Doing Business in Russia

Export and Investment Chapter 5 Trade Regulations, usance and Standards Chapter 6 Investment Climate Chapter 7 Trade and Project Financing Chapter 8 personal credit line snuff it Chapter 9 Contacts, grocery Research and Trade Events Chapter 10 Guide to Our operate 1 6/7/2013 Return to table of contents Chapter 1 Doing Business in Russia Market Overview Market Challenges Market Opportunities Market Entry Strategy Market Fact Sheet Link Market Overview Return to topWith a long landmass, extensive raw(a) resources, more than 140 million consumers, a growing middle class, and almost illimitable groundwork needs, Russia re importants one of the most promising and eexciting markets for U. S. exporters. Russia is the worlds 11th largest economy by nominal gross domestic product (gross domestic product) and 7th largest by purchasing power parity (PPP). It has the high-pitchedest per capita GDP ($13,400) of the BRICS countries (Brazil, Russia, India, China, and South Africa). Russia is an upper middle income country, with a highly educated and trained workforce and sophisticated, discerning consumers.Russias economy is still recovering from the economic crisis that began in 2008, with GDP growth estimated at 2. 8% for 2013. In terms of trade in goods, Russia was the United States 27th largest export market and the 16th largest exporter to the United States in 2012. Russia was Americas 21st largest trading partner overall. U. S. exports to Russia in 2012 were $10. 7 billion, a natural record book and an increase of almost 30% from 2011. This is six cadences more than the growth rate for overall U. S. exports worldwide, which rose by 5%. Russian exports to the United States in 2012 were $29 billion, a decrease of 15% from 2011.Russias leading trade partners were recently Netherlands, China, Germany, Italy, Ukraine, and Tur secern. U. S. accumulated investment in Russia is approximately $10 billion. According to Russian data, the United States is Russias 10th largest foreign investor. Russia joined the World Trade Organization (WTO) in imposing 2012. This brought the worlds largest economy outside the WTO into the organization and bound it to a set of rules governing trade. sexual congress also enacted legislation to extend permanent normal trade transaction to Russia in the same year.Russias membership in the WTO entrust liberalize trade with the rest of the world and create opportunities for U. S. exports and investments. For industrial and consumer goods, Russias average bound tariff rate declined from almost 10% to under 8%. U. S. manufacturers and exporters will get more certain and predictable access to the Russian market as a result of Russias commitment not to raise tariffs on any products above the negotiated rates. For American businesses, Russias accession to the WTO will also bring the following 3 More liberal treatment for service exports and service providers.Sthronger commitments for testimonial and enf orcement of IPR. Rules-based treatment of agricultural exports. Market access under country-specific tariff-rate quotas. Improved transp arncy in trade-related rule-making. More effective WTO dispute resolution mechanisms. The United States is working vigorously to expand bilateral trade and investment cooperation to win two Russia and the United States. In the last several years, the positive atmosphere resulting from the reset of bilateral relations has direct to an unprecedented advance in economic cooperation between our countries.From 2009 to 2011, U. S. exports to Russia rose markedly by about(predicate) 57%, and total United States-Russia trade increased by more than 80%. There is more than more room for growth in this important relationship. Return to top Market Challenges Russia is the largest country in the world, spanning nine era zones and encompassing over 17 million square miles. Seriously underdeveloped infrastructure poses logistical challenges, especially in accessing markets outside of major cities.An incomplete transition from central planning has led to an insufficiently iintegrated economy and disparities in wealth distribution, both geographically and demographically. Conducting business might be hinder by burdensome regulatory regimes poor intellectual property rights (IPR) protection and enforcement widespread corruption and inadequate rule of law inconsistent application of laws and regulations lack of transparency and the continued presence of large state-owned, or state-controlled, enterprises in strategic sectors of the economy.Investments in strategic sectors of the Russian economy are subject to Russian authorities control. Recent reforms make it easier for companies to hire expatriate employees, but the Russian immigration and visa system conducts time and patience for business travelers to obtain necessary permissions to do business in Russia. English is not astray spoken although knowledge of the language is exp anding especially in the major cities. Return to top Market Opportunities In alphabetical order Agricultural Equipment Apparel Automotive Parts and Service Equipment/Accessories Aviation 4 Chemicals/Plastics turn Consumer Electronics Electric Power Generation and Transmission Equipment Energy Efficiency/Green Build Medical Equipment Refinery Equipment guard and Security Equipment Travel and Tourism to the United States Return to top Market Entry Strategy bill time, personnel, and capital seriously, as developing business in Russia is resource-intensive. Conduct market research, such as with the U. S. commercialised Services Gold Key or International Partner Search services, to identify opportunities and capability Russian business partners.Conduct due diligence, such as with the U. S. Commercial Services International caller Profile service, to ascertain the reliability of business partners. Consult with U. S. companies already in the market, as well as with the U. S. Commercial Service and business organizations such as the American Chamber of Commerce in Russia and the U. S. -Russia Business Council. Communicate regularly with Russian business partners to ensure common understanding of expectations. Frequent travel to Russia is sthrongly recommended in order to establish and maintain relationships with partners and to understand hanging market conditions. Maintain a long-term timeframe to run through plans and achieve positive results. Return to table of contents 5 Return to table of contents Chapter 2 Political and Economic Environment For background information on the political and economic environment of the country, interest click on the link below to the U. S. Department of State Background Notes. http//www. state. gov/r/pa/ei/bgn/index. htm training on Russia can be found at the following link http//www. state. gov/r/pa/ei/bgn/3183. tm Return to table of contents 6 Return to table of contents Chapter 3 Selling U. S. Prod ucts and Services Using an Agent or Distributor Establishing an Office Franchising Direct Marketing Joint Ventures/Licensing Selling to the presidency Distribution and Sales Channels Selling Factors/Techniques Electronic Commerce Trade Promotion and Advertising set Sales Service/Customer Support Protecting Your Intellectual Property Due Diligence local anaesthetic anesthetic Professional Services Web Resources Return to top Using an Agent or DistributorEncompassing nine time zones, Russia is the largest country in the world by landmass. Therefore, many businesses tend to approach the Russian market on a regional basis. Most new entrants start in capital of the Russian Federation and then move into the regions any through an existing distributor or by seeking new distributors in those locales. As both Moscow and St. Petersburg are major universe and business centers, many Western firms have representatives there. The Northwest federal official District consists o f the northern part of European Russia and includes eight federal subjects (equivalent to U.S. states), including Russias second largest city, St. Petersburg. St. Petersburg and the surrounding Leningrad Region are home to Russias largest port facilities, and the area has significant natural resources, especially in forest products and oil and heavy weapon. The regions population of over 13 million provides a stable and highly educated workforce. In addition, the region shares a long border with Finland, and nearly 40% of European Union-Russia trade takes place along this border.American companies have make significant investments in northwest Russia Caterpillar, Ford, GM, International Paper, Kraft Foods, Wrigley and ConocoPhillips are some of the U. S. brand names with investments there. just about companies have successfully entered the Russian market by starting distribution in other key regions first because of market features and industry sector concentrations (e. g. , woodw orking in northwest Russia and energy insures in Sakhalin and western sandwich Siberia) and then expanding elsewhere. Well-organized distribution channels are established in western Russia, especially in Moscow and St.Petersburg, and continue to 7 develop rapidly in southern Russia, the Volga region, Urals, Siberia, and Russian Far East. With a high concentration of mineral resources (diamonds, favourable, silver, tin, tungsten, lead and zinc), fishing, and timber resources, the Russian Far East also represents business opportunities for U. S. exporters. The Russian Government is promoting a shift in the region to deep processing of natural resources and fostering local production of high value-added products, while preserving a reasonable focus on resource extraction.Deep processing is center on the timber, fishing, and agricultural (meat and milk production) industries and will create a need for equipment in these areas. Local and global environmental groups are supporting thi s strategy, aimed at more sustainable economic development in the region. The Russian Government has mega-projects in the fuel and energy sectors, including continued development of the major Sakhalin oil and gas project at a cost of over 1. 8 trillion rubles. Chemical production facilities using natural gas will likely be built along the pipeline routes.A large-scale petro- and natural gas chemical industry is expected to develop in the Russian Far East along the main pipeline routes to include methanol, ammonia, and fertilizer products, as well as manufacturing of polymeric plastics. These new projects will require procurement of equipment and machinery to support their production. The mining sector is also expected to be developed, including continued development of gold deposits in the Amur and Magadan regions and the Chukotka Autonomous Region.New projects in the mining sector will drive up the demand for expand fleets of road construction machinery, and other equipment by loca l companies. The development of regional aviation as a mearns to connect population centers in the Russian Far East is another Government priority. A new Federal program (adopted in April 2013) plans to allocate 101 billion rubles to support regional aviation, including the upgrade of local airdromes infrastructure. This will create business opportunities for suppliers of regional aircraft and equipment, as well as for service providers specializing in airport modernization.