Obstacles to Building Business in Russia

By optilingo

What Obstacles Interfere with Practicing Business in Russia?

Before you begin working your way to foreign language fluency, it helps to understand the culture behind the language you’re learning. After all, language exists to help a group of people express their ideas and beliefs. Russia is a vast country with a rich history and culture. As you begin your Russian language program, gaining a strong grasp on this history, the values, and the etiquette will help you rapidly achieve success. In particular, building modern business in Russia tends to come with its fair share of challenges.

A Difficult Economy for Businesses

While Russia did have a kind of renaissance in the 1990’s when it came to the business environment in the country, it has fallen on hard times lately. This is largely because the Russian government under Putin has seized quite a bit of power when it comes to even private businesses.

One part of the business world that has been able to have success in Russia is their oil concerns. Over the last few years, oil exports have gone up by 55 percent, though there are plenty of experts who believe the country is relying on oil far too much. If there is ever a real drop in the oil prices the government could run into some serious problems. The kind of problems that would make it difficult to feed its people.

When it comes to paying workers these days, wages in Russia are rising but there is quite a gap between the haves and the have nots. Recent studies show that 15 percent of the Russian population is able to take in about 57 percent of the profits. This has led to more than 40 percent of the Russian people living below the national poverty line. Experts say that this is something that is only going to get worse as the years go on.

People talk about the fact that Russians cannot come up with savings accounts because they just don’t have anything to save. This is one of the reasons crime it still so prevalent all over the country.

A Country of Thinly-Veiled Corruption

Over the last few centuries, there is one aspect of the Russian economy [Obstacles to Building Business in Russia] that has remained consistent. Corruption is a part of life when you live in Moscow and the larger cities of the country especially. There is corruption that comes from the civil servants and corruption that comes for law enforcement. The top level of civil servants has always been considered quite powerful because they are able to change the rules when it comes who gets what and how much.

While it’s usually pretty hard to tell when someone is being corrupt, it’s so prevalent in Russia that there have been some ways in which people are able to come up with scientific numbers. According to INDEM, which is the Russian “Information Science for Democracy” foundation, says that the Russian citizens pay an annual amount of $2.8 billion (US) in bribes. It is also understood that as long as Russia tends not to pay its civil servants a wage that they can really live on, there is always going to be a high level of corruption in its government.

One of the most glaring examples of the rampant corruption in the Russian government came when a top soft drink manufacturer wanted to build a new plant. The company could not get approval of the plant because it was constantly failing fire safety checks. When the firm agreed to shell out the money in order to build a brand new fire station, the plant construction was finally approved.

Economic Woes Have Inspired a Bolder Approach to Finances

There were a number of economic downturns through the 1990s, such as severe hyperinflation at the start of the decade. Add that to the end of the pyramid financial schemes and the personal losses from the market crash of 1998 and it’s easy to see why societies everywhere have altered their perceptions of privacy and modesty. Where some cultures have maintained their respect for privacy over personal finances, other societies have grown more bold and inquisitive.

That new outlook may be most apparent in Russian society, where any topic is fair game. Those past economic misfortunes inspired many Russians to take a keener interest in the world of finance. From banking and interest rates to topics of investing, there is little mystery left to Russians about their economy.

As a result of that hunger for knowledge, Russians are insatiably curious about everything. They’re particularly interested in the costs of goods and services, as well as the salaries in various career fields. While it may seem rude to inquire about such matters in western societies, that’s not the case with Russians. The average Russian won’t be too shy or timid to ask how much you paid for your new car or how much you make a year. Even in asking about the details of your mortgage, there’s no offense intended. Your average Russian conversationalist is just curious. In speaking with him or her, you should be prepared to field a number of direct and personal questions, but don’t ask about their own income. Even though Russians like to ask foreigners about their salary, often they won’t be willing to discuss their own finances.