Obstacles to Foreign Carmakers with the Expansion of the Market in Russia - Essay Example

RUSSIA: A HUGE EMERGING CAR MARKET ISOLATED FROM OIL CRISIS Do you think it is a good idea for the Russian government to take the measure of encouraging foreign carmakers to build factories in Russia instead of setting trade barriers as it did in 2002 to help relieve its carmakers from the challenges from the imported used cars? Why or why not? Yes, I think it is a very good idea to encourage foreign car makers to set foot in Russia to manufacture and sell their cars. This will give a boost in FDI sector for Russia.

Plus when foreign car makers come in and set up their own factory, the investment will give a rise in economy of Russia which was always a concern for them. As people over there have already started buying cars compared to what the scenario was before, I think it is a good idea to give them more ideas by inviting the best of the best car makers to sell their variants. 2. What obstacles might foreign carmakers encounter when they expand to Russia’s market?There are few obstacles which are faced by foreign car makers in Russia.

For instance, those business accomplices who needed to put resources into Russia experienced certain issues like: conflicting laws and terms, absence of law authorization, boundless debasement, unusual natures domain, and wheel and deal transactions, does not give any particular assessment or import obligation help to remote investors. As most of the spare parts are locally made, there is a high charged tax for imported parts.3. Russia’s domestic carmakers are facing fierce competitions from foreign counterparts as many local firms in other countries might do upon the arrivals of foreign firms.

Do you think the strategies of Russia’s domestic carmakers will work? Why Ever since the arrival of foreign car makers in Russia, the domestic counter parts are facing a fierce challenge from them. The reason is the better offering offerings of model and features by those international cars. Till now the domestic car makers had the strategy of manufacturing low cost cars for people to purchase as the market for cars was not so developed over there. But now that there has been a rise in the economy and the people have higher disposable income, the trend has changed.

The local are looking forward to latest models and better features which is being offered by these foreign manufacturers. The domestic manufacturers also need to understand the requirement of the consumers and make cars with better features and design to suit their needs.References:1) Krkoska, Libor and Spencer, Alan. “Automotive Industry in Russia: Impact of foreign investments in car assembly plants on suppliers’ entry”. 24th January, 2014. PDF file. 2) 3)