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Is Doing Business in Russia Really That Difficult?

Is Doing Business in Russia Really That Difficult?
Doing business in Russia is not something that many westerners have thought about, particularly at the moment. This program explores some of the stereotypes which abound about Russia and doing business there. If you are remotely interested in doing business in Russia, this program is for you.

Guy Eames, an Englishman, the director of a UK environmental consultancy: ‘Planet 2030' and an active green building advocate, joins the program. Guy is the chair of the Russian Green Building Council (RuGBC), and has a long track record over the past 30 years of successfully doing business in Russia.

Guy starts the program by describing some of the business activities he has been engaged in with Russia over the years. "In the early days I was mostly involved in business development, in telecoms, and in logistics. Over the past few years I have been more involved with program and events management, a lot of marketing, PR, those types of activities, with some government relations as well."

Talking about the differences between doing business in Russia and the UK, Guy says that: "One of the main differences is that Russians are quite direct. In England we have this way of asking for things: could you possibly do this, and what are your feelings about this or that? Russians will ask you in a much more direct way, which could sound a bit rude to some Anglo-Saxons, particularly Brits, maybe less so to Americans because I think Americans are more direct….If you go into a meeting, after small talk where the Russians will definitely suss you out, they will then start to ask you questions very directly."

"They are also very high tech; I would say they are more high tech than Brits, so for solutions that include sending payment for example, they prefer high tech immediate solutions, rather than more traditional approaches such as sending invoices by post and using an accountant. Business in Moscow is quite fast paced, you get used to it. This directness has other aspects which can challenge your comfort zone. In England, the meeting might finish, and you walk away and that's it. In Russia, there is a high chance, particularly if you are a foreigner, that after the meeting they will invite you to some kind of social event in the evening. They are very social, very hospitable. Maybe not so much between Russians themselves but between Russians and foreigners. They expect that if you a foreigner travelling to Russia, that you will be met at the airport and/or they will invite to dinner and show you around, they are very nice in that way. But it can be a bit too much for some Brits."

Host John Harrison mentions a few common stereotypes associated with Russian business people — vodka, good looking platinum blondes hanging on to their oligarchs' gold chains. Guy says: "I think these are similar to the stereotypes that Russians have about Britain with Mary Poppins and people wearing bowler hats, Sherlock Homes around the corner, and meeting the Queen for tea. All that has generally gone out of the window in Moscow, although it is like in the UK, it can still be found if you really look for it. So, when you are doing business in Russia you can expect to meet people in modern restaurants, in cafes, if you are into a social scene, or in modern offices which are usually really nicely done up. You can expect to be received promptly, on time, in pretty much the same way as in the UK or the States. So a lot of these stereotypes are pretty much from the 1970s, or 1980s, and are a bit out of date."

Perhaps one main difference between doing business with Russians and westerners is that in Russia there is an emphasis on relationships between business people. "It has taken me many years to understand that. I have worked in other countries; if you work say in Germany or in central Europe and other countries that helps….Russians want their partners to be really interested and into whatever project it is, not just to fulfil points on a contract. So this is a different kind of relationship, not just ticking the boxes. The Russians are interested in you being a proper business partner, and following common goals which may change as the project moves forward….I think you have to be very open and always look for ways to add value, rather than looking [only] at the text in the contract and all of the items there."

Another major issue that people have about doing business in Russia is corruption. Guy says: "I've been coming and going to Russia over the last 20 years, I think 10-15 years ago, there really was a lot of lawlessness and the rules for business were really quite different. Today, Russia has definitely become a much more modern normal place to do business. It is important that your business is a normal and legal. I could imagine that if you were selling cigarettes that you had brought in in your suitcase on the streets, then completely different rules might apply. With normal business, business really is very transparent, there will be a contract in nine cases out of ten where all of the obligations of both sides are laid out, and they are very specific about what needs to be done, whereas in the English language we can be a lot more fussy as to what words mean… Another big difference is in advertising. Word of mouth has always been the number one way of advertising. Traditional advertising — billboards on the streets, television advertising, advertising in journals is disappearing quite quickly. It's a global trend, and quite often, when we discuss with companies — well you could pay us something to promote your products, they are not interested, not even in digital media. I think we are moving on to this era of dynamic advertising, which is below the line, through new media, things are changing very quickly on that front."

Guy also mentions some of the difficulties that Russian business people experience in the West. "Firstly, getting in the door. A lot of Russians suffer from Russiaphobia, which is in widespread at the moment. We have all sorts of outrageous things being written, most of them completely unsubstantiated. So if they call a company and want to meet and discuss something, they are not met with a positive attitude, and I think this is one of the biggest problems today. If Russians already have a base in the UK, then setting up meetings isn't so difficult. The other main difference is that Russians will expect westerners to go into a deal with their heart and soul and then they are disappointed when this doesn't happen. Of course, Russians abroad do quite a lot of business with other Russians abroad, in which case they don't have those cultural difficulties…"

The final point Guy makes is that doing business in Russia is very much to do with who you know. "There is a lot of top-down control, though pyramid structures, where the boss decides everything." None of these difficulties, though, are really a problem, Guy stresses, "if you understand them."

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