Doing business in Russia
Expats made easily squeamish or who consider themselves faint of heart should avoid doing business in Russia entirely. The local populace is both cynical and fatalistic, and their comfort with negative consequences has made them into 
intimidating negotiators; not to mention, their general mistrust of the state and its legislation has created a business culture tied tightly to corruption and grey practice.
In the World Bank’s 2011 ‘Ease of Doing Business’ report, Russia was ranked a dismal 123 out of 183. A position that likely reflects the poor legal safeguards in place for investors/entrepreneurs, and the high levels of bureaucracy present in the nation.
Those expats willing to rise to the challenge though, will find a business environment that’s been steadily improving since the dissolution of the former USSR. Opportunities in the energy and metallurgy sectors are especially promising. That said, Russia was hit hard by the 2008 global economic recession, and only started to make movements toward recovery in the second half of 2009.
Business travellers to Russia (unless you’re from Serbia or a CIS country) will need to obtain a visa for entry, a document that will only be granted with a formal invitation from an authorised Russian entity. Processing time can be as much as 25 days, so take care to plan in advance.
In order to understand business culture in Russia, it’s vital expats gain some knowledge of the nation’s political past. This framework will provide some insight into why modern Russian businessmen possess a tendency to respect informal rules, rather than formal laws and authoritative bodies and structures.
Similarly, it will explain why relationship-building is paramount to successfully conducting business in Russia. The state’s former untrustworthy nature has motivated a current culture in which close, personal relationships and allegiances take primary importance. Expats should be mindful of this point, and should devote an appropriate amount of time to befriending the right people through face-to-face interaction.
In the same vein, take note that Russian business hierarchy unfolds around a strong, central figure. This figure, usually a male, retains nearly absolute decision-making power. Some consideration is given to the views and inputs of specific middle managers, but for the most part, to accomplish anything it’s necessary to ‘go straight to the top’.
Additionally, more is achieved in small, formal meetings with this individual, rather than larger meetings that include more people. The purpose of the latter is to disseminate information, not to discuss issues, negotiate or generate ideas.
Subordinates in Russia generally take specific and precise orders from their seniors with little feedback expected.
Expats should also note that appearance can play an important role in Russia. Expensive and stylish clothing can communicate the same amount of prestige that a stable of degrees and a wealth of experience may beggar.
Dress formerly, and conduct yourself similarly. Firm handshakes are exchanged in greeting and in leave, and expats should always address their colleagues and their counterparts with a great deal of respect. Some people may only introduce themselves with their surnames, but it is always courteous to address businessmen as ‘Gaspadin’ (equivalent to ‘Mr’) and businesswomen as ‘Gaspadja’ (similar to‘Mrs or Miss’) plus their surname.
It’s common to exchange business cards; one side should be written in Russian and the other in English.
While humour can be an acceptable way to diffuse a tense business situation, it is not given the same credence as in British culture; use it sparingly.
In its 2011 ‘Ease of Doing Business’ report, the World Bank ranked Russia 108 out of 183 in countries in terms of ‘Ease of Staring a Business’. The process takes an estimated 30 days and requires that expats complete nine separate procedures.
That said, the basic logistics of naming and incorporating your business are achieved far more easily than the actual act of getting your business off the ground. In Russia, the operating environment is fraught with corruption and red-tape. Furthermore, foreign companies that are unknowingly roped into engaging in some sort of grey practice, or that knowingly do so, risk reputational and regulatory harm.
Business language: Russian, but English is spoken by younger business people in the main city centres. Still, always explore the necessity of hiring a translator.
Hours of Business: 9am to 5pm, Monday to Friday
Dress: Formal and conservative. Dark suits for men, and suits or skirts and blouses for women. Dress is taken as a sign of prestige in Russia, and Russians often spend more than they can afford on business clothing. Expats should dress stylishly and well.
Gifts: Russians enjoy giving and receiving gifts, but this is not a mandatory or an expected act.
Gender equality: Equal in theory, but not in practice. Women remain inferior to men in the Russian business world, and though foreign businesswomen will be treated with old-world courtesy, they will not be respected as key leaders. It is rare to find women in senior management positions in Russia.
intimidating negotiators; not to mention, their general mistrust of the state and its legislation has created a business culture tied tightly to corruption and grey practice.In the World Bank’s 2011 ‘Ease of Doing Business’ report, Russia was ranked a dismal 123 out of 183. A position that likely reflects the poor legal safeguards in place for investors/entrepreneurs, and the high levels of bureaucracy present in the nation.
Those expats willing to rise to the challenge though, will find a business environment that’s been steadily improving since the dissolution of the former USSR. Opportunities in the energy and metallurgy sectors are especially promising. That said, Russia was hit hard by the 2008 global economic recession, and only started to make movements toward recovery in the second half of 2009.
Business travellers to Russia (unless you’re from Serbia or a CIS country) will need to obtain a visa for entry, a document that will only be granted with a formal invitation from an authorised Russian entity. Processing time can be as much as 25 days, so take care to plan in advance.
Business culture in Russia
In order to understand business culture in Russia, it’s vital expats gain some knowledge of the nation’s political past. This framework will provide some insight into why modern Russian businessmen possess a tendency to respect informal rules, rather than formal laws and authoritative bodies and structures.
Similarly, it will explain why relationship-building is paramount to successfully conducting business in Russia. The state’s former untrustworthy nature has motivated a current culture in which close, personal relationships and allegiances take primary importance. Expats should be mindful of this point, and should devote an appropriate amount of time to befriending the right people through face-to-face interaction.
In the same vein, take note that Russian business hierarchy unfolds around a strong, central figure. This figure, usually a male, retains nearly absolute decision-making power. Some consideration is given to the views and inputs of specific middle managers, but for the most part, to accomplish anything it’s necessary to ‘go straight to the top’.
Additionally, more is achieved in small, formal meetings with this individual, rather than larger meetings that include more people. The purpose of the latter is to disseminate information, not to discuss issues, negotiate or generate ideas.
Subordinates in Russia generally take specific and precise orders from their seniors with little feedback expected.
Expats should also note that appearance can play an important role in Russia. Expensive and stylish clothing can communicate the same amount of prestige that a stable of degrees and a wealth of experience may beggar.
Dress formerly, and conduct yourself similarly. Firm handshakes are exchanged in greeting and in leave, and expats should always address their colleagues and their counterparts with a great deal of respect. Some people may only introduce themselves with their surnames, but it is always courteous to address businessmen as ‘Gaspadin’ (equivalent to ‘Mr’) and businesswomen as ‘Gaspadja’ (similar to‘Mrs or Miss’) plus their surname.
It’s common to exchange business cards; one side should be written in Russian and the other in English.
While humour can be an acceptable way to diffuse a tense business situation, it is not given the same credence as in British culture; use it sparingly.
Starting a business in Russia
In its 2011 ‘Ease of Doing Business’ report, the World Bank ranked Russia 108 out of 183 in countries in terms of ‘Ease of Staring a Business’. The process takes an estimated 30 days and requires that expats complete nine separate procedures.
That said, the basic logistics of naming and incorporating your business are achieved far more easily than the actual act of getting your business off the ground. In Russia, the operating environment is fraught with corruption and red-tape. Furthermore, foreign companies that are unknowingly roped into engaging in some sort of grey practice, or that knowingly do so, risk reputational and regulatory harm.
Doing business in Russia: Fast facts
Business language: Russian, but English is spoken by younger business people in the main city centres. Still, always explore the necessity of hiring a translator.
Hours of Business: 9am to 5pm, Monday to Friday
Dress: Formal and conservative. Dark suits for men, and suits or skirts and blouses for women. Dress is taken as a sign of prestige in Russia, and Russians often spend more than they can afford on business clothing. Expats should dress stylishly and well.
Gifts: Russians enjoy giving and receiving gifts, but this is not a mandatory or an expected act.
Gender equality: Equal in theory, but not in practice. Women remain inferior to men in the Russian business world, and though foreign businesswomen will be treated with old-world courtesy, they will not be respected as key leaders. It is rare to find women in senior management positions in Russia.
Do’s and Don’ts of Business in Russia
- Don’t - spend too much time negotiating with junior and middle managers, decision-making power tends to lie with a single individual who rarely entertains the input of others.
- Do - respect silences; Russians often take time to think before they answer questions.
- Do - be punctual, and don’t take offense if your Russian counterpart is not so timely.
- Do - try to avoid giving too many concessions when it comes to negotiations; caving in is a sign of weakness. It may even be beneficial to build “throw-away concessions” into your plan.
- Don’t - engage in corrupt practice. Though it’s commonplace in Russia, foreign businessman stand a more likely chance of being exposed and prosecuted against.
- Don’t - assume the people you’re doing business with will speak English. Only just over 20 percent of Russians speak another language in addition to Russian.
