German companies secure contracts for 2014 Sochi Olympics | Business| Economy and finance news from a German perspective | DW | 14.07.2010
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German companies secure contracts for 2014 Sochi Olympics

Chancellor Angela Merkel is on an official visit to Russia to further economic ties between Russia and Germany. One area in which partnerships beckon is Russia's preparation for the 2014 Winter Olympics in Sochi.

Sochi 2014

The Olympics is a major event for businesses, as well

The German economy recognized the potential for business in connection with Russia's preparation for the 2014 Winter Olympics as early as 2007, when the Committee on Eastern European Economic Affairs in Berlin organized the working group designed especially for the Games.

Edward Kinsbruner is involved with the committee and is well aware of the possibilities for German companies in Sochi.

Thousands cheer in Sochi after Russia was named host

Hosting the 2014 Olympics is a big deal for Russians

"The aim of this working group is to make German companies aware of their chances in preparation for the Sochi Games in 2014. German companies are themselves in the phase of concentrating their efforts on establishing contracts and we are looking to support them both economically and politically," Kinsbruner told Deutsche Welle.

A few weeks ago, Prime Minister Vladimir Putin hosted the chief of the International Olympic Committee Jacques Rogge in Sochi for the first time. At their meeting, Putin said only 20 percent of all investment is planned to go directly into stadium building and infrastructure costs. The lion's share of the funds is to be put into modernization of the region.

"We see the Olympic Games as an ideal occasion for the development of southern Russia," Putin told reporters after the meeting.

Siemens looks to profit from infrastructure development

Leading German firm Siemens, meanwhile, has already secured over 700 million euros ($891.6 million) in contracts in Sochi - at this point, above all in turbines and generators for local power plants. The engineering giant says it's looking to at least double those numbers in the run up to the Games.

Mathias Merta, who works for Siemens as a commercial manager in St. Petersburg, says the most lucrative opportunity is in infrastructure - the production and delivery of regional trains.

ICE train

Siemens ICE trains will help transport spectators in Sochi

"Our partners in Russia have already confirmed an order of around 38 trains, made 100 percent in Germany at our Krefeld location. That alone will amount to around 410 million euros. We're also working other joint venture orders, but we still have to see how those will be split up between our contingent and that of the local companies," Merta told Deutsche Welle.

In the end, the regional train order could result in revenues of close to 600 million euros. The trains, however, aren't only planned for use in Sochi.

"Some will be used in the capital Moscow and other cities. But during the Olympic Games, there will be a fleet present in Sochi, that's for sure. The trains will be used to transport people between Sochi and Krasnaja Poljana, a mountainous area in the nearby Caucasus," said Merta.

German firm plans development of ski jumps

Meanwhile, another German company is in charge of the planning and development of the Gornaya Karusel, a ski resort at Krasnaja Poljana, where two Olympic ski jumps are being constructed.

Matthias Kohlbecker, of Kohlbecker Architects and Engineers, says he has been working on the Krasnaja Poljana project for more than four years.

A map of Russia and Europe

Sochi is a gateway to Russia for some German businesses

"We've been in Russia now since 2006, when Sochi was still just a candidate city. First we had to open our Russian office and work on all the licenses. But after that we did very good business until the financial crisis set in. This year, starting in March-April, business has begun increasing again," he said.

Kohlbecker wants most of all to be involved in the building of a theme park in Sochi, for which his company has already provided completed plans. And he is looking to branch out to hotel construction in Sochi and around Russia, as well.

Kohlbecker's aspirations mirror those of many German companies, who also look to use the Sochi Games as kindling for much greater business in the Russian market in the future.

Author: Andrew Gurkov/glb
Editor: Martin Kuebler

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