Expanding Business into Russia – a Few Hints
Here is an extract from our article on the same topic:
- Ignore the MSM – find your in-market source
Many international businesses are scared of expanding into the Russian market because of Russia’s image in the Western politics-driven mainstream media (MSM). Find a reliable source or business compatriot in Russia who can comment your questions and concerns. Then, make your decision.
- Do some research before
In many instances, you don’t necessarily need a costly in-depth feasibility study to identify demand for your products in Russia. The Russian market is unsaturated in many sectors. Getting the first reaction among your potential consumers might send you a clear signal whether to proceed further.
- Find a reliable partner
Having a partner who is successful or your provider / supplier speeds up the market entry process significantly.
- Build trust first
The first meeting rule in Russia is to be open, decisive, clear and straightforward with your offer, as well as highly competent in your product/ service area.
- Personal relations are crucial
Personal relations prevail over contracts. Russians tend to screen you at the personal level to answer the question if you are a trusted person to deal with. Once you establish your relationship, it is a common practice that they will likely introduce you to other decision makers and business connections, thus paving the ground for your business success, leads you need, and sales after all.
- Networking value
Be friendly with other companies operating in your chosen area and consider them as your allies rather than your local competitors. That would broaden your business relationships significantly and you’ll learn the local landscape much faster.
- Stay politically correct
Russians are generally proud of their culture, heritage, and history and don’t like outsiders to judge them. So, be focused on business and don’t let your unwanted message affect your relationships and, after all, business.
- Identify your entry point
It is prudent to start from one geographical location, e.g., a Special Economic Zone (SEZ), your Russian partner’s location, Moscow or St Petersburg where most of resources are available, or in a region with necessary facilities and cheaper workforce.
- Have professionals handy
Listen carefully to what your local consultant/ lawyer recommends as to the business model, customs formalities, papers required, contract and logistics nuances, interactions with government officers, etc. They know the local rules and practices better. Besides, they normally outperform their international counterparts in due diligence, reputation / background / security checks due to peculiarities in information collection practices.
- Language and communications issue
Hiring English-speaking staff could easily solve the language issue. Millions of Moscow and St Petersburg residents speak English these days. Dealing through a local agent/ distributor/ representative could be even a smarter solution. JV opportunity with local established business is another efficient model for successful operation on the market.
- Government relations (GR)
GR should be taken seriously as the State authorities are often the most powerful stakeholder in Russia. Consider government bodies as your partner, not just as a taxpayer, and you will be rewarded. It is crucial to show that you are bringing real benefits to the local communities and people who live there.
- Identify the Government needs
Russian Government at all three levels – Federal, regional, and municipal/ local – has multiple programmes to fund public-sensitive projects. Check the government tenders or investment programmes if your product/ service could meet some of those.
- Capitalise on challenges
Be creative. For example, Russia’s vast territory and underdeveloped infrastructure is considered a challenge for trade. There is a number of new logistics companies that both undertake delivery to any point on the Russian map and collect payments upon delivery. Use those players as your logistics and payment processing contractors and start selling on-line. Ecommerce is growing in Russia with great prospects for the years to come.