Russia – Strong economic opportunities for strong organisations

The Russian Federation is the world’s largest country geographically, stretching across nine time zones

and sharing land borders with 14 countries from Scandinavia to the Pacific Ocean. The Russian

Federation was formed by the breakup of the former Soviet Union, and was officially recognised in its

new configuration in 1991.

Russia has a long and proud, if often turbulent history. It was the dominant force over the Eastern

reaches of the Roman Empire from the Middle Ages, after the fall of Constantinople in the 15th Century.

Led by a succession of Tsars, its territory expanded from its Western borders at the edge of Europe

across most of Northern Asia. In the early 17th Century, the Romanovs began a 300 year rule of

Imperial Russia, lasting until the Russian Revolution at the end of the First World War.

The aftermath of the Russian revolution and civil war saw the establishment, growth and eventual

disintegration of the Soviet Union, the world’s first government modelled on socialist principles.

Starting with Lenin and followed by Stalin, the government of the USSR was centralised, establishing a

centrally controlled, planned economy, structured collectively and led by authoritarian rule. The USSR

industrialised and developed a strong military (and space exploration programme) over the next

several decades. However, economic difficulties also existed with the scarcity and uneven distribution

of basic goods, eventually contributing to its collapse after a long period of economic stagnation.

Russia’s population is currently estimated at 143 million. More than 80% of the population is ethnically

Russian, with most of the remaining residents belonging to ethnic groups from its current regions or

former Soviet Republics. Although the former USSR was never officially atheist, it effectively

discouraged and restricted many religious practices. Today’s Russia practices a mix of religions (and

no religion), with more than 40% of the population identifying as Russian Orthodox, and significant

minorities following Jewish, Muslim, Buddhist and other Christian faiths.

Russian is Russia’s official language, with some regional languages also recognised within those

regions. Although some younger Russians may speak English, overall the ability to speak English is

mixed, and should not be automatically expected. Many organisations may need to work with an

interpreter or translator if they do not employ any Russian speakers within their organisation.

Although Russia’s political and social challenges can seem daunting to outsiders, it continues to enjoy

steady economic growth. Those organisations that have a robust attitude toward new business

development may be wise to explore Europe’s nearest BRIC (Brazil, Russia, India and China) country

for expansion opportunities.

Why Russia?

Russia is a member of the G-20 major economies and, in 2011, joined the World Trade Organisation. It

is also the largest economy of the CIS (Commonwealth of Independent States), comprised of many of

the former Soviet Republics mostly along its southern border. Although its growth rate is not as great

as that of China and India, the IMF estimated Russia’s GDP to be 3.5% in 2012.

Russia is a free market economy, with some economic controls. Natural resources such as oil, natural

gas, agriculture and forestry products account for more than 80% of the country’s export revenues.

In addition, the Russian economy is strong in the areas of manufacturing, transport, science, technology,

software development and engineering disciplines.

Although Russia is enjoying the rapid growth of a middle class, it is also experiencing economic

challenges. Most of the growth is in and around Moscow or other cities in the West of the country,

leaving much of the rest of Russia little better off than during Soviet times. Russian infrastructure is

often old and poorly maintained, sometimes to the point of crumbling. It also has environmental

challenges, with some areas amongst the most polluted in the developed world.

Foreign organisations looking to do business in Russia are in a position to consider any of Russia’s

market segments that are not considered to be Strategic Sectors defined to be in the interest of national

security, which hold many restrictions for foreigners. Russia’s export markets are growing, particularly

in the energy and scientific sectors.

Cultural implications of doing business in Russia

Russians are proud of their cultural heritage and appreciate anyone who takes an interest in anything

Russian. Russian art, music, literature, dance, architecture, and sport are all topics of interest to most

Russians. So are fashion, the latest technology, and other outward displays or wealth and status.

Organisations looking to do business in Russia should keep in mind that, although Russians can be

transactional in their attitude toward business, solid business relationships must be established and

nurtured if your organisation wishes to remain in the market long term. Most business relationships

are established through a recommendation or other connection. Blat – the Russian term loosely

meaning connections and reciprocity – is how business is effectively conducted. Getting things done

can often take longer in Russia than in some Western countries, often due to significant bureaucratic

requirements. Similar to blat, Russians also cultivate their syvasi or connections in high places to

facilitate business.

Many outsiders may characterise Russians as untrusting. A sign of gaining a Russian’s trust is if they

ask you for a favour. Russians value a display of strength. They tend to judge your negotiation skills

by your ability to remain strong and gain as much as possible as compromise is generally regarded as a

sign of weakness. It is your obligation to earn a negotiated concession – Russians will be motivated to

win regardless of your negotiating abilities or concept of fair play. They will also almost certainly use

time to their advantage, especially if you reveal deadlines or other time constraints.

Russian communication styles are often described as blunt and very direct, with a very strong

handshake, sustained eye contact, loud tone of voice and a distinct lack of smiling. Foreigners should

try to reciprocate in kind as these are all meant to be signs of strength. Foreign organisations should

also be aware that Russian business structures value respect for hierarchy, authority and formality

more than most Western organisations. You should also ensure that your job title is clear as Russians

will generally prefer to meet with other powerful people.

Although Russia’s economic growth rate has slowed, it’s also enjoying economic recovery rates greater

than those in most developed economies. The future of Russian business is bright. Foreign

organisations can share in the country’s growth if they are prepared to dedicate time and effort into

building good relationships, show strength in their business practices, and to remain patient.

Why understanding Culture is so important

Intercultural competence is a critical skill that organisations and their employees operating

internationally can no longer ignore. A lack of cultural intelligence and sensitivity to the local

environment can prove costly for both the individual and the organisation. Poor working relationships,

failed negotiations, and exposing employees to potential dangers are just some of the risks that

unprepared organisations and their staff face.

Russia is an unknown entity for most organisations and their employees. Understanding the local

environment and people is vital if organisations are to be successful and their employees secure.

How can Communicaid help you to find success in Russia?

Being prepared for and addressing the often hidden and implicit values of Russian culture that drive

social and business behaviour will give you and your organisation the competitive edge when doing

business in.

We can help you to anticipate, manage and harness the cultural differences you may face when

operating in Russia through a series of training and consultancy solutions. By increasing your cultural

awareness and understanding of the new ways of doing business in Russia, our solutions will:

Provide you with a cultural framework for understanding Russian business practices

Increase your understanding of recent historical and political events and key players in Russia

Enhance your awareness of who and how to influence in Russia

Provide you with practical strategies for doing business and getting things done in Russia

No matter what your international project or challenge, we will work in close partnership with you to

understand your requirements and design a tailored solution to assist your organisation to achieve its

international business objectives.

Some of the solutions we can provide to organisations doing business in Russia include:

Images: © istockphoto.com/BondMatia/x-drew, Sean Locke, Nicole Waring | clipart.com

Whether you are sending employees to Russia on an international assignment or short-term business

travel, or if you have teams who will work virtually with Russian employees from another location, we

can provide targeted cultural and language training, consultancy and advisory services pre-departure

or on arrival in Russia to individuals or teams.

Key clients who have recently benefited from Communicaid’s cultural awareness and language

training and consultancy solutions include BP, Exxon Mobil, BNP Paribas, G4S, Barclays Bank, Rolls

Royce, Technip and Safran.

About Communicaid

Communicaid is a culture and communication skills consultancy. We have more than twenty years'

experience of assisting the world's leading corporate and public sector organisations to mitigate the

risks and maximise the opportunities of working in a complex and ever-changing international

environment.

With training centres in London, Brussels, Paris, Frankfurt and New York, combined with a worldwide

network of trainers, consultants and partner organisations, we are uniquely placed to meet your global

requirements wherever they may be.

© Communicaid Group Ltd. 2013