Doing Business Russian Style


To explain how to do business in a specific culture without using stereotyping is almost impossible but it might be beneficial to start by sharing those stereotypes because they are often true although exaggerated or simply outdated.

 

 

I found the following video created by  “2sharp creative brand agency” for Russian lighting company Tochka Opory very useful, especially for new expatriates coming to Russia for business. It is funny and provocative enough to ignite some interesting debates about various communication styles across cultures.

 

To put in perspective this video, I have highlighted some very good points written by Konstantinos Tsanis in his excellent article: Do’s and Dont’s when doing business in Russia combined with useful tips from Interdean’s  Moving to Russia Guide  and some other facts from the book: The Emerging Market in Russia - For Dummies

Risks of doing business in Russia

Some Russians complain that international investors focus too much on Russia’s risks while ignoring similar risks in other markets. For example, Russia gets demerits because it repealed of many of the glasnost-era freedoms but China’s repression is overlooked. The Russian resentment is probably valid, but even so, Russia has plenty of risk:

  • An aging population and brain drain: The average age of the population in Russia is 38.5 years, and the birthrate is below the replacement rate. This situation raises the question of whether Russia will have enough workers to support its retirees and enough workers and consumers to support a more diversified economic base.On top of the declining birthrate, Russian scientists and engineers have a long history of leaving for greener pastures in other countries. However, as Russia’s economy becomes more stable, the people will feel more confident about the future, which in turn will boost the birthrate (the government already pays a bonus to women who have a second child) and lower migration.
  • Corruption and crime: Like many formerly Communist countries, Russia has a long-standing culture of corruption because that’s how people got things done. That corruption scares off foreign investors. The government has been addressing the issue, and if investors notice a real change, Russia will become a more attractive place to do business.
  • Reliance on one key industry: The Russian economy is based on oil and gas. That’s good because global demand for carbon-based fuel is huge and growing. However, by being so narrowly focused, the Russian economy is directly exposed to price fluctuations. Also, the planet’s oil and gas will be used up someday. The lack of diversity in Russia’s economy creates a big challenge over the long-term.

On the plus side, Russia has the potential to have a more diverse economy. It has a range of natural resources and geography, and its people are talented. Diversification should happen.

The Russian Soul

That is something that you feel immediately when you arrive in Russia, even in Moscow : Russians are not Westerners . The term Russian soul  has been used in literature to describe Russian spirituality. The Russian soul can be described as a cultural tendency of Russians to describe life and events from a religious and philosophically symbolic perspective. Whether this is true or not can be challenged by  the fact that younger Russians are strongly influenced by globalization and economic development opportunities. Nevertheless Russians are really proud and appreciate the arts and rich history of Russia.  Russians  are almost always very educated, whilst in most Western countries only 50-60% of people receive University Education. Russians always have an opinion about politics and current affairs.  So it’s good for you to understand that education is a value, rather a necessity.

Russians do not tend to make a distinction between hard logic and emotion, which governs the Western culture. They value intuition rather than rationality. They will make business with you because they like you,  not because of economical or technical arguments based on rational analysis.

The importance of informal relations

As mentioned above, Russians will make business with you because they like you. This means that, even though a business meeting will always start in formal ways, a business will develop only through the creation of informal bonds. In other words, even though in the beginning of a relationship they might appear ‘cold’ and reserved, they are much happier in an environment where they can also express their feelings and emotions. That’s why meetings might last longer than expected; Its much more important to complete the business through a  good hand shaking rather stick to timetables.

Other things to consider when doing business in Russia

  • Russians do not value nyeculturny (without culture) behavior. So, don’t swear, don’t forget to leave your coat in the cloakroom, don’t stand with your hands in the pockets, and do not shout in public.
  • Do not start with a joke. Instead, keep your presentation serious, include facts and technical details. You can inject emotion in your discussion slowly. In my personal experience humor is rarely translated and what makes some people laugh in one culture may offend people from different countries.
  • Even though it’s not of primary importance, your blat (personal network) matters as well. So use it and refer to it accordingly.
  • Constant communication through visits and phone calls are crucial. Moreover, when a business has been set up, monitoring the performance is critical.
  • Re-negotiations are always present, so even though you will have a contract, expect the unexpected.
  • Bring gifts with you: Russian people value gifts. Good gift ideas are brand-name products of high quality. With home visits try flowers, alcohol and branded food products. Avoid cheap products, they can have a negative impact in your relationship

 

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2 thoughts on “Doing Business Russian Style

  1. Lola Elistratova November 18, 2012 at 12:30 am Reply

    Hello Anne,
    just some remarks:
    “Attitudes and Values when doing business in Russia”

    “Emphasis in moral laws” – It’s not true. Ethics and deontology are important words in Europe, specially in France, but not at all in Russia.
    “Importance of spiritual principles” – Spirituality is not connected to the business. These are completely separate fields.
    “The joy of working” – What does it mean?
    “Tendency for teamwork, which has its fundamentals on a history of collectivism” – Network, not teamwork
    “Making of long horizon plans with sweeping actions” – Not at all. Long-term plans are dead since Soviet Union time. Business has got a very short orientation.

    Don’t believe what they are saying in some books!:)
    Have a nice evening.
    Lola Elistratova

    • Anne Egros, Global Executive Coach November 18, 2012 at 5:27 pm Reply

      Hello Lola,

      The whole idea of this post is to stimulate discussion and produce ideas as I think there is no one truth about one culture.
      So I thank you for sharing your opinion, I agree with your points with some nuances.

      A culture is a living thing and I found what I read in books or articles from “experts” in Russia not necesarily valid today and what I experiment. What I like in the video is : “You Never Know”,, that is a very good attitude to approach a new market, that I translate as “be aware of business etiquette and traditions, but be open too, because you never know”!

      By the “joy of working” I think the author of the article I mentionned is reffering to the fact that, at least in Moscow and for white collars, people work very hard and often on weekends or until midnight even the secretary. So money is not the only reason why people work so hard, they enjoy what they do. Young people, even those in their ealy 30s, have more opportunities to get promoted to a management position than any other western cultures So they stay loyal if they see other benefits than just money. If they don’t enjoy it they quit. If you compare with French employees today, I definetively find Russians more enthusiastic by what they do.

      Russians authorities have huge long term plans such as those of “The Moscow City Administration” on “On Strategy for Development of the City of Moscow up to 2025”. Improving Russia’s healthcare system is also part of the “Strategy 2020 national social and economic development concept”. Russian Railways are preparing a concept for Trans-Siberian traffic down to 2020 etc. This is important for foreign companies to be part of such plans from the beginning since it takes even more time and trust to work in joint-ventures.

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