Any hopes that sanction-hit Russian "inefficient companies" will be able to replace Western capital with Chinese or Asian investment are a "big myth", says Mikhail Shamolin, president and CEO of Russian investment giant Sistema.

Speaking at the Moscow Exchange Forum 2015 in London on December 8, Shamolin said, "when it concerns attracting investment into Russian business, from our perspective, it doesn't make much difference between European, US, Chinese-based, Asian, Arab or Middle Eastern investors. They all ask same questions and they all want to see business efficiency".

"It is a big myth that we'll be able to attract Chinese or Asian money into inefficient projects or companies. This is not true. They will not invest," Shamolin added.

The Sistema head sat on a panel that included representatives of the Russian government, as well as former Russian finance minister Alexei Kudrin, who now chairs the supervisory board at the Moscow Exchange (Moex).

Part of the inefficiency Shamolin spoke of is, he suggested at the Forum, down to the vast empire of state-owned companies that Russia runs. "We [Sistema] are invested in 18 different industries and I know, personally, how difficult it is to manage the businesses that we own. I don't know how the government can be well equipped to run [these] companies. It is a very difficult job to do it efficiently," he said.

The recipe for economic success that Shamolin shared with the audience at London's Andaz Hotel is simple: "The government should do two things: collect taxes and make sure there are no monopolies in the market. The more competitive the market is, the lower interest rates are, the cheaper the credit is and the easier it is to develop the economy."

The privatisation of state-owned companies was unanimously agreed upon as a key step in fixing Russia's ailing economy. Alexei Kudrin called the privatisation process "one of the important most structural steps" that Russia must take. He did, however, warn of the risks attached to a smash-and-grab mass sell-off of state assets which existing, private mega companies could benefit from. "We already have some private companies who have a privileged position in the market and privileged access to state purchasing and contracts, and many companies cannot compete," Kudrin explained.

The former finance chief, who is again said to be in line for a top appointment, is concerned that large, existing players will buy the - in his opinion, currently undervalued - state assets, switching the business landscape from an uncompetitive state-owned one to an uncompetitive privatised one.

Russia's deputy minister for economic development, Nikolai Podguzov, pointed toward the many smaller state-owned companies that should also be targeted in any privatisation drive. "Usually, when talking about privatisation, people mean blue chip companies. There are thousands of enterprises in government hands which the government should get rid of first," Podguzov said. "In 2010 we had more than 3000 small companies under government or municipal control. That number is now 1500."

He warned, too, of the fiscal impact that a mass sell-off could have on Russia's bottom line, noting that much of the state-owned sector's revenue is what balances Russia's budget. A windfall from selling, while offering immediate benefits, could in future leave a hole in government revenues, Podguzov said.