Holland goes Russia

The Dutch-Russian maritime tradition dates back to the late 17th century when Tsar Peter the Great, who dreamed of making Russia a maritime power, went to the Netherlands to learn the trade. To emphasise their long bilateral relations, 2013 was declared the Netherlands-Russia year, and of course the maritime industry plays a role in these celebrations.

Russia is an interesting country for several industries within the Dutch maritime cluster and offers many possibilities to the Dutch. Take for example the offshore industry. ”Russia has the biggest natural gas reserves, the second biggest coal reserves and fulfils a top ten position worldwide regarding their crude oil reserves”, says Maurice de Kok, area manager offshore at dredging, marine and offshore contractor Van Oord. ”These natural energy reserves are not always easy to win. A trend we see, is the movement of the Russian energy industry towards the Arctic and that developments are more and more taking place offshore. Next to the expansion of the offshore industry we also see developments within the maritime transport industry, including port development. Because of our vast technology knowledge and extensive experience, the Dutch dredging and offshore industries can contribute to these ambitious Russian developments.”

Next to port development, offshore and dredging opportunities, the Netherlands could also benefit from a bilateral agreement which allows commercial vessels flying the Dutch flag to enter the Russian inland water ways, which is currently only possible for commercial vessels flying the Russian flag. Michael Roerade, export promotion manager CIS at HME explains: ”The Royal Association of Netherlands Shipowners in cooperation with Holland Shipbuilding Association see this huge opportunity for the Dutch maritime industry and therefore actively encourage the Dutch government to take action and reach an agreement with Russia. The first step towards this agreement was made in 2011 during a trade mission with Dutch prime minister Rutte and minister for infrastructure and environment Schultz van Haegen and recently this was taken up again.”

”Russia also is an important market for the yachtbuilding industry, but only for the consumer market, not so much for the suppliers in the yachtbuilding industry”, Roerade continues. ”However, the shipbuilding industry can seize opportunities in Russia, as the Russian inland shipping fleet is out of date and needs to be replaced. We could set up a cooperation between Dutch shipyards and engineering companies and Russian companies to build vessels in Russia with Dutch knowledge. Many developments are currently taking place, which offer opportunities to all levels of the maritime cluster. However, the big question is: how to capitalise them?”

Local representation in Russia is essential
First steps

A Dutch company that set its first steps in Russia is Kolmer Elektromotoren, based in Putten. The company designs and produces customised electric motors, working with motors from Cemp and Cantoni. Kolmer offers several certifications of their products, one of them being RMRS, Russian Maritime Register of Shipping. ”About seven years ago, we found out that our clients find this certification very important to be able to sell the motors in Russia and Kolmer motors were sent to Russia as a semi-finished product in our clients’ applications”, says Yuri Veldhuis, sales manager at Kolmer. ”Two years ago, we received a tip about a project in Russia from a Dutch client and went to Russia, where we met Nicolay Voronin. During NEVA we met Nicolay again, who was starting up his own company in the shipbuilding industry to sell complete propulsion systems and offer consultation services for newbuild and refit projects. We invited Nicolay to Putten and showed him our company. He can use this practical knowledge for his company and we support him. He visits trade fairs and if he hears about an interesting project he tries to get involved in it. Our next step will be to help Nicolay further during this year’s NEVA.”

No 5 MbH Juli-Aug 2013-Voor Website.jpg 14 1Doing business in Russia does not only offer opportunities, it is challenging as well. Roerade: ”Of course there are some difficulties. Take the shipbuilding industry: as of 2016, 60% of the total value of a vessel has to be sourced locally. When building vessels for Russia, it is therefore important to buy local products. To set up local production might prove difficult, but once it is set up, it will definitely lead to a competitive advantage.” De Kok adds: ”During our projects, we face challenging circumstances that are typically Russian, for example arctic circumstances, the remoteness of working locations and lack of existing infrastructure and legislation issues. If you want to work in this region, a perfect preparation and an accurate planning are essential. Especially working in Arctic and sub-arctic regions means having very restricting working periods and requires a strict policy to be able to guarantee the safety of our people and vessels. Our colleagues in our offices in St. Petersburg, Moscow and Yuhzno-Sakhalinsk know the local circumstances and play an essential role during the preparations of the projects.”

Local representation

Having a local representative in Russia seems to be a key prerequisite. Veldhuis: “As a Dutch company you cannot do business in Russia without a local representative. Russians have a different mindset, the willingness to grant a project plays a bigger role than in the Netherlands. You have to see the Russian business world as a family, and you have to be part of the family to be able to do business. Rules and regulations are difficult, and we are pleased to have Nicolay taking care of this, as he has the knowledge, experience and network to do so. Moreover he speaks the language.” Also Roerade mentions the local representative: “The most important thing is to find a local partner, to make a good analysis of the market and not wanting to do everything from the Netherlands. Doing business in Russia is all about trust, professional relationships and granting each other contracts. It is important to build up a steady relationship and be present in Russia regularly.”

No 5 MbH Juli-Aug 2013-Voor Website.jpg 14 2During the Netherlands-Russia year, the Royal Netherlands Navy also plays a role. In July, the air defence and command frigate HNLMS Evertsen and the submarine Dolfijn paid a visit to the bi-annual International Maritime Defence Fair and in September, the air defence and command frigate HNLMS De Zeven Provincien will be present during NEVA, together with the new offshore patrol vessel HNLMS Friesland. Commander Geert Lalleman works at the Ministry of Defence and is the project officer for defence activities during the Netherlands-Russia year: ”The contemporary cooperation between the Russian and the Dutch navy goes back to just after World War II, when we signed a protocol to prevent accidents at sea. Recently we started to intensify our relationship, by cooperating in the fields of safety at sea, think of the fight against piracy, terrorism and drugs, but also in the field of hydrography.”

Lalleman continues: ‘‘The visit in July was a huge success. The vessels attracted a lot of attention and a special delegation under command of Rear admiral Bekkering came over to meet colleagues from Russia. We even received an unexpected visit from the vice president Rogozin, responsible for the Russian defence industry. This cautious reengagement and collaboration is not only worthwhile as such, it also smoothens the path for possible contracts for the Netherlands Defence industry. This requires a long breath since President Putin wants to grant orders first and foremost in Russia itself. Tsar Peter the Great was the starting point of the Russian-Dutch cooperation, he took the best from the Netherlands with him to Russia, which is still visible today. The Russians are impressed with the Dutch, want to learn from us and are sincerely interested in our maritime technologies; because of our long-term history, they prefer Dutch business partners. The Russians also look at our golden triangle: the cooperation between the industry, knowledge institutions and the government. This golden triangle is a perfect basis for doing business and Russia offers many opportunities for the Dutch maritime industry: the Arctic Ocean will be opened which means huge future benefits for commercial shipping, but it also means an opportunity because of the natural wealth that that environment offers, which is commercially interesting for the Dutch. The Netherlands has a lot to gain in the Arctic, for example by building and transporting platforms, laying pipe lines and building ports.” An example of a Dutch company involved in building ports in Russia is Royal Boskalis Westminster, who recently signed a contract for the construction of the Bronka Port in St. Petersburg.

No 5 MbH Juli-Aug 2013-Voor Website.jpg 14 3NEVA and The Strategy of Water Transport

From 24 to 27 September, the international shipping, shipbuilding and offshore energy exhibition NEVA 2013 takes place in St. Petersburg and will mark the showpiece of the Netherlands-Russia year for the maritime industry. 16 Dutch companies will participate in the Holland Pavilion, one of them is Kolmer. ”We decided to be part of the Holland Pavilion, because the Russians are interested in Dutch products. However, Russians will not easily make contact with foreigners. Therefore Nicolay will be present, too. Next to that, we made roll-up banners, leaflets, posters and business cards, all in Russian. Even our website has been translated. This will make it easier for Russian visitors to approach us.” Lalleman: ”We will be present with the HNLMS De Zeven Provincien and HNLMS Friesland, which will bring along a Replica of the Dutch Tsar Peter house. During the reception at the IMDS, Dutch companies like Thaïes, Damen, DSM and Mafo Naval Closures had the opportunity to display some information on the helicopter deck and give a presentation about their company. During NEVA, the frigate will be used for the reception after the conference The Strategy of Water Transport. It is important and valuable to cherish the relationships with these kind of visits, as Russia is one of the biggest countries in the world, we have this historical link and we also try to boost commercial relations.” The Russian Navy will pay the Netherlands another visit during the World Harbour Days, this year themed ‘From Volga to Maas’, in Rotterdam beginning of September.

NEVA is seen as a strategic exhibition for the Dutch maritime industry. Roerade: “Therefore we have received funding from the Dutch Ministry of for Foreign Trade and Development Cooperation. The funding is used for the PR of the pavilion and the conference The Strategy of Water Transport.” This one-day conference, co-organised by Dutch Maritime Network/Bloem Doze Nienhuis and Admiral Makarov State University of Maritime and Inland Shipping and supported by the Dutch state and several maritime companies, will be a highlight of the NEVA and focus on the key topics shipping, shipbuilding and infrastructure. Prominent speakers from Russian and Dutch side will exchange views on the strategy of water transport with the main goal to bring maritime professionals from both countries together and to provide a forum for exchanging ideas in a number of related fields that interact. Many leading maritime companies, governmental agencies, research infrastructure and maritime trade associations are expected to attend.

No 5 MbH Juli-Aug 2013-Voor Website.jpg 14 4Sergey Baryshnikov, rector of Admiral Makarov State University of Maritime and Inland Shipping, is pleased about the Dutch-Russian cooperation regarding the conference: “The Dutch obviously hold a strong position in the professional education within all segments of the maritime industry. Being highly internationalised, Dutch universities keep a firm grip on applied science and research for particular businesses. No wonder that our university has good relations with Technical University Delft, Maritime University – STC Group, Harlingen Academy, Breda University and some others. We have visited these universities and colleges many times and learnt how modern institutions should function – all to attract youth and to work closely with maritime business and government.” Anatoly Burkov, director of international cooperation office, adds: “In our turn, Admiral Makarov State University of Maritime and Inland Shipping can share its expertise in, for example, ice navigation and inland navigation. Despite the fact of the Dutch leading experience in inland shipping in Europe, this segment in Russia requires more accurate mutual preparatory work in a view of forthcoming opening of Russian inland waterways for Dutch commercial vessels. Our university was one of the first institutions at the end of eighties where preliminary studies were done on LNG engines to be used on inland vessels, and this can also be a hot topic for close cooperation with the Dutch within bilateral government-to-government programmes or large framework EU programmes such as Erasmus for all or Horizon.”

Van Oord is one of the supporting parties of the conference. De Kok comments: ”We think the conference to be an important possibility to share our knowledge about doing business in Russia with business relations and potential customers. Next to that we want to share our positive experiences regarding bilateral collaborations that we enter to execute our works. A perfect example of this is a recent project to install a gravity-based structure for the Arkutun-Dagi field, offshore Sakhalin which we successfully executed together with our Russian partner.”

No 5 MbH Juli-Aug 2013-Voor Website.jpg 14 5Maritime Hotspot

The importance of Russia for the Dutch maritime industry also showed during the election of the Maritime Hotspots in November last year. St. Petersburg was chosen as one of them, alongside Rio de Janeiro, which Maritime by Holland Magazine highlighted in edition 2 of 2013, and Istanbul, which will be highlighted later this year. The goal of the hotspots is to intensify the relationship with important maritime regions worldwide. ”Up until now, two meetings took place from which several points of action derived”, says Roerade, also secretary of the Maritime Hotspot St. Petersburg. ”For example, the Maritime by Holland branding is being upgraded, the promotional movie will soon be available in HD and with a Russian voice-over. Last but not least, together with the Maritime Hotspot Rio de Janeiro, we investigate other countries’ best practices of doing business in Russia: how do they work, how is the financing regulated, which parties are involved and how can we use this information for the Dutch situation? As soon as we have finished this investigation, we will send our report to the government. During the kick-off participants also pointed out that a dedicated local representative of the maritime industry is needed. We are now investigating if a construction whereby the government can offer us accommodation and the industry funds the local representative might be possible.”

The Dutch can offer Russia a lot, but also the Dutch can learn from Russia. De Kok: ”We need to be aware that we can learn from each other, it is not a one-way road. Every stakeholder brings necessary experience and expertise from his own perspective to a project. Technological issues like the working methodology and the materials are important, but issues regarding the environment and knowledge about local rules and regulations are essential for a successful execution of a project.” Roerade adds: ”The Russians have extensive experience in the Arctic. Their scientific theoretical knowledge is of a very high level and with our long maritime traditions, we would like to find a synergy to combine the Russian and Dutch knowledge.”

Russia is a country with plenty of opportunities for the Dutch maritime industry; by combining the best of both countries, it should be possible to boost the relationship, find fruitful collaborations and successfully do business together, supported by several initiatives and last but not least the positive influence of the Netherlands-Russia year.

Gail van den Hanenberg