Doing business in Russia
A look into the nation and its business culture
What is considered polite? Should I say this instead of that? What about gifts? Good conversation topics? For a person looking to establish business relations in any new
What is considered polite? Should I say this instead of that? What about gifts? Good conversation topics? For a person looking to establish business relations in any new country, there are hundreds of questions like these confusing them. Though there are some universal cultural similarities, some aspects are unique to the particular nation and should be understood to build better relationships. In this article, we are going to discuss Russia, to better understand its culture and business environment and build better partnerships.
Russia emerged as a nation after the Soviet Union disintegrated in 1991. A new constitution was adopted in 1993, and the nation was no longer a communist state. At present, Russia has a federation style government with a market economy. President Vladimir Putin is the chief of state, with the Premier being head of the government.
A nation with rich oil fields, coal mines, mineral reserves, natural gas and timber, Russia has long been an economic power house. According to the CIA Fact book, Russia ended 2005 with its seventh straight year of growth, averaging 6.4% annually since the financial crisis of 1998. High oil prices and cheap rouble (Russia's currency) helped this economic gain. Nevertheless, serious economic problems persist; inflation and unemployment are high. Industries badly need modern equipment, and the law and order situation has been questioned with the rising influence of mafia in the major cities. Also, Russia's international image as an investment location suffered when a prominent industrialist was jailed by the government in a tax dispute. Attack on free media and the rising influence of the government has also raised questions.
Despite the problems facing the nation, Russia is still an attractive business destination. Its large natural resources, which are yet to be fully exploited due to geographic constraints, are a major attraction. With modern equipment and technical manpower, they could be harnessed to generate great profit. With almost 100% literacy, the country has potential to be an outsourcing hub. Compared to India and China, it has better infrastructure and its geographic proximity to Europe is an advantage. The large Soviet-era nuclear power stations which are now mostly abandoned due to lack of proper management and upkeep could be used generate energy for potential markets in Eastern Europe.
For those attracted by Russia's potential, learning about its culture and people is an equally interesting opportunity. People of the land of Tolstoy and Chekhov are great readers and pride themselves in their long history of great literature and art. Russians are generally not individualistic and are family oriented. Although the nation was atheist for 70 years (during the communist era), today the majority are Russian Orthodox Christians.
As for public behavior, there are some dos and don'ts that everyone is expected to follow. It is considered rude to stand with your hands in your pockets. When entering a Russian Orthodox Church women are expected to cover their heads. As for being punctual, a foreigner is expected to be on time but the host may be late by 5 or 10 minutes. Business in Russia is mainly done through connections, meaning it is always beneficial to have friends in government offices. Gifts are a good way to make friends and are always appreciated. When shaking hands, take off your gloves and always address women with their last name.
Some common business sense also helps. While doing business in Russia, avoid the street salesmen and companies without an office which give out only cell phone numbers. Exercise caution while responding to the classifieds and always check business history before making any commitments.
Taking a little time to learn about the nation and culture would surely make doing business in Russia a great experience. For more information on the nation, please don't forget to check the links we have listed in the blog, and join us at the discussion board.
Related Links:
Learn about the founding of St. Petersburg
Sources:
CIA Factbook
http://www.amcham.ru/amcham-v14/page.php?pageid=105033663100486
http://www.ctec.ru/eng/Activities.asp?ob_no=529
