Guest post by Irina Fedorova. Originally from Russia, Irina has over 10 years’ experience in tech, working in multiple regions including Russia/CIS, Europe, Africa, China, Taiwan, North and Latin America. Her passions include development, innovation and start-ups. She is an expert on client relations, fundraising, early stage products, sponsorship management and partnership programs.
Because of its various landscapes and multiple niches, the Russian market attracts many tech companies looking to expand globally. But, while the Russian market is a great opportunity for expansion, it is also unpredictable; there’s no anticipating what will happen next. This is the reality, but don’t let it scare you away.
If you follow these insider tips, your company can tap into the great potential the Kremlin has to offer.
The Moscow skyline
Prepare yourself to work with serious and intense business people.
Because Russians are serious and straightforward—as is the Russian culture overall—it is important to remain formal and focused during business meetings. Meetings should start right away and should stick to key points. There should be no personal greetings, jokes, or storytelling.
In fact, less formal business meetings can upset Russian participants. As a Russian businesswoman, I was shocked when, during my first meeting with Latin Americans, there was joking and small talk for the first 30 minutes. Not comfortable with a less formal business environment, I almost hyperventilated! While I eventually learned to appreciate increased socialization during business meetings, that first time rattled me.
Because it is not commonplace or acceptable, socializing during business meetings with your Russian partners is likely to result in flat-out rejection. So, skip the socializing, and stick to the necessary details. What is your product or service? How much money can they expect to make? Be specific and stay focused on the meeting’s professional purpose.
Expect lack of market data and a dynamically changing landscape.
If you are a company looking to expand into the Russian market, there are few official ratings and little research data to help you do so. In the absence of such information, personal connections are extremely important. You must meet and get to know the experts in the field; their advice will be invaluable. It is best to befriend people who have insider knowledge of, or who have worked for, the company you are pursuing.
If you play it cool, believe in your own value, and know the market inside and out, you can make all the right friends in all the right places.
Once you have made friends in high places, regularly check in with them on the status of the partners you are hoping to work with. They can let you know when a company’s financial situation or goals have changed and help you consider the benefits and drawbacks of partnering with large or small companies.
When in doubt about the Russian market, don't Google, call a friend.
Take time to build business relationships.
Not only should you cultivate relationships with experts in the Russian market, but you should also nurture your relationships with potential business partners. Just because a company is resisting a partnership now, doesn’t mean they always will.
You can turn resistance into a future partnership by maintaining a professional and knowledgeable demeanor and by continuing to propose options for cooperation. Russians are not very good at providing direct feedback, but don’t be fooled by their silence. If they keep working with and listening to you, then you are on their radar. Even though they haven't yet decided how to work with you, there is a good chance you will get an amazing partner eventually. Keep asking and proposing options.
Maintain good relationships even if they don’t seem promising at first. It just might work out later on.
A friend of mine meeting the president of Tartarstan at a technology conference. A good example of relationship building in action!
Offer the Best Tech.
The Russian market is highly connected, utilizing all of the latest devices for business and communication. Because of its reliance on tech, the Russian market for tech may seem like a minefield of contradictions.
On the one hand, the price of a product should be competitive. Only companies like Apple can set overly-high prices. On the other hand, people will pay a lot of money for new features. Offering a unique product reduces competition and allows you to set higher prices.
Unique products will also stand out among other devices in Russian stores and tech publications. Make sure that trained salespeople in PC stores and authors of technology blogs can easily differentiate your product from others for potential customers. As in the US, many Russians inside and outside of the technology industry follow these publications, using them to make personal and business purchasing decisions.
Additionally, stocking and timing can keep you ahead of the competition. Always keep enough merchandise on the shelf and release it at the right time.
Master complex market entry procedures.
It is difficult to enter the Russian market because of complex market entry and clearance procedures. One of the main entry obstacles, among many others, is Notification. Companies must apply for this certificate before they can enter the Russian market. The application process can take several months, and specific documents, such as a transaction passport, may be required to complete the process. All of this can delay your schedule.
Because of these difficulties, even big players prefer to buy from distributors or via niche import-export companies that have experience and established credit lines.
Despite their complexities, however, you can master these procedures.
To do so, find a logistics partner with a warehouse inside the country or in Europe—Germany or Finland, for example. Having a Russian or European partner will keep the stock and delivery chain efficient, stable, and fast. Make sure your product is available for smooth delivery and your logistics partner knows how to import the product and prepare the paperwork.
Like the complexities of driving through Moscow traffic, one must learn to navigate through the complexities of Russian regulations.
Be honest and keep promises.
Russian culture values execution and performance over discussion and negotiation. Once you and your Russian partner have reached an agreement, you must deliver your product or service on time, according to the confirmed terms and no matter the circumstances. You must deliver no matter what, so be honest about your capabilities.
Russia may be a big country, but its technology market is small. Every player on the market learns about new deals, new shipments, and new market players quite quickly. News about malfunctions, dishonesty, or failures to deliver will spread like wildfire, damaging your company’s reputation.
While working in Russia, I saw this happen to an up-and-coming supplier. This company provided the same product to two key competitors on the market without permission to do so. This created a variety of problems for everyone involved; it complicated order executions, created a competition scandal, and even resulted in the supplier having to return funds to the two completing companies.
So, if you don’t want to end up hounded by money collectors demanding repayment, keep your business interactions simple—be honest, keep your promises, and deliver what you agreed to deliver on time.
Don’t let this happen to your company in the Russian market.
Approach Moscow differently from smaller regions.
Russia’s Technology market may be small, but it is also fragmented and complex. Spread across a large geographical and cultural landscape, it is natural that the key market players will differ from region to region. In particular, there are major differences between how business is conducted in metropolitan and regional areas. While price matters most in large cities like Moscow and St. Petersburg—even 50 cents can influence the deal being made—trustworthiness and established relationships matter more to smaller regional businesses.
Like New York City, Moscow is very business-driven, and companies here will prioritize business terms and a fast-moving market above all else. Relationships are not that important.
The situation is quite different in regions of Russia with smaller populations. There, businesses prioritize trustworthy partners and long-term relationships over markets and money. This is not to suggest that price is unimportant outside of Moscow. It definitely is. However, when conducting business in regional areas, a potential partner’s reliability is even more crucial.
While this may resemble how business is done in the US, there is a crucial difference. Whereas in the US, the economy is spread more or less evenly across metropolitan and less densely populated regions, Moscow and St. Petersburg alone account for more than 50% of Russian business.
Additionally, online services, including shipping and delivery, are not evenly predictable across the country. These services tend to experience more success in big cities such as Moscow and St. Petersburg.
Make the effort to travel to Russia.
Every culture conducts business differently. For Russians, travel to and familiarity with their country, is key. They trust partners who travel to them and are willing to meet with them face to face. A partner’s willingness to travel to Russia communicates a serious investment in the Russian market, as well as respect for their culture.
The internet and a variety of communication tools and apps have made it easier than ever before to talk with others around the globe from the comfort of our own homes, but if you truly wish to impress your Russian partners, you must abandon convenience. Traveling to them shows that you’re a serious partner and that you respect their cultural traditions.
Traveling to them may very well seal the deal.
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These 8 insider tips take time and effort to implement. They require professionalism, respect, knowledge, networking, and of course, nurturing and maintaining healthy business relationships. However, it is well worth the work (and airfare!). Breaking into the Russian technology market may be tricky, but it will ultimately benefit your company now and in the future.
Finally, always remember this: If you earn a Russian’s love, you are loved forever.