Doing Business in Russia
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Expats doing business in Russia will find themselves in a unique environment. The locals are often viewed as cynical and fatalistic, but the actual business environment has improved considerably over the past few years. This is especially the case for the country’s large financial centres like Moscow and St Petersburg, which are home to numerous international companies and corporations.
In the World Bank’s 2018 Ease of Doing Business Survey, Russia was ranked 35th out of 190 countries. The country did particularly well in the categories of getting electricity (10th) and registering property (12th) and faired relatively well in starting a business (28th) and getting credit (29th). These rankings reflect positive changes in the country’s business environment. Alternatively, the country ranked poorly in the category of trading across borders (100th), a reflection of the contentious political issues that Russia still faces.
Office hours in Russia are generally from 9am to 6pm, Monday to Friday.
Russian is the official language, but English is often spoken by younger business people in the main city centres. The option of hiring a translator is always available.
Business attire is 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.
Russians enjoy giving and receiving gifts, but this is not a mandatory or an expected act. Appropriate gifts if invited to a Russian's house include sweets, wine or liquor.
Men and women in Russia are 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 generally not be respected as key leaders. It is rare to find women in senior management positions in Russia.
Business culture in Russia
In order to understand business culture in Russia, it’s vital that expats have some knowledge of the country’s political past. This framework will provide some insight into why modern Russian businessmen seem to have 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 formerly untrustworthy nature has motivated a current culture in which close personal relationships and allegiances take primary importance. Expats should be mindful of this and devote an appropriate amount of time to befriending the right people through face-to-face interaction.
Russian business hierarchy tends to unfold around a strong, central figure. This figure retains nearly absolute decision-making power. Some consideration is given to the views and inputs of specific middle managers but, for the most part, it is necessary to ‘go straight to the top’ to accomplish anything.
More is achieved in small formal meetings with this central individual, rather than in larger meetings that include more people. The purpose of the group meetings is usually to disseminate information, and not to discuss issues, negotiate or generate ideas. Subordinate employees in Russia generally take specific and precise orders from their seniors without expecting much feedback.
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’ and businesswomen as ‘Gaspadja’ followed by their surname.
While humour can be an acceptable way to diffuse a tense business situation, it is not given the same credence as in Western cultures and should be used sparingly.
A firm handshake and direct eye contact should be maintained when greeting Russian associates. Hugs are common between good friends and family. A handshake is generally exchanged with female associates, but sometimes a slight nod of the head will suffice. If unsure, wait for a female coworker to extend her hand first.
Dos 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 offence if Russian counterparts are not as timely.
Do try to avoid giving too many concessions when it comes to negotiations, as caving in is a sign of weakness in local business culture.
Don’t engage in corrupt practices. Though corruption is commonplace in Russia, foreign businessmen stand a higher chance of being exposed and prosecuted.
Don’t assume that people will speak English. Most Russians do not speak an additional language.
Do print business cards in Russian on one side and English on the other.