Doing business in Russia

Doing business in Russia

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Before you do business in Moscow, it is important to understand how things are done differently in the city, advises Shayonti Misri.

Doing business in Russia is not easy. Even today, years after the decentralisation of the economy, the risks are huge. Security is an issue at every step, and the legal system is unable to provide the 'expected' levels of comfort for foreign investment and business. Nevertheless, with its wealth of natural resources and an inexpensive, educated labour force, Russia continues to attract big business.

To be a success in the business world you need to understand Russia and the Russians. It is good to remember, as once said by a writer from Moscow, "Nothing good ever happened in this country, and that is what makes it so interesting."

The endless metamorphosis

Russians can heave a sigh of relief that the days of endless queues and deficits, when people didn't buy things but sourced them through contacts, when items were collected from the backdoor's of shops lined with empty shelves, are now a thing of the past.

Today shopping malls, designer shops and over stocked supermarkets are a common sight in cities like St. Petersburg and Moscow. Hypermarkets and cash and carries line the outskirts of the cities.

The key to success in Russia
Knowing the Russian soul is the key to survival and success in Russia. Sensitive and imaginative, the Russians have demonstrated a patience that permits survival under unbearable circumstances. Russians are impressed by size and numbers which is reflected in the grand scale of their achievements, whether in the arts, sciences or the military. If you can prove to be the leader, the Russians are great implementers who appreciate complete faith and commitment.

The rules in Russian business
According to one HR manager: "In Russia daily work conditions can be compared to a jungle where you really don't know what can fall on your head in the next minute."

> Personal and corporate security is a major issue in every city. Background checks of employees and subcontractors, whether local or foreigners living in Russia are critical.

> Reimbursement of business losses, legal remedies for fraud and recovery of damages of any kind are almost non-existent. It is good to use Russian legal counsel for safeguarding your interests. Laws governing intellectual property are in their infancy.

> Business is hierarchical, so find out who's who before a meeting and do business with the decision makers. Business cards are essential.

> Russians are addressed by their name and father’s name carried by all Russians rarely by the family name. For example – Alezander Petrovich – which translates literally to Alexander son of Peter.

> Russians like direct talk. It is good to underline the profitability factor at an early stage of the meeting, but remember they consider too much compromise as a sign of weakness. Often the final deal is not final and you may strike a better bargain by holding out a bit more. When a deal is struck, it is often sealed off with a glass of vodka, better not to refuse.

> Punctuality is not a strong point of the Russians, but they expect foreigners to be punctual.

> When dealing with bureaucrats patience is a virtue. In government offices, small gifts and money can work wonders. It is important to know how the official and 'unofficial' systems work.

> Corruption and petty theft is rampant and often justified, even amongst company employees. It is good to be cautious.

> An expat needs to be flexible with his Russian subordinates and colleagues. To get the best, motivate them, allow them to feel secure and voice their feelings. Sell your ideas to your Russian colleagues, don't force them.

Remember learning how to unlock the human potential of Russian employees is critical for a foreign firm to be successful in Russia. Sometimes the company atmosphere, non-monetary benefits and a guarantee of a stable future is more important for a Russian than the salary.

Russian etiquette and social customs
Hospitality is a Russian virtue and at home you see a very different side of the Russians you know at work. It is an honour to be invited to a Russian home and there are certain rules to remember when you visit a Russian home for the first time:

> Bring a gift when invited. Wine, cake, chocolates and flowers are appreciated. Flowers should be given in odd numbers and avoid yellow roses, which are a sign of separation.

> Don't shake hands or kiss across the threshold of the doorstep it is considered to bring bad luck. Remove your gloves before shaking hands. You might be expected to take off your shoes before entering the house.

> Both the guest and host are expected to dress well.

> Traditionally a guest will be directed to a table laden with food and drinks immediately upon arrival, though the influences of 'European' behaviour are becoming increasingly evident. At the table you are expected to participate actively in conversation.

> Be prepared to accept all food and alcohol, Russians enjoy their drinks, if you want to decline do so very tactfully.

> Russians have a particularly unique form of toasting. Take part and learn it, as you shall be expected to give toasts when entertaining.

> Often the host will talk about his travels, prized possessions or achievements. They might even bring out family albums. Be sure to show your appreciation. More often it is a way of opening up to a guest. Russians can take criticism and are great satirists.

> Dinners go on late into the night and there is often lot of drinking and loud talking. Don’t expect too much of formalities. Remember the best of the house is on the table, give it the due respect.

Shayonti Misri / Expatica

Indian born expat Shayonti Misri, who currently lives in the Netherlands, lived and worked in Russia for 13 years.

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1 Comment To This Article

  • madmilker posted:

    on 30th December 2010, 17:03:02 - Reply

    Бойкот Walmart начинается за 3 февраля 2011 года.

    Боже, благослови Америку.

    On Wal*Mart's China web page under "About Us."

    "Wal-Mart China persists in local procurement which provides more job opportunities, supports local manufacture industry and promotes local economy. So far, 95% of merchandising sold at Wal-Mart China store are local products by which Wal-Mart has established business relations with nearly 20,000 suppliers. At Wal-Mart, we treat suppliers as partners and would like to develop with them. In 2008 Wal-Mart won the Supplier Satisfaction published by Business Information of Shanghai for five consecutive years."

    5% foreign in China...


    That doesn't support American exports and American jobs.

    Remember what Lance Winslow wrote in that article "The Flow of Trade in a Global Economy"....

    "Now let us look at Wal-Mart again; you buy a product there, 6% goes to the employees, 10-18% is profit to the company, 25% goes to other costs and 50% goes to re-stock or the cost of goods sold. Of the 50% about 20-25% goes to China, a guess, but you get the point. Now then, how long will it take at 433 Billion dollars at year for China to have all of our money, leaving no money flow for us to circulate? At a 17 Trillion dollar economy less than 40-years minus the 1/6 they buy from us. Some say that if we keep putting money into our economy, it would take forever, but if we do not then eventually all the money flow will go. If China buys our debt then eventually they own us, no need to worry about a war, they are buying America, due in part to our own mismanaged trade, so whose fault is that? Not necessarily China, as they are doing what's in the best interests, and we should make sure that trade is not only free, but fair too."

    Think for a moment about George Washington....yes the man that is on the US dollar bill....How do you think George feels being sent overseas in return for all that foreign so-call cheap items and being left in a foreign bank because the American worker doesn't make anything for the foreigners to buy. Cheap items didn't make this great union of 50 states the greatest place on the face of this Earth.....the American worker (union and non-union) did.

    You can't have a strong country without having a strong currency and you can't have a strong currency unless you keep it floating around within your 50 states. This is why the store with the star in the name puts 95% China made items in their stores in China....to keep their "yuan" in their country helping the nice people there. And with only 5% left for all the other 182 country's that make stuff including the United States of America....that doesn't produce very many jobs outside of China.

    Being an old person myself and knowing how it was back in the 40's, 50's and 60's in this union of 50 states....I look at George each time I pull him out of my billfold and make a promise to send him out for items made in America so after floating around helping each hand he touches just maybe one day he will shake mine again.

    Fifteen cargo ships pollute as much as 760 million automobiles.

    $9 billion a year in hidden taxes to all American taxpayers to clean fish from ballast tanks of ships...

    think about all those facts the next time you pull that George out of your pocket....

    Retail makes NOTHING...

    Governments only make MORE DEBT...

    It's time for less of those two and for America to get back to what it does best....MAKE STUFF..

    cause George Washington on that dollar can't help anyone in the United States of America if he is being held in a foreign hand.

    Made In America is the only way out of this mess cause foreign made put US here.