Greetings from the Russian Market

Greetings from Obninsk, in the heart of Russia. I am spending the week here lecturing in St. Petersburg and giving a training seminar in Kaluga region. I decided to include some personal observations that I have made on this visit as well as the numerous business trips I have made over the last 10 years.


Obninsk, Kaluga Region

When you travel by train between St. Petersburg and Moscow, you will quickly notice that the construction market holds a lot of potential. Old dilapidated buildings are a constant sight. As one nears the major cities of St. Petersburg and Moscow, the amount of new construction projects will also become very evident. The construction industry is a good indication of a robust and growing economy. Many companies benefit, either directly or indirectly from such a healthy industry and market. Many of the companies we work with in the Jyväskylä region in one way or another depend on new construction projects for their continued growth. So it’s natural that they would be interested in what’s happening with their eastern neighbour.

Business is about relationships

In order for foreign companies to benefit from the opportunities offered by the market, they need to first understand the market and then take a proactive approach towards it. Unfortunately, many individuals and companies have a somewhat distorted view of the Russian market. It’s natural for the media to only report the negative about trying to do business here. Of course there are problems. However, the better you understand the problems, the better you can avoid them. One should also learn about the business culture. For example, one thing I have observed in my numerous travels in Russia is that Russians place a tremendous value on developing the business relationship. It is more personal than in many other countries such as Finland, the USA and Germany. Therefore, foreign business people need to take time to invest in and develop the relationship. How many times have I seen Americans and others fly into town with the expectation of leaving with a signed contract that very same day. That just isn’t going to happen.

Your market needs to be developed

For many advanced products and technologies, the market is already there. So don’t think you can pass off your obsolete product and technology versions to Russian customers because they aren’t buying! Whenever possible, Russians want to buy the latest products.
For many products, especially many specialty and technical ones, the word seems to be that “although there isn’t a market for this product now, there will be in the future.” So a company can wait for the future, or they can make it happen now. They can do so by thoroughly researching the market. A good dedicated Russian partner can also be very valuable here. By continuously working with them, you may be able to identify a “beachhead” or niche into the Russian market. Once established, you can leverage your success into other niches and segments of the market.