A massive land of opportunity – an export guide to Russia
To read the press or to listen to those who do not do business in Russia, you could be forgiven for assuming that Russia is on a war footing with the west, or that foreign visitors are seriously endangering their lives by travelling to Moscow.
Neither, I am pleased to say, is the case!
I am pretty sure that companies owe it to themselves to do what the politicians and journalists are clearly not capable of – namely, to have a good look at this market.
Over 600 British companies are registered in Moscow alone; AstraZeneca not long ago finished building a factory in Kaluga, and many business people travel there every week, creating opportunities for the UK. Thousands of UK companies are successfully exporting to Russia – I know this to be true, because 7,000 of them are on my database!
Is it not time that this business voice is heard?
Russia is the biggest export market in the world for many British companies. That means employment and that means wealth and stability.
And as Brexit bites, our non EU neighbours become critical to our economy.
Across a multitude of business sectors, there are massive opportunities to be explored, and when I say massive, I mean that quite literally. Over seventy times the size of the UK, Russia’s land mass is the same as that of Pluto! 17 million square kilometres….. Its oil and gas pipelines would stretch six times around the earth….. There’s also massive opportunities for renewables, automotive, power, food/drink, packaging, chemicals, aerospace, engineering, leisure, construction, mining, oil and gas, telecommunications and all infrastructural projects.
A population of some 148 million is also worth thinking about. That’s a large market by any standards, and it’s far closer to our own doorstep than many of the markets that companies talk about – it takes just three and a half hours to fly to Moscow.
And what about the opportunities connected to Russia’s hosting of the World Cup next year? The opportunities here are not just about constructing stadia and roads, but also language, consumer goods, training, consultancy. All sorts of avenues are open.
I have heard some talk about an embargo on goods to Russia. There is no embargo. There are some carefully crafted sanctions put in place by the EU which centre upon military, dual use equipment, sub-arctic drilling equipment, and a number of listed Russian individuals close to the Russian Government. That’s pretty much it. The sanctions simply do not affect the vast majority of exporters.
103 million internet users and e-commerce growing at 20% per year represent another huge area for businesses.
For those who think that Russia is probably very difficult, have a look at the World Bank Ease of Doing Business report. Russia is in a (considerably) higher position than for example China, India and Brazil. Not only that, but Russia is improving all the time.
Do not believe what you read about corruption, because much is exaggerated, and frankly, I don’t suppose Westminster or the press are really in a position to lecture anybody on this subject. Corruption exists as it exists everywhere, but is the exception, not the norm. Why else would giants such as BP, Shell, AstraZeneca, Unilever and so on be doing business here?
For some reason, the press will also have you believe that the Russian economy is about to tank. I find this hard to believe; Russia has the largest reserves in the world of natural gas, nickel, iron ore, diamonds, silver, tin, zinc, titanium, niobium, the list goes on. It is the second largest producer of oil after the middle east. The pundits’ figures just don’t stack up on this one.
So, how to tap into this seam of wealth – what steps do you need to take?
Well, firstly, do some desk research – much can be learned from the internet without spending money. Talk to the DiT also as they have some very good advisers.
Secondly, have a think about what you want to achieve and how quickly, then put together a budget. Don’t try to do Russia for free because that just is not going to work. Even if you travel to Moscow you will have some expenses so have a think about that because the last thing you want is the FD breathing down your neck!
Keep an open mind on distributors, and don’t just look for one that speaks English; look for one that can sell! Exclusivity needs careful thought. Can one distributor really cover a territory the size of Pluto?! Support your distributor, but don’t let them control you! You should question them, maintain contact with them. Make sure you don’t leave everything to them.
For example, you should obtain your own product certification (it’s easy), and definitely do not let the distributor do this. This means the document is in your name, which gives you control.
Bear in mind that you will need to put information into Russian so that it will be read by the senior people (who usually do not speak English).
We have worked with many exporters of many sizes, and most of these companies have used Albion to conduct what I call the “grunt work”, finding buyers, obtaining certification, calculating costs and price lists, diligence on the competition. This is all worth doing because you may find the mark-up’s and margins can be higher than in other markets. And most of the companies we work with say one thing to us afterwards: “I wish we had started earlier”. For many, Russia is now their biggest market.
Russia is a market for fast moving, hungry smaller companies, not just for the giants. This may be a different market, but it does not have to be difficult.
Topics: Export Planning and Market Research