ESTABLISHING AN OFFICE IN RUSSIA

by Richard Steffens

Business in Russia is personal and local, and potentially very lucrative.  A full-time
office is usually required, however, to build substantial business in Russia.  A
representative is needed to cultivate local business and government contacts, to
establish and manage distributors, and to overcome the many obstacles to doing
business here.  Though establishing an office in Russia can be arduous and
expensive, it is better than the alternatives: doing business from a distance, which
often goes nowhere, or not doing business in Russia at all, which means ignoring
one of the most promising new markets of the decade.  

Companies establishing a business in Russia should remember that Russia is not
one market, but a series of regional markets which cannot be covered from one
city, much less from the United States.  You must decide where to start.  Most
firms start in Moscow, although others have chosen St. Petersburg or Vladivostok.  

Selecting the Office Manager
The Commercial Service of the United States usually recommends that U.S.
companies entering the Russia market hire a U.S. citizen to oversee the first office. 
American companies want an office that maintains U.S. business standards,
follows U.S. business customs, and obeys U.S. laws.  Although Russia has many
talented entrepreneurs and managers, American business practices are still new to
most of them, and it is very difficult to closely monitor an office in Russia from a
distance.  

For the first office director, we recommend an American with considerable
overseas experience, preferably in NIS or Eastern European markets.  Russian
language ability, while not crucial, is very helpful.  One option is to interview an
American who is in Russia already.  Many come to Russia in search of good jobs or
business opportunities, and a good number have become very successful office
directors for U.S. firms.  Former Peace Corps volunteers and others with similar
on-the-ground experience offer advantages over newcomers, because they have
already overcome the first culture shock and mastered many of the fundamentals
of doing business in this complex market.

If you decide to send a current U.S. employee overseas, select that employee
carefully.  Russia is not for everyone, and it takes a special temperament to
succeed here.  An employee with other overseas experience, especially under
challenging circumstances is a good second choice.  Americans who thrive on
challenge, chaos, and adventure do very well.  In selecting your office manager,
remember that meeting the challenges of doing business in Russia frequently
requires all the stamina, fortitude, perseverance, and patience one can muster.

Preparing for an Assignment in Russia
We strongly suggest that future office directors have at least one month of
full-time Russian training.  A small amount of Russian goes a long way in making a
person feel at home.  Also, spend time reading about Russia -- its history and
culture -- before you go.  Read a good Russian novel or some short stories.  Buy a
guide book or two.  Find contacts or referrals to people who are here already.   
You will need a visa to work in Russia.  Obtain one through the Russian Embassy in
Washington, or its consulates in New York, San Francisco, or Seattle.  You usually
need a letter of invitation from a Russian organization to obtain this visa.  If you do
not already have a Russian partner, contact BISNIS for a list of Russian visa
facilitation services.

Bring warm clothing, lots of cash, travellers checks, credit cards (which are great in
Moscow and St. Petersburg, although still rarely used in the provinces).  Bring extra
copies of passport and visa.  Have a medical check-up and get needed shots.  Bring
lots of small presents from America, like souvenirs from your hometown or city and
pins, pens, or badges with your company's logo.

A first point of contact for any new firm considering the Russian market is the local
Commercial Service District Office.  There, international trade specialists will be
happy to explain the full array of Commercial Service programs for exporters.  For
initial guidance on doing business in Russia, contact BISNIS at (202) 482-4655;
(202) 482-2293 (Fax); or on the Internet at http://www.itaiep.doc.gov.  
Richard Steffens is with the Commercial Service of the United States in Moscow.

**Produced by the Business Information Service for the Newly
Independent States (BISNIS)