Doing Business in Different Cultures : Russia Hannu Toivonen 11 April 2004

Doing Business in Russia Practical Suggestions Build relationships –Business laws and contracts do not mean as much in Russia as they do in the West –Russians tend to trust more in relationships than in contracts Use local consultations –It is better to have a local Russian than a Russian expatriate as a consult

Doing Business in Russia Practical Suggestions Consider business ethics –Ethical rules and traditions are different in Russia Be patient –Russian are very patient and used to wait for what they want

Doing Business in Russia Practical Suggestions Stress exclusivity –Russians prefer exclusive relationships –All conversation is based on the assumption: ”I have chosen to deal with you because you are the best one to deal with. I am not talking with anyone else”

Doing Business in Russia Practical Suggestions Respect is everything –It is important to be patient –When receiving an offer on paper, Russians may leave it for a while to ”mature” and wait for personal contact

Doing Business in Russia Practical Suggestions Financial information is personal –Westerners may spend a great deal of time for investigating and sharing financial data on one another prior to establish a business relationship –Russians prefer to wait until friendship is developed

Doing Business in Russia Negotiations Russian Expectations –Russians may overestimate for the foreign investor’s interest in the Russian market Scheduling –Russian counterpart will likely have an overloaded and badly planned weekly and daily schedule, –This makes it difficult to secure a meeting date that works

Doing Business in Russia Negotiations Cultural Differences –Russians may tend to underestimate the extent of cross-cultural differences Benefits –Russians may expect both individual and organizational benefits from negotiation

Doing Business in Russia Preparation Know the negotiator –Try to get more information about your Russian counterpart if possible –Investigate the Russian company’s hierarchy Obtain references –Ideally you should obtain references from other sources, such as Western firms already doing business in Russia...

Doing Business in Russia Preparation Clarify language –It is essential that business terminology and jargon is clarified and simplified Use consultants –It is best to find your own interpreter and Russian consultant –You need to be able to trust the interpretation

Doing Business in Russia Preparation Carefully select the delegation –Choosing the right members of you delegation is crucial –Age, status and gender are very important to Russians Consider ethics –Westerners must understand very clearly their own ethics and the limits of what is acceptable

Doing Business in Russia Conducting the Negotiation Build rapport –Pay compliments –Recall that Russians prefer to work with friends and operate from basis of fellowship and trust Stress exclusivity –Emphasize the exclusive nature of your offer and the significance of your company –Russians prefer to do business with important people representing important corporations

Doing Business in Russia Conducting the Negotiation Share information –Be willing to divulge something quasi- confidential to the head of the Russian delegation Build connections –In discussions with your Russian counterpart, stress connections and similarities rather than differences

Doing Business in Russia Conducting the Negotiation Know your partners –Get to know your counterparts and the company they represent Stress mutual gain –Take time to explain the mutual benefits of your new relationship Clarify terminology –It is extremely important to be sure that everybody understand clearly one another’s terminology

Doing Business in Russia Conducting the Negotiation Prepare to drink –Be ready to drink vodka Close the deal –Be prepared to fix and reinforce the final agreements with a nice dinner together –Be prepared to invite the Russians to visit your country and see your facilities