Doing Business in Russia

By Anna Shevchenko, Senior Consultant at Farnham Castle International Briefing Centre

Russia is the biggest country in the world, covering about one-ninth of the surface area of the planet.  Two-thirds of Russia’s territory is in Asia and three-quarters of the population live in the European part.  Its geography covers 11 time zones. Russia has a quarter of the world’s mineral resources and yet, its estimated 142 million inhabitants only make up around 2.5% of the world’s population.  Increasingly, Russia is a country of commercial opportunity and one of importance on the world business stage. 

Any executive attempting to do business with a foreign nation will find numerous cultural differences to overcome before deals are signed and projects are completed successfully.  Russia is no exception. 

In today’s global world it might be easy to assume two countries like Britain and Russia would be able to put their various cultural differences aside to conduct business successfully together.  However,  our respective cultural traits and values are often so deeply ingrained we are often not aware of their very existence and this in turn can create misunderstandings, inconvenience, damage to relationships, and sometimes, lost business without anyone really being sure ‘what went wrong’.

From a business perspective Russia is the twelfth-largest consumer goods market in the world and car ownership has increased more than eightfold since 1999.  However, although typical wages are rising there is a massive gap between wealth and poverty Just a small percentage of people are making large profits, with more than 40% of the population living below the poverty line.  In 1998 the crash of the ruble practically wiped out the emerging middle class overnight.  The business landscape is one of volatile opportunity.

So, what are some of the main Russian cultural values and beliefs which need to be understood to help smooth the path of any business transactions?

Firstly, it is useful to appreciate the importance the Russian culture places on building close, long term relationships.  The relationship comes first then business follows.  The right connections make all the difference between business success and failure.  In this sense, Russian culture is often described as a ‘high context’ culture.  On an individual level it is all about liking or trusting someone first then doing business with them.  Compare this to the typical British arms-length approach; after a brief ‘hello’ and handshake people like to get down to business quickly.  

However, even the simple action of a handshake could cause unease.  A British business man welcoming a Russian counterpart with an extended palm when opening the office door would almost certainly received a frown.   This is because there is an unspoken Russian rule that considers it bad luck to shake hands over a threshold.

Loss of face is also an important aspect of Russian culture, which is not really understood in Britain.  Where trust and a relationship has been successfully created, a Russian executive would rather promise than say a project cannot be delivered.  British executives find themselves needing to confirm and re-confirm arrangements to ensure things work to their pre-planned, target orientated project timetable.

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