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Mar 08

Challenges of Doing Business in Russia

A huge country richly endowed with natural resources, Russia continues to develop both politically and economically. Russia’s cultural identity has been influenced by a mixture of ethnicities and a diverse history.

The largest country in the world, with the ninth largest population, Russia has recently established a consumer economy which is increasing business and investor confidence in Russia’s economic prospects.

While there are some clear benefits to doing business in Russia, an understanding of Russian business and social culture is essential to an international company’s success.

Punctuality – Russia is a polychronic culture, in other words, people tend to be flexible in the organisation of their priorities and attitudes towards punctuality are relaxed. Polychronic cultures also often feel it is more efficient to do several things at once; therefore meetings may not follow a linear agenda and may be interrupted by phone calls or people coming in. As a foreigner, you are expected to be on time to all business appointments, however social events are more relaxed and being up to 30 minutes late is acceptable. Patience is highly valued in the Russian society, try not to be mad when a colleague arrives late and do not expect an apology, they may simply be testing your patience.

Collectivism – Historically a country rooted in agricultural communes, Russia has maintained a collectivist spirit that pervades many sectors of society. The Russian affinity for the group can be seen in every day life, for example, Russians will often choose to join strangers in a restaurant, recreation is commonly arranged in groups and advice can sometimes be given to you by a complete stranger. This sense of co-operation and togetherness must be considered when doing business in Russia, especially when communicating. For example, it is important to remember to address the group rather than the individual.

Hierarchy – Hierarchy is an important aspect of Russian business culture with status being linked to age and position. It is important to be aware of the fact that usually meetings are held with people of equal status. Decision making is commonly done by the most senior employees in the company. Showing respect for seniority is essential for maintaining strong business relationships when doing business in Russia.

Personal relationships – Relationships start out quite formal within Russia but maintaining trust and a good working relationship from the beginning is invaluable for future business. When meeting someone for the first time, it is wise to address them by their patronymic name. This name is based on the name of the person’s father with the suffix “ovich” (son of) for men and either “ovna” or “evna” (daughter of) for women. The Russian language also has two forms of the word “you” distinguishing between the formal “vy” used to denote respect and the more casual “ty” used between friends.

Communication style – Russians tend to have a high context communication style. A high context preference translates to placing emphasis on relationships, emotions and body language and expecting the listener to read between the lines. Differing communication styles can often pose one of the most significant challenges for businesses working cross-culturally. When doing business in Russia remember that Russians are patient and will expect the same patience from you.

Negotiating – In negotiating, Russians often take their time and will not rush to make a decision. Russians tend to avoid compromise, which they see as a weakness and expect to either win or lose a negotiation. Therefore, expect negotiations to be tough and occasionally theatrical. Do not be surprised if you witness the occasional loss of temper, people leaving the room and threats to call off the deal, this is all part of the process of driving a hard bargain.

Russian woman dmbaker i 300x199 Challenges of Doing Business in Russia

Although recognising that cultural differences exist is an important first step when doing business in Russia, international organisations must also understand the reasons and implications of these differences in order to develop effective strategies for coping with these challenges.

A Doing Business in Russia cross cultural training programme will help organisations maximise the benefits and opportunities of doing business in Russia. Cross cultural training programmes also create a workforce with a high level of intercultural competence which is a huge asset to any organisation working in a competitive global environment.

© Communicaid Group Ltd. 2010

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Mar 03

Benefits of Doing Business in Russia

Cross Cultural Training, Culture, Culture training for Business & Management, Culture training for Human Resources, Culture training for the Public sector No Comments »

Russia is by far the largest country in the world. The country covers an area all the way from Europe in the West to North America in the East and bordering with Asia in the South, and boasts a vast geography that spans eleven time zones.

Russian building 2 Dmitry Mordvintsev i 425x283 Benefits of Doing Business in Russia

Emerging as a diverse nation after a long and eventful history, Russia’s growing and strengthening consumer economy, with a market of over 140 million people, is evolving into a prime location for investment. Business opportunities can be found in many sectors of Russia’s economy and strong support exists for investors from both the government and the Foreign Investment Advisory Council (FIAC).

Doing business in Russia offers the following key benefits:

Stable and Growing Russian Economy
According to Invest in Russia, Russia boasts one of the most dynamically developing and attractive economies in the world. Since 1999, GDP growth has averaged 6.8% per year and reached 8.1% in 2007 (compared to 4-5% average world economic growth). Thanks to the strengthening rouble, in dollar terms the 1999-2007 GDP growth was an astounding 26% per year, far outstripping international growth rates.

Egalitarian Attitude
Russians generally subscribe to attitudes that promote equality, reciprocity and mutual advantage in business and a “deal” is often regarded as an opportunity for equally shared benefit. Personal relationships are also of great importance in Russia. When doing business in Russia it is worth investing time initially in creating strong bonds, as these are likely to form a solid basis for future business negotiations.

Large, Educated Consumer Market
There is untapped potential in Russia’s captive market of over 140 million people whose incomes are steadily improving. Additionally, Russia’s strong educational system has a good reputation for producing a highly skilled workforce and discerning consumers. The talent of the Russian people is starkly evident in the achievements of Russian art, music, literature and architecture.

Unique Geographical Location
Russia’s massive geographical presence spans a distance unmatched by any other single country. Linking Europe with Asia and bordering the North American continent, Russia has excellent access to sea, road and rail routes and is home to several major airports. Russia’s location is further supplemented by its vast natural resources of mineral reserves, coal mines, natural gas and timber.

Unified employees
Russia is a predominantly collective society, with a communal spirit perhaps stemming from its history and climate. Russia’s severe winters and geographical conditions have meant that collaborating, rather than competing has been necessary for survival. This sense of co-operation and togetherness must be considered when doing business in Russia, especially when communicating with Russian counterparts. For example, it is important to remember to address the group rather than the individual.

International organisations can profit immensely from the above benefits of doing business in Russia. Utilising these benefits comes with the necessity to create effective strategies for navigating the geographic, political and cultural diversity of Russian society. This requires a comprehensive understanding of Russian business and social culture on all levels.

International organisations employing people in Russia or doing business with Russia on a regular basis should therefore participate in cross-cultural training programmes for business and management such as Doing Business in Russia to ensure they develop the skills to successfully deal with the many cultural differences in working preferences, values and communication styles.