Entering the Russian market, foreign companies often find themselves unprepared for its realities. In this article, we will tell you about the most common problems that foreign entrepreneurs face in Russia.
Unreliable counterparties
All foreigners know Gazprom and Sberbank, but what if the name of the counterparty says nothing? Many Russian companies do not have an English version of the website and without knowing the Russian language it is impossible to understand how reliable and understandable a partner is.
Foreign entrepreneurs do not always understand why they need to additionally check counterparties before signing an agreement. It would seem that the agreement has already spelled out the responsibility of the parties and penalties. What could go wrong?
Nevertheless, companies operating in Russia need to take a responsible approach to checking counterparties: this allows you to protect yourself from working with a one-day company, as well as from fines for dubious transactions, and ultimately you can protect your money. Even if you win the court, what can you get from a company with a registered capital of $ 150?
The RAUIE helps foreign entrepreneurs check partners and buyers in Russia. We carry out electronic checks of legal entities, as well as visit organizations and support meetings.
Controversial situations
Russian legislation is not always transparent and unambiguous. It changes frequently, which makes it difficult for companies to meet its requirements. Its features should be taken into account not only when submitting reports, but also when drawing up contracts with partners and contractors. Often, when it comes to disputes, foreign entrepreneurs find themselves in a weak position and lose the courts.
To protect yourself from financial and reputational losses, it is better to consult with lawyers in Russia.
The language barrier
Despite the fact that English has long become the international standard for business communication, the level of English proficiency in Russia remains well below average. In this connection, when negotiating, misunderstandings often arise, which negatively affects the results of interaction.
The RAUIE recommends using the services of highly qualified translators, both for negotiating with partners and for drafting contracts, translating documents, etc.
Ignorance of Russian business culture
Russia is a Eurasian country located between the West and the East, so it is not surprising that the culture of doing business, like the culture of the country as a whole, is mixed. Moreover, Russia is a multinational country, traditions, the specifics of communication and doing business will differ in each region.
The RAUIE conducts offline and online trainings for foreign entrepreneurs to study the business culture of Russia. The course includes both theoretical knowledge and analysis of practical cases, full immersion in the business environment of the Russian Federation
Scope of workflow
In Russia, companies must collect and submit to regulatory authorities much more documents than abroad. If the set of documents is incomplete, then the tax authorities will issue a fine or even consider that the company has underestimated the income tax base.
At the same time, it is important not only to receive the primary documents from the supplier, but also to check how correctly they are drawn up and whether they comply with all legislative norms. Such difficulties often come as a surprise to foreign entrepreneurs. What to do? We recommend working with reliable accountants and lawyers in Russia, many of whom are the RAUIE members.
Personal data storage
In Russia, there is a law according to which all personal data of Russian citizens must be stored on the territory of the Russian Federation. For violation of the law, a legal entity faces a fine from 1 million to 6 million rubles. For a repeated violation - from 6 million to 18 million rubles.
At the same time, many foreign companies need to use cloud systems to manage their personnel. Therefore, the representative offices of companies in Russia are forced to spend additional funds on providers' services which can set up a data exchange system.
These are the most frequent, but far from all, problems that foreign entrepreneurs may face in Russia . If you need more detailed advice on doing business in Russia, you can contact our specialists.
For more than 10 years the RAUIE has been helping foreign entrepreneurs to enter the Russian market and develop their business.
We know everything about business in Russia!
If you have questions or need advice on doing business in the Russian Federation, you can leave a request in the feedback form or contact our specialists at the contacts below:
Maxim Kuznetsov - vice-president of the RAUIE
investment@raspp.ru
WeChat: maximkuznetsov
