Business in Russia is organized by the clan system. This means that the Russian contractor engaged in this activity in Russia, is required to follow the moral standards (be responsible, honest, keep his word etc; this includes customer/supplier relationships) with his partners in the business, but with competitors all means are good.
Partners in business are individual networks where personal contacts are very important. They will also be extremely useful at a government level. It should be noted that some people who are now in private practice, worked in a government organization whose services may be needed, and old acquaintances provide a good flexibility.
In the absence of knowledge of Russia, foreign entrepreneurs based in that country are advised to approach Russian professionals (at least, lawyers). Some, impressed by the ‘horrors' of the media in the Russian economy, do not believe it is possible to recoup their investments legally and use all means to achieve it, but they are ultimately punished by fines or confiscation of their property, and leave totally disgusted with Russia. Others (this is, in general, TNCs) prefer to pay whatever they are claiming, to preserve their reputation.
Sometimes they spend more than necessary, and it makes them very skeptical about the investment ambiance in Russia. The solution in these cases is to treat your business in Russia with the help of a local partner. It will help to decipher the certainty of land, to be able to respond to new legislations, fiscal changes or customs and we must always remain vigilant. The advantage of this approach is that it is easier to control a partner.
Also, foreign companies have no incentive to buy or sell themselves, because it is very difficult to grasp the subtleties of Russian reality. It is more efficient to contract with a local company and tell it what to buy or sell. The company avoids the cost of installing a permanent establishment, and does not pay taxes in Russia (excluding VAT).
Tags: Russian clan system, business in Russia, foreign companies in Russia
[...] Some tips • The Russians appreciate gifts. • It is not usual to shake hands with women in Russia and this should be avoided. • After a few meetings, Russians like to be called b their patronymic or their first name. But one must wait for a sign from them to begin, especially if the person is older than you. Sources SIDOROV Alexei (2002) "Business Ethics in Modern Russia and Sustainable Economy", The Moscow Aviation Institute RCCI Rhone-Alpes (2005) "Guide to Being Knowing export" "Working with Russian companies: Tips for Business Success", Journal of Management, May BAYVET Dominique (2006) "The Russians run on emotional rather than rational," the Journal of Management, May MICHEAU Joel-Henry (2006) "The Russians are very direct in business", Journal of Management, September NIKOLAYTCHUK Igor (2006) "Reputation and Recruitment: pitfalls to avoid," the Jouranl ROST, May [SYMBOL 42 \ f "Symbol" \ s 12] ∗ But in regard to foreign partners, some companies can take advantage of their ignorance of the Russian business environment. [...]
[...] Doing Business in Russia Relationship between business partners in Russia - Business in Russia is organized according to the Clan system. This means that when a Russian contractor is carrying out the services of his business, it is mandatory that he follow a set of moral standards that have been prescribed (including being responsible, honest, keeping his word etc.) This standard is specifically set for the customer - supplier relationship and to ensure that relationships with its partners in the business and with his competitors remain friendly. [...]
[...] As they were not able to defend their businesses, they were forced to flatter the authorities. An alternative to this behavior is what many are using now, which is to circumvent the obstacles that government agencies have created. Many companies use a combination of these two types of behavior. There are three kinds of enterprises that are present in Russia. The local entrepreneurs have called these categories ‘white', ‘grey' and ‘black.' ♣ The ‘white' companies are honest with their partners, the authorities etc. ♣ The ‘gray' companies are partially honest. [...]
[...] For example: If a foreign company wants to recruit a specialist(s), through a Russian recruitment agency, it must provide it with clear and precise information about its project. This information may be of interest to its competitors. Therefore the contract must include a confidentiality clause. Peculiarities of Russian legislation concerning the establishment and operation of a company - The legislations that govern mergers and acquisitions are particularly important for foreign investors. Law No. 948-1 encases stringent obligations that must be fulfilled when starting a company under Russian law or staking equity in a Russian company. [...]
[...] ♣ ‘Black' companies conduct completely illegal businesses. - Most state officials carry out businesses with accordance to the planned economy; these are called ‘red servants.' They serve the state and not the company (which is the larger category).There is also a group of officials whose primary motivation is to preserve their bureaucratic position (accept the market and the businesses to cover corruption). These practices are beginning to change for the better but it should not be banked upon. Thus, adopting a proper attitude of the applicant will bring more fruit than aggressive behavior. [...]
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