International News - German giants take first steps into Russian market

German DIY giants Obi and Praktiker are preparing for an advance into Russia, following the lead of Swedish furniture group Ikea.

A spokesman for Praktiker, which is owned by German retail conglomerate Metro, said the first Russian store will open next year if a suitable property becomes available.

Metro already has a presence in several European countries through its cash-and-carry operations. The spokesman added: 'It's a big advantage for us to follow them.'

Obi, part of the Tengelmann group, will open its first two stores next month near the Moscow Ring Road, according to a report by US analysts MVI.

A further two shops are scheduled for next year as part of a US$140 million (£90.1 million) drive with local partner Mega. This may result in 10 stores in the next three years.

Expansion by retailers into Russia has been slow, due in part to deadening bureaucracy in the country. Nearly 20 different permits are required to construct a store in Moscow.

An Ikea spokeswoman in Moscow said: 'One of the problems in Russia is bureaucracy and a system which is not developed to accommodate the changing environment.'

However, new laws liberalising the use of agricultural land on the outskirts of Moscow could force local government to ease its strict controls over development.

Ikea was recently awarded US$100 million (£64.4 million) by the European Bank for Reconstruction & Development in a bid to assist its expansion in the country.

Ikea has two Moscow stores and aims to have a total of 20 shops in Russia.