Moscow Anyone who tries to export successful systems to Russia can sometimes fail on a simple steel staircase. Because not all steel stairs are the same. The requirements of the German industrial standard (DIN) and the Russian GOST standard differ, for example in terms of the dimensions of the steps or the maximum height of the stairs. The banister must also be higher in Russia than in Germany.
“Everyone who designs a steel structure has to design practically twice, once according to European standards, the other time according to Russian standards. And then he has to have it confirmed again in Russia, ”says Thomas Krause. The man from Chemnitz knows the Russian market very well and has been active there for 14 years. His Alpha Consulting advises large mechanical engineering companies such as McDermott, Siemens or MAN on projects in Russia.
Now there is another obstacle that affects all European companies that want to gain a foothold in Russia: the growing competition from China. The country is increasingly trying to enforce its own standards and thus make access even more difficult for Europeans.
In the international standards committees, China is now increasingly occupying the secretariats of technical committees in order to enforce its own technologies as international standards and thus give domestic companies advantages.
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“We have already been to meetings where we sat across from 20 Chinese experts with four or five international colleagues who presented a finished draft standard,” reports Benjamin Oppermann, Head of Standardization at SMS Group. As chairman, he leads the European standards committees for metallurgical plants.
Ten percent of the investments go into standardization
The battle for the norm is no wonder: Russia is one of the most important markets – also for German industry. But different standards and norms are one of the biggest obstacles when entering the market, especially for small and medium-sized companies.
Anyone who wants to export a switchgear to the Russian-led Eurasian Economic Area (EAEU) has to spend 10,000 to 15,000 euros on tests and certifications. “However, the switchgear usually only has a goods value of between 1,000 and 4,000 euros – that’s the market for medium-sized companies here,” Krause calculates.
What the exclusion of the market means for small companies also causes considerable effort for large corporations. The SMS Group supplies plants for steel and iron production to Russia. Benjamin Oppermann puts the costs for testing and certification of the goods at around ten percent of the order volume. A figure that is customary in the industry for the costs of standardization – and with margins of around 15 percent, quite painful.
There are also other risks: pipelines supplied by SMS must be calculated according to a Russian system. “Only someone who is approved for it in Russia is allowed to do that,” says Oppermann. SMS therefore has to call in external companies to carry out the calculations. “It’s always a balancing act: How much do you give out so that you can build the product yourself at the end of the day and not everyone knows how to lay out the pipeline and what materials you use,” says Oppermann.
Russians are no better off in Western Europe
The Russians have to struggle with the same problems if they want to go to Western Europe. Here, too, the market entry barriers are high because of the dissonant norms. In 2018, the Eastern Committee of German Business and the Russian Association of Entrepreneurs and Industrialists, RSPP, started the German-Russian initiative to harmonize technical regulations.
The result is a joint working paper with recommendations for harmonizing standards. Among other things, Russia should adopt the Industry 4.0 glossary. Krause is certain that it is more than just a piece of paper. With the participation of the RSPP, the initiative has a powerful lobbying effect.
“The process has started”, the responsible authorities are involved in the harmonization process, confirms Oppermann.
First of all, the mutual recognition of test protocols and laboratories should be waved through. Then a TÜV also applies in Russia. That alone could save the German economy hundreds of millions. However, it will be a few years before the standards are fully harmonized.
China is accelerating
It is a race against time, because China is also lobbying its own standards. Beijing recognized some time ago: Those who have the norm also have the market. The Chinese are also financing large infrastructure projects through the Silk Road program and are also promoting the use of their own technical standards in neighboring countries.
When the Chinese take part in projects in Russia, they also enforce their own standards. Suppliers from the EU are then quickly out because they often have to certify triple for such projects, says Krause.
In December, a Russian-Chinese commission published its concept for harmonizing standards in the aviation sector. Experts estimate the document, which mainly deals with questions of acoustics in the cockpit and in the passenger cabins, as relatively empty. “But the fact of the pressure from China is of course indisputable,” admits Krause.
One of the toughest competitions between Europeans and Chinese recently went into extra time: Kremlin chief Vladimir Putin wanted to build a high-speed line from Moscow to Kazan. Siemens, with its ICE counterpart “Sapsan” on the Moscow – St. Petersburg was already very successful, was interested – and also ready to transfer technology to Russia.
But suddenly the Chinese railway had the project. Beijing offered Moscow to finance the construction entirely with loans. In return, the line was to be built using Chinese technology alone. Siemens would have been out of business. The chances for follow-up business would then also be minimal.
Only the economic downturn in Russia gave Siemens a second chance. The Moscow-Kazan project has been canceled for the time being because it does not pay off. Instead, the Russian railways should recalculate the profitability of a high-speed route to St. Petersburg. It remains to be seen whether Siemens can prevail against the Chinese railways.
More: China is reaching for the industry standard – and German companies are left behind