Every fifth company closed in Russia In 2019 - Information portal

Every fifth company closed in Russia In 2019

26 Февраля 2020, 13:52
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Every fifth company closed in Russia In 2019

biznes_d_850.jpgThe recent trend toward a “depopulation” of business (growing number of closed companies compared to newly established ones) intensified in 2019, according to a study by FinExpertiza, an international audit and consulting network. Last year, the number of companies terminated exceeded the number of new ones by 2.3 times, i.e. every fifth company pulled the plug.

Mortiferous business climate

264.6 thousand new companies started operations in Russia in 2019 (the study covers business enterprises alone, excluding state and municipal enterprises), while almost 611.8 thousand businesses were closed. Thus, 2019 saw 2.3 closed companies per one newly opened, with the decrease exceeding 347 thousand enterprises.

The number of “dead” businesses has been growing steadily in recent years. The earliest reference to business demographics dates back to 2017, when 359.4 thousand companies emerged and 510.7 thousand ones were closed (1.4 times more). In 2018, 290.2 thousand new companies were opened, and 622.1 thousand were shut down (2.14 closed businesses per one newly opened one). With the total of 3.8 million active businesses (having employees and operating) in Russia in 2017, as few as 3.12 million left in 2019, that is, the number of businesses dropped by 680 thousand (18%) over 3 years. If we take into account the demographics of all organizations, including state and municipal entities, then we can see that the “mortality” started to prevail over the “birth rate” way back in 2016.

At the same time, it becomes obvious that not only newcomers closed their business. More than half of the enterprises were closed after working for more than a year. Thus, over 28.8 thousand companies left the market after 1-2 years of work, 85.6 thousand companies at the age of 2–3 years, 85.7 thousand three-year-olds, 64.7 thousand four-year-olds and over 48 thousand companies at the age of five and older.

Reduction in the number of businesses in the Russian Federation in 2017-2019

The number of closed businesses exceeded the number of opened ones in all but five regions of the Russian Federation in 2019. The lucky exception included the Leningrad Region (an increase of 585 enterprises), Chechnya (+154 companies), Buryatia (+37 companies), Ingushetia (+27 companies) and Chukotka (+2 companies).
The largest drop in the number of businesses (the difference between closed and opened companies) was recorded in Moscow (-124,497 companies), followed by St. Petersburg (-31,782), Krasnodar Krai (-16,626), Sverdlovsk Region (-10,472), Moscow Region (-9,686), Novosibirsk Region (-9,275), Chelyabinsk Region (-8,142), Tatarstan (-6,878), Perm Krai (-6,878), and Samara Region (-6,697) that rounded out the bottom ten. At the same time, despite the businesses were most intensively closed and opened in these regions, the “mortality” dynamics still turned out to be prevailing.

While there are 2.3 closed companies per each newly opened one in Russia as a whole, then in the regional context the most negative “demography” was recorded in the Murmansk Region, where 389 new companies were opened and 2,506 were closed in 2019, i.e. 1 against 6.4. Then comes the Kaliningrad Region with one new company per 5.4 closed ones, followed by the Stavropol Krai (1 against 4.5), the Volgograd Region and the Jewish Autonomous Region (1 against 4.2), the Republics of Mari El, Altai, Kalmykia, Komi, and the Krasnodar Krai (in these regions every third or fourth company was closed).

Moscow also demonstrates the highest business “death-rate” amidst the total number of active enterprises. Last year, every fifth company was terminated in Russia and every third or fourth – in Moscow (1:3.5). Then come the Stavropol Krai (1:3.6), Krasnodar Krai (1:3.9), the Murmansk Region (1:4.2), the Jewish Autonomous Region (1:4.3), the Yaroslavl Region (1:4.4), the Republic of Mari El (1:4.5), the Vologda Region (1:4.5), the Perm Krai and the Volgograd Region (1:4.8).

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