Trade Fairs International 2-07 |TFI-KNOW-HOW
How to do business with the Russians?
Ilja Eisen | General Manager COMMPANY Russia:
In Russia, some things work differently than elsewhere. Since the days of Mikhail Gorbachev and Helmut Kohl we know how important human relations are.
Doing business
The hallmarks of doing business in Russia are rapid action and fast decision-making. Long correspondence and unnecessary explanations are avoided. In most cases, personal recommendations are key for business. No matter how interesting your product may be " it will be absolutely unimportant if you don’t get the eye contact right or stumble over a personal weak point. A conversation over a glass of beer at a German trade fair or cup of tea in St. Petersburg is often much more important than any product feature. The Russians don’t believe in the ultimate advantages of a certain product; in their opinion you can find a replacement for everything.
It may sound funny but the first talk is often decisive. Unlike in many other countries it is not seen as a source of information " but serves to check out sympathy or antipathy. As soon as a “smile relationship” has been established, as many call it, a visit will be announced. Although by then, things will have been decided 70 per cent, this visit will serve as the actual source of information. As long as there is a real intention to work together, smaller discrepancies will soon be overcome. This will be followed by many questions, and you may get the feeling they want to hear your full business story. If there’s information you don’t want to disclose, you should only tell them little.
Still, you should never give your prospective partners the feeling that you don’t trust them. Don’t be surprised that every piece of information will be taken very seriously. As soon as the visit has been reciprocated, you’ll start scraping the barrel. Now the top level will only be sporadically involved or have a supervisory function. They will talk to you about the details only in an emergency. As a German managing director you will probably find yourself facing a horde of not so well-informed managers.
They are all assigned to work with you. Have fun! Of course, this is not always the case: More and more Russian companies are now introducing international hierarchy structures and internal information systems.
Personal ties
Smiling and eye twinkling are the best means. You may say: “But I’m not on a date!” But, basically the same behaviour patterns often apply. The Russian soul demands love, a pioneering spirit and courage, like the famous Russian poet Leo Tolstoy once said. The
Russians are a peace-loving people but don’t know what to expect from German partners: Arrogant knowalls who want to teach the little East Europeans something about life with a fake mien " or people who know nothing about business?
The important thing is to establish a personal relationship in your conversation with a prospective partner. He doesn’t just want to work with your company but with you. You will soon have a chance to become a friend. And to be the cause for many a new toast at a joint dinner, which is standard after successful negotiations. If your partner should put on oligarchic airs and bore you with cold formalities and his philosophy of life, you can disarm him " not just with your know-how but with wit, charm and understanding for his situation.
“Age differences”
Business partners differ in their behaviour. One reason is their “political age”. When was he brought up? Before the collapse of the Soviet Union or after? And how did he get started during the difficult 1990s? Older businesspeople have their own philosophy and negotiating strategies and are not interested in new organisation and management methods. New managers are interested in anything they can get their hands on. Some (mostly younger) Russians like to see themselves as analysts, will take that role and will keep rubbing your nose in it. Or they will silently form their opinion but never tell you (Soviet cadre).
Language
The higher up you go on the business echelons " let’s say on the level of small business top management or stakeholders " the scarcer the foreign language skills. And if they should be available, you will often only find out after the tenth glass of vodka and then only as a joke. A Russian businessman likes to express himself precisely, and he doesn’t mind using a translator, if need be.
Pitfalls
There are lots of possible pitfalls. Listen to your partner and never try to undermine his loyalty to others or to his principal. Business is important but not the only thing that
counts. Give people the feeling that they are interesting as persons. In your conversations you should try to identify the basic principles your partner will never talk about.
Misunderstandings
It’s still a legacy of the Soviet Union that people try to impress foreigners. Everything has to meet the highest European standards. If it doesn’t, you’ll be offered excuses and told that everything will be better next year. Stalin’s words are still in the Russian blood until today (“Life has become better, comrades, life has become more cheerful”).
Show some leniency towards constant boasting, which is only aimed to impress you, and express lots of respect and admiration. You may also find yourself working with medium or higher-ranking managers who show a rather indifferent attitude " despite all the big talk you heard in the presence of their boss. This indifferent behaviour normally doesn’t mean anything negative. It doesn’t harm to talk about it. But don’t go pulling rank on them " it could make you unpopular with your Russian partners.
Clichés
There’s the famous sauna cliché. Indeed you’ll be able to do much better business, if you reach a point where you can go to a sauna and sing karaoke with your partner. Remember the old boy scouts’ rule? “Adventures connect.” Follow this rule and never reject an invitation to a mixed event. Any chance to improve your friendship is important. It’s often irrelevant hether you can understand each other’s language. You can always find a translator and if not, many men understand each other also with simple gestures.
Contracts
Written agreements only have a meaning with the partners’ personal commitment. Never rely in a contract only, look into your partner’s eyes " and try to appraise whether he will stick to the contract or not. Apart from with major groups or large companies you will have a very hard time asserting your rights with a contract. If your Russian partner doesn’t want to stick to the contract, no signature will make him do so. Take the contract merely as a detailed description of your obligations and relations. Either it is effective and complied with or it is worthless. There won’t be any minor deviations and disagreements. If the contract is broken, it’ll be in a major way!
Payments
Only do business with companies that are really solvent and for whom you have a good due diligence. Protect yourself against German-Russian contracts. Ask your partner to found a company in Germany or Europe and conclude your contracts there. If that’s not possible, don’t hesitate to outsource. There are many reliable outsourcing service providers in Russia nowadays. They will take on your contractual role and meet the obligations according to all European standards. Always try to get your money in Germany and make your partner responsible for the transfer. Russian finance is too complicated to risk larger sums.
Doing business
The hallmarks of doing business in Russia are rapid action and fast decision-making. Long correspondence and unnecessary explanations are avoided. In most cases, personal recommendations are key for business. No matter how interesting your product may be " it will be absolutely unimportant if you don’t get the eye contact right or stumble over a personal weak point. A conversation over a glass of beer at a German trade fair or cup of tea in St. Petersburg is often much more important than any product feature. The Russians don’t believe in the ultimate advantages of a certain product; in their opinion you can find a replacement for everything.
It may sound funny but the first talk is often decisive. Unlike in many other countries it is not seen as a source of information " but serves to check out sympathy or antipathy. As soon as a “smile relationship” has been established, as many call it, a visit will be announced. Although by then, things will have been decided 70 per cent, this visit will serve as the actual source of information. As long as there is a real intention to work together, smaller discrepancies will soon be overcome. This will be followed by many questions, and you may get the feeling they want to hear your full business story. If there’s information you don’t want to disclose, you should only tell them little.
Still, you should never give your prospective partners the feeling that you don’t trust them. Don’t be surprised that every piece of information will be taken very seriously. As soon as the visit has been reciprocated, you’ll start scraping the barrel. Now the top level will only be sporadically involved or have a supervisory function. They will talk to you about the details only in an emergency. As a German managing director you will probably find yourself facing a horde of not so well-informed managers.
They are all assigned to work with you. Have fun! Of course, this is not always the case: More and more Russian companies are now introducing international hierarchy structures and internal information systems.
Personal ties
Smiling and eye twinkling are the best means. You may say: “But I’m not on a date!” But, basically the same behaviour patterns often apply. The Russian soul demands love, a pioneering spirit and courage, like the famous Russian poet Leo Tolstoy once said. The
Russians are a peace-loving people but don’t know what to expect from German partners: Arrogant knowalls who want to teach the little East Europeans something about life with a fake mien " or people who know nothing about business?
The important thing is to establish a personal relationship in your conversation with a prospective partner. He doesn’t just want to work with your company but with you. You will soon have a chance to become a friend. And to be the cause for many a new toast at a joint dinner, which is standard after successful negotiations. If your partner should put on oligarchic airs and bore you with cold formalities and his philosophy of life, you can disarm him " not just with your know-how but with wit, charm and understanding for his situation.
“Age differences”
Business partners differ in their behaviour. One reason is their “political age”. When was he brought up? Before the collapse of the Soviet Union or after? And how did he get started during the difficult 1990s? Older businesspeople have their own philosophy and negotiating strategies and are not interested in new organisation and management methods. New managers are interested in anything they can get their hands on. Some (mostly younger) Russians like to see themselves as analysts, will take that role and will keep rubbing your nose in it. Or they will silently form their opinion but never tell you (Soviet cadre).
Language
The higher up you go on the business echelons " let’s say on the level of small business top management or stakeholders " the scarcer the foreign language skills. And if they should be available, you will often only find out after the tenth glass of vodka and then only as a joke. A Russian businessman likes to express himself precisely, and he doesn’t mind using a translator, if need be.
Pitfalls
There are lots of possible pitfalls. Listen to your partner and never try to undermine his loyalty to others or to his principal. Business is important but not the only thing that
counts. Give people the feeling that they are interesting as persons. In your conversations you should try to identify the basic principles your partner will never talk about.
Misunderstandings
It’s still a legacy of the Soviet Union that people try to impress foreigners. Everything has to meet the highest European standards. If it doesn’t, you’ll be offered excuses and told that everything will be better next year. Stalin’s words are still in the Russian blood until today (“Life has become better, comrades, life has become more cheerful”).
Show some leniency towards constant boasting, which is only aimed to impress you, and express lots of respect and admiration. You may also find yourself working with medium or higher-ranking managers who show a rather indifferent attitude " despite all the big talk you heard in the presence of their boss. This indifferent behaviour normally doesn’t mean anything negative. It doesn’t harm to talk about it. But don’t go pulling rank on them " it could make you unpopular with your Russian partners.
Clichés
There’s the famous sauna cliché. Indeed you’ll be able to do much better business, if you reach a point where you can go to a sauna and sing karaoke with your partner. Remember the old boy scouts’ rule? “Adventures connect.” Follow this rule and never reject an invitation to a mixed event. Any chance to improve your friendship is important. It’s often irrelevant hether you can understand each other’s language. You can always find a translator and if not, many men understand each other also with simple gestures.
Contracts
Written agreements only have a meaning with the partners’ personal commitment. Never rely in a contract only, look into your partner’s eyes " and try to appraise whether he will stick to the contract or not. Apart from with major groups or large companies you will have a very hard time asserting your rights with a contract. If your Russian partner doesn’t want to stick to the contract, no signature will make him do so. Take the contract merely as a detailed description of your obligations and relations. Either it is effective and complied with or it is worthless. There won’t be any minor deviations and disagreements. If the contract is broken, it’ll be in a major way!
Payments
Only do business with companies that are really solvent and for whom you have a good due diligence. Protect yourself against German-Russian contracts. Ask your partner to found a company in Germany or Europe and conclude your contracts there. If that’s not possible, don’t hesitate to outsource. There are many reliable outsourcing service providers in Russia nowadays. They will take on your contractual role and meet the obligations according to all European standards. Always try to get your money in Germany and make your partner responsible for the transfer. Russian finance is too complicated to risk larger sums.
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