Background To Business in Russia

Russia:

Russia has emerged from a decade of post-Soviet chaos and disintegration to reassert itself as a major player on the world stage - both politically and economically.  President Putin and his successor President Medvedev have restored public confidence in the country and vast oil and gas reserves have resulted in growing political and economic influence.  Russia cannot be ignored - it needs to be understood.

As an enormous geographic area, it is dangerous to ever generalise about Russia but certain universal truths do, however, typify the Russian approach to business and life in general. Firstly, it is always worth bearing in mind that for centuries (long before the advent of the Soviet system), the state has always been seen as an organ of oppression and repression. Laws and statutes are therefore seen as the 'enemy' and to be avoided and evaded at all costs. Contracts are valid only if supported by a close personal friendship and taxes are left unpaid on both a corporate and personal level.

Secondly, the only things that can be relied upon are close personal relationships within the business environment. Networking and extended interpersonal allegiances are essential to successful business and the importance of resource allocation to ensure the development of good quality relationships should not be underestimated.

Thirdly, the legal status of many things in Russia is very dubious. Who actually owns what assets? The laws are being rewritten constantly and are, in any case, often unenforceable without the right level of political influence. Thus, most agreements have to be made on a trust basis - a strong element of which has to be clearly identifiable self-interest. The legal basis of any arrangement will probably mean very little once the relationship breaks down.

Despite these issues, Russia has been identified as a high-growth potential market with opportunites in market sectors as varied as banking and finance, technology and computing, infrastructure development and education.

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