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Disclaimer
Article is based on author’s experiences while doing business in Russia between
1995-1999.
Many of the facts cited in the case may not be true in current business scenario of
Russia.
Contents
Seven Characteristics of Russian Business1
Russian business Psyche2
Characteristics of Russian negotiator3
Guidelines for Negotiating4
Country- Overview
Source: KPMG report 2012
7 Characteristics of Russian Business
Russian Businesses are a MESS
Cluttered Physical plants
Handwritten financial records
Slow adaption of Western standards
Still Operate on primitive BARTER SYSTEM
Short of working capital
1.
7 Characteristics of Russian Business
Production driven system
Focus is not on developing business strategies.Track the flow of inputs and outputs, heedless of whether value
had been added or subtracted, Money made or lost.
Primitive Financial Markets
Communist accounting standards- Impossible for Non-Russian to read. Still using RAP and not IFRS.
Tax system is such that it allows to falsify the records
Lack of transparency- External & Internal
7 Characteristics of Russian Business
Questions on OWNERSHIP & CONTROL
Companies often do not know the authority or the balance sheet of the entity they are dealing with
Lack of Legal Institutions
Corporate insiders can often refuse to recognize transfer of shares or simply steal shares of companies
Contracts are negotiated agreements of intentions but not hard-core promise.
7 Characteristics of Russian Business
Bargain everything in Russia
Everything is Bargained in Russia=From stable assets to salaries of skilled employees !
The Russian Business Psyche2.
Russian Philosophy
“START big,
MAKE it BIGGER approach”
Western Philosophy
“CLASSIC VENTURE CAPITAL
APROACH”
Start small Grow Big
Philosophies of doing business
2 kinds of Russian Businessmen
OLDguard
Entrepreneurial trader
Relationships and egos count
more than Bottom Line
Bringing western goods to Russia and distributing
them.
What can you expect from a Russian Negotiator?3.
Characteristics
Anchor High/ Refuse to BudgeSigning Protokols
Negotiation with Emotions
Different sense of timing
Arms control negotiation
Savior Complex
Guidelines for negotiating4.
BeRealistic
About system, structure, people& competency.
About contextual factors like Travelling In Russia, Hotel facilities
etc.
About your own expectations
About length of time yournegotiation will take
Guidelines for negotiating4.
BePatient
Match their patienceIn order to close the deal.
Guidelines for negotiating4.
Build relationships
and trust
Know about the potential partner.
Don’t hire a RussianTo represent you.
Negotiate face to face.
L O G O
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