Every year, there are a collection of companies that close in Russia. In 2020, the number of closures reached one million after the effects of the covid pandemic and the restrictions imposed with it. Even in the seemingly restorative calm of 2021, statisticians counted 377,000 companies of all forms of ownership that officially ceased operations.
The reasons for this can vary, with a significant part of the closed legal entities already existing only on paper or served as pads, which became unnecessary at a certain point. Despite deducting these facts, the number of companies that leave the market each year is impressive. According to experts, the timely recovery of at least 10% of enterprises facing bankruptcy would help considerably increase Russia’s economic development in general.
Unfortunately, there are no such mechanisms at the state level (not counting the financial sector). Given the difficult economic situation the country is in now, it is logical to assume that they will not simply appear. Yet, the economy knows how to protect itself, and the weaker its members, the more active the process of forming private structures that can pull individual enterprises or entire clusters away from the abyss and give them new life.
- The life expectancy of companies in Russia is 35.3 months
- 64% of SMEs that were active in January 2016 are still operating
- On average, 56,000 new active businesses emerge monthly in Russia, while 28,000 cease operations
- The probability of a company’s death is exceptionally high during the first year of its existence up to when it is 36 months old. SME companies registered in the Far East live the longest; the leaders are Chukotka, Kamchatka, and Sakhalin (average life span since 2016 is 37 months)
- The lowest mortality of companies is observed in the medical sector; the highest company mortality rate is in the transport industry, non-banking financial services, construction, and retail trade
When referring to this experience, we are talking about the Euroinvest holding and its head, Andrey Berezin. On account of the businessman today, there are three industrial enterprises with a rich history, large teams, and an agricultural complex in the Pskov region.
Beginning with the latter, at the beginning of the last decade, the holding bought land and a dairy herd in the Dnovsky district of the Pskov region. The investor immediately indicated his desire to turn the enterprise into a model producer of grain crops and dairy products, announcing plans to invest about 400 million rubles into these areas.
Over the past years, they were vastly exceeded. Modern equipment appeared on the farm, cowsheds were put in order, and fundamentally new facilities for processing raw milk, including cottage cheese and yogurt, were built. The cluster itself was named after the original farm Krasnoye Znamya, and their own brand, MoleMe, was created for the milk processing line.
At the beginning of 2022, investors further strengthened their agricultural enterprise by purchasing the production base from their neighbors. Krasnoye Znamya could then increase both the volume of equipment and the capacity of the premises.
The intermediate results are as follows: the enterprise found stability and regained the once-lost scale of production. It is no coincidence that the regional authorities in Pskov now include the cluster among the priority investment projects on their territory.
At the same time, it should be acknowledged that Krasny Znamya products are distributed within a small region. The owners make specific efforts to expand these boundaries. Not long ago, they secured an agreement to supply animal feed to the Leningrad Zoo. Admittedly, the deal is somewhat symbolic regarding volume, but it is essential for the brand image.
Berezin refuses to tell people how the farm will develop strategies in the future, referring to the fact that this year’s economic storm is hindering long-term planning. However, he makes one thing very clear: Evroinvest will not leave or close his agro complex, and that in itself is worth a lot.
Modernization Instead of Construction
Despite this, the story of Andrey Berezin’s holding’s entry into the electronics industry is much more enjoyable. In 2012, the Svetlana plant was purchased. It should be noted that it is not just a plant but one of the symbols of the St. Petersburg industry, which began its work and became famous in pre-revolutionary times.
It existed successfully during the Soviet period, and later the management could cope even with the difficulties of the 90s. Chronic underfunding and obsolescence of material funds still paid off. By the time of its purchase by Euroinvest, many people had serious doubts about the plant’s future.
Moreover, even the fact that Berezin structures had purchased it was viewed as a sign that there would be a forthcoming closure of the plant in favour of a conversion of its premises to residential housing. These expectations were influenced by the fact that Euroinvest was mainly engaged in developing the city and the suburbs.
However, these fears were dispelled in the short term. As in the case of Krasnoye Znamya Joint-Stock Company, the new owners immediately started a severe investment program, with hundreds of millions of rubles were invested in renewing the equipment, communications, and premises.
The plant management system was definitely, though not radically renewed. Berezin set up a new department in the holding structure: the Evrovenchur Venture Fund. It became a kind of expert filter assessing the viability of the projects undertaken by the Svetlana team.
In combining financial and expert support, the same practice was applied to two other plants that came into the orbit of the influence of Berezin and the company. It was first the Rigel battery factory, then the Recond, which was an enterprise producing various radio components and microcircuits. Both are united by their St. Petersburg location and, like Svetlana, the difficult financial situation in which they found themselves due to the depreciation of their fixed assets.
Recond has started going through rehabilitation procedures recently, and it is still too early to speak about any results, even intermediate ones. One can ask these questions about the efficiency of Svetlana and Rigel, and there are already eloquent answers to them.
Robots and Biochips: A Step into the Future
For Svetlana, the most striking sign of its return to the path of stable and effective development is the resumption of active implementation of innovative projects. Some of them are already generating serious interest in domestic business and state structures, as well as abroad.
A landmark project in this sense is the creation of a particular medical robot – an assistant for oncology surgeries. The robotic complex is equipped with a unique system of manipulators and a mobile source of X-rays. Subsequently, it can be used directly during surgery, exerting radiation influence strictly on certain tissue areas. According to experts, this can lead to a radical increase in the effectiveness of treatment and, therefore, in the survival rate of patients.
The main application of the robot is expected to be the treatment of lung tumors. The flexible functionality will also provide help in other areas of oncology, if necessary. In this case, the joint efforts of the plant developers, doctors of the city hospitals, scientists of local universities, and specialized robotics research institutes managed to finalize the prototype to the required conditions in a reasonably short time. It is now going through the final approvals stage, gradually approaching a position to ready itself for entering the market.
It should be noted that this market will most likely become international. Even though the supply of medical equipment from Russia to the West is unlikely, it remains in high demand in the East. According to calculations, the total sales of the robotic complex in Russia, the CIS, India, and China will be about a thousand units per year. These figures are more than enough to make the project commercially successful.
Berezin highly appreciated the importance of this development, including the development of the regional industrial complex, to which he stressed in one of his speeches: “The importance of this project is not only in the creation of an innovative product but also in the fact that with the entrance to the Russian and foreign markets Saint-Petersburg will get a full production platform with new jobs based on St. Petersburg enterprise Svetlana, where key production and software technologies of a new level will be concentrated.”
Despite this, the robot is not alone in the bank of Svetlana developers. The plant’s projects in the field of medical diagnostics are no less interesting. The same X-ray units, for example, are used in the mobile complex for breast tumor diagnostics that are now being created. Due to the device’s portability, doctors will be able to use it directly in the operating room, obtaining detailed results of the analysis of the tissues taken for testing in a few minutes. Consequently, this will help make decisions about further treatment without leaving the operating table.
In addition, the company has grown a brand-new biochip production facility in the last few years. Their primary application, though not there only capability, is the polymerase chain reactions, otherwise known to Russians as abbreviation PCR. They are used to diagnose various infectious diseases, including the infamous COVID 2019.
The new generation of biochips being developed will solve much more ambitious tasks. Its use will help to take the next step in diagnosing genetic diseases, aiding in deciphering each individual’s genome.
Private Initiative is an Example of the State
The Rigel plant has symptoms of recovery. One of them is an increased interest in the company’s products on the part of major Russian players in the market of the knowledge-intensive industry. Almaz-Antey Concern signed an agreement with Rigel to supply a new generation of traction batteries this fall. They will be used in producing the concern’s line of electric cars, including crewless cars.
No less exciting cooperation plans are planned with NIAI Istochnik, which, like Rigel, has been specializing in developing and producing batteries for many years. The companies will collaborate to create Russian power sources for mobile electronics. Additionally, their partnership has a significant defense dimension, which the parties prefer not to disclose.
The achievements of the plants belonging to Euroinvest Holding Company could be listed for a long time. However, the already mentioned examples are enough to understand that despite the formal absence of work experience in the industrial field, Mr. Berezin managed to understand and solve the problems of each enterprise. The new owner managed to restart them not only from the level of material equipment but also from the point of view of the work content, directing them to innovative developments.
At the same time, Berezin’s Euroinvest is a purely private enterprise that operates independently, relying only on the financial resources it manages to attract through publicly available channels. Nevertheless, he manages to act as Suvorov managed to achieve high results where they were not expected.
Conclusively, it is safe to say that the experience of transforming and modernizing industrial assets accumulated by Berezin and his colleagues has succeeded. We are sure that the Russian economy will benefit significantly if this experience is considered by the state.
Andrey Berezin was born in 1967 in Leningrad. He graduated from secondary school #239 with an advanced degree in mathematics. In 1990, he graduated with honors from the Leningrad Ustinov Mechanical Institute. In 1990 he graduated with honors from the Leningrad Ustinov Mechanical Institute, where he specialized in automatic control systems for aircraft. During his studies, he was Lenin’s and Ustinov’s scholar and had scientific publications. In 1990 he was enrolled in the post-graduate course at LMI and started the parallel business.
In 1993 he took part in creating the North-West Fisheries Company. In 1995, together with Yury Vasilyev, he founded the Euroinvest investment company and had been its Chairman of the Board ever since.
Today Euroinvest is a diversified holding company, which includes companies and projects from different economic sectors.
One of the directions of Euroinvest work is legal and engineering support for developing land plots and territories, including in St. Petersburg and the Leningrad region.
At the end of 2017, Euroinvest Group created its construction division Euroinvest Development, which is engaged in the construction of housing and other objects, thus forming a full-cycle development business.
A relatively new direction for Euroinvest is the agro-industrial sector. For example, Agrocluster Krasnoye Znamya in the Pskov region specializes in producing grain and fodder for livestock.
In May 2017, the managers of IC Euroinvest established a venture fund Euro Venture with an initial amount of € 10 million. Priority investment areas are innovative developments in the scientific and technical sphere and projects in the creative industry.
In 2017, Andrey Berezin was awarded a certificate of merit by the Ministry of Industry and Trade of Russia for his outstanding contribution to developing the Russian industry and many years of diligent work.