Before you decide to do business in Russia, make sure you understand all of the specifics of doing business in Russia, since you will soon discover that you will have to deal with new legislation, collaborate with Russian colleagues, and compete with local businesses.
Discover some interesting facts about Russia
Remember that evaluating a vast quantity of data, understanding diverse cultures, and pinpointing the target regions of a company’s operations across the country are all necessary for a successful business. You will also benefit from knowing the following facts about Russia:
- Despite the disintegration of the Soviet Union in 1991, Russia remains the world’s largest country in terms of land area, including nearly all of North Asia and much of Eastern Europe.
- It has a population of 145.9 million people and is divided into 22 republics.
- The Russian economy ranks 12th in the world in terms of gross domestic product (GDP), and sixth in terms of purchasing power parity (PPP).
- Russia is a member of the BRICS group, along with South Africa, China, India, and Brazil.
- Russia intends to develop an international financial centre to facilitate the expansion of legal and financial firms.
- Russia exports a wide range of goods.
- Pharmacy, engineering, education, consumer goods, and retail are the most popular industries.
If you plan to do business in Russia, you will communicate in Russian, which is the official and state language. It should be noted, however, that the country has 27 other official languages, and many immigrants speak in their native tongue.
Why should you establish a business in Russia?
Given that Russia has one of the world’s 10 greatest economies, it stands to reason that the country provides several opportunities and benefits to those seeking to do business there. The country encourages the development of the Russian economy through mortgages and consumer loans, which expand industry capacity, and it is not uncommon for Russia to have already returned a major percentage of its foreign debt.
To further support market development, the state also offers a variety of tax relief options. Many corporations have recognised many of the government’s efforts, which has considerably strengthened their confidence in the country. New structural reforms are being implemented on a regular basis, creating numerous business opportunities in the energy, pharmaceutical, retail, and telecommunications industries.
Understanding the Russian market has a direct impact on business performance
Understanding of the Russian market and the proper business idea are necessary for establishing and running a successful company in Russia, but you will also have to deal with a number of procedures that require knowledge of specific legal difficulties.
1. Obtaining a visa
If you intend to set up a business in Russia, keep in mind that you will need a residence permit, which is required to start and run a business. If you are a non-resident, you can only join the company as a shareholder, and it can only be operated by those who have a permanent or temporary residence visa in Russia.
If you do not have a residence permit but wish to start a business, you can apply for a Russian work visa and become self-employed, but this option is only available at the invitation of the Russian Migration Office. Another option for starting a business in Russia is to establish a company that will generate revenue and provide job opportunities. In this case, you will need to secure a Russian business visa.
As a foreign investor, you can also engage in Russian business. In this case, you will have the same status as locals, but you will be subject to certain restrictions in insurance and banking, the acquisition of land, and specific investments that are strategically significant to the country.
2. Business plan
We strongly advise you to establish a business strategy based on market research before establishing a business. This will answer the question of whether the products or services you will offer will be profitable.
3. Forms of companies
Before starting, it is necessary to define the type of company available in Russia, as they differ in terms of individual characteristics as well as legal structure.
A limited liability company is the most common form of business in Russia. It is a private business form with a maximum of 50 shareholders. They are liable for the company’s debts up to the amount of share capital. A foreign company or individual can be a shareholder, but not a company founder or a member of the management board unless they obtain a visa.
A joint stock company can be closed, private, public, or open. If a joint stock company is public, it can have more than 50 shareholders, and the shares are freely available to the public. Other obligations and permits are the same as they are for a limited liability company.
A partnership it is appropriate if you intend to set up a small business. On the one hand, the partnership might be general, which means that the partners participate in the management of the company and the agreement governs their rights and obligations. On the other hand, a limited partnership means that the partners share profits and debt obligations and use their assets to cover costs.
Branches are another type of company that is established in Russia and acts as a company’s representative. Commercial activity is not permitted in this case.
4. Company name and address
When choosing a company name, the same restrictions apply as in any other country, therefore it should not be the same as that of any existing Russian company.
5. Prepare the necessary documentation
When forming a company, as with many other procedures, it is required to prepare the necessary documents and execute a number of formalities. As a result, the full name of the company with all abbreviations, business founders, the amount and nature of shareholders’ contributions, business management rules, legal obligations of management, and, if necessary, details of the directors must be provided.
6. Company registration
After you have completed all of the necessary paperwork, the business must register with the Federal Tax Service’s registration office, where you must submit an application for registration, founding documents, proof of legal status of the founders, and payment of the state fee.
The registration service will assess your application and notify you of its decision within five working days. If your application is approved, you will receive a certificate of establishment or registration, a tax certificate, the taxation company’s identification number, and an extract from the Russian official register of legal entities seven days after submitting it.
7. Opening a bank account
To open a bank account, send all of the documentation you will receive from the Federal Tax Service to the bank, which will provide you with information about your bank account.
The regulations of doing business in Russia will make it easier for you to run a company
To make doing business in Russia easier, it is a good idea to know a few business guidelines that will help you run a successful business. If you are not confident in your ability to do so, contact a law firm to safeguard you from a lack of awareness of the regulations.
When concluding deals, it is important to verify all local subcontractors and employees. Because Russians prefer direct communication, it is also beneficial to bring up the profitability element at the outset of the discussion, and a glass of vodka usually seals the deal. You never allow yourself to be late for meetings, which is something you do not expect from your Russian colleagues.
Consider social customs and ethics
If you decide to go on a business trip to Russia, you should plan on having numerous formal and casual meetings with your business partners and clients. The Russians are very hospitable, but there are a few rules to follow.
Bring a gift such as chocolate, cake, or wine whenever you pay a visit. If you decide to give flowers, avoid odd numbers and yellow roses. With greeting gestures, wait to enter the home, as otherwise it brings misfortune. It is customary to remove your shoes before entering some homes.
Dress nicely, whether you are the host or a guest. Accept food or drinks respectfully, but because Russians like to drink, learn how to deny a drink politely. In Russia, as in other European countries, a fork is on the left and a knife is on the right side of the plate. Russians typically enjoy discussing their accomplishments, so show them that you value them.
For a successful deal, it is often critical how the business meeting takes place, so it will not be unnecessary for you to become acquainted with some details.
Plan business meetings a few weeks ahead of time. If you plan to attend the meeting, confirm your attendance two days before the meeting and, above all, be on time.
It is beneficial to learn as much as possible about Russian culture, history, and geography, as this will show your enthusiasm for the country. While older Russian businessmen prefer to conduct business in groups, younger businessmen have more of an individual approach.
Regardless, it is critical to dress appropriately for business meetings, with women’s skirts reaching above the knees. Each meeting usually concludes with a protocol, such as a meeting summary, which you are expected to sign.
Do not expect to conclude business negotiations quickly in Russia, as these typically take a long time. Therefore, having a lot of patience and keeping a cool head is always a good idea. A common negotiation tactic is to cancel critical meetings as well as leave a meeting while negotiations are taking place. In this case, maintain your cool and wait for them to return.
Russians are well aware of the hierarchy, so those attending the meeting must match the status of their Russian counterparts in terms of age and position. The Russians will not budge, so how you present your offer to them is entirely up to you.
Professional translations can help you do business in Russia more easily
When starting and running a business, it is critical to remember that you will be meeting with your business partners, customers, and employees on a regular basis. If you want to do business successfully in Russia, you must communicate professionally and correctly.
Even before you begin doing business in Russia, you will have to deal with visa applications, followed by all of the documents that must be submitted upon the company’s establishment. Of course, you can expect them to be written in Russian, so you will undoubtedly require the services of a translation agency that provides translations from Russian into your required language. So, don’t put it off any longer and find a good translation agency that provides professional and high-quality translation for the most successful entry into the Russian market.
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