Business in Russia

Russian history is a fascinating and turbulent tale, not unlike the vast frozen landscape that makes up the country. From 1922 until 1991, Russia was under Communist rule and thus heavily secluded from the social and economic practices of the United States and other parts of the Democratic world. During the Soviet era, Russian business was owned and operated by the State, and the business practices were not only different from the West, but from those practiced in Russia today. Since 1991, Russia has been reformed as a Federation, changing their governmental and economic structure to account for extreme poverty and human welfare that the people of Russia experienced under the Iron Curtain. Russian business and economy are now geared more toward dealing with the world market and rebuilding severed ties with the West.

Key Values

Russian culture is distinct, yet varied, like most countries, but there are a few universal values that are apparent in the Russian business world: Collectivism, egalitarianism, and dusha (or soul).

Collectivism

Russian collectivism goes back further than the Communist rule of the 20th century. Cultural anthropologists believe that Russia’s strong communal bond comes from the large amount of cooperation that must be demonstrated to survive in such a cold climate. This togetherness is in sharp contrast with the competitive nature of Westerners.

Egalitarianism

Egalitarianism is an important social philosophy that strives for equal treatment of people through all avenues, may they be pay benefits or social standing. In the business realm, this translates to equal opportunity, reciprocity, and mutual advantages. Business deals in Russia focus on the shared benefits of the deal and do not believe in Western practice of the “upper hand”, instead, they believe that business partners should be “co-equals.”

Dusha

The Russian concept of “dusha” or “soul” is important to Russian social behavior in general. Dusha is based around idea of mutual understanding and emotion. This is the biggest opposition to Western social and business practices of competitive domination. Instead, Russian business relationships based around the concept of dusha, are formed around mutual understanding and emotion.

Business Practices

The hierarchy of Russian business is not unlike those of the West. The higher up is in charge of the subordinates; however when it comes to decision-making, the collective good is most often at the top of this list. This does not mean that the hierarchy is ignored, there is still a strong recognition of the power structure and the respect of the hierarchy is central for smooth business operations.

Personal space is not important in Russia; it is said that there is no word for “privacy” in the Russian language. Bodily contact in a business meeting is often a good sign.

Russian Sales and Marketing

Sales and marketing in Russia are part of the country’s new economy. These events are part of Russia’s move toward capitalism and free trade. During the Cold War, these practices were illegal and a feature of the underground economy. The government banned sales that generated a profit or were an attempt to run a business. All services were controlled by the state and followed the rules of socialism.

With the collapse of Soviet Russia, there has been a major increase in sales and marketing by all types of businesses. To succeed, these companies need to understand the diversity of the country. The languages and buying habits of these people are very diverse. These cultures include Slavic, Turkic, Finno-Ugric and Armenian speakers. Developing a presence in these areas is necessary for an effective sales and marketing plan. Unlike the communist system, there is no longer one way to reach a mass audience of consumers.

Sales and Marketing in Soviet Russia

After the Communist Revolution of 1917, the government outlawed all private trading and individual business dealings. Prior to the revolution, Russia had many businesses and successful individuals. Some of these trades included farming, furs and trapping, shipping, carpentry and the sale of oil and minerals. All of these industries became part of the communist government. Marketing these goods was an official part of state propaganda.

Under communism, many of these industries were poorly managed and struggled to survive. The lack of private owners did not encourage workers to produce quality materials. Also, the government’s control of farming did not succeed. There were serious shortages and famines throughout the Soviet Union.

Marketing only existed as a form of politics. People were told to buy certain things for the protection of the communist system. With the arrival of Mikhail Gorbachev and his glasnost policy, there was more opportunity to sell or market certain things. During this time, Western companies like Pepsi-Cola and McDonald’s opened businesses in Russia.

Sales and Marketing in Modern Russia

Today, Russia has a capitalist economy that requires the use of sales and marketing. There are many European and North American businesses now in Russia. Some of these companies include IBM, Microsoft, Xerox, Coca-Cola, Nike, Sony and AT&T.

Selling in this environment requires knowledge of Russia’s many cities. For example, buyers in St. Petersburg have different interests than buyers in Moscow. Companies must market to each of these cities with effective advertising

Since Russia is no longer a closed society, there has been a large increase in the use of advertising as a sales tactic. Examples include billboard advertising, TV commercials, radio spots and Internet campaigns. All of these efforts are a way for businesses to reach millions of consumers in the new Russia.