By Yelena Zheberlyaeva
BISNIS Representative
Yekaterinburg, Russian Federation
General Overview
----------------
Chelyabinsk is a highly developed industrial region situated in the southern part of the Urals. The population of Chelyabinsk Oblast is 3.6 million, 85 percent of whom live in urban areas. Chelyabinsk Oblast occupies 87,900 square kilometers, roughly the same size as the State of Indiana. Chelyabinsk city, with a population of 1.1 million, is the eighth largest city in Russia. Due to the high concentration of defense-related industries Chelyabinsk was closed till the mid nineties, like many other Urals’ cities.
Today the city is known for its heavy industry and ferrous and non-ferrous metals plants. The Magnitogorsk Metallurgical Plant and the Chelyabinsk Metallurgical Plant are internationally-known steel producers.
Chelyabinsk is also a center of higher education and research. There are over 12 institutes and universities in Chelyabinsk. The population is highly educated. 14 percent of city residents have graduated from universities or other institutes of higher education.
The Oblast has a well-developed transportation network. Chelyabinsk and a number of other cities in the oblast are located along the Trans-Siberian Railway. The daily rail transportation is 180,000 tons. The shipping industry is highly competitive. Over 10 international transport companies in Chelyabinsk Oblast are permitted to work outside of the Newly Independent States.
Airports are located both in Magnitogorsk and Chelyabinsk. Both offer regular flights to Moscow as well as some charter flights to foreign countries.
Natural Resources
----------------
Chelyabinsk Oblast abounds in mineral resources. More than 300 deposits have already been explored. More than 20 iron ore deposits exist. The oblast is rich in ferrous ores, titanium magnetite, copper, nickel and gold. The largest magnetite deposit in Russia is located in Chelyabinsk Oblast. The Oblast also possesses 10 million square meters of high quality marble. 56 percent of the oblast's territory is arable and 27 percent is forest. 28 percent of the forest is coniferous wood.
Economic and Industrial Development
-----------------------------------
Chelyabinsk Oblast ranks third in the Urals in terms of industrial output after Sverdlovsk and Tyumen oblasts. Major industries are metallurgy and machinery building, construction and agriculture. Metallurgy represents 50 percent of the oblast's industrial output and is a key sector in the Oblast’s economy. Ferrous and non-ferrous metallurgy remains a growth sector. Magnitogorsk Metallurgical Plant and the Chelyabinsk Metallurgical Plant "Mechel" export their products all over the world and are the main contributors to the oblast budget.
Chelyabinsk Oblast produces more than 15 percent of Russia's tractors, 10 percent of its lorries and 90 percent of its bulldozers. Metallurgical enterprises produce 25 percent of Russia's total output of rolled ferrous stock and 18 percent of pipes. The non-ferrous metals industry produces about 65 percent of Russia's zinc, 12.6 percent of refined copper and about 3 percent of nickel. Nuclear centers, Snezhinsk and Ozersk, are located in the northwest part of the oblast.
Another growth sector is food production and processing. After the August 1998 financial crisis, the purchasing power of consumers became limited and local enterprises started developing their own production. Many food production companies are now interested in purchasing foreign manufactured equipment to improve the quality of products and packaging.
According to the Deputy Chairman of the Chelyabinsk Chamber for Trade and Industry, the unavailability of locally produced quality packaging is the most serious problem current facing local food producers.
According to data released by the Chelyabinsk State Committee for statistics, production volume in the first quarter of 1999 dropped 95.8 percent, compared to the same period of 1998. Nevertheless a steady rise has occurred in machine building, construction metals and some branches of the food sector, such as bread and pastries. However, production of cereals, meat and meat products and diary products has dropped considerably. Consumer purchasing power remains low even for locally manufactured goods.
Business support structures are not well developed in Chelyabinsk Oblast. An Agency for Entrepreneurial Support and Investment, a Chamber of Trade and Industry, and numerous consulting companies provide assistance to local businesses. Over 13,000 small and medium enterprises employ over 90,000 people in the Oblast. Both the Agency for the Entrepreneurial Support and Investment and the Chelyabinsk Chamber of Trade and Industry are involved in business consulting and training for local entrepreneurs and search for commercial partners abroad. They also organize trade missions and provide information support to the local entrepreneurs.
Two companies organize exhibits and trade shows in Chelyabinsk. The exhibitions are generally smaller in size and a bit different in attitude of the participants than exhibitions in Yekaterinburg. The Managers of a recent exhibition, "Mediko-99", indicated that participants used the exhibition as a means to market their products and services. Before the financial crisis of August 1998, such exhibitions were highly attended both by foreign and local companies and many large contracts were signed as a result. In contrast,
"Mediko-99", held June 15-18, hosted about thirty participants, including local manufacturers, numerous Moscow firms and branch offices of foreign companies. At the same time an annual International Medical Conference addressed related issues.
Opportunities for Foreign Investment
------------------------------------
The Economic Committee of the Oblast Government works continually to improve the region's investment climate.
Chelyabinsk Oblast offers investors opportunities in raw materials and heavy industries. The financial crisis has priced many imports out of the market. Nonetheless, there is still interest in importing equipment for food processing, construction materials, and equipment.
According to official Oblast statistics, 400 enterprises with foreign investments and branch offices of foreign companies were registered as of June 1, 1999. The trade turnover in 1998 was valued at USD 2,288 million, including USD 1,699 million in exports and USD 589 million in imports. The trade surplus with the U.S. in 1998 was USD 350 million. The accumulated foreign capital in the regional economy constituted USD 64 million. The top foreign investors in Chelyabinsk are Germany, the UK, U.S. and Cyprus. Over 35 representative offices of the U.S. companies are registered in the oblast.
According to Chelyabinsk Customs statistical figures in January-February 1999, the Oblast's trade turnover was USD 311.5 million, down 22 percent compared to the same period in 1998. Exports decreased by 0.2 percent to USD 269.6 million. Imports fell by 68 percent, to USD 41.9 million.
Contact List
Oblast Government
Pyotr Sumin
Governor, Chelyabinsk Oblast
4, Ploshchad Revolutsiyi
454113, Chelyabinsk
Russia
Tel: 7 (3512) 33-92-41
Fax: 7 (3512) 33-12-83
Igor Serbinov
Deputy Governor on Economy and State Property
4, Ploshchad Revolutsiyi
454113, Chelyabinsk
Russia
Tel: 7 (3512) 33-35-85
Fax: 7 (3512) 33-12-83
Alexandr Kiselyov
Chairman, Foreign Relations Committee
4, Ploshchad Revolutsiyi
454113, Chelyabinsk
Russia
Tel: 7 (3512) 33-78-75
Fax: 7 (3512) 33-49-85
E-mail: comitet@komvn.chel.su
Alexandr Slav
Head of the Innovation and Investment Department
4, Ploschad Revolutsiyi
454113, Chelyabinsk
Russia
Tel: 7 (3512) 33-50-62
Fax: 7 (3512) 33-00-07
E-mail: cecon@chel.surnet.ru
Fyodor Dyagteryev
President, South Urals Chamber for Trade and Industry
63, Ul. Vsenko,
454080, Chelyabinsk
Russia
Tel: 7 (3512) 66-18-35
Fax: 7 (3512) 66-52-23
E-mail: urals@chel.surnet.ru
Viktor Valchuk
Director General, Chelaybinsk Regional Agency for Entrepreneurial Support and Investments
83, Prospect Leneina
454080, Chelyabinsk
Russia
Tel: 7 (3512) 61-60-01
Fax: 7 (3512) 65-43-48
E-mail: victor@chelyabinsk.ru