Originally from South Tyrol in Northern Italy, I grew up bilingual (speaking German and Italian) and lived abroad in several countries. During a semester abroad in the U.S. I met my now wife, who is Russian. While she was the trigger for me to come to Russia, there were also two additional reasons to my decision - I received a job offer at a German accounting firm in Moscow and found a suitable university to complete my studies. I was actually the first graduate with a non-Soviet background at the IBS Plekhanov in Moscow.
Moving to Russia in 2008, I thought that there are many unused business opportunities and a lot of potential here. Moscow seemed like the perfect place for my personal and professional growth.
Climbing up the career ladder, in 2012 I was already working as the director of an Italian subsidiary and looking for a new step in my professional development. Once a former client contacted me to help with accounting and, because the market was recovering, I realized that starting my own accounting business would be a great chance at that time. Being a foreigner and having practical expertise and in-depth knowledge gave me a competitive advantage to occupy a market niche offering accounting and business set-up services for international companies.
Challenges
A big challenge when setting up the business was bureaucracy. At the same time, this reaffirmed my business idea to handle those challenges for my clients. What made life easier was that I already spoke Russian. Yet, I do think that the language barrier causes a lot of challenges when entering the market because most people don't speak English and all the paperwork is in Russian too.
Another challenge of being an entrepreneur in Russia was headhunting for suitable and loyal employees that are proficient in English or German. All our clients are international, and foreign language skills are crucial for communication.
The ruble devaluation in December 2014 made it difficult for our clients to sell imported products on the market - their goods became twice as expensive overnight. That affected our workload and we switched from fewer big projects to many smaller ones. The crisis led to a diversification of projects and clients and we are now more broadly positioned in the market.
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How Russia changed in 11 years
A big change was the devaluation of the currency and the effects it had on the business environment. Apart from challenges for importing goods, in 2015-2016 Russia became less attractive for foreign employees and expats because their compensation was stipulated in rubles.
A positive development, however, was that over the years legal security in Russia increased while corruption decreased. When it comes to accounting and tax, electronic documentation workflow and online interaction with authorities made processes faster, easier and more transparent. Overall those changes led to a higher ranking of Russia in the Ease of Doing Business Index - the country climbed from 124th position in 2010 to 31st in 2018.
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European vs Russian business culture
Doing business in Russia is fundamentally different from Europe. The biggest difference is probably that business is tendentially made top-down and the hierarchy is steeper than in Europe. Europeans also tend to plan much more before they take action, while Russians make decisions more impulsively and take action faster. I really admire that people here are very creative and find solutions for every challenge that they face.
Another difference is that personal relationships between partners are crucial for business success in Russia. I think that, even though this factor plays a huge role in Europe too, its importance in Russia is still much higher and more emphasis is laid on emotional factors.
There are many similarities too. For example in Russia, people are cautious and want to be certain. If you have to make a deal with a Russian, you should always come prepared. Similarly, in Europe, a lack of preparation or uncertainty will likely cost you a new client.
On stereotypes
One of the biggest prejudices of European companies against Russian partners is that they are less reliable. Often they fear to be fooled and not get paid. In my experience, unfortunately, there were cases when Russian companies just disappeared when the payment was due. Plus, the bureaucracy can be overwhelming and foreigners are often afraid to make mistakes and suffer from consequences.
Despite that, I also know that, if you stick to the local formalities, you can do good business here. As a foreigner, you need to adapt to the Russian way of doing business and come prepared. Yes, Russia is different from Europe, but it has so much potential.
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What’s so special about Russia
I really enjoy that in Russia everything is so dynamic and every day is different and poses new challenges. Moscow is constantly moving and changing. Working here is versatile and exciting all the time. The market continuously offers new opportunities and if you take on the Russian mentality and become more spontaneous, there are great options for growth and business.
For foreigners considering to do business in Russia, I would suggest to lay emphasis on the foreign origin of their product and use the positioning as a means to stand out from the competition. Products from Europe have a good reputation here and stressing European quality is a good strategy that offers a clear advantage.
On the other hand, it is more difficult to compete on price in Russia because local production here is much cheaper compared to Europe. At the same time, you have to adapt to local circumstances, for example, when it comes to payment or other special needs and requirements of the market.
Generally, I would recommend planning sufficient time if you want to do business in Russia. Here everything takes longer and it can be arduous to deal with all the bureaucracy and to obtain local certification. To avoid those difficulties, working together with a partner that has long-standing experience in Russia can be an advantage. Summing up, I think Russia is a viable market, now and in the future, especially for niche products.
This story is a part of Russia Beyond’s new series of articles about foreign professionals working and doing business in Russia. Do know anyone who might have something to say, or want to share your personal experience? Please contact us here: info@rbth.com.