Alexander Kondakov,

1
What People Who Do Business in Russia See
Problematic
4th workshop on "Flexibility in Business
Contracting 20-22 March 2013, Regensburg,
Germany

• Alexander Kondakov,
• Centre for Independent Social Research (St.
  Petersburg, Russia)

2
The project

• International Cooperation and Contracting Legal,
  Social and Institutional Aspects of Investment
  Climate in Russia
• Project Team Soili Nysten-Haarala (Luleå
  University of Technology, Sweden), Elena
  Bogdanova, Alexander Kondakov (Centre for
  Independent Social Research, Russia), Fredrik
  Jørgensen (Stockholm University School of
  Business, Sweden)
• Term 09.2012 07.2013
• Funded by Valday Discussion Club, Foundation for
  Development and Support (Russia)
• More information http//cisr.ru/en/projects/mezhd
  unarodnaya-kooperatsiya-i-kontraktnye-otnosheniya-
  pravovye-sotsialnye-i-institutsionalnye-aspekty-in
  vestitsionnogo-klimata-v-rossii/

3
methodology

• Grounded-theory build theoretical solutions from
  below
• Case-studies Finnish, German and US business in
  Russia
• In-depth interviews right now 10 (3-5 more to
  come) accounts
• Court decisions (companies interviewed)
• Problematisation (issues discussed in interviews)

4
Whats the problem?

• Russia is very attractive and lucrative as well
  but it is always a very significant challenge to
  handle
• (top-manager, US, engineering)

5
Russian Exaggerative Bureaucracy and Access to
Justice

• Bureaucracy is more or less scary (top-manager,
  Finland, resort and retail)
• sure, the first reaction of any international
  client is, its a nightmare (lawyer, Finland,
  retail)
• when we pass papers to financial control office,
  we rent a van, and when we close quarterly
  accountant reports, there are huge mountains of
  paper appear in the office (finance manager,
  Germany, transportation)
• a stamp is amazing thing, Ive never seen one
  before Russia (top-manager, US, engineering)
• we had to get from 45 to 50 different papers to
  have a terrace opened (lawyer, Finland, resort
  and retail)

6
Russian Exaggerative Bureaucracy and Access to
Justice

• for international partners it is a novelty to
  sign and handle in originals of different acts
  that do not exist in their countries (lawyer,
  Finland, resort and retail)
• Bureaucracy makes it hard to be successful, it
  takes a lot of time (top-manager, US,
  engineering)
• it makes business useless (manager, Finland,
  resort and retail)
• participation in the process took one a half of
  a year only to be freed from a small sum of
  money (lawyer, Finland, resort and retail)

7
Law and the Rules of the Game

• to be successful in this market you really need
  to know Russian law hundred percent (manager,
  Finland, resort and retail)
• in Russia, there are its own legal standards and
  patterns that are set by taxation inspection and
  other official bodies (lawyer, Finland, resort
  and retail)
• money transfers go through the Russian banks and
  they require this kind of agreement in this
  particular form and with this exact information
  (lawyer, Finland, retail)
• state law is not stable and creates bribes
  (top-manager, US, engineering)
• the rules of the game to be more open and
  on-the-table the government greatly affects our
  ability to do business, and we are hoping that
  this is stabilizing with WTO (top-manager, US,
  engineering)

8
Trust and Transparent Business

• it is possible for a company to be transparent
  in Russia, but its not easy to be simultaneously
  transparent and successful in Russia
  (top-manager, US, engineering)
• a letter of credit at the end of the day is just
  a piece of paper (top-manager, Finland, resort
  and retail)
• some years ago we decided to take prepayments
  (finance manager, Germany, transportation)
• there is a black list on the Internet, all bad
  companies are listed there (lawyer, Finland,
  retail)
• we try to educate our partners (top-manager,
  US, engineering)

9
Business Culture and Russian Mentalitet

• Russian mentality includes carelessness and
  irresponsibility (manager, Finland, resort and
  retail)
• the expectations of people when they are doing
  business, is to be very restrictive
  (top-manager, US, engineering)

10

• So rather than not come, weve chosen to come,
  to invest but participate in deals that we can be
  proud of, and so we follow our guidance and keep
  our goals low
• (top-manager, US, engineering)