Investments in modernization: are investors rushing to Russia?

"We have thrown all these misanthropic intellectual-business arguments into the trash"
The head of Rusnano, Anatoly Chubais, explained to Kommersant columnist Irina Granik that investors are ready to invest in Russian modernization.
The article is published on the Rusnano website

– How do you assess the results of the Davos forum for Russia?– For the first time, the forum was opened by the President of Russia.

It is doubly significant that he still came here, even for a few hours, despite the tragic events in Domodedovo. The fact that the speech took place was received very positively by the forum participants. It contains ideas that give Russian options for responding to global challenges, in my opinion – quite appropriate and valuable in themselves. Today, Russia has made applications that are in demand on the world agenda – modernization, the international financial center in Moscow. So far, these are applications that should be further supported by concrete cases and concrete results. But in general, there is a feeling that foreign investors believe much more in the process of modernization in Russia, in the process of change, than the elite inside the country, which has more skepticism and apathy.

– So, according to your feelings, investors are ready to respond to the signals given by the Russian president and the entire Russian delegation? Are they ready to invest in Russian modernization?– An investor is such a very special being.

In a sense, it always wants to invest, just as any organism wants to eat. It is ok. Moreover, investors, as is well known, are divided into two groups. Some who have a bad memory, and others who do not have it at all. In this sense, the situation is generally favorable, we have plenty of opportunities to send them the right signals. To be honest, I myself had concerns and doubts whether they, investors, would want to hear them from Rusnano. And I have met dozens of skeptical comments from the Russian side: "Why is it even necessary? Invest in Russia, in high-tech industries? Yes, they are not in Russia. Why would they come to us? Yes, they have everything anyway." As a result, we threw all these misanthropic intellectual-business arguments into the trash. Instead of all this chatter, they began to engage in real work with real investors. To date, out of 104 projects approved by Rusnano, there are 28 projects with foreign participation. Among what has already been approved, there are unique flagship projects. For example, the Plastic Logic project, which has recently had a great resonance. We will build in Zelenograd near Moscow the largest enterprise that will produce flexible displays for the new generation of "electronic books". Plastic electronics is the newest high–tech trend in the world, which will allow creating new product groups. Or another direction related to lasers, which was created in the Soviet Union by academicians Prokhorov and Basov. We brought it back, but not as a study, but as a business. The largest laser production in Russia will be opened in Fryazino together with the world leader in this field – IPG Photonics Corp. I can continue with examples. And this proves what I said: we have no doubt about the desire of investors to accept our signals.

– But no matter how well you work with investors, there are systemic problems that are difficult to solve quickly. Everything that is called a bad investment climate, starting from corruption, including in the judicial system, poor protection of intellectual property and property rights in general. And another factor has just reminded us of Davos: the threat of terrorism. – Of course, there are things that fundamentally undermine the attractiveness of Russia.

This cannot but affect the work in the innovation sphere. That is why I consider the topic called "investment climate" or the topic called "Moscow – financial center" to be strategically important. But there are two points in the innovation sphere that, oddly enough, reduce the importance of risks, including corruption. I emphasize that they do not remove, but reduce the importance of risks. First. You can probably seriously consider the risk of a raider seizure of an oil well. But the raider seizure of a research center that has developed technologies for the production of new plastic chips is not a very serious threat. Well, it is unlikely that the raiders will seriously manage molecular beam epitaxy. That is, innovative projects are slightly less vulnerable to these classic diseases of ours.

Secondly, we at Rusnano understand well what business is in Russia and how it works. What is power in Russia, how it works. And in this sense, we openly offer our partners direct support of all kinds. We say to our project companies: in case of any threats of corruption that arise – when allocating land plots, coordinating issues on the construction of engineering infrastructure, in dozens of other issues – colleagues, contact us immediately if someone comes along with not very noble goals. This is also a factor that, in general, is important.

– But it turns out that an investor in Russia should only deal with a state corporation or a large partner with a state "roof". Otherwise, an investor, especially a small one, is not protected from Russian, as you said, classical diseases. – So far it is.

The problem of corruption in Russia, of course, has not been solved, and I do not know of any real short-term technology for solving this problem.

– What attracts investors, who, for example, have received protection from the problem of corruption thanks to you, to Russian projects? Lower implementation cost? Technological base? But isn't there such a base and projects in Silicon Valley or in Europe?– There is no one simple answer to this absolutely correct question.

There are several factors that, having come together, eventually attracted our partners to the fact that, for example, a plant for the production of plastic electronics is being built in Russia near Moscow. Firstly, it is capital. This is important. In fact, access to innovative capital in the world is not so easy. If you read a recent article in the Wall Street Journal, in which one of the key experts describes this story, it contains a paradoxical thesis for Russian perception that the system of attracting and supporting innovation in the United States is much worse than in Russia and China. This is not my opinion, this is the opinion of an American author, even if it may be somewhat exaggerated. Second. Of course, the existing surrounding technological culture is important. It's not by chance that we are going to build a plant in Zelenograd. This is a well-known Russian electronics center. And this is a zone of free enterprise – a zone of technical and innovative type. That's where we will pull our R&D, our research. This was a very significant factor for our colleagues from Plastic Logic, who have their headquarters in Silicon Valley, a research center in Cambridge, the first plant in Dresden, and we will have the second.

And the last one. Of course, we have our weaknesses, but there are also strengths. And competitors have weaknesses and strengths. The topic called "intellectual property protection" in China is vulnerable. This will affect innovative projects in this country. Many experts have told me about this, including colleagues from the Plastic Logic Research Center in Cambridge. This also played in our favor when choosing the location of the project. By the way, we have been conducting very difficult negotiations on the placement of production in Russia for more than a year. It is the production, not the distribution, marketing or advertising center. We had a very competitive situation. A very large Chinese leader, I don't want to mention his last name, competed head-on with us. Which had an unlimited amount of financial resources in order to attract this very technology to China. In a sense, we just managed to combine the set of advantages that we have and minimize, as much as possible, the amount of disadvantages.

– There is a point of view that countries with advanced technologies do not seek to come with them or transfer them to other countries. Are you not facing this problem?– All these concerns are reasonable, they often sound.

But the same Plastic Logic is the best thing in the world in the field of non–silicon electronics. I don't think you will find at least one specialist in the world who will say that this is a second-level technology. There is another problem: like any breakthrough high-tech direction, this direction, of course, is associated with risk. It may or may not revolutionize the world of electronics. Or maybe in five years it will turn out that it is not as promising as we hoped. This is also possible.

– So there are venture investments here? What is the financing scheme?– This is a rather unique case.

Here, pure venture capital is combined with private equity. In a sense, this is a startup, not just a venture. The product that we are going to manufacture in Russia has not been manufactured and sold in the world. This commercial product did not exist. According to the classics, this is a startup. On the other hand, the scale of total investments is about $1 billion. And this dimension is not for a pure venture. We are joined by such grandees of the venture industry as Oak Investment Partners, one of the key venture funds in Silicon Valley. Such a connection of the unconnected is a good sign. There is always a breakthrough at such points. Although I emphasize once again: no one can be guaranteed from failure. This is an innovative field.

– They say you have some new developments for the fight against terrorism. Did you not present them in Davos as proof that Russia can provide security? – We really have something to offer.

We have a commercial product, I want to emphasize, this is not a development, this is not a research, this is not an idea, this is already a commercial product. Which we are ready to sell. It is called DViN – a detector of explosives and narcotic substances. Without any exaggeration, the technological level is the best in the world. This type of detectors exist, except for Russia, in only two other countries of the world. This is the result of our joint work with specialists from JINR and Rosatom. Including those who were engaged in modern weapons systems. The uniqueness of the detector is that it works with the entire spectrum of narcotic substances and with the entire spectrum of explosives. As a rule, existing detector systems have only a certain set of explosives as their target product. In this case, we are talking about the detection of an almost complete spectrum of explosives and narcotic substances with one device. This is a finished product that we know how to produce, certified by the FSB. We are now completing negotiations with the St. Petersburg metro. We hope that a decision will be made soon on the purchase of the first large batch of these installations for metro stations in St. Petersburg. At the same time, we are preparing for the next tender in the Moscow Metro. It is more than five times. We are ready to enter mass production of this product. Events have shown that such a device will be in demand at airports as well. We will also work on a special modification of this device for airports, for customs terminals, as soon as we feel that we are potentially expected there, and we can get there. And plus, this detector will certainly be in demand not only in Russia, but also abroad.

– Was your visit to Davos productive? Have you agreed on something with investors here?– Yes, I had a lot of negotiations.

Dozens of meetings have been held with our existing or potential partners. Very meaningful talks were held with the President of Alcoa. After our joint work, there are definitely already two live projects, very significant. And two more on the way. I hope they will be implemented within a year. I met with the president of Siemens, with the presidents of venture companies. That is, we have expanded the list of potential partners, investors, and technology investors. We are less interested in banks and even more so in commercial banks. We do not have a financing problem, we have problems of technological partnership and attracting "smart" money. Where, if not in Davos, to solve this problem.

Portal "Eternal youth" http://vechnayamolodost.ru
10.02.2011