Regulation: December 2009 Archives


Beyond language barriers, the negative perception of Chinese products’ quality often hinders their ability to enter the Russian market. Although a prospective deal between a Russian client and a Chinese supplier may make it to the final stages, even to a point just before the contract is signed, reservations on the Russian side may lead to a failed or delayed transaction. All may be ameliorated with a single certification – the GOST R.

GOST R Certification

The GOST R is not an advanced certification, hence for certain industries allows fast access to the Russian market. It is issued by the Federal Agency of the Russian Federation on Technical Regulating and Metrology to ensure that production activities, goods and services conform to Russia’s national standards.

There are two types of GOST R: the Single Shipment Certificate and the Serial Production Certificate. The Consignment Certificate of Conformity for Single Shipments is a trade document valid for one consignment only, i.e. for a certain quantity and product type. It can be issued only if the foreign manufacturer is able to prove that there is a pre-existing agreement with a Russian customer/importer by means of a contract or an invoice.

In contrast, the Serial Production Certificate of Conformity is a trade document whose validity can vary from one to three years, and is issued specifically to manufacturers. In this case, there is no need for the manufacturer to provide documentation from a customer/importer in Russia. This certification enables the foreign suppliers to send an unlimited quantity of goods during the certificate’s period of validity. To obtain the Serial Production license, Russian experts must first inspect the manufacturer’s facilities and test product samples.

Of these two Certificates of Conformity, there are both voluntary and mandatory types whose colours are blue and yellow, respectively.

The GOST R certification system concerns the majority of products sold and/or used in Russia, such as foodstuffs, textiles, cosmetics and toys; mechanical and electrical goods; and equipment for such industries as food, chemical, oil and gas, and construction as well as others.

Regional Applications

The benefits of GOST R certification are apparent in CIS countries. It is officially required and acknowledged in Russia and Belarus. And although not officially required in Kazakhstan, Azerbaijan, Moldova, Lithuania, Latvia, Estonia or the Ukraine – in the Ukraine, UkrSEPRO is the officially required standard – the possession of GOST R certification is widely recognised, and assists in the promotional activities of one's product.

In addition to GOST R certification, RTN certification is necessary for exporting potentially dangerous products to Russia. This applies to manufacturers of such items as lifting equipment, heat exchangers, hot water boilers, pressure equipment, and compressors.


Type GOST R Certificate UkrSEPRO Certificate GOST K Certificate
Certifying Body GOSSTANDARD Derzhspozhyvstandard KAZMEMST
Certificate Types

Mandatory Certificate of Conformity (yellow)

Voluntary Certificate of Conformity (blue)

Mandatory Certificate of Conformity

Voluntary Certificate of Conformity

Mandatory Certificate of Conformity (blue)

Voluntary Certificate of Conformity (pink)

Validity

Single Shipment Certificate

1 Year Certificate

3 Year Certificate

Single Shipment Certificate

1 Year Certificate

2 Year Certificate

5 Year Certificate

Single Shipment Certificate

1 Year Certificate

3 Year Certificate


Another point to mention is that Russia’s individual industries, and even individual leading enterprises, may have their own standards. For example, some steel end-users only buy boiler tube with ОАО "CNIITMASH" certification, and oil major Rosneft has its own qualification standards for providers of its equipment.

Once the language barrier is overcome, obtaining GOST R certification is the next step toward enhancing a product’s competitiveness in Russia and the CIS. It is an indispensable move for making the quality of one’s product recognisable to these countries to ensure that, next time, the deal runs smoothly.

RMB.jpg

US president Barack Obama’s November visit to China highlighted China-US trade relations and the importance of these two major economies in leading the world out of crisis. The US president and other world leaders have charged that China is keeping its yuan currency artificially weak in order to benefit domestic exporters. An appreciating yuan, these foreign leaders feel, would bring greater balance to trade and lead the world out of the current crisis. But is this really the case? Perhaps history and a few economists can shed more light on this issue.

Those in favor of a dearer yuan include the IMF Managing Director, Dominique Strauss-Kahn. In a recent speech he emphasised the need for the global economy to shift away from the old paradigm based upon US consumption, fueled by easy credit and cheap goods from export-dominant countries. Trade surplus countries such as China must fill the consumption void left in the absence of the US. A stronger yuan is needed to increase Chinese buyers’ purchasing power abroad and to stimulate a depressed world economy.

Nobel Prize winning economist Paul Krugman is even more strident in his criticism of China’s monetary policy. He contends that China has engaged in a 'beggar-thy-neighbor devaluation' and that the nation is “siphoning much needed demand away from the rest of the world into the pockets of artificially competitive Chinese consumers” in a time of crisis. He warns that large trade imbalances, such as that between China and the US, could lead to an eventual failure in trade altogether. An appreciated yuan, he insists, is necessary to heal the world’s economic ills.

Not all agree with this sentiment. Justin Yifu Lin, chief economist at the World Bank, warns that appreciating the yuan will not help to improve global trade balances and would spoil what appears to be the beginning of economic recovery. Goods would become more expensive in the US, adversely affecting the already beleaguered American consumer. The trade deficit between the two countries would not diminish significantly because manufactured goods shipped from China are not produced domestically in the US. Mr. Lin advises instead that a growing China and a reformed US financial sector are the keys to global recovery.

Historic precedence also challenges the assertions of the likes of Krugman and Strauss-Kahn. In the 1980s the world’s major central banks worked to appreciate the Japanese yen by around 50% to the USD. The unexpected result was that the US trade deficit with Japan actually increased. The first significant decrease did not occur until 1990, five years after the central banks’ action and three years after the currency revaluation.

There is no simple short-term solution to trade imbalances. In the end, China’s monetary policy is set by China’s leaders who appear content with the yuan at around 6.82 to the USD. The result: China’s GDP once again surpassed the 8% growth rate with indications that the rest of the world is regaining its economic footing. It could be a lot worse. Debates on China's monetary policy will continue, but for now the yuan is staying put, for better or worse.