ROSATOM's Outpost

How to transform contacts into contracts, why to work with competitors and how important a native-speaking employee is in an overseas office.
Efficiency, production system and single team have long been buzzwords in the industry. And so has another phrase, new markets. That is it, it seems, but values are nothing until every division, every company and every employee holds them. They will otherwise lose their appeal and meaning or fade away. Alexander Merten, President of Rusatom International Network (RIN) told us how to be a single team and struggle for every contract even if it is not million-worth, and how to save on business travel and hold effective talks via video conference.

- ROSATOM has a network of 11 regional offices. Is the network completed? Is it already in operation for the sake of nuclear industry companies?

- Our primary task is to gain direct access to information in commercially attractive countries; this is why physical presence in all of these regions is vital for us. Today ROSATOM's international network includes 11 offices located in North and South Americas, South Africa, the Middle East, Europe, etc. All of them are de jure managed by RIN and registered as its local subsidiaries. This year all the offices will be launched technically, staffed and provided with necessary infrastructure. We furnish ROSATOM and all of its divisions and subsidiaries, that is, the entire Russian nuclear industry, with information across their areas of interest. We possess a number of industry-wide competencies, among them product marketing. We promote all the products and services offered by ROSATOM Group and marketable internationally. We provide support for the Group's divisions engaged in nuclear engineering and construction, fuel fabrication, nuclear services, equipment supplies for cogeneration plants and petrochemical companies. We promote nuclear medicine technologies and isotope sales. In other words, we work for the entire nuclear industry. This is the reason why KPIs of RIN employees take into account the total portfolio of foreign contracts, total international revenue and total orders for ROSATOM's new products. As we know, ROSATOM CEO Sergei Kirienko has recently emphasized three dimensions of the nuclear industry development. They are international markets, new products and costs. The first two dimensions are in our focus. This is where we support ROSATOM 's divisions.

- Do you promote products offered by ROSATOM's divisions or sometimes act as a customer?

- We depend on the Group companies in terms of products and prices. In our turn, we inform them of what products are in demand on international markets, thus setting goals and landmarks for the companies to make competitive offers. Since our domestic market is down for well-known reasons, we have to refocus our efforts on overseas markets, as Mr. Kirienko said. At present, currency revenue makes 50% of ROSATOM's total revenue, so our goal is to strengthen our global position. Since the ruble is weakening, every dollar earned is important for us. It is for this reason that ROSATOM's management thinks it necessary to diversify its international offering and not get stuck on the conventional product range, large nuclear stations. Not every country has money to finance construction of a nuclear power plant. We are somewhat restricted in providing public finance for our overseas construction projects although they are definitely positive for the Russian economy. A loan provided to another country to finance construction of a Russian-designed nuclear station returns as payments for our products and services. We are also interested in the so-called small projects. For example, ROSATOM's product range includes small research reactors. Not long ago we signed a framework agreement to build a radiation technology center in Bolivia. The price of a construction contract yet to be concluded is 300 million US dollars. What is more important, the entire project is financed by Bolivia. This amount seems to be tiny if compared with the price of a large nuclear power plant, but it does not grow on trees. Any amount, whether one or ten million dollars or even 100,000, comes in handy when it comes as currency revenue.

- What other tasks does RIN have?

- Apart from international marketing and promotion of products and services offered by ROSATOM Group companies, we are engaged in PR activities through exhibitions, seminars and media coverage. In our overseas PR projects, we stay in close contact with Rosatom's Communications Department and its divisions, depending on our tasks and goals in particular regions.

Business interests are our priorities. As Sergei Kirienko says, we do no politics. We focus on two things – safety of our technologies and mutual benefits for us and our international customers and partners. They should know that they buy a high-quality product at a reasonable price. We should be sure that we deliver high-quality products and receive currency revenue. ROSATOM's established reputation as a responsible and reliable partner is as important for us as it is for our customers. Many projects can be, and actually are, carried out in partnerships with our foreign colleagues. For instance, floating nuclear stations can be built in a partnership with foreign ship-building companies. This is where RIN comes in as a link between foreign manufacturers and ROSATOM.

Any amount, whether one or ten million dollars, does not grow on trees and comes in handy when it comes as currency revenue.

- Does it mean that any ROSATOM Group company having a promising export project may seek your support?

- More than that. RIN is financed by its parent company AtomEnergoProm. To receive finance for the promotion of products and services, we have to draft a program that includes projects proposed by the Group companies. Prior to being approved by ROSATOM's management, the program covering activities of RIN and its regional offices is first approved by ROSATOM Group divisions. We estimate how much finance we will need to promote these projects and then receive funds to implement our program. The funds are allocated between regional offices which do what is needed to promote products and services offered by ROSATOM Group companies. Another competence we possess is to coordinate activities of ROSATOM on international markets. We serve as an independent source of information for ROSATOM's management about the performance of Russian nuclear companies on international markets. If the management company needs to step in and adjust their activities, we request it to be done. For example, a foreign company requests a proposal for a product manufactured by several Russian companies. It was not unusual that several ROSATOM Group companies attempted at winning a contract on their own and caused difficulties to each other, instead of forming a consortium to supplement each other's competencies and come out with a joint proposal. Whatever the channel, revenue comes finally to the parent company, ROSATOM. This is why we coordinate activities of other companies, helping them reach an agreement and improving horizontal integration.

- Many ROSATOM Group companies have their own international divisions. Do their functions and those of RIN overlap? For example, TENEX has offices in many countries. How do foreign representative offices interact?

- Historically, TENEX has been an international distributor of uranium enrichment products and services. It has a well established infrastructure, and there is no point in rearranging it, especially when it is tied to existing contracts. It functions effectively, and we do not interfere in its business. We do not sign contracts – we only help signing them. Where TENEX does not have local offices, for example in Latin America, we are ready to help in building new contacts and finding partners. This is what we do in Latin America, Africa and Southeast Asia. The back end of the nuclear fuel cycle is a new task for TENEX as a service integrator. This is an area where we work with TENEX all over the globe and help them even in those countries where it does have local offices. We do not stand in each other's way, but rather supplement each other's competencies. Besides, we cooperate with some of TENEX subsidiaries (for example, in South Korea) which act as country offices for our regional offices. I would say our primary task is to build a synergy. RIN has regional expertise because our offices employ people from those countries where they are located. We have knowledge of particular markets and companies operating there. ROSATOM's divisions have expertise in products, their properties and pricing. Overlapping of these competencies creates a synergy. We know local markets; they know what they sell. Joining together, we reach our goals. Examples of successful cooperation are many, both from this and last year.

- What other indicators are used to estimate RIN's performance? Are there any informal criteria apart from the contract portfolio and currency revenue?

- Cost reduction. Reduction of costs is a goal vital for the entire industry. Of course, it is not our immediate task, but rather a task of ROSATOM's manufacturing divisions. Nevertheless, we are working on it, too. Cost reduction does not pertain to production alone. We reduce prices of exported products by cutting down on operating expenses, for example, business travel expenses, which are also included in the final price of products.

We do no politics; we focus on two things – safety of our technologies and business interests.I would say our primary task is to build a synergy.

How do we contribute to price reduction? First, many of ROSATOM's divisions have closed (some are closing now) their foreign offices after we established our regional network because we provide the same range of services as their offices used to. Second, it is business travel. Why to fly for preliminary meetings if there are our regional offices and our employees may hold meetings and negotiations with potential customers to understand whether further contacts are necessary? All preliminary meetings may be held by our regional offices. You know what it means to fly to Latin America. Five people fly there just to find out whether their offer is of any interest. If not, they fly home.

Flight costs will be finally included in the product price. Besides, most talks can be held via video conference in any of our offices to solve all preliminary issues on-line and avoid unnecessary flights abroad.

As a result, costs are reduced significantly. Tickets, accommodation, transfers and travel expenses make up a large amount of money. According to our calculations, expenses for foreign business support may be reduced by up to 30% across the industry by 2018 after the Group companies close their local offices, which are now replaced with our regional network. This reduces business trips, optimizes accommodation expenses (our regional offices are given corporate discounts in some major hotel chains) and finally decreases product costs.

We are not going to increase the headcount. A regional office employs 8–9 people on the average, which is enough.

- Is it important to have native speaking employees?

- Every regional office has native speaking employees who are either locals or Russians having resided in the country for a long time. With communications as their primary competence, our employees are marketing experts who know sales processes down to the last detail, are able to hold talks, have good knowledge of the local market and solid sales expertise, primarily in the energy industry. For instance, Sergei Krivolapov, Vice President of our Latin American office, has lived in Brazil and worked in the energy field for more than 20 years. Of course, he has contacts, knowledge of the local market and culture, and a good command of the Portuguese language. Such people work in every regional office. Another example is Andrey Rozhdestvin from our office in Western Europe. He has a multi-year industry experience (held a position of Vice President at TVEL) and good knowledge of French and English to speak fluently with customer in Western Europe.

We are a point of contact for customers to make their claims and proposals.

- Sergei Kirienko once said that all ROSATOM Group companies should train a specific group of employees with good market knowledge, and each company should give it a thorough thought. Why should they do it if they have RIN?

- Indeed, the management has tasked every company to employ people with a good command of foreign languages, good negotiation and cross-cultural communication skills, and so forth. ROSATOM 's First Deputy CEO Kirill Komarov initiated a large-scale corporate training program for such employees in all divisions and subsidiaries. The Steering Committee has already held its first meeting on this program. The training under the program will begin in the Rosatom Corporate Academy in the near future.

RIN does not make contracts – we only make necessary preparations, hold pre-bid talks, clarify goals, needs and possibilities of a prospective customer. Contracts are signed by those who release a product or provide a service. This is the reason why ROSATOM's subsidiaries need people who can do it.

We do not sign contracts – we only help signing them.

RIN employees are few in number and will not be cloned. We are not going to increase headcount in our regional offices. Each of them has an average of 8–9 employees, which is enough to cover a region. Our key difference is that we act for the whole industry and across the entire product range, providing regional coverage. Even if our regional office is opened in a particular city like Rio de Janeiro, it does not mean that the office is not active in Argentina. In many respects, the contract in Bolivia is an effort of the local RIN office. If it had not been for our representatives flying to the country and holding talks directly to Evo Moralez, President of Bolivia, ROSATOM would not have signed a cooperation agreement last March. Truth be told, the colleagues from ROSATOM’s International Relations Department and Rusatom Overseas (acting as an integrator for research reactor products) joined our representatives somewhere along the line, and we teamed up to draft the agreement within the shortest time. We continue working on this project as a single team. The same was with a research reactor project in Indonesia.

Our task is to beat the path for ROSATOM, in this case Rusatom Overseas, which integrates products for large nuclear stations and research reactors.

- Do you collect customer feedback after the contract is signed?

- Sure we do. We are always in touch. The customer knows whom they could contact if anything goes wrong in the project operated by ROSATOM's subsidiary. If, for whatever reason, the customer's problem is not solved, they can come to our office acting as a point of contact. The customer is not always satisfied with what the contractor is doing, and the contractor may lack a critical look at the situation. We are kind of an arbitrator in such situations.

Besides, we are accountable to ROSATOM's top management and thus able to bring home important information. This is crucial for customers. We are always open for our customers' claims and proposals and guarantee they will get a hearing. Thus, we function as account managers supporting projects and providing assistance and advice to avoid penalties for our companies, synchronize their activities and assure the customer we are always in touch. This is done to contribute to ROSATOM's reputation as a reliable partner. We are kind of ROSATOM's office on the international market, its outpost.

- What interesting project are you working on?

- We are assisting Indonesia in developing large-scale nuclear power generation. In South Africa, the plans are to build an 8-unit nuclear station, and our office in Johannesburg is working at it. Additionally, our South African office in active in Nigeria, Zambia, Tanzania and other Sub-Saharan countries that have announced their plans to develop national nuclear industries. Our regional offices in Western and Central Europe promote competencies of Russian nuclear companies in mechanical engineering (Atomenergomash) and equipment supplies and maintenance (Rusatom Service). They assist in carrying out contracts in Hungary and Finland. The regional office in Eastern Europe supports the construction project in Belarus (ASE Group of companies and Rusatom Overseas), enters new markets with AEM products for heat and hydro generation and the petrochemical industry (Israel, Georgia and Azerbaijan), and helps TVEL solve problems in Ukraine. We are negotiating a nuclear station construction project in Argentina. Besides, Argentina and other countries as well need nuclear decommissioning services, and we have relevant competencies. For example, ROSATOM's subsidiary NUKEM Technologies GmbH based in Germany has won a contract for decommissioning of a reactor unit in Germany. Interesting to note that it will work in a consortium with Westinghouse, which is, quite unsurprisingly, our rival in other projects. We cooperate with South Korea's KEPCO in the United Arab Emirates where they are building the first nuclear station. Russian companies provide enrichment services and supply uranium to this station.

We are a young company and learn from our mistakes. ROSATOM has never had a similar network. We have established it on our own, sometimes going astray and sometimes learning from international majors.

It might sound strange but competitors are able to become our partners. RIN recommends where and how we can team up with competitors, supplementing them with our competencies and us with theirs, sharing knowledge and implementing reference projects on mutually beneficial terms. Our position can be described with a catch phrase from an old Russian movie. When translated, it says, "He who stands in our way will help us." ROSATOM's management understands what we do and supports us in our initiatives when they are truly advantageous.

- What is your vision of the company? You said once that you saw no point in increasing the headcount in regional offices. Does it mean that you concentrate your efforts on other areas?

- We have already established regional offices where we need them. ROSATOM's network covers the entire globe, and we have no plans to increase the headcount. The only thing we might do is to set up country offices to support our regional offices in those countries where ROSATOM has large-scale projects. For example, a country office of the regional office for the Middle East and North Africa may be established in Egypt. Our primary task is to build new contacts and transform them into contracts, and contracts into revenue.

Another important dimension is to facilitate public acceptance of nuclear energy in the world. We are active in this field, working together with ROSATOM's Communications Department and organizing seminars and exhibitions in the regional offices where renowned scholars and public figures speak about safety of nuclear technologies. The more countries with broad public acceptance of nuclear energy there are in the world, the more people trust ROSATOM as an innovative industry leader offering high-quality products and services. As a result, ROSATOM Group companies will win new contracts. And this will be our joint story of success.

Vestnik of Atomprom Magazine

Alexander Merten, President of Rusatom International Network told in the interview how to transform contacts into contracts and why to work with competitors
Alexander Merten, President of Rusatom International Network told in the interview how to transform contacts into contracts and why to work with competitors