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The Pragmatics of business in Russia Emita: Russia – Looking Further East 18 th October, 2007

The Pragmatics of business in Russia Emita: Russia – Looking Further East 18 th October, 2007. “Darling, they’re sending me to Russia…”. Overview of Russia. Largest country in the world A dynamic process of change in every sphere Politically sensitive Economically resurgent Unpredictable

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The Pragmatics of business in Russia Emita: Russia – Looking Further East 18 th October, 2007

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  1. The Pragmatics of business in RussiaEmita: Russia – Looking Further East18th October, 2007

  2. “Darling, they’re sending me to Russia…”

  3. Overview of Russia Largest country in the world A dynamic process of change in every sphere Politically sensitive Economically resurgent Unpredictable Former superpower, struggling to assert its position Autocratic, not traditionally democratic

  4. FDI slow Albion: (Overseas) Ltd

  5. FDI in Russia (2006) 2006 FDI nearly $14 bn; 82.3% from: ► Luxembourg ► Cyprus ► UK ► Netherlands ► France ► USA ► Germany ► Switzerland ► India Main trade partners (54.1% of trade turnover) ►Germany ►Netherlands ►Italy ►Turkey ►Poland ►UK ►Finland

  6. The trend of FDI into Russia:

  7. Albion: (Overseas) Ltd Russia’s Meteoric Rise

  8. FDI slow Mafia Corruption Bureaucracy Non-Payment Albion: (Overseas) Ltd

  9. Doing Business in Russia Devaluation: August 1998 “It was like the american dream in reverse: we woke up poor”.

  10. FDI slow Mafia Corruption Bureaucracy Non-Payment IPR Corp. Governance Language difficulty Albion: (Overseas) Ltd

  11. Albion: (Overseas) Ltd “Два пивa, мой друг платит” David Cant Circa 1986, 1987, 1988, 1989, 1990, 1991, 1992…..

  12. FDI slow Mafia Corruption Bureaucracy Non-Payment IPR Corp. Governance Language difficulty Entrepreunership Security issues Legislative and political issues Cultural barriers Albion: (Overseas) Ltd

  13. Genghis Khan Repressive Czarist Regime (Ivan the Terrible) 1861 Emancipation of Serfs 1905 Russo-Japanese War 1905 Failed Revolution 1906-1910 Black Hundreds’ Revenge 1910-1913 Largest army on earth 1914-1918 (1916) World War I 1917 Bolshevik Revolution 1918 Romanov Family shot 1918-1920 Civil War 1921-1928 USSR is born; Lenin dies, Stalin takes over 1929-1940 Confiscations, Show Trials “Industrialisation” 1939 (1942) -1945 World War II 1946-1952 Zhdanovshina, Cold War, Atomic Test 1953-1963 Warsaw Pact,Berlin Wall 1964-1975 Oil Crisis, centralisation 1976-1985 Stagnation, Afghanistan 1986-1988 Glasnost, Perestroika, oil 1989-1991 Wall falls, USSR ends 1992-1999 BNY, chaos, oligarchs 2000-2003 VVP, Centralisation, Autocracy 2004-2008 Oil Enrichment, Economic Growth “The only country with an unpredictable past”

  14. FDI slow Mafia Corruption Bureaucracy Non-Payment IPR Corp. Governance Language difficulty Entrepreunership Security issues Legislative and political issues Cultural barriers Economic instability Remote Location Weak Banks Partner difficulties Albion: (Overseas) Ltd

  15. Doing Business in Russia • Loyal • Dependable • Thorough • Resourceful • Pragmatic Phlegmatic Stubborn Direct Unresponsive Bureaucratic Hierarchical

  16. FDI slow Mafia Corruption Bureaucracy Non-Payment IPR Corp. Governance Language difficulty Entrepreunership Security issues Legislative and political issues Cultural barriers Economic instability Remote Location Weak Banks Partner difficulties Inflation Demographic Crisis Weak Military Brain Drain Alien Business Environment Albion: (Overseas) Ltd

  17. Meetings The meeting room Purpose and agenda Hierarchy: Delegation Head Them/Us: seating Decision fakers, Global Industrialists… Leading and managing Interpreting Silence & cigarette lighters Presenting of gifts Concluding a meeting

  18. FDI slow Mafia Corruption Bureaucracy Non-Payment IPR Corp. Governance Language difficulty Entrepreunership Security issues Legislative and political issues Cultural barriers Economic instability Remote Location Weak Banks Partner difficulties Inflation Demographic Crisis Weak Military Brain Drain Alien Business Environment Capital Flight Climate/Size Lack of infrastructure Accountancy Stds High cost of entering the market– time and money Albion: (Overseas) Ltd

  19. Albion: (Overseas) Ltd Short-term “leg-up” into the market Market Introduction Finding Distributors Troubleshooting Cost-savings • Long-term “Footprint” Your Office in Russia Local “Ivan” Consignee Address, Legal entity Business support by another business • Can be shared between companies • Training people doing business in Russia

  20. Increasing number of companies friendly tax regime Appetite for business with UK Geographical Proximity Large pockets of wealth Less expensive than you think Growing economy political stability 99% literacy skilled low-cost labour 11 time zones from east to west High margins Customs, certification, no problem! Albion: (Overseas) Ltd

  21. Albion: (Overseas) Ltd01732 373020david@albionoverseas.com • Visit the Market • Visit the Market again! • And again…. • No Stock? Don’t advertise! • Spend your money wisely • Sell in $ or €, not £ • Literature and cards into Russian • Don’t expect answers to emails or faxes • Don’t assume they’re out to get you! Size doesn’t matter Understand Russia Be patient Use specialist help Make no Assumptions Be Positive Mind your Language! Get above the Power Line Get past the Relationship line Consider your product or service. Need for adaptation?

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