"We want to deliver a lot of different products", says Horst Niebaum, Moscow head of Krupp, the German steel and chemical giant. "This way, when the market really opens, we will have already acquired an export basis".
Krupp mostly delivers machines in exchange for raw materials, which are the mainstay of barter deals with Russia. In southern Russia, for instance, Krupp hopes to swap coriander oil, used in cosmetics, for the machines that help make it. "It is easier", said Niebaum, "simply because there is no export tax on barter deals -- not yet".
Most barter deals are actually triangle deals, said Bernd Kitzelmann, of chemicals group BASF. His firm turned to barter to slow the slump in its trade with Russia, which is expected to drop at least 50 percent this year to an estimated $360 million.
Kitzelmann explained how a shoe factory wanted BASF chemicals but could only pay in shoes. "But what are we supposed to do with shoes? ", he said. BASF finds Russian third parties who can give BASF something it needs, mostly raw materials, and which are willing to swap for shoes, tights, or vodka.
Barter will account for 10 percent of BASF trade. A typical barter deal for BASF, swapping copper oxide for tights and shoes from a firm in Yekaterinburg, was worth only $81, 000. The decline of centralized contracts and the growth of small regional producers has complicated matters. "Now we have to talk to each firm individually", said Kitzelmann.
Even the best-laid barter plans can go astray.
In Omsk, Krupp delivered presses for rapeseed, in exchange for 20, 000 tons of diesel oil. The diesel will be exported by a Russian firm, after which Krupp gets part of the profits. So far, however, the diesel oil is stuck in Omsk because there are no train wagons to carry it.
For some firms the hassle outweighs the benefits. "The so-called barter deals usually entail a lot of problems", said Frank Lessenich, representative of the chemical firm Hoechst. "It depends on the products you get. Most are products that are hard to market, because everything that is good, well-known and saleable is already being exported directly".
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