Use Less, Make More

What brought on the decision to begin operations in Azerbaijan?

Schneider Electric’s operations have been developing very successfully in Turkey as well as in Russia for the last 40 years. As soon as the countries of the Caucasus and Central Asia became independent and political stability was restored, our company started its activities in Azerbaijan. Following the signing of the oil and gas production sharing agreements and the arrival of major international companies, we opened an office in Baku in 2006. Formally managed from Moscow, our Azerbaijani operations are now part of the Middle East and Central Asia division based in Istanbul.

How large are your operations in Azerbaijan compared to other countries?

Although we started less than five years ago, in terms of ratio to GDP per capita, our level of operations in Azerbaijan already reaches about one-third of what we observe in Turkey. However, the market in Azerbaijan is not as mature as it is in Turkey or the EU. The market is very different mainly because the public-private partnership (PPP) model is not as developed at the moment. We have been growing fast in Azerbaijan and we believe this growth will be sustained in the coming years.

Where is your main target market?

As a global specialist in energy management with operations in more than 100 countries, Schneider Electric offers integrated solutions across multiple market segments. Schneider is the market leader in sectors such as public administration and infrastructure, machine industries and manufacturers, both residential and non-residential buildings, and data centers and networks. Dedicated to producing safe, reliable, efficient, productive, and clean energy, its more than 130,000 employees realized sales of ‚¬22.4 billion in 2011, working alongside individuals and organizations to help them make the most of their energy. Schneider Electric specializes in energy management and directly addresses the energy efficiency challenge that humanity is facing. How do we meet world energy demands, which will double by 2050, while halving our CO2 emissions to avoid dramatic climate change? At this moment this is not as big of an issue in Azerbaijan as it is in the EU. However, energy consumption in Azerbaijan is growing fast and the issue is becoming a general concern also for local economic actors. Indeed, today we can see that about 40% of our business is related to energy efficiency. Schneider Electric is involved all along the chain between energy production at power stations and consumption through electrical sockets in the home, with solutions including hardware, software, as well as services.

What are some things Schneider has done to increase energy efficiency in Azerbaijan?

We are working very closely with the local authorities that know us very well from numerous seminars given in Azerbaijan and abroad. Our customers are very much aware of the energy challenge and are willing to cooperate with us on many projects. One example is the Gobustan Alternative Energy Polygon Project developed by the Agency for Renewable Energy. This project aims at demonstrating how small- and medium-sized renewable energy generation can be effectively integrated into the power network of the region of Gobustan, thus feeding a great part of local needs while keeping connected to the national grid thanks to the latest “Smart Grid” solutions developed by Schneider Electric. Another example is our cooperation with utilities and design institutes to promote the design of more efficient solutions for industries and homes. Indeed, with the technology available today on the market, a 30% energy saving can be easily obtained from existing building or industrial facilities. A final example is our already famous online “Energy University,” which over the last three years has been providing free training in energy efficiency to thousands of engineers. We now offer, in cooperation with the Institute of Energy Professionals (IEP), online Professional Energy Manager Certification. This program provides individuals with the training required to be successful in this field—and proof of their capabilities. What we really bring to the market can be summarized through the slogan, “We help everyone to make the most of energy everywhere.” With 39% of its turnover made in new economies, and about 5% of turnover invested into R&D, Schneider Electric is a world leader in developing new solutions that make energy safe, reliable, efficient, productive, and green. In Azerbaijan, we are now close to 10 people, mostly electrical engineers. Azerbaijan is developing quickly and it is an increasingly easier environment to work in. Our business model is to bring knowledge and advice to improve our customers’ business. Our customers invite us because of our technology, engineering expertise, and our technical support. We bring specialists from abroad to encourage and develop cooperation with our customers.

What is your outlook for the Azerbaijani economy in the upcoming years?

I have been here since 2010, and it has been a very satisfactory time for us. We have seen very positive government action on many fronts. In business operations many things have become easier, such as the tax issue. There has been major progress, and due to this, business opportunities will increase. However, there are still issues, the biggest of which is the lack of transparency. For an international company to thrive in this environment is not simple. We hope and believe this will improve. We see signs and action, but it will take a long time.

What advice would you give to someone wanting to invest in the Azerbaijani electricity sector?

First, I would advise getting an agent and starting the business slowly to see how things go. The selection of a partner is obviously the key factor for sustainable development. Schneider Electric in Azerbaijan owes its success not only to the quality of its solutions and reputation, but, to a great extent, on the right choice of strategic partners. Our business partners manufacture under our technology license, distribute our products, and integrate our products into theirs. Such co-operation makes our business in Azerbaijan very sustainable.

What is your outlook for Schneider Electric over the coming years?

Within the turmoil of the worldwide economic crisis, our company has demonstrated strong resilience. Energy efficiency and cost management are major concerns for all our customers and Schneider Electric offers efficient and flexible solutions that are very well appreciated and valued in the market. We believe that our culture of flexibility and permanent adaptation will enable us to continue our successful growth in the coming years in Azerbaijan and in the region.

© The Business Year – November 2012