in Ukraine and Freight One Scandinavia. With the help of these 2 subsidiaries Freight One got access not only to Ukraine and Finland themselves but also to other neighboring countries. · Freight One Scandinavia is a logistics company specialized in rail carryings between Finland, Russia and the CIS countries. It was founded in 2009 by VR Group and Russia’s largest railway operator Freight One, each owning half of the shares of the company. · Freight One in Ukraine was created in 2008. Today, the Company offers the full range of transportation and logistic services, transports and forwards freights by railways of Ukraine, CIS, Baltic States and Europe. It offers comprehensive legal and marketing support, timely online control and dispatching of transportation.
Industry/ business area	Freight transportation
Entry mode	· Joint venture Freight one Scandinavia – venture between Freight One and VR group; · In Ukraine a greenfield strategy was used.
Motives	Freight One was founded in 2007 as a result of reorganization of "Russian Railways" ("RZD"), which is completely state-owned, through the provision of rolling stock monopoly. Because "Russian Railways" is a natural monopoly with regulated tariffs, it could not compete on equal terms with the other owners of the rolling stock. Freight One was created to ensure the competitiveness and investment attractiveness of freight transportation, and as a consequence - to obtain additional funds to upgrade the Russian rolling stock and infrastructure financing. Other general motives were the “pull” ones, i.e. growth opportunities: · To increase sales · To increase market share of the firms
Firm specific advantagesused on the foreign market	Efficient operation, modern rolling stock.
First mover or follower	Follower
Type of state involvementin the process of internationalization	At the beginning their was a direct involvement, including help (for example, RZD supplied Freight One with 200,000 cars)
Evaluationof the success of the internationalization	Yes, it helped company to raise its revenue substantially.

Transaero

State influence:

Short-, medium-and long-haul flights from Moscow and St. Petersburg in Russia and worldwide. Base airports: Moscow Domodedovo, St Petersburg Pulkovo. Aviation company "Transaero" started flying in 1991. "Transaero" is the second largest airline of the Russian Federation on the international routes. “Transaero" is the owner of the largest fleet of long haul aircraft in the Russian Federation. The route network covers 85 destinations. "Transaero" Russia is the only airline, operates scheduled flights to five continents of the world.

Transaero Airlines was the first private airline in the history of Russia, so the state does not directly interfere in company operations. However, the government still exercises some influence on it due to the nature of the airline industry, for example, through state airline regulations, licensing (e.g. government rule that companies in the industry are required to have a minimum number of planes, as was the case after a series of crashes) and airport fees and rules.

Internationalization:

Country	Transaero network contains many European destinations such as Austria, Cyprus, England, Germany, Greece, Israel, Spain and others; Transaero Airlines operates flights to China, Japan, Thailand, India and many other countries of Asia. American destination develops rapidly – company has flights to the USA, Canada, Mexico, Cuba, Dominican Republic, Brazil.
Year of entry	In 1993 Transaero launched regular service on (some) domestic and international routes.
Industry/ business area	Air passenger transportation
Entry mode	Via agreements with special air space agencies, other airline companies, alliences
Motives	To explore the opportunities of new markets, to expand.
Firm specific advantagesused on the foreign market	Constant seek for innovation, focus on wide-body aircraft, balanced market strategy.
First mover or follower	Follower.
Type of state involvementin the process of internationalization	No direct involvement. Company is private.
Evaluationof the success of the internationalization	Internationalization is quite successful. In 2012 the airline has passed a new benchmark in its history: for the first time ever since its foundation its passenger traffic exceeded 10 million in one year.

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