Russia and International Business

Introduction

Russia is continually growing stronger as an integrated country in international world markets. There are many aspects of the Russian business environment that must be taken into account when pursuing international business interests in this particular country. This report will first look at many of the important cultural factors such as the importance of effective communication, features of the country’s high-context culture and methods of handling business concerns and issues. This report will also address Russia’s current state of trade by discussing the country’s trade of goods and services as well as its entrance into the World Trade Organization. Additionally, the report will discuss the effect of Russia’s investment policies and what sectors of the Russian economy have had significant foreign investment. Next, the topic of Russian politics will be addressed by examining the organization of Russia’s political system as well as its main political developments. Finally, the report will study some of Russia’s laws that foreign investors must become familiar with before doing any business in the country.

Russian Culture

To successfully operate overseas it is very important to become familiar with the culture of the target country, in this case, Russia. Misunderstanding of cultural features can ruin not only a single business transaction, but an entire business operation.

Communication plays a vital role when conducting business internationally. By improving ones ability to communicate effectively across different cultures, one can learn to recognize any cultural differences and try to overcome any ethnocentrism. Experiencing difficulties when trying to understand cultural differences is a common problem, particularly for low-context cultures (Brean, 2007). According to research studies, people that are brought up in individualist cultures such as North America are less able to imagine the world from someone else's perspective than those who are raised in collectivist cultures (Brean, 2007). This clearly indicates that doing business in high-context cultures, such as Russia, requires businesses from the low-context countries to increase their efforts in trying to understand the specifics of high-context cultures such as Russia (Brean, 2007). An additional high-context culture feature present throughout Russian culture is the presence of hierarchies, titles, and numerous levels of position distinctions (Ghimire, 2006). Although this particular characteristic is not as prominent and strong as in Asian countries, it proves to be a powerful and evident feature found throughout Russian corporate culture and may prove to be a hurdle for any foreign business person (Ghimire, 2006).

The way a new comer or a foreigner speaks in Russia, is also very important and imperative to achieving successful business transactions (Dumetz, 2007). There is strong evidence that distance exists between the ways Russian society uses vocabulary to communicate, which a foreign business person must be aware of. To illustrate, there are two different words for the word “You”: Вы is a formal variant and Ты is informal variant. The use of Ты instead of Вы can sound too informal, disrespectful and even insulting in some situations (Dumetz, 2007). In Russia, for instance, one must also be prepared to experience the use of diminutives such as differences in name pronunciations, (i.e., Olga can be called Olya informally); inside jokes, and corporate traditions (i.e. birthdays are celebrated by all staff members in the corporation) (Dumetz, 2007). In any corporate tradition, it is important to note that it is highly undesirable to avoid any participation in corporate formal or informal events if you want to succeed in building personal relationships with members of Russian businesses (Ghimire, 2006). Russians devote much energy to their relationships and friendships, and the concept of a professional relationship without personal contact is unknown to Russians. Business in Russia is mainly done through connections, meaning it is always beneficial to build strong relationships and partnerships with business owners, as well as government employees (Ghimire, 2006). Dumetz also states that in high-context cultures such as Russia, words are not as important as the actual context, which may include factors such as the speaker’s tone of voice, facial expressions, and body gestures. Consequently, a face-to-face discussion is the standard and most preferred method of communication when conducting business in Russia (Dumetz, 2007). Although the telecommunication infrastructures allow methods such as talking on the phone (which is often used) or sending faxes and e-mails; the traditional businessperson who attends regular trips to Russia, will find it