Russia, the largest country in the world, has a rich and diverse cultural identity that has been shaped by its long history and vast geography. With the world’s largest resource of raw materials and the recent establishment of a consumer economy, Russia has become a prime location for investment and business opportunities. The country has undergone, and is still undergoing, an enormous transition in almost all spheres of life. The way the Russians learn and do business is getting progressively better too, and many foreign companies who set up offices in Russia several years ago have already re-called the ex-patriots and appointed local personnel to top positions.

Many businesses are proving to be successful due to the highly diverse range of products and services they sell or provide. In spite of high competition, there is still huge potential for products to the growing middle class. Producers of luxury products are benefiting in Russia much more than in other countries because of non-market reasons which arise from the Soviet era of supposed ‘equality’ resulting in the unnatural eagerness of people to become and live rich NOW and TODAY.

Another factor which puts foreign companies in a more beneficial position is the cost of capital which for most Russian companies is higher than for foreign ones. The experience and knowledge in the development of markets which foreign companies have gives them a huge advantage in developing strategy and implementing growth.

In analysing this market a key point is to differentiate between Moscow, the capital of Russian Federation, and the rest of the country. The City of Moscow, with a population over 10.5 million people is considered a country within Russia. It is not a big exaggeration to say that most of the business is done there. All the biggest retail and pharmaceutical chains, banks, development and construction, media and communication, IT and tourist companies are controlling their affiliates scattered all over the country from Moscow headquarters. All the decisions are made there, as the “satellites” don’t have real power. Also, Russian companies are often driven and directed by one strong, central character. Without the approval of this individual, very few decisions will be taken. So don't waste time trying to get a response from the middle and junior managers - go straight to the top if possible.

Russia is not a country choked by rules. It is a nation of relationships and you have to be prepared to adjust to the way people do business. It's not just about what you know, but more about who you know. But isn't it the same in the US? Initial meetings are usually approached as a formality. It is at this stage that your credibility will be assessed. The best strategy is to appear very firm and dignified, while maintaining an air of warmth and approachability.

Russians will respect you, if you look smart and wear nice clothes, expensive watch and shoes. They make a big deal of it themselves wearing brand names very often even if they cannot afford them, and expect the same from serious partners. The way you speak is also very important. The more eloquent you are, the more successful you will be.

Generally Russians are quite mistrustful. You will find them very careful about the way they will want to do business. Therefore it is important to get their trust by maybe taking them out, or having somebody whom you both know to give you a good recommendation. Doing business and getting to know each other is often being done over dinner. If your Russian counterpart decides to invite you out, do not refuse as it would be rude. Remember Russians do like a drop or two of alcohol, and can stand it well. Refusing to drink is unacceptable, unless you give a plausible excuse, and in this case the process of relationship construction will take longer time. Always bear in mind that you will be discussing business at dinner, so know your alcohol limit and expect your companions to be higher. Be prepared to be taken to a splendid restaurant with fancy menu and prices suitable for kings and queens. The quality of food will be excellent, so indulge and enjoy!

As much as we like to impress, we like to give and receive gifts. And you will soon find that you receive a lot of gifts while doing business in Russia. It is unthinkable for Russians to come to visit you with empty hands. A bottle of expensive vodka is a very frequent gift. If you are given something you don’t know what to do with, just shake hands or give a hug as a wonderful way of establishing a personal contact with your business partner.

Russians have far more relaxed approach to life than western business people, and being proactive is still a challenge to many of us. We live by a sincere hope that things will take care of themselves somehow, and often don’t bother to make even easiest steps to safeguard our actions. If something doesn’t go as planned, we simply shrug our shoulders and say: that’s life! When you are planning your visit to Russia, and calling your partners to set up the time, they may say: call me when you come. Strangely enough the meetings happen. But the idea is: be prepared to be flexible.

Among other problems newcomers may face is the abuse of law by government agencies, especially for the registration of business or products. Unfortunately, in many cases it is easier, less trouble and faster to do what a certain official asks you to do rather than to go to court and defend your rights. The most unpleasant factor in such a situation is that your business suffers because of the whim of a certain official, and there is no fast way to prove that you are right.

It would be foolish to pretend that corruption doesn’t exist in Russia moreover we admit its existence. The consensus seems to be that if you don’t court trouble, you won’t find it. A lot depends on choosing a trustworthy partner and standing your ground. The best way to find a reliable agent or distributor in Russia is to go for experience. The risky thing is just to get on a plane, come to Moscow and start dealing with people you don’t know. Ask somebody who has been here and is willing to share their experience. Speak to the people who know the business, who know the country, and who can give you a recommendation.

One of the most common challenges for 99% of foreign businessmen is expectations of expense and time: frequently for Russia both have to be doubled. There are so many factors that influence the time factor that foreseeing possible problems can be difficult even for experienced business consultants. There are at least 2 explanations to this: firstly, Russia has more government officials than in just about any other country; and secondly, Russian logic is different! For example, it is common practice for us to repair roads in winter when it is snowing! And every year winter comes totally unexpected! However, the potential volume of future business in a country with 141 million inhabitants often offsets frustration of delays.

The general perception of Russia is that it is a quite wild and dangerous country. This is not true. However, you must not forget about your personal security precautions and be reasonably careful. Walking in the streets of Moscow is not more dangerous than in New York, unless you are speaking loudly in a foreign language on your mobile phone. That obviously may attract certain category of people perceiving you as a cash machine. Also think smart when renting an office or an apartment, buying a car or looking for a hotel to stay. Always know who you are dealing with and go to the trusted parties. Preparation and planning is the key.

However, Churchill's description of the country as a 'riddle wrapped in a mystery inside an enigma' still very much holds true for outsiders. Gaining some basic insight into the Russian mentality, culture and etiquette are imperative for anyone considering doing business in Russia. It may not be the easiest market to set up a business but for a number of foreign entrepreneurs it has been very rewarding. Many even admit that the supposed difficulties are exaggerated and setting up a business in some European countries was more frustrating than in Russia.

As an independent consultant I can provide the various services related to your business establishment in Russia along with an ongoing level of support.

Elena Bazhko
Medica International Ltd
Tel.: +371 2954 5657
Е-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Elena Bazhko is from Russia and she speaks the language fluently. She is Medica International’s Area Manager in that region and helps with many related projects. She is also able to assist other Wisconsin companies that have an interest in entering the Russian market.