The Does LogisticsMatter? Podcast is all about trends and innovations in supply chain and logistics. This episode features Johan Elzes, Business Unit Director and Russia Advisor at Ahlers. Thank you, Johan, for sharing your knowledge about Russia and strategies to expand your business in emerging markets.
Doing Business in Russia
One of the essential assets for doing business in Russia, or any other emerging market for that matter, is local knowledge. For a European company, it is relatively easy to do business with customers in the United States and vice versa. When companies from Europe or the United States want to do business with companies in Russia, matters are not that simple.
Local Presence, Knowledge, and Culture
Local knowledge is key, but you also need to understand the culture. Russians have a different approach and a different way of thinking compared to us in the west. We tend to be both more flexible in our way of working and much more direct in how we communicate. Russians are more hierarchical. It is important to understand what Russians think is acceptable when doing business.
Knowing about these cultural differences is not enough. If you want to trade with Russia and sell to Russian companies or consumers, you need a local presence. Your company needs to be registered in Russia if you want to import goods into Russia. In Russia, the importer always needs to be registered there. This means that if your customer doesn’t want to import the goods, you need to register your company in Russia. The director of any company registered in Russia always has to be a Russian. You also need to employ Russians as well, and you have to be sensitive to how they think, how they view authority, and how they approach their job. And there are many more facets you need to think about.
Strategies for Developing your Business in Emerging Markets
When you want to expand your business to Russia, or any other emerging market there are different routes you can take.
- You can register your company locally, which can be a complex process, with complicated rules and regulations and a lot of hassle.
- You can use the distributor model, where another company takes care of selling your products and delivering them to the end customer.
- You can use the master-importer model, where Ahlers handles the import and logistics side of your business, while you handle marketing and sales in Russia.
For more on developing your business in emerging markets listen to my conversation with Johan Elzes via your favourite podcast platform.
This blogpost is sponsored by Ahlers