Cooperation makes wealthy people
The TechnoNICOL president and managing partner Sergey Kolesnikov shared his view on the prospects of Russian building industry, business constraining factors and ways to solve institutional problems in his interview to the magazine Expert.
The TechnoNICOL president and managing partner Sergey Kolesnikov states that Russian producers of construction materials have driven out imported goods from the domestic market. Moreover, TechnoNICOL demonstrated growth by 8-9% in natural terms in H1 2016, most of which due to proper export. The positive outlook relates to the B2C market and sales in the DIY segment. “We have made an enormous leap here and plan a double digit growth rate in the coming 3 to 4 years. By now, we work closely with a ten of 30-50 outlets, which is great business potential,” said Mr. Kolesnikov.
“Building is similar to bread – everyone needs it”, and regional authorities know that. Mr. Kolesnikov positively regards governors’ and regional authorities’ attitude to investors: “Over the past two years I have received as many proposals from Federation subjects as I had not received over the previous 20-year period. Almost all the regions offer good conditions. They have become approximately the same – profit tax preferences, land and property assessment facilities. Sometimes subsidies on communications installation are available”.
However, the venue choice is also determined by such factors as population, paying capacity, transportation and logistics. The TechnoNICOL plants are now functioning in six countries, and the distance between them is from 300 to 1000 kilometers. The major production clusters are concentrated in the Central and Ural regions. If we launch an innovative material (such as PIR insulation boards) or a new product line, the first plants are built in the central and Ural regions. As market demand increases and the opportunity to substitute import arises, new enterprises emerge in Siberia, then Southern and North-Western regions.
The discussion raised fundamental institutional problems as well. The businessman points out the lack of people creating products and the excess of state funded organizations and dependents. “It has to deal with excessive taxing of labor costs. The labor should be exempt from tax. It’s the added value, that should be subject to taxation. If we strive to increase the economic expansion, if we wish to create new workplaces, we need straight actions. In order to encourage demand for labor, the labor tax must be decreased. The demand for labor will eventually rise its value up and enhance the consumption”. Sergey Kolesnikov gives an example of IT branch, which increased exports of IT-products to seven billion dollars with only 300 thousand people employed after the insurance charges were diminished to 7%.
The president and managing partner of TechnoNICOL suggested that business and regulators should pay more attention to cooperation. “Complex goods are created by means of cooperation, not competition. It’s the cooperation and high added value that make us wealthier in this complex world”. Mr. Kolesnikov mentioned in the interview the concept of the American scientist and consultant William Edwards Deming, who developed the idea of statistical product quality administration and paid attention to the concept of cooperation. His ideas were popular in Japan in 1950s and later on, implemented in TechnoNICOL. It’s the Japanese philosophy of lean production that served as a basis for the Corporation’s growth worldwide.
The full text of the interview of Sergey Kolesnikov to the magazine Expert is available here http://www.tn.ru/img_out/articles/upload17yvl9kyz8d.pdf