The Security Russian Market by Groteck and S News
S News meets Andrey Miroshkin, CEO Groteck Business Media and organizer of TB Forum, Info Security, All-over-IP, to discuss about the Security Russian Market.
Mr. Miroshkin, we started last year our cooperation inside our project about Italian Companies Internationalization towards the Russian market, because we think it is a good, important and interesting market in our field. As CEO of Groteck Business Media and organizer of important and objectively succesful exhibitions in Russia such as TB Forum, InfoSecurity Russia and All-over-IP Expo, can you update our readers about your market potentialities and opportunities?
As you correctly point out, the Russian security market is one of the fastest growing markets in the world. Depending on the production segment, it increases at a rate of 15 to 40% per year, with an average growth rate of over 20% per year. The Russian security market, excluding CIS countries, is 10% of the world market, and 65-95% of its high-tech equipment is imported.
Russians have increased their purchases of video surveillance systems in all classes: as high-margin – IP surveillance products, and also HD-SDI.
Purchases of perimeter security systems have also increased, because Russia is the country with the largest border in the world, as is well known, and it provides a good metaphor for the Russian market: the long borders, large area, long highways and large facilities all stimulate the further development of perimeter protection systems.
The Russian market, which was just an alarm market for a long time, has become more like the Europe market due to the increase in demand for access control systems (ACS). Naturally, the demand and the amount of procurement for Identity Management systems and Biometrics has increased. ACS goes beyond the scope of security systems.
Russians are very strong in the development of video system management software. We have seen a convergence of IT and Security at the consumer level, utilizing a comprehensive approach. Code written by Russian programmers is purchased by many manufacturers all over the world, and this kind of market development for specialized software creates positive opportunities for equipment manufacturers.
Russia has a large number of public projects, which tend to drive market development. The “Safe City” program has been implemented in all major cities and, along with comprehensive transport security programs, stimulates the development of screening equipment and other segments of Homeland Security. Special regulations stimulate the market for protection of critical infrastructure and critical facilities.
On the backdrop of recent scandals and revelations in the field of electronic espionage, there has been increased investment in cyber security systems and information security in Russia.
Many distributors of IT products on the security market, which shows strong growth rates and a higher margin than the IT market, have become professionally engaged in the distribution of security systems.
Companies such as IKEA and Mega have introduced a positive trend in the Burglar Alarms and Fire Safety areas through procurement of fire safety systems from global brands and significantly saving on insurance costs.
Cloud and other new trends also influence the market. Security systems that offer security as a service have garnered high demand and interest from buyers. This provides new, additional business for the installer, increases the availability of high-level services, and helps to provide security for more organizations and facilities.
Russia has developed a communication network, a broadband network and high quality mobile communications. This infrastructure is used to wirelessly construct the wireless security system. Growth of demand in this segment is more than 50% per year, but the demand has not yet been satisfied because there are still insufficient proposals.
The smart-home market is one of the markets in the early stages of development. Rapid growth is expected in this area in the next 2-3 years with a significant increase in purchases made by small and medium-sized businesses and households. The industry is already preparing for this transition, and today is a good time to take a position on the market.
There are over 30,000 installation companies operating in Russia, so any products, tools or services that can help the Russian installer work faster, more efficiently and more productively will receive excellent demand.
Major projects are being implemented and investment in premium facilities is increasing. For example, a transport hub in Khabarovsk is being created, large sports facilities for the upcoming World Cup and other international sporting events are in the process of construction.
The Visa regime with European Union countries and other Schengen countries has been simplified, and this is going on against the background of an accelerated development program for biometric passports and other identification systems.
Thus the Russian market is a market full of great opportunities. It is entirely consistent with the global trends and has a huge number of potential customers among small and medium-sized businesses and households, as well as among large corporations and government customers.
Why, specifically talking, is the Russian market particularly interesting for the Italian Security and Safety Industry?
Italy has a good reputation in Russia as a manufacturer and one of the power-houses. In Italy there are a large number of companies that produce original, innovative products, and Russians are willing to pay a higher price for good quality. Italian culture is reasonably close to Russian culture, and so it is easier to do business together, because we have a deeper understanding than is possible with people from other countries. Italian products are a “must have” in the portfolios of Russian distributors, and working with them in the right context is what Groteck Business Media does to help our customers.
Well, in order to enter and to win in the Russian market, which are the most important aspects the Italian companies have to take into consideration and which are the tools, the actions that you can offer to support them?
Russian distributors carefully select products, paying attention to quality and giving preference to products with suitable properties and sufficient profitability.
In Russia, most of the major distributors are simultaneously system integrators and multi-vendor suppliers with their own brands of security system products.
Sales in Russia are largely vertical, so you must find a way to reach the end users and establish relationships with them to ensure success of luxury and unique products. This is the best guarantee that the system integrator or distributor will make a purchase at the request of the end user. We know of many cases where such tactics brought big profits to our customers.
It must be remembered that Russia is a big country; the world looks different from Siberia than from Moscow, so you definitely need to think about regional specialization of distributors.
In Russia, security system equipment needs to work in a wide range of temperatures. If your product has these properties, you can successfully sell throughout the country.
In most cases there is no vertical specialization among Russian distributors and integrators; in other words, there is no one who specializes exclusively in one segment. Although large companies have close integrators, they only serve their own companies. You must promote successful cases and implementation.
There is a strong paper culture in Russia and special attention is paid to contracts, the printed word, recommendations and so on. The Russian style of work involves a fairly high level of information-marketing activity on the part of the vendor, and even for successful distributors. You must also have personal involvement in key business relationships to get large contracts and dominate the information environment.
Groteck offers the opportunity to understand the Russian market; we provide information about the market for each of our clients.
With decades of experience in the Russian security market, Groteck Business Media has become a major relationship broker for buyers. They trust Groteck's customers as well as the company itself.
As for exhibitions, our support is based on the promotion of company proposals, allowing you to inform consumers in advance and test out which of your proposals is the most relevant for the market, allowing you to carry out prepared meetings at the exhibition.
We pass on lists of potential customers prior to the exhibition. We also place lists of leads at the disposal of our clients during and after the show.
We interview all of our foreign clients, especially those who are in Russia for the first time, about their interests, giving them recommendations and introducing them to potential partners.
As the leading media company, we are in constant contact with the Russian security industry and buyers throughout the year and are part of a system of relations that allows us to meet almost any need of our customers and provide them with a full range of media services, and support the majority of marketing strategies.
We are very pleased to develop our relationship with S News. Our company cultures are similar, which means that we can better serve Italian customers. Our Italian partners have an understanding of the media business, customer's professional interests, and the exhibition business, and an understanding of how to use the toolkit which Groteck Business Media deploys here in Russia.
by Monica Bertolo
