Doing Business in Russia

Russia is not just a country of contrasts; it is a country of outright contradictions.  A country where free-reign market capitalism in some sectors meets absolute state interference in others.  A country where foreign direct investment is actively sought in some areas; whilst made virtually impossible in others.  Half the population yearn for a more open, democratic society whilst the other half admires the autocratic approach of the current regime.

Periods of fast, aggressive growth in GDP and individual earnings are followed by sharp recessions – often allied to the demand for, and price of, the petroleum products upon which the country is heavily dependent.  Massive displays of conspicuous wealth and consumption are contrasted with the deprivation that can still be found in many second cities and rural areas.  The great metropolitan cities of Moscow and St Petersburg continue to grow and develop but the roads 30 kilometres outside those cities are in a parlous state.

So Russia remains a transitional economy moving from its Soviet past to an unknown and uncertain future.  Over 50 percent of Russians depend on the state for either their livelihood or handouts and a crippling lack of investment in both infrastructure and plant and machinery shackle the countries push for a brighter economic future.

In addition to this array of contradictions there is another, possibly bigger issue – generational tensions.  Older Russians who were born, educated and programmed during the Soviet era have an attitude and approach to life and business which is in sharp contrast to the younger generation who have been raised in a slightly freer, more liberal environment.  These tensions can be seen in the macro-Russian issues such as politics and economics but also in more micro issues – such as internal and external relations within a business context.
This is just one example of the many, many cultural issues that need to be factored into any business relationships you are engaged in or contemplating with Russia.  The Russian approach to business is very heavily influenced by Russian cultural characteristics and the impact of the Soviet past.  In fact, Russia ranks fairly high on the World Bank Group’s index of difficult places to do business.

Before starting any business dealings with Russia or Russian companies, it is strongly advised that you do some serious research into the way in which business is executed in the country and gain a thorough understanding of Russian business culture and Russian business etiquette.  Look at, and understand, Russian communication styles and their approach to meetings and leadership – this can help you steer your way through the choppy waters of Russian business practice.

This Russia country profile is designed as a starting point to help you begin to wrestle with the way things are done in Russia and gain an understanding of Russian business culture – but it is only a starting point.  When you have read this country profile, why not invest in one of the books suggested in the reading list or, better still, talk to Global Business Culture at  Global Business Culture are world leaders in the field of the impact of cultural differences on international business performance and have assisted a large number of companies who are working with, or wish to work with, Russia.