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Selling and Operational Adaptation in Russia

Apart from adapting to the Russian culture, you may find yourself having to reassess the way you traditionally operate and conduct business. Here are some things to think about when you're planning:

• Will you be able to easily obtain the raw materials you require?

• Will you be able to import all the materials you need?

• Will you be able to find skilled workers?

• Will you be able to take current employees, if needed?

• Are you obliged to employ nationals?

• Are you prepared, if necessary, to increase workforce and productivity?

• Are you familiar with the laws, regulations and trade barriers that could affect your business?
  
  

Selling and getting your goods to market

To improve the chances of successful business expansion in Russia, you need to consider a few key issues. Sales presence, for instance, should be a top priority. Will you sell directly? Will you trade over the internet? Perhaps trade shows are more suitable? Could you benefit from a local partner who knows the market? Here are a few fundamental choices:

• Get yourself a Russian distributor who has a proven track record of selling on a local or national level.

• Find sales agents who can either sell your products or services, or alternatively acquaint you with potential clients or customers.

• Joint ventures with local companies have gained in popularity, primarily because of their knowledge and established presence in the market. It is often a pricey option but lessens the risk.

• Set up your own Russian office, ensuring maximum control on all operations. This is obviously the most expensive of all your options.

When considering the distributional needs of your business, it is essential to account for the logistical factors which could affect it. These include things, such as:

• Your goods: are they fragile, expensive, perishable? Do they need to be kept at a certain temperature?

• Are your goods live, or considered dangerous, and, if so, can you meet the requisites of customs and excise, or health and safety?

• How regularly will you deliver? Daily, weekly, monthly? Can you find a distributor who can accommodate this?

• Can you foresee the dates / times you'll need to distribute?

• Have you worked out the transportation costs? Air freight and couriers are fast, but also the most expensive forms of freight.

• Reliable and invariable collection and delivery times, which offer accurate predictability and time-traceability

• Awareness of transit times so you can plan around them

• Freight security

• Fuel price fluctuation

• Effect of congestion or delay
  
  

Infrastructure

There are a number of routes which can be used for shipping goods into Russia. The most common routes are by road or rail overland across Western Europe, Poland, Belarus to Moscow, or by sea to St Petersburg or Finland and then road or rail through St Petersburg and to Moscow. For smaller consignments or goods which are required urgently, air freight is a viable option and there are a good range of airfreight services available to Russia from the UK. Be aware that road safety in Russia is poor with a road accident 60 times greater that of Great Britain.

Each route presents different benefits in terms of cost and time. Most freight forwarders will have routes that they prefer and use most of the time. It is very important to use a reputable freight forwarder that has experience of shipping goods to Russia and preferably has representation in Russia.

The main ports are Azov, Kaliningrad, Kavkaz, Nakhodka, Novorossiysk, Primorsk, Saint Petersburg, Vostochnyy. The airport network is extensive but not always modernised.

Warehousing

Warehousing is available in most main cities, offering flexibility and speed of delivery. However, legal advice should be sought before entering into any agreement.

Wholesale

Traditionally, wholesalers are used for selling low-value directly to retailers and, occasionally, the public and businesses. It is an economic way of targeting and reaching vast numbers of people quickly, and frees you from the burden of contacting retailers individually.

Distributing products in bulk not only means products sell faster than one-at-a-time, but it also allows your business to grow at a quicker rate.

Dispensing products and collecting money is generally considered more manageable and easy than dealing with a variety of customers. However, both the wholesaler and retailer will add their own mark-ups, meaning your profit margin will be less than full potential.

Just like with distributors, do some meticulous research into the wholesalers available. Here are some things to think about when choosing an appropriate wholesaler:

• Their client base: a healthy wholesaler-retailer relationship can only increase sales

• Will you want to limit sales only to retailers that suit your product's image?

• How well-established is the wholesaler? A national presence could help bring your company to the forefront of the market

• Will the wholesaler appreciate your product? If it already sells a competing product, how will it negotiate pushing yours too?

• Will you have a say in the price the wholesaler sets for your goods?

• Will the wholesaler do its best to promote your goods to its clients?

• How will the supply exchange operate? Minimum order levels / resupply?

• Will you be restricted in any way, such as limitation on distributing through alternative channels?

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