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 the inter regnum 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 opportunities in market sectors as varied as banking and finance, technology and computing, infrastructure development and education.
Written and Produced by Keith Warburton
This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in Russia. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.
With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in Russia and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.
Therefore this briefing note is broken into short, bite-sized sections on the following topics: