UK companies still thriving in Russian downturn –but only if you understand the system
With Russia’s main stock exchanges plummeting recently – the MICEX alone has dropped 74 per cent from its May 2008 peak – it seems like it could be a good time for British companies to avoid doing business in the country. Yet some British businesses are reporting that the economy is still offering profitable opportunities, but only if you are prepared for the unique challenges of the Russian system.
Antal International Russia, part of British recruitment firm, the 510 Group, has been established in Russia since the early 1990s. Its managing director, Tremayne Elson, says that, while the financial services sector is definitely suffering, consumer and production markets are still holding up well. “The staffing situation had got out of hand in the boom years with relatively average people able to double their pay overnight by simply changing jobs. What we’re seeing now is a return to normality rather than a slump in demand for good managers and professionals.”
With nearly twenty years’ experience in Russia behind him, Tremayne gives the following tips for British companies keen to work within the country:
1) Expect a lot from local staff - The level of education in Russia is incredibly high across both humanities and science subjects. It’s not uncommon for the vast majority of your local employees to have a degree, maybe two and there will be a rich sprinkling of PhDs as well. They’ll also almost certainly have a high degree of fluency in English.
2) Get round bureaucracy - There is an entire service industry built around expediting and dealing with state bureaucracy, from procuring visas to dealing with tax, labour law, customs and other compliance, registration or licensing. You can do it yourself but it’s just easier and actually cheaper in the long term to give these tasks to commercial agencies. Often their fees are a fraction of the opportunity and actual costs you will incur yourself.
3) Work with, not against, the authorities - On our last tax inspection we were advised to find some small areas of non compliance so the tax inspector could levy a nominal fine. What we paid in kopecks would have been exceeded in tea and biscuits had she tried to find something herself!
4) Don’t worry unduly about crime - Crime in Moscow is no worse than any other major world city. I’ve lived here for nearly 15 years and been burgled once. They stole a suit, an out of date passport and an iron that didn’t work. If you see a man in a oversized suit, unironed shirt being stopped by passport control then that’s my man, so please contact my local militsia!
5) Be patient - Time invested in personal relationships should not be underestimated as a key element to success. Many business people come to Russia expecting to meet, greet and sign. Because of this they often head home with the view that you can’t do business with Russians, but that’s simply not true.It may take one or two more meetings to achieve the goal, but after this come the rewards.
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