**Russia Rejects 'Screwdriver Assembly' Model for Foreign Business, Emphasizes Technology and Expertise**
In a recent statement, Anton Kobyakov, a presidential adviser, articulated Russia's strategic shift away from the traditional "screwdriver assembly" model for foreign investments. Speaking to TASS on Sunday, Kobyakov emphasized that Russia is seeking to attract foreign technologies and management expertise rather than merely engaging in basic assembly of imported components. His comments were made in anticipation of the upcoming Eastern Economic Forum in Vladivostok, a key event aimed at fostering investment in Russia's Far East and enhancing economic ties with the Asia-Pacific region.
Kobyakov described the Russian government's approach as one that favors pragmatic and mutually beneficial cooperation, focusing on joint production, capital-intensive industries, and scientific research. “We need the best management practices and the best technologies – all of it!” he stated, highlighting the need for more comprehensive involvement from foreign businesses beyond simple assembly operations.
The "screwdriver assembly" model, which involves the importation of nearly finished components for basic final assembly within Russia, has been a common practice in the past. However, Kobyakov's remarks indicate a desire for a more sophisticated level of collaboration that goes beyond mere assembly.
The backdrop to these developments includes the significant exit of numerous US, European, and Asian companies from the Russian market, prompted by sanctions imposed by Western nations following the escalation of the Ukraine conflict in 2022. Many companies left due to supply chain disruptions, the risk of secondary sanctions, or public relations pressures. In many cases, departing firms sold their Russian assets to local buyers, often including buyback options in their agreements.
However, recent changes in Russian legislation have altered the landscape for these buyback rights. Earlier this month, President Vladimir Putin signed a law that allows Russian courts to terminate buyback rights held by foreign investors under specific conditions, tightening the rules for potential returns.
Despite the political pressures faced by businesses from Western countries, Kobyakov noted that companies from nations such as Germany, France, Italy, the UK, Switzerland, Spain, Greece, and the Netherlands continue to maintain contact with Russia. This suggests a nuanced approach among some foreign firms, which may be looking to navigate the complexities of operating in a sanctioned environment.
Russian officials have argued that the sanctions imposed by the West have inadvertently strengthened domestic industries by fostering import substitution and encouraging local production. President Putin remarked last year that these sanctions have acted as a "powerful catalyst for structural changes" in the Russian economy, allowing domestic businesses to fill market gaps left by foreign companies and accelerate the development of local technologies.
Interestingly, some major Western companies have chosen to remain operational in Russia despite the ongoing sanctions. Firms such as Nestlé, Mars, Mondelez, PepsiCo, and Procter & Gamble continue to conduct business within the country. An analysis conducted by the Russian outlet Vedomosti in June revealed that approximately 55% of foreign-owned companies, or 2,350 out of 4,265, are still active in the Russian market.
As the Eastern Economic Forum approaches, Russia's focus on attracting foreign investment through technology and expertise rather than simple assembly is likely to be a central theme. Kobyakov's statements reflect a broader strategy aimed at fostering deeper economic ties and enhancing domestic capabilities in the face of ongoing geopolitical challenges.