• Australia
• Chile
• China
• India
• Japan
• Mexico
• Russia
• South Africa
• South Korea
• Spain
• United Kingdom

International Resources: Global Market Profile: Russia

As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information about Russia from Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette resource guides.

Entering the Russian Market

Being a developing market economy, Russia is full of both opportunities and challenges.

There is a line of obstacles that newcomers as well as experienced players have to overcome to work successfully in this growing market.

Business hours are generally from 9:00 a.m. to 5:00 p.m., Monday through Friday. The most common times to find employees working are from 10:00 a.m. to 6:00 p.m. In the provinces, work finishes earlier

There is a Russian term meaning "connections" or "influences.” It is extremely difficult to do business in Russia without help from a local. To help with this, gifts, money or other items are often a good idea when doing business in Russia. A U.S. company, operating on its own, will generally pay higher customs fees, face more difficult inspection procedures, and be forced to contend with more administrative delays than would a local importer. The local importer may or may not also be the distributor. This entity will serve as a conduit for products into Russia and can deal with the numerous barriers to bringing a new product into the country. These connections help eliminate red tape.

Don’t let culture shock impair your business judgment. Some Russian business people are not friendly and open during first meetings. Still, many entrepreneurs are outgoing and speak English well. Small talk is important. To initiate conversation, good topics include peace, the current changes taking places in Russia, and their current economic situation. Also remember, Russians are afraid to show emotion, neither should you.

The best way to communicate with your Russian counterpart is through faxes and e-mails. Try to send information regarding your intentions for your visit. Business proposals and objectives are normally sent pre-arrival. Make sure to have all material in Russian and English.

Don’t expect to do everything at an American pace. While the business environment is improving, many things simply move at a different speed. Build extra time into your schedule - you will probably need it. Also there is no Russian word for privacy, so in Russia, social space is much closer.

Russia is also a very status-conscious nation and believes in co-equals. Due to their egalitarian background, it is important to use strategies of equality, reciprocity, and mutual advantage. A "deal" is often thought of from the perspective of equally shared benefit. However, negotiations often end in a win-lose manner. It is not common for a win-win situation on all accounts. Also, knowledge of the hierarchal system will help ensure achieving and maintaining business partners.

Four main guidelines to remember while dealing with the Russian market are:

1. Sell directly to a Russian importer/distributor/processor.
2. Use the services of an American trading or export Management Company.
3. Sell to an agent/consolidator in Western Europe.
4. Establish your own import and distribution facilities in Russia.

Gift giving is common, not only to gain local connections but also to show the importance of the impending business deal. Take a gift that symbolizes the stature of your company, preferably an item characteristic of your local area or one that displays the company logo. Other good gifts include baseball caps, good perfume, American cigarettes and expensive lighters (if you know your counterpart smokes), and good soaps.

Never give vodka, it is believed vodka symbolizes the recipient’s liquor stock is not of good quality.  If attending dinner at a family residence, it is appropriate to bring a gift, such as a good bottle of wine, dessert, chocolates, or a bouquet of flowers. If bringing flowers, you should only bring odd numbers, even number flowers are only given at funerals. Also, try to avoid white or yellow flowers, and remember red flowers are considered symbols of romance. More expensive gifts should be wrapped, while cheaper ones need not be wrapped. Avoid giving gifts such as pencils, pens, lighters (unless they are expensive ones), cheap wine, notebooks, etc. Also, gifts of thanks are expected.

Russia is the fifth largest worldwide importer and consumer of fruit. China, South Africa, and the European Union are major exporters of fruit to Russia. Russia is also a large importer of vegetables; however, they are more self-sufficient in the vegetable realm. China is also a main vegetable exporter to Russia. Root vegetables are staples in Russian cuisine. Potatoes, turnips, radishes, carrots, and beets are common in Russia. Production of fresh produce is limited so many countries help make produce available to Russia. Hungary is also an important exporter of produce to Russia.

Currently agriculture counts for 5.3% of Russia’s GDP and 10.8% of the country’s labor. According to the Economist, food and agricultural products account for 13.1% of Russian imports.

The United States is becoming more important in fresh produce trade with Russia.

Doing Business in the Russian Market

First impressions are important. Some differences are simply due to the language barrier; others are due to differences in deeply held traditions and practices. If you maintain a polite, patient, and professional manner, the likelihood of committing a serious faux pas will be greatly diminished. To help bridge the gaps, we suggest that you:

• Dress professionally and conservatively: Businessmen in Russia usually wear suits that are dark and well-tailored along with good dress shoes. A businessman’s wardrobe demonstrates the individual’s image as a professional. Women should wear a suit (skirt, not pants) and heels. Women should also avoid anything gaudy or flashy.
• When going to a Russian home, dress well, because it shows respect for your hosts.
• Prior appointments for meetings are necessary.
• For business meetings, punctuality is expected (since you are a foreigner); however, your Russian counterpart is allowed and often will be late. This is done to test your patience. Do not expect an apology for their lateness and it is considered rude to express disappointment in your counterpart’s tardiness.
• Allow for extended amounts of time when it comes to meetings. In Russia, meetings will often not start on time and end hours later than originally planned.  
• When attending a social event, it is acceptable to be 10 or 15 minutes late as a foreigner, but no more.
• Patience is an extremely important virtue in Russia; punctuality is not.
• A firm handshake accompanied with a smile, eye contact and appropriate greeting is normal in a business setting. However, never shake hands over a threshold, it is considered bad luck. Some women may not shake hands with men, although this is becoming less common.
• Make sure to remove gloves before shaking hands, it is impolite not to do so.
• Introductions are made beginning with the most important person to the least ranking member.
• Carry plenty of business cards. Have one side translated into Russian. Keep cards in good condition – a tattered card will reflect badly on you.  Make sure to include advanced university degrees. When presenting the card, hand it so the Russian side is legible.
• Make all presentations straightforward and comprehensible. Length is normally not an issue.
• After meetings, it is common to sign a form detailing what went on and what was discussed.
• It is important to be patient as time is not of the essence in Russia – meetings will last as long as they need to last. If/when you do travel to Russia to visit potential trade partners, don’t expect to spend a few days and close a deal. That could happen, but a successful partnership may take months to develop.
• Decisions are made at the top, and authority can overrule subordinates; however, Russians look for the common good and try to work collectively.
• Negotiations will often include flared tempers. Do not be surprised if you witness temper tantrums or walk-outs. If confronted with confrontation, take a more personal approach rather than an official one, because Russians are people-oriented.
• It is considered that it there are not at least 2 walk-outs during a negotiation, you are being too easy. Play hardball with Russian business people.
• While negotiating, you should not remove your jacket or disagree with members of your team. Bring a plan of action and include a few items you would not mind relinquishing during negotiations.
• Russians are known as great "sitters" during negotiations, this demonstrates their tremendous patience.
• Some 'hard-line' Russians still view compromise as a sign of weakness, and often refuse to back down. To these individuals, compromising is bad business.
• As a foreigner, you should realize that "Final Offers" are often not actually the end of the negotiations and that often times the outcome will be more beneficial and attractive if you can hold out.
• Remember that business might be conducted out of the office, but the final negotiations and deals will be made in the office.
• Be prepared to make a toast or have a drink, refusing is a poor breach of etiquette.
• Showing the soles of your shoes is very offensive. They are considered dirty and should not contact any type of seat (like a subway or bus).
• Do not stand with your hands in your pockets, because it is considered rude.
• The American symbol for “OK” is considered very rude in Russia.
• When dining at a Russian home, keep hands visible and use the fork in your left hand and the knife in your right.
• Men pour drinks for the women seated next to them. Also, do not begin eating until invited to or leave the table unless told.
• Leaving a small amount of food on the plate shows you enjoyed the meal.
• It is a good idea to know a Russian toast. One of the most common toasts is “Nah-zda-ROE-vee-ah”.
• It is common to have two bottles of clear liquid on the table at both business and social outings. One bottle is water and the other is vodka. If the bottle of vodka is opened, be prepared to finish it in one sitting. Russians are known for their ability to drink heavily and have a clear frame of mind.
• When you enter a building, you should remove your coat. Never sit with your coat on during a concert, at the theater, at a concert, etc.
• Never whistle indoors. There is a belief it will cause a loss of money. 
• The American symbol for “O.K.” and shaking your fist is considered vulgar.
• Do not sit with your legs wide apart or with your ankle resting on your knee.

Consumer Preferences, Tastes, and Traditions

Russians do not produce large quantities of fresh produce due to poor soil and inconvenient climates. Consumers in Russia have very high-protein and high-fat diets. There is a shift toward healthier foods and more produce. Consumers want quality, quantity, variety, and availability when it comes to fresh vegetables and fruits. There has been a small shift towards organic foods.

Flavor is also a major determinate in Russian food. Most traditional dishes include a bland vegetable like a potato and a spicier one such as garlic. This mix of flavors is extremely common. Many fruits and vegetables are pickled, due to the fact that they are hard to acquire between October and April.

Export Business Reminders

Before coming to Russia, use the many sources of information, for example, the U.S. Foreign Agricultural Service, state agricultural offices, and state/regional trade organizations.

• Take time to research the market for your product. The better you understand local conditions and opportunities, the more likely that you will succeed in finding a buyer.
• Build at least a minimum team within your company to help on the Russian market.
•  Pay attention to business fundamentals. Business basics - knowing your market, putting the customer first, and offering quality products - are as useful and necessary in Russia as in any other market.
• Use metric terms.
• Ensure that all sales documentation is correct. Exported goods will not be allowed into Russia without proper documentation.
• Signed contract and shipping documents
• Certificate of Origin and Quality
• Phytosanitary Certificate from the exporter
• Import license of the importer
• Certificate of Conformity
• Holdups also occur when there are discrepancies when invoice prices are at odds with Russian customs. Ensure all prices and paperwork are the same for you and your counterpart.
• Pay all VATs and duties prior to shipping, this will allow for a smoother entry for your products into Russia.
• Use letters of credit to reduce risk.
• Hedge export values with your U.S. bank if you are concerned about exchange rate risk.

Russian Regulatory Bodies
The most important Russian regulatory agencies involved in food imports:

Federal Service for Technical Regulation and Metrology of the Ministry of Industry and Energy is the national body for conducting surveillance and testing for conformity with state standards. This Federal Service is the result of transformation of Gosstandart into two institutions as part of administrative reform.

Department of Technical Regulation in the Ministry of Industry and Energy develops standards and technical regulations.

Federal Service for Surveillance in the Sphere of Protection of Consumer Rights and Well-Being of People (Rospotrebnadzor) is responsible for surveillance in the areas of nutrition and food safety.

Federal Service for Veterinary and Phytosanitary Surveillance (VPSS) is responsible for plant and animal health issues.

Certification Bodies

The Russian Testing and Certification Center (ROSTEST) provides a full range of quality control and inspection facilities in Russia.
Phone: 011 7 (095) 129-3200
Fax 011 7 (095) 124-9966

The Russian Research Institute for Certification (VNIIS) issues Certificates of Conformity.
Phone: 011 7 (095) 253-3580
Fax 911 7 (095) 253-3360

Food Standards and Regulations

Please, review the Moscow Agricultural Affairs Office (AAO), Moscow FAIRS Reports RS5025, RS5026, RS5008, RS5009 http://www.fas.usda.gov/scriptsw/AttacheRep

Russia has complex food import regulations and exporters should carefully question importers regarding certificates and procedures needed for clearance into the Russian Federation. USDA has provided substantial reporting on these issues in the reports listed above and on our website http://eng.usda.ru/ at the Market Access page.

http://eng.usda.ru/en/docs/70.doc Lists labeling procedures and pesticide levels.

Advantages/Disadvantages to doing business in Russia

Information: Import/Export

Agricultural imports from all countries (2004, in millions): $2,508, U.S. market share: 9%. Consumer food imports from all countries (2004, in millions): $1,755, U.S. market share: 7%

U.S. Exports to Russia

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

U.S. Imports from Russia

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

Trade Agreements

The United States and Russia have reached agreement in principle on a bilateral market access deal in the context of Russia’s efforts to join the WTO, and are in the process of finalizing the details. 

The Agreement:

• Creates new market access opportunities for U.S. providers of goods and services to the Russian market.  It is a strong commercial agreement that should strengthen economic relations between our countries.

• Addresses long-standing trade irritants between the two sides and puts trade relations on a more cooperative course, particularly with respect to agriculture where the veterinary services will work closer together.

• Sets the stage for an intensification of work in the multilateral phase of negotiations where the United States will work in close collaboration with Russia and other trading partners on Russia’s Protocol of Accession and Working Party Report.

• Encourages greater transparency and a strengthening of the rule of law in Russia and fosters economic reform in Russia, which will improve the conditions for expanded commercial relations between our countries.

Highlights and Key Results:

Agriculture:

• Russia is almost a $1 billion export market for U.S. agriculture products, and the largest U.S. export market for poultry. 

• The U.S. also resolved long-standing issues that had impeded agricultural exports of beef, pork, poultry, and products of biotechnology.  These commitments take effect upon signature of the bilateral market access agreement.

• The tariff commitments will benefit U.S. farmers, ranchers, and food processors of wheat, corn, barley, apples, pears, grapes, raisins, almonds, walnuts, pistachio nuts, dairy, soybeans, soybean meal, soybean oil, pet food, pork, beef and poultry, among others, once Russia joins the WTO and we apply the agreement.

Annual Exporter Guide for Russia (2005)

http://www.fas.usda.gov/gainfiles/200512/146176466.pdf

Information Regarding:
a) better understanding of the market on pages 5-7 of guide
b) market sector trends available on page 8 of guide

Russian related Links and Resources

Currency - the currency of Russia is the Ruble. Use the free currency converter to compare to dollars, British Pounds, etc.

Weather - visit Yahoo!'s up to date Weather for Russia.

News - check out all the latest Google news on Russia.

Intercultural Know-how - use the Intercultural Business Communication tool for tips on doing business in Russia.

Dialing Code - the international dialing code for Russia is +7.

Time –Russia spans 11 time zones. Moscow, Russia is +3 hours GMT. Get the time in Russia.

History - read about the long and rich history of Russia.

Free guide to Russia - travel, people, money, living, driving, articles about Russia.

Government Resources

• Russian Ministry of Agriculture and Food Production: www.aris.ru (in Russian) Information in English
• U.S. Embassy and Consulates in Russia: http://moscow.usembassy.gov/embassy/print.php?record_id=contact
• Food safety regulation in Russia is not a straightforward process. Presently a number of different bodies are involved in the process, each having a specific area of specialization. Those organizations include the National Body of Sanitary Control, Ministry of Agriculture, Agency of Technical Regulation, State Trading Inspection, Ministry of Economic Development and the State Grain Inspection which all have a hand in traceability, safety and hygiene for the Russian food market.
• Russia is also following the Health Approved Safety Standards Protection Act (HASSP). Following the procedures has helped Russian manufactures gain food safety confidence abroad.
• Background Notes on Russia.

Important websites in Russian

• Ministry of Agriculture:  http://www.mcx.ru (In English)
• Ministry of Economic Development and Trade:  http://www.economy.gov.ru
• Federal Service for Consumer Rights and Social Welfare of the Ministry of Health and Social Development: http://www.gsen.ru