Entering the Russian marketplace: opportunities for Asian countries
Strong relationships are paramount – very necessary to spend time to build relationships and nurture trust with Russian business partners. Why?
1. Market is still dominated by large and complex Russian and Western entities who share hard-forged business relationships.
2. Recent economic strain compels Russia to seek new business partners – window of opportunity opens for Asian countries.
3. Despite steady improvements, business environment is still complex – strong local partners can help navigate the rules and market practice.
4. Loyalty is long-term in the Russian business perception – good partners are regarded as friends for life.
Offer differentiated products, invest in ground due diligence, hire capable Russian interlocutors, invest in payment protection.
1. Prepare to compete against European and American standards and quality with more competitive pricing. Russians are still used to Western quality standards.
2. Invest in physical due diligence to overcome low transparency. There is no reliable Bizfile equivalent in Russia. Desktop research does not give accurate picture.
3. Hire able interlocutors, not just interpreters. It is common that the same English words mean different things to a Russian and an English speaker. An interlocutor experienced in the norms of the sector can help prevent costly misunderstanding.
4. Ensure payment protections are in place. Financial sanctions have caused Russian businesses to suffer payment delays. Be ready to negotiate amicably while preparing for longer payment terms.
In a nutshell:
1. Russia and businesses will adjust to the new environment. Russia’s large resource base and highly specialised talent pool will provide stable foundation for future FDI and export growth. Russia will pay heed to maintain diverse economic ties with the world, instead of focusing only on its neighbouring European markets.
2. Competition in Russia was formerly from Western players. Going forward, Russia will pay heed to maintain diverse economic ties with the world, not just with the West. There will be additional competition soon from China and North Asia rivals.
3. The "window period” will not last. Russia’s pivot to Asia does not mean Western investors have left the market place. By end of 1Q2015, Asian bargain hunters have begun to fill the vacuum. Over time, the Russian marketplace is likely to become more, not less diverse, and more competitive, offering Russian customers a wider choice of price points and quality levels.