Pros and Cons of Doing Business in Russia
It’s the largest country in the world, and with that vast land mass comes a vast economy. There are ups, downs, goods and bads about Russian business, many of which you’ve probably already heard of, and all of which you should seriously take into consideration before deciding it’s the road for you — now is not the time to jump the gun.
So, what are these ups and downs and goods and bads I’m speaking of? Lets explore:
From 2000 to 2010, Russia’s GDP growth averaged 5.3%, and that’s including a fall of 7.8% in 2009; it’s also the world’s seventh largest economy by purchasing power parity.
The economy is expected to grow from $2 trillion in 2011 to over $3.2 trillion in 2017; coupled with one of the lowest levels of public debt of any major economy.
There are over 140 million consumers with increasing incomes, and one of the most highly skilled workforces due to a strong education.
The country has huge array of natural resources, including 35% of the worlds gas production and exports and 23% of the worlds forest resources.
They have a very attractive taxation system that’s aimed at promoting investments and developing the economy.
It can be difficult to obtain real estate; administrative processes can be lengthy; and expenses are high, the same can be said for import taxes.
Common business tactics are unenforceable and negotiations often occur in place of contracts.
The business policies and procedures of Russia change often, so you need to stay up to date to make sure you’re not violating any laws.
Then there’s the often heard about corruption. There’s seemingly unavoidable bribery; overcharged licenses, registrations and inspections; payoffs to organized crime; and questionable safety, environmental and customs violations that can be claimed.
While there are some obvious difficulties and rather questionable practices, this lucrative market is not out of reach, but it’s imperative that you do your research, look at the market you want to enter and find other success stories that you can model yourself on. There have been many companies that have found success, but there have also been a number of companies that have struggled with establishing themselves or flat out failed; A big plus is if you can keep a positive relationship with the Russian government, they’re not the best foe to have — this is going to be a lot easier if you learn Russian, take some classes and get your Russian language level up to par so that you can effectively communicate, inquire if you need any more info about this. Remember, the trick is to cover all angles, if you set yourself up properly there’s a big economy there waiting for you to take advantage of.