This year’s St. Petersburg International Economic Forum, which starts tomorrow, is expected to result in the signing of millions of dollars worth of deals.
Over the 17 years of its existence, the St. Petersburg International Economic Forum has evolved from a small regional meeting into a key gathering in the economic life of Russia. It's an important event on the calendar of the world’s leading businessmen. The forum (which is working on developing the brand of its acronym, SPIEF) can be compared in scale to the World Economic Forum in Davos. Overseen personally by the Russian president, it is attended by high-ranking delegations from countries around the world and CEOs of major multinational companies.
1. It’s a meeting place for the world’s economic elite
According to the SPIEF-2013 Organizing Committee, more than 200 heads of major foreign companies and around 400 heads of Russian companies have confirmed their participation.
They include CEO of BP Robert Dudley, CEO of Unilever NV Paul Polman and the President of Siemens Peter Loescher.
Some major names from the United States include Chairman of the Board of Directors of Dell Michael Dell, CEO of GE Jeffrey Immelt, CEO of Citigroup Michael Corbat, Chairman of the Board of Directors of ExxonMobil Rex Tillerson and Chairman of the Board of Directors of Chevron John Watson.
Meeting their foreign counterparts will be a Russian delegation that will include President of Sberbank German Gref, CEO of Gazprom Alexei Miller, CEO of Rosneft Igor Sechin and General Director of the Severstal Group Alexei Mordashov.
In connection with Russia's presidency of the G20 this year, SPIEF-2013 will also feature B20 (Business 20) and Y20 (Youth 20) events, bringing in representatives from those demographic groups.
2. It produces big deals
The history of SPIEF can be divided into two parts: before 2006 and after. In its early days, the forum was arranged under the auspices of the CIS assembly and most deals were made between former Soviet states. The forum later became the province of the upper chamber of the Russian parliament, but remained primarily a regional event.
In 2006, responsibility for organizing SPIEF was assigned to the Ministry of Economic Development, which expanded its outlook and appeal. That year saw the signing of four investment agreements, totaling just over $1 billion; a year later, 13 deals were made worth $13.5 billion and 2008 was a record year with 17 agreements signed, worth $14.6 billion.
But 2008 was a watershed year for the global economy. Although the number of deals in 2009 fell only slightly - to 14 - the total sum reached only $6.8 billion. In 2010, 18 investment deals were signed, totalling $9 billion.
The situation improved somewhat in 2011. That year, 68 agreements were made worth $10.5 billion, and last year saw a record 84 agreements worth $12 billion. This year, the preconditions are in place for both records to be beaten.
3. It’s no longer the little sibling of London’s Russian Economic Forum
Until the mid-2000s, SPIEF lived in the shadow of the Russian Economic Forum (REF), which took place annually in London. Founded by Russian businessman Sergei Kolushev in 1998 a year after SPIEF, the forum in the British capital traditionally took place in a conference center located opposite the Houses of Parliament. Kolushev used to joke: "the spirit of parliamentarianism pervaded the air at our forum."
For many years, REF was a major event that attracted top government officials from Russia, as well as the heads of large Russian corporations and multinationals doing business in Russia.
However, as more Russian oligarchs moved to London and relations between Russia and the UK cooled against the backdrop of scandals over the extradition of Akhmed Zakayev and the murder of Alexander Litvinenko, the London forum lost much of its influence to the St. Petersburg event.
In 2007, no major Russian officials attended REF. This move by the political elite influenced the mood of the business community, and over the next few years REF sank into oblivion while SPIEF gained more recognition.
4. Russian hospitality, German cars
In 2007, Audi became an official partner of SPIEF. It was followed by BMW in 2008. Since 2009, Mercedes has provided transportation for the forum's guests.
Immediately after SPIEF, the autos are offloaded to dealers for sale at a discount. In 2012, for instance, the most affordable model was the S-350, on sale for 3.95 million rubles ($122,000). Brand new, it would have cost $4,500 more.
5. Want to go? Get out your credit card
Participation in the forum is becoming more expensive every year. In 2013, an all-inclusive package cost 70 percent more than in 2012.
In 2012, 1,450 rooms in 19 hotels, including 586 in the premium segment, were booked for guests. The price for a hotel room ranges from $310 to $3,100 per night, and prices for rooms effectively double during the event.
Forum regulars like to tell the story of Sergei Polonsky, the head of a construction company, Miramax, who once brought a hotel bill totaling 571,000 rubles ($17,700) for a three-day stay to one of the roundtable events. Polonsky indignantly stated that he had given the money to an orphanage and stayed with a friend instead.
According to Mikhail Polyakov, deputy general director of Golutvinskaya Sloboda Group and a participant in this year’s SPIEF, the fact that the city's hotel rooms become so much more expensive during the forum is an indicator of its popularity.
"The forum overshadows nearly all other such events in Russia. We attend it every year to keep a finger on the country's economic pulse and synchronize our corporate development with the latest nationwide trends."