Conducting Business in Russia

The Russian Federation, commonly known as Russia is a federal multiparty with two legislative chambers. The first being the upper house, also known as the Federation Council and the second being the lower house, also known as the State Duma.
Based on their constitution, Russians have a dual executive which consists of the President, who is the chief of state, and the Prime Minister who is the head of government.
The official language for Russia is Russian.

Doing Business in Russia

Russia is a highly ranked emerging market in the world with consumers who are rich and willing to spend. This makes it an attractive market for any investor.
As an investor, if you are looking to tap into new markets by venturing into Russia, ensure that you understand the ins and outs of doing business in Russia. You will be governed by new regulations and will be required to work with or in competition with Russian entrepreneurs. A good understanding of the process of starting and running a business in Russia is therefore important.

Managing Russian Employees

In Russia, people still strongly uphold traditional standards and values which play a huge role in how business is conducted.
For example, Russians value an open and honest approach to work. You need to establish your authority quickly since they respect both status and technical expertise. It is also important that you appear friendly. Russians can argue with you at the beginning just to understand what you stand for. You need to be assertive with your values and uphold your dignity at all times.
In addition to that, you need to understand that in Russia, patience is a virtue when doing business. Russians have a fascinating way of doing business that strongly involves strong hierarchies and involves certain formalities. This might delay the overall business process but to them, it is very important.
In Russia, there is a common word known as ‘blat’ which is Russian for ‘connections’ or ‘influence’. It involves an exchange of favors. That is, when you do something for someone, they now owe you a favor. Gifts, of monetary value or otherwise, are often part of this exchange.

Punctuality

Russians highly regard punctuality and they expect foreigners to arrive on time. Nevertheless, a Russian business partner might arrive at a meeting late just to test the patience of their counterpart. These meetings may also not have a specific agenda. The agenda will be determined by the Russian executive.
This means that you should always allow plenty of time for each meeting. Not only can they start late, but they may also run overtime and be followed by lunch or dinner to allow them to acquaint themselves with each other.

Negotiating

Russians have a very strong approach to negotiations, to most, it is a ‘power game’.
When negotiating with Russians, you need to be factual and include all levels of technical details. Most Russians do not make compromises. It is often considered morally inappropriate and seen as a sign of weakness. Russians would rather out-sit the other negotiator and gain more concessions from the other side. It is not uncommon for people to walk out of meetings during negotiations.

Payments

The majority of Russian firms may look prosperous and full of potential at first glance. If you are planning on investing, you should select a partner upon full knowledge of their assets and control.
When it comes to payments, the payment method usually varies depending on the business model and the relationship with the Russian partner. Russians will often request for some funds to be paid to them directly in cash or to an account in a foreign bank. You need to be prepared to propose other payment options if they are available. Requesting advance payment for goods and services is often advised until you have established a business relationship.

Joint Ventures

If running a joint venture, one tactic that they use is to allow the foreign partner to own 51% of the joint venture. However, contracts usually require unanimity among the partners for major decisions, so 51% is not a controlling interest. Additionally, their regulations are in constant flux which makes it the biggest liability to owning a joint venture. Therefore, do not expect your Russian partner to be up-to-date with the legal issues involved.
Do not be perturbed when you discover that something you did yesterday is obsolete tomorrow that is just how it is. Likewise, some of their laws are unclear and their interpretation is subject to change. To avoid all this, you need to get yourself an expert in Russian Law.

Business Entertaining

Entertaining is an important part of conducting business in Russia. When invited out for lunch, dinner, or drinks in Russia, you can never be certain of what to expect. It could be a simple get-together to build relationships or it could be a detailed business meeting to complete a deal.
Whichever the case, you can be sure that the meal is going to be lavish with exquisite drinks, more than enough to keep you going for the rest of the day. You need to appreciate the kind gesture and reciprocate it.
When it comes to drinking, Russians are very confident in their ability to drink heavily and remain clear. Most often than not, they prefer conducting business when you are drunk. When having drinks, it is important to know a few toasts, the common one being ‘Na Zdarovye’ meaning to Your Health.

Greetings

Russians only display affection in public during a greeting. With strangers, they shake hands and state their name rather than uttering a polite phrase such as “how do you do”
With relatives and close friends, they engage in a noisy embrace and kiss each other on the cheeks.

Titles

Russians address each other by their first and patronymic names. Alternatively, they might also use a bewildering amount of diminutives and nicknames.
Their names are listed in the same order as in the west but the middle name is patronymic. For women, if their surname ends with the letter a, for example, Medvedev’s wife she would be referred to as Mrs. Medvedeva.
If a Russian has a professional title, it is advised that you always use the title followed by the surname. If he/she does not have a title, use Mr, Miss. Mrs, Ms plus their surname.

Dress Code

Business attire in Russia is conservative. Generally, Russians prefer European style more than American dress style.
When doing business in Russia, you should wear well-cut clothes, this helps you appear refined.
If you are in Russian during winter, you need to have warm clothes. You can buy Russian-style hats and gloves upon arrival.

Summary

Without help from a local, it can be quite difficult to do business in Russia. This is mostly because of their laws and the fact that they do not make decisions immediately. Decision-making usually requires some deliberation and connections that are done in private.
Most importantly, when conducting business in Russia, you need to practice patience and avoid any sort of conflict or confrontation.