Goodbye Vietnam!

Russian power engineering manufacturers are unable to conquer large eastern markets

The head of FSUE Technopromexport, Sergei Molozhavyi, said at the end of last week during a visit to Hanoi that without government support, Russian power engineering companies are already losing large markets. Thus, in Vietnam, neither Power Machines nor Technopromexport are able to resist Chinese and Japanese corporations. There, in the first quarter of next year, a tender will be held for the supply of equipment for the country's largest hydroelectric power station, Shonla, with a capacity of 2,400 MW (the contract value is estimated at $600-700 million). As Hoang Trung Hai, Minister of Industry of the Socialist Republic of Vietnam, told Mr. Molozhavoy last week, the main condition of the tender will be the independent attraction of an investor for the project, who will agree to provide money for a long period at only 3% per annum with a long deferred repayment. “With this condition, Russian companies are once again effectively cut off from participating in tenders,” said Mr. Molozhavyi.

In Vietnam, the problem of energy capacity shortage is now very serious. In the northern part of the country it reaches 5%, and in the southern part - 15-20%. The standard of living is gradually increasing, followed by an increase in energy consumption. Vietnam is trying to build hydroelectric power stations on its own. In particular, the dam and auxiliary mechanisms are being built by local companies, and foreign companies are involved in the supply and installation of turbines. Recently, Russian corporations have been losing tenders for supply and installation to the Chinese and Japanese. Mr. Molozhavyi believes that the tender for the Shonla HPP will not be an exception. It is possible to attract 600-700 million dollars in Russia only with the help of state banks, but they will not agree to this - the rate of 3% per annum is small for them, because you can earn more on the domestic Russian market. It is also impossible to take out a loan from foreign banks on such terms, since de facto there is no collateral for this loan and no investment insurance. Roseximbank, which was created to implement state investment projects, does not actually work.

At the same time, Chinese and Japanese corporations are increasingly developing in eastern markets. In Vietnam, they have already won tenders against Russian companies three times. The governments of these countries support their companies at the state level: they, of course, do not cover losses from a particular project, but provide government loans on preferential terms. As a result, the starting positions for companies from these countries are much more attractive. And although now China actually does not need foreign markets - colossal construction of power plants is underway within the country and power engineering companies sell all their products in their own country - Beijing is trying to work for the future and conquer neighboring markets as the most attractive in the future in terms of equipment repair (after all, repairs are usually carried out by a company from the country that built the power plant).

The Japanese actually produce expensive equipment. They don’t make some types at all and order them from South Korea or Russia. However, they provide a longer warranty period to the customer (usually twice the country standard).

Moreover, new competitors are emerging. Recently, Mr. Molozhavyi says, Poland began discussing the issue of providing a loan to Vietnam for the construction of a thermal power plant.

Russia, on the other hand, lacks tactics for working in foreign markets. Power Machines, according to the head of Technopromexport, approached the Ministry of Finance with a proposal to provide Vietnam with a state loan for the construction of the Son La hydroelectric station in the amount of up to $600 million, but there was no response to this appeal (probably because Vietnam did not officially become ask Russia for help). On the one hand, Power Machines and Technopromexport are themselves to blame for the fact that developing countries demand low prices from contractors: in Vietnam, for example, Russian companies competed so fiercely that they reduced prices to a level below cost (and this has already made it possible to reach market to Chinese companies). However, on the other hand, Technopromexport and the new management of Silmashin have already agreed that this will not happen again, and now the task is urgent expansion into the markets of different countries. After all, if this does not happen, companies will soon be forced to sharply reduce their work abroad (old contracts are ending, but no new ones), which in turn will lead to a decrease in production at enterprises throughout the machine-building chain.

However, even Russian state-owned companies do not have much hope in the state. As Mr. Molozhavyi said, most likely, in order not to miss the market, Technopromexport will try to enter the tender for the Shonla hydroelectric power station in alliance with Japanese corporations. But even in this case, he believes, there is not much chance of defeating the Chinese.

Nikolay GORELOV, Hanoi - Moscow