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Doing business in Russia

When entering a new market, you always encounter new norms and values, exemplified in the way your foreign business counterpart behaves. Suddenly you find that the Russian managing director does something completely unexpected and you do not know how to react. Often this will be the case in Russia. This guide will present a few hints how to avoid the most serious mistakes, but it can never be complete. There will always be customs not covered in such publications.

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Russian greetings

Russians shake hands. This is done formally and informally and when meeting strangers and old friends. In the latter case heartfelt embracing and even kisses may follow this up also between men. The handshake is the most commonly accepted form of greeting. Often a Russian prefers to be direct and informal.


Forms of address may be confusing for a foreigner. Russians normally have three names: an
imya , which means the first name, an otchestvo or patronymic and familya or surname. Introductions can be made with different combinations of these, depending on the persons and the situation. Often a formal setting will require of a person.

Below you see the male and female versions respectively.

Imya = Ivan or Anna

Otchestvo = Vladimirovich or Vladimirovna

Familya = Petrov or Petrova

First names are normally reserved for family and close friends. Even old colleagues address each other with the first names and patronymics.

Language

Most Russians do not speak foreign languages. There is a strong probability that your counterpart does not speak English or any other Western language which you may master. Consequently you need an interpreter.

Even if your counterpart presents his interpreter, you may want to bring your own associate who speaks Russian in order to be sure not to be misunderstood. Sometimes the interpreter misinterprets your words and you may loose the deal due to such a problem.

Concept of time

Russians have a relaxed relationship to the concept of time. Excuses for being late can vary, but often chaotic traffic can be a legitimate explanation. But sometimes meetings can be missed without notice or you will be kept waiting.

The reason will often be that something more important came up. This can be difficult to handle if you are in a hurry, so don’t be! In your own interest you, however, should always be on time. Russians focus on the moment and Western expectations to be able to arrange meetings long time ahead, are most likely wasted. The Russian time frame is often just a couple of weeks.

Office hours

Most business offices start work at 9.00 - 9.30 and operate till 17.00 - 18.00.

Well motivated Russian employees will often work till late in the evening. Most boutiques and shopping malls are open from 9.00 to 21.00 and some are even open 24 hours.

Formality

If the counterpart is an official, he will expect to do business with only the highest-ranking executives. The project manager representing an international company in Russia should be at least a Regional or East European manager.

Executives there are not impressed with "representatives." A top executive should handle the final stage of negotiations on larger deals. The chairman or deputy chairman might even consider entering the negotiations at some key stage to get things moving.

Most likely Russian business people will enter all negotiations well prepared and researched, so it is advisable to be accompanied by at least one member with technical expertise.

It may be a good idea to have on hand a large supply of business cards to distribute. The university degree of the business visitor should be included on the card, and it should be printed in Cyrillic. At negotiations involving many officials, be sure to give a card to everyone present, in order not to overlook someone who might turn out to be important.

To the uninitiated observer, some people in the C.I.S. may appear still and lifeless. Gestures are usually kept to a minimum. Expressions may seem blank and uninterested. Smiles are rare, except between people who are very close. You may find Russian closed persons at first, but when you get to know them they are extremely hospitable and friendly people.

Meetings in Russia

Do not expect Russians to present solutions to problems. Often they will not know the answer to problems presented to them, in opposition to Western businessmen. Presenting a problem is considered half the solution, whereas often Westerners focus directly on solutions. This may lead to extended (or broken) meeting schedules and lost negotiations as a result.

Solution: Prepare your counterpart with your expectations and devote more time to meetings. Things take time, especially in Russia.

Russian executives do not like a quick tempo of business and the American attitude that time is money. They are able and willing to devote far more time and manpower to negotiations than Westerners ordinarily do. Continuity and personal relations in the negotiations are important factors, so one person should be identified as the project manager throughout all negotiations. You should aspire to meet your counterpart in order to establish personal relations with them. This will create bonds between you, which often have been known to facilitate future deals. Such meetings may not become productive before you meet the family of your Russian counterpart or go to a bar or even sauna with him.

Arranging meetings

 

Trying to arrange meetings with people can be a time-consuming process. You may have to go through several ministries and agencies, and approval from one does not guarantee approval from the others. If possible you should have VIP’s arranging your meetings in order to get past the gatekeepers in the front offices. This can be embassy personnel, high-ranking executives or even celebrities. You may have to devote a lot of senior executive time, since broad segments for bureaucracy can be involved. At the same time, nowadays, you may encounter a simplified process since many segments of this bureaucracy are gradually becoming obsolete and are being phased out with the transition to a market- economy. Generally, you should be aware of and prepared for possible bureaucratic obstacles within the field of business you are in.

Russian customs

Etiquette

Often business visits will lead to dining with your counterpart, which is often combined with a certain amount of drinking. These occasions often lead to good relationships and broken ice in the cooperation and here you may solve the last parts of the negotiations. You should not decline invitations to social events unless you can provide a very good reason. Often you will experience many and long toasts to everything and it is appreciated if you empty your glass.

Principally you should only drink when a toast is proposed. To not take up business topics unless forced. In stead, show interest for the personal life of the host and for Russia. You should not decline drinking vodka (unless ready to show a letter from your doctor), as Russians have a basic disbelief towards people not drinking vodka. You should not propose a toast before the host has done so and even after this it is considered good manners to ask for permission. Be aware of the third toast, which is for the women

(of the table, of Russia or the World) These toast can be very sentimental (along with the rest) and should overflow with love to the female sex. After a few glasses of vodka it is generally accepted to sip a little bit, as Russians know Westerners cannot drink so much.

Legal advice

To a certain extent, contracts do not carry the same legal commitment in Russia . It is more considered to be a letter of intent, which can be fitted to the dynamics of the surroundings later. Often contractual matters are better solved during negotiations and good relationships than through the courts.

It is in your own interest to secure your payment as you see fit and in a manner fitting the needs of your company along with those of your partner. Often you can claim a guarantee from a serious bank and if a potential customer does not accept this, he may not be worth dealing with. The Russians are mostly used to this, so it should not create problems.

Despite the long traditions for bureaucracy in Russia , the might of bureaucrats is declining. The later years have brought many attempts to modernize the large state structures, which harbor the bureaucrats, but still a long way is ahead. Often people go extremely into formalities and details. It is extremely important to have the right papers with the right stamps. The reason for this is the often blurry regulations and open up for individual interpretations. Everything is possible if you have the right contacts, which may enable great flexibility. If you do not have contacts, the opposite may be the case. Corruption is one still popular option to avoid the problems, but as a foreigner you should avoid getting in a situation where you try influencing decisions in an unauthorized manor.

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The Trade Council at the embassy can be contacted daily between 09:15 and 17:00 - Friday till 16:00 (GMT +3)

 

Tel: +7 (495) 642 6800
Fax: +7 (495) 775 0197

 

mowamb@um.dk

 

 

The Trade Council at the Consulate General in St. Petersburg can be contacted daily between 09:00 and 17:00 - Friday till 16:00 (GMT+3)

 

Tel: +7 (812) 703 3900
Fax: +7 (812) 703 3529

ledgkl@um.dk