India Russia business- How to boost!!

When it comes to doing business with Russia, Indian corporates and businessmen generally are confused as they have few concerns in mind. To put it in simple terms, they don’t know how to do business with Russia. Where to start and how to proceed?

There are some basic things I will cover in this article regarding doing business with Russia. First let me enumerate the general concerns of common people and businessmen in India regarding Russia.

1. There are mafias in Russia and no laws to protect businesses - This is absolutely ridiculous. There are all kinds of laws and no business takes place without proper documents and contracts which are taken into consideration by the court in case of any disputes. In most cases of business disputes, courts have decided in favor of foreign businesses taking into consideration the contracts and agreements. So it becomes absolutely necessary to draft contracts and agreements properly before doing any business. So one should take the services of good lawyer who will make the agreement foolproof using words which will cover everything. As published by the World Bank, Russia’s ranking in enforcing contracts is very high at 12 as compared to India’s dismal ranking of 172.So this clarifies the concern.

2. Russia is a poor country and no growth – Russia’s per capita GDP is US$ 14,000 or so as compared to India’s per capita GDP of mere US$ 1,500. So, it is not poor country. In last 2 years, Russian economy slowed down significantly because of sanctions and decline in oil prices. But things are looking up again. Russia is very advanced in technology particularly in space, railways and metro, aviation, defense, construction and infrastructure and agriculture sectors. So there are tremendous opportunities for Indian companies and businesses for cooperation and collaboration. The best part of doing business with Russia is that high level technologies and products are available at half or two third of price compared to Europe or USA.

3. Bureaucratic and difficult business environment – Russia’s ranking given by World Bank in ease of doing business is quite high at 40 as compared to India’s ranking of 130. So this is also just a misconception.

4. Language problems- This is genuine concern for doing business in Russia. It makes sense to learn Russian language. One has to understand that outside Europe and USA, one has to learn local language for doing business. Still this problem can be overcome by hiring local Russian people. The best way to go about doing business with Russia is either establish a local office or have a representative based in Russia.

Having discussed the common fears or concerns in the minds of common Indian people about Russia, I would now elaborate on the ways for successfully doing business with Russia.

1. As discussed above, contracts and agreements are sacrosanct in Russia. So first step in starting anything is to make foolproof contract with the help of good lawyer well conversant with Russian laws. Once the contract is in place, half the battle is won. In fact, Russia’s ranking in enforcing contracts is 12 as compared to India’s dismal ranking of 1 72. Documentation is the most important for doing anything in Russia. So one needs to start doing any business with proper documents.

2. Need to have a local office or representative in Russia - Russian companies and people would not do business unless they get comfortable with whom they are going to do business. The comfort only comes when they can see the person who is based in Russia whom they can contact in case of any problems regarding quality, payment, etc. This also assures them of ones seriousness in doing long term business and affirming that you are not a fly by night operator.

3. 3N is the key – 3N stands for Networking, Networking and Networking only. In Russia, business happens only through networking and references. Without networking and right connections, it is difficult to do business. The reason being that trust is very important in any business and Russians don’t trust easily going by the history and so if one goes through someone’s reference, it gives confidence.

4. Patience and perseverance is required for doing business with Russia – Since building trust and friendship requires lot of time, getting business deals done also takes time. But it is necessary to keep in contact with the client and networking with them and invite them for some parties and concerts, etc. This helps in bonding with the clients. Because once you have earned a Russian’s trust and has become your friend, normally he will be friend for life. He or she will not go shopping around trying to find cheaper alternative to your offer. Once you have got into his list of buyers or sellers for a particular thing, you will remain there and will continue to get orders unless you goof up or default big time.

5. Written agreement and cultivating trust and friendship is very important - Once a Russian has agreed and starts trusting, he will not try to bypass you unlike Indian mentality even though it may be only a verbal agreement.

6. Business deals in Russia in general get finalized in restaurants and bars over food and drinks post office hours and not in offices. This also helps in winning the trust.

7. One needs to understand the social customs and etiquettes - It is considered big honor if you are invited by a Russian to his or her house as generally one gets invited only if one is considered a friend or family, so one needs to understand the social etiquettes and customs. When you are invited, you should always carry a gift which can be flower bouquet or bottle of wine or champagne or chocolates, etc. Once in the house, you will be directly taken to the dining table and all discussions will happen there over rounds of food and drinks. Even if you do not drink alcohol, don’t refuse it and hold a glass in your hand. Refusing the drinks is considered insult.

8. In general, Russians like gifts and it is not considered inappropriate to give and accept gifts even in companies. So try to carry some small gifts for key contacts of the company with whom you are going to meet for business.

9. Adhering to timelines and quality is very important. There have been instances in the past of selling inferior quality than agreed and taking very long time to deliver which has sullied the reputation of Indian businessmen. I would give an example of textiles business. Though India is one of the largest textiles exporters but exports to Russia is minuscule and much below the potential. In fact, Turkey, Vietnam and even Bangladesh get bulk of Russian business. The reasons are simple, Indian companies do not adhere to timelines and price. Russia has 4 seasons in a year and so every 3 months fashion changes. If summer clothes are not delivered in time then it gets wasted as summer is for a short time only and so on.

10. In my work experience with few Indian corporates, I have observed that we have more bureaucratic work environment in private companies also and bigger the company, more bureaucratic the work culture is. This is also one of the reasons for delays as accountability is not fixed for each and every individual. We have excuses like workers went on strike or it was bank holiday or it is our festival and so we were not working and so delay has happened. This does not work and if you want to do business with Russia, you have to make provisions for all these eventualities and then only give commitment. Because once agreed and signed, it needs to be respected else you will lose that client forever.

11. Russia is price competitive market - Gone are the days of Soviet Union when it used to be closed country and very few people travelled outside and choice was limited and so no competition. Now Russians are the biggest tourists and travel all around the world and so know the price and quality of things. So, one has to be price competitive along with quality for being successful in business with Russia.