Japanese companies are striving to establish businesses in the Russian Far East, a region where Russian President Vladimir Putin is currently focusing on development.
Russia is trying to lure foreign companies into the region with the aim of developing this raw materials supply area into a manufacturing hub, and expects the Eastern Economic Forum in Vladivostok to serve as an incentive for the region’s development.
At an industrial park in the Russian city of Khabarovsk, Russian workers were tending cucumber seedlings several centimeters long in greenhouses the size of soccer fields.
The greenhouse operation was set up in 2015 by a company jointly established by leading Yokohama-based industrial plant engineering company JGC Corp. and a Russian company.
“The temperature in winter drops to minus 20 C. It’s impossible to grow plants outdoors,” said Tomoyuki Igarashi, president of the joint company. “We thought it would become a [viable] business if vegetables were cultivated year-round here.”
The company grows a variety of vegetables such as tomatoes, lettuce and spinach as well as cucumbers in the greenhouses and ships 1,000 tons of them a year. More than 70 people currently work here, but only two of them, including Igarashi, are Japanese.
In winter, vegetables from China dominate the market in the Russian Far East. Greenhouse vegetables are priced 30 percent to 40 percent higher than Chinese ones. But Igarashi believes the response has been favorable.
“There are consumers who seek better quality and safety in vegetables grown with Japanese agricultural technology,” Igarashi said.
DOWNSIDE OF SUCCESS
Greenhouse vegetables are highly evaluated by both the Japanese and Russian governments as a successful example of launching a business in the Russian Far East.
However, businesses in the region experience continuous trouble. Those newly entering the region are often slapped with penalties concerning labor management and production capacity. A person from one such business lamented, “We’re struggling with new regulations and penalties.”
There are about 100 Japanese companies operating in the Russian Far East and its surrounding area, according to the Japan External Trade Organization (JETRO) and others.
According to Russian customs statistics, trade between Japan and the Russian Far East exceeded $10 billion (¥1.1 trillion) in 2013, but the figure fell to $5.2 billion in 2016, partly due to sanctions against Russia over the situation in Ukraine.
In tandem with Putin’s visit to Japan last December, business circles in both nations created about 70 written agreements. However, many of them were memorandums that only confirmed industrialization plans and failed to go so far as to be contracts.
Regarding economic cooperation between Russia and Japan, Deputy Prime Minister Yury Trutnev showed his dissatisfaction, saying, “I have no idea what was actually realized, especially in the Far East.”
Click here to read the full article at The Japan News.
Photo credit: The Yomiuri Shimbun