Geopolitical tensions, international sanctions and economic instability appear to have damaged Russia’s ability to attract inward investment, but Chinese investors are stepping into the breach and making their moves into the market at a time when western companies are shying away.
The number of greenfield FDI projects into Russia declined 39 per cent to just 134 in 2014, according to fDi Markets, a Financial Times data service. Russia now stands as the eighth most popular investment destination in Europe, trailing neighbouring Poland (ranked number five) and just ahead of Romania. Russia received only a third of the number of projects that second-ranked Germany did, and a seventh of the number registered by top European destination the UK.
But those investors continuing to invest in Russia are doing so in large volumes: Russia was the second ranked country in Europe last year for capital expenditure in inbound greenfield projects, with an estimated total of $12bn, capturing 10 per cent of European FDI. And these committed investors seem mostly to be coming from China. The top five biggest investors in Russia were all Chinese companies, which together announced more than $5bn of FDI projects in Russia in 2014. Russia was the second most popular destination country for Chinese outbound investment after the US, based on greenfield capital expenditure.