Over the past year, Russia has made headlines by reportedly meddling within the US election and stoking the hearth of confrontation with Ukraine. Given the country’s reputation for controversy, it’s no surprise that companies face a variety of distinct challenges when doing business abroad in Russia.
However, the world’s largest nation also presents several unique opportunities that would make the proper company’s international expansion extremely successful. Here, Galvin International breaks down both the drawbacks and therefore the benefits of expanding to Russia, so you'll determine if it’s a strategic move for your business.
The Challenges
Preparing for the subsequent challenges when doing business abroad in Russia can prevent time, money, and energy:
Sanctions
In light of Russia’s aforementioned transgressions, the EU and therefore the US has implemented sanctions against the country and lots of other nations have followed suit. Such sanctions have a huge impact on imports and exports and may limit the operations of companies active in Russia. Have a glance at our blog post on sanctions and international business for more in-depth information on dealing with sanctions.
Vast size, varied markets
Russia spans nine time zones and features a big variety of markets. Make sure you specialize in your target market. for instance, if you're getting to found out in Sakhalin to service the local oil and gas opportunities there, commit it to memory is 8 hours before Moscow. Find local support that may offer you the responsiveness and on-ground assistance you need.
Corruption and transparency issues
The extent of corruption in Russia is difficult to quantify, but it’s known to be a serious problem, particularly within the judiciary and therefore the higher levels of the state. It’s crucial that you simply suit your home anti-corruption laws, e.g. all UK businesses must suit the United Kingdom Bribery Act, also as all anti-corruption laws enacted by the Russian government.
The Benefits
It’s also important to think about the benefits of expansion to Russia – despite sanctions and corruption; many aspects of Russian business are thriving:
Growing bourgeoisie
With Russia’s bourgeoisie rapidly increasing in size, many foreign businesses are finding that Russian consumers are highly receptive to their brands, particularly within the realm of luxury goods and food and drink. Counting on your industry, you would possibly find that Russia is home to the right marketplace for your company.
Investment prospects are looking up
Russia has initiated new investment programs and is encouraging foreign investment, which could prove beneficial for businesses looking to seek out funds and continue the expansion process.
Strong logistics and provide chains
Though Russia’s size can make logistics and provide chains a challenge, recent developments in transport links and infrastructure have greatly improved the logistical efficiency of doing business in Russia. Additionally, international expansion to Russia could open up opportunities to export to other countries within the Commonwealth of Independent States.
Companies that are ready to balance the risks and rewards of fixing business in Russia could find measurable success there. If you’re considering international expansion to Russia or the other location, Galvin International can assist you to determine the proper target marketplace for your company and walk you through each step of the worldwide growth process. Our one-stop international expansion concierge service provides expert guidance and implementation. Get in-tuned with us today to find out how we will help your business thrive in new markets.
Starting a business in Russia
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Opening a business in Russia
For Let’s Russia, that is our membership consulting services. Once you figure out what it is you can do remotely, you can incorporate an LLC in Russia and your customers or foreign companies pays the Russian company for those services.
