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Doing business in Russia - cultural considerations for HR

15th Jan 2014

The Russian Federation is the world’s largest country, stretching across the northeast of Europe and the north of Asia. Russia borders fourteen other countries and is situated across eight separate time zones. It experiences some of the world’s harshest weather, with winter temperatures plunging to an average low in Moscow of -10C in February and significantly colder average temperatures in the Siberian interior. According to the IMF, Russia’s economy is the world’s eighth largest at $US2.02 trillion as of 2012. One of the world’s economically vibrant BRIC countries, Russia’s economic growth has been strong, averaging 7% throughout most of the 2000s. During the global economic recession, Russia’s economy has stabilised at a relatively healthy growth rate of 3.4%. Unemployment is lower than in many countries, estimated at 5.4% as of 2013.

Russia in Focus

Russia has an estimated population of 143 million people as of 2013. Its government is a federal semi-presidential system, comprised of 83 separate federations. The head of state is the President, who is directly elected to a six year term. The Prime Minister is head of government. Russia is administered by the State Duma, which is effectively the lower house of legislature, the Federal Assembly of Russia. The upper house is the Federation Council.

Russia’s population is unusual in that it has been in decline for most of its post-Soviet era. This has been due to low birth rates and high emigration and death rates. In the past few years, the population has effectively stabilised, although death rates for men of working age remain substantially higher than in most developed countries – the average life expectancy of a Russian man is currently less than 65 years.

Russia’s population is approximately 81% ethnically Russian. Nearly 4% are ethnic Tatars, and another 1.4% are Ukrainian. The remainder are other ethnic groups, both indigenous and from immigrant communities. The majority of people live in European Russia. 

The majority of Russians are Christian, with nearly 80% of all Russians belonging to the Russian Orthodox Church. However, a large percentage of these Russians do not actively practice their religion. Islam is the largest minority religion in Russia, with estimates of about 15% of the population. Buddhism is prevalent amongst major ethnic groups in the east of the country. Judaism has also been practiced in Russia, although many Jewish people have emigrated in recent history.

Russia’s economy privatised after the collapse of the Soviet Union in 1991. However, economic growth has been uneven from a geographical point of view, with most of the gains made in and around Moscow.  Russia’s economic strengths are in the areas of natural resources, including substantial oil and what is believed to be the world’s largest natural gas reserves. The economy is also strong in the fields of manufacturing, agriculture, communications, science and technology. Russia’s economic growth has also been uneven from a control point of view, with power concentrated in the hands of several oligarchs, usually with the right political connections. Thus, doing business in Russia can seem to be corrupt by some organisations contemplating expansion into this market.

Russian is the country’s official language, with 27 minority languages recognised in various regions of the country. Tatar is the second most spoken mother tongue. Although some Russians may speak another language, many may not speak English. Regardless of linguistic skills, most Russians expect business to be conducted in Russian. English may be spoken in some multinational organisations with a regional presence in Russia, but these are the exception. 

Core Cultural Values

Being Russian

Dusha is the Russian concept of feeling and belonging to the Russian culture and way of life. Although outsiders who are not Russian may never belong to the Russian ‘family’, showing empathy to Russian values and emotions is important.

Group orientation

Perhaps due to harsh environmental conditions and a difficult if glorious history, Russians rely on one another in daily life. This is most often exhibited in the importance of the Russian family, but may also include loyalty to a number of other groups or collectives.

Strength

Surviving in adverse conditions introduces the need for strength. Russians value a strong, confident demeanour and can question other cultures who are more modest and understated. They may also challenge other cultures that come across as boastful and overly aggrandising. Thus, a confident, self-assured style is likely to resonate with most Russians.

Important Business Values

Pride

Russians are proud of their substantial cultural and business achievements. This pride extends to language, food, art, literature, music, dance and sport. Showing an interest in Russian cultural achievements is welcome and will generally endear you to the Russians.

Although most Russians may not expect you to have much knowledge of the Russian way of doing things, they will still expect you to learn the Russian business values, including the development of good business relationships and trust. Do not be surprised if you are invited to social functions, which generally involve (sometimes a lot of) alcohol.

Hierarchy

Russia remains very hierarchical. Expect things to take time, especially if decisions must be made at a level significantly higher up the chain of command or involves a government ministry. Business etiquette remains relatively formal, especially when doing business with government officials.

Do not underestimate the importance of syvasi, or business connections. As most business is conducted with connections in mind, business relationships must be nurtured. Rushing business will not be appreciated. 

No compromise

Russians appreciate, respect and expect a strong business relationship. Compromise is often seen as weak. Do not be surprised if negotiations are tough, with strong competitive behaviour and the appearance of wishing to crush the competition. Make sure concessions are never given unless something is received in return that is perceived to be of an equivalent value.

Do’s and Don’ts

Although most Russians will overlook small political and social faux pas, visitors doing business in Russia should be aware of the following pitfalls that could jeopardise their business relationship.

DO

  • Try to learn some Russian if you don’t already speak the language, even if it is just the courtesies
  • Expect and be prepared to give a very firm handshake
  • Translate your business card into Russian
  • Include professional titles and qualifications on your business cards if you have them
  • Be prepared to defend your position with strength and self confidence
  • Be prepared for the presence of alcohol in many work-related functions

DON’T

  • Expect meetings to start exactly on time, although it is important that you arrive on time.
  • Try to deflect a situation by using humour. Confrontation is perfectly acceptable and direct debate to defend your stance is expected.
  • Shake hands over a threshold as it is considered to be bad luck
  • Smile too much, especially when you are still establishing a business relationship, as it can come across as naïve, dishonest, or untrustworthy
  • Be impatient.
  • Try to rush business

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