Players and the rules of the game
Showing their hand.
Who better to explain how the Dutch and Russians can make the most of business opportunities together than the players who know the playing field well - like Yuri Fedulov of Ashmanov & Partners and Jeroen Ketting of The Lighthouse Group.
Jeroen Ketting The Lighthouse Group
'Russia is one of the top global players in ICT'
Jeroen Ketting, who has lived and worked in Moscow for 19 years, advises Dutch companies wanting to do business in Russia. He sees major opportunities for commercial cooperation, in sectors including ICT. “A market of 60 million computer users is just waiting to be developed. And e-commerce, e-health, e-learning and e-banking are going to be booming.”
Jeroen Ketting: “If you want to do business in Russia you have to be adventurous. Above all you have to take a genuine interest in the country and its people. Does the Russian culture hold no appeal for you? Can you not be bothered to pick up the country’s customs? Then look for another market because you’re not going to make it in Russia. I’ve seen it happen time and again. This is not an easy country to live and work in. But if you do succeed in connecting with the Russians then you’ll discover that they are the nicest people in the world. As well as being loyal business partners.
“When I came here in 1994 as a student of Leiden university it took me a month and a half to become the one-eyed man in the land of the blind. I started representing Dutch companies and established Russia’s first call centre. In 1998 the rouble crisis hit and things were very difficult for a few years. I started to work as an independent business consultant and am now head of a consultancy that employs 15 people in Moscow. We assist foreign companies that are new to Russia, for example helping them to find distributors, buyers and office space. In addition we help companies that are already doing business with Russia and want to open an office here. In these cases we act as an advance party. We are also able to provide strategic advice to companies in Russia.
“As a Dutch consultancy we took the conscious choice to only base ourselves in Russia. The thinking behind this is that you need to be streetwise and stay in constant touch with the market, which changes every six months. What’s going on at present is that Russia is on the edge of a recession. Sentiment is less bullish than a year ago. The country is also in a state of political flux. The middle class, which comprises some 30 million people, is taking little notice. These people are bent on consumption, with luxury goods from the West being particularly popular. At the same time the country is producing more and more luxury and consumer goods itself and this presents opportunities for foreign suppliers. All the big car brands now have their own production facilities in Russia; a few years ago everything still had to be imported.
“The ICT sector is booming. Russia is one of the top global players in terms of both software and services. ICT is one of the few sectors that are not rooted in Communism. It is surprisingly modern and international. Software and related services account for four per cent of GDP, not far behind levels in the West. For the Netherlands it is mainly the sheer size of the Russian market that offers opportunities. There are 60 million computer users. Internet penetration may still only be 50 per cent, but it is growing by 10 to 15 per cent a year. The opportunities for e-commerce companies are enormous. But e-health, e-learning and e-banking are also going to be booming in Russia.
“What Russian companies are really in need of is products and services to raise efficiency and lower costs. Process improvement and innovation: that is what Russians need in order to remain competitive. The Russians are heavily into research but the research triangle of university, government and industry does not really exist in Russia. As a result there is no smooth process for translating knowledge into products and markets. This is an area where the Dutch traditionally excel.
Ketting's rules
for doing
business with
Russians“A big difference between the way Russians and the Dutch do business is the importance that Russians attach to personal relationships. They want a
relationship built on trust. And once they have it, Russians are very loyal. Russians are also proud; they frequently criticise their own country but will not accept criticism from a foreigner. Drinking is part of doing business in Russia. Go along with this if you possibly can. If you are a teetotaller, make this clear right from the start. Explain that you don’t drink alcohol, and never have, because you don’t like the taste of it. If you wait until dinner before saying so, a Russian will feel insulted and see you as a poilsport. For Russians, drinking is part of doing business, a way of putting his business partner to the test. You may be nice and polite during negotiations, but what are you like after four vodkas? Are you still just as nice? Do you have tall tales to tell? A sense of humour? These are things a Russian wants to know. It tells him who he is getting involved with and reinforces the bond of trust. To a Russian, alcohol brings people closer together.” .
Ketting's rules for doing business with Russians
1 “Personal relationships are more important than business relationships. A Russian will primarily do business with you, rather than with the company you represent.”
2 “A Russian is a strategic negotiator who thinks several steps ahead, like a chess-player. He will bring the full range of emotions to the table: warmth, coolness, anger, joy. It’s all part of it.”
3 “Status is important to a Russian. If he’s used to getting around Moscow in a chauffeur-driven car, a Russian will expect the same treatment in the Netherlands. So don’t collect your business partner from the airport in your wife’s Mazda. Make sure your business card states your job title and pay attention to your clothing and appearance. Conduct negotiations at equal level; that means: don’t send a junior colleague. And don’t allow yourself to be fobbed off with someone who is lower in rank.”
4 “In negotiations a Russian does not think in terms of win-win or giving ground to one another. To concede is to give something up and a Russian will always try to get the most out of a deal. Before entering into negotiations decide what you are readily willing to ‘give up’ but which will feel like a ‘victory’ to your Russian business partner in the negotiations.”
5 “Accept that things work differently in Russia compared to the Netherlands, for example the bureaucracy. Resisting it is pointless. And don’t take the attitude that you’ll go in and bend things to your will.”
Yuri Fedulov Ashmanov & Partners
'Russian internet provides opportunities for companies that adapt'
The Russian ICT world is just as dynamic as it is in the West, but the Russian internet is different. Ashmanov & Partners know the rules of the game. The internet marketing company translates its know-how for companies in the West targeting Russian consumers while at the same time trying to pick up the Western way of doing business. This is progressing well, according to Ashmanov branch manager Yuri Fedulov. “The younger generation of Russians in ICT is hungry. They draw their know-how from international sources.”
Yuri Fedulov: “The internet is global. To be a success in the ICT sector you have to dare to think globally. We have been making good strides since 2001. Our company works for multinationals such as Yves Rocher and mail order company Otto. International companies are becoming more and more interested in Russian consumers. This is no real surprise. Russia is a really interesting emerging market from a consumer point of view. And it is a market in which the importance of the internet is rapidly growing. No less than 15 per cent of the 500 million European internet users are Russian.
“Our company responds to the growing need of international companies to conquer the Russian market. We have been active in Germany for some time but have not been in the Netherlands very long. But I am nevertheless fully confident about it. We see that working together with parties in Western European countries goes quicker than, for example, in Asia where we also operate. The cultural gap between Russia and a European country like the Netherlands is smaller.
“That is not to say that there are no differences between our countries. Even though the World Wide Web is a global phenomenon, newcomers to the Russian market would be best off ‘thinking global, acting local’. Companies that want to reach Russian customers via the internet have to take into account considerable cultural differences. Currently you often see that multinationals underestimate the importance of adapting to the Russian internet reality. For instance by copying their dotcom website. That does not work because the internet in Russia is a different story than the internet in the West where it is dominated by Facebook and Google. Russians have their own Facebook called VKontakten and their own search engine,Yandex. That is a really big player which, like Google, also provides other services. The most recent studies show that 62 per cent of Russians use Yandex and 27 percent use Google. At Ashmanov & Partners we are well aware of how Yandex works because our founders were involved in the development of search engines.
“Companies that want to attract a lot of Russian customers would be wise to also make an .ru website that can easily be found on Yandex. This is particularly important when searching for a product. When a Russian looks for products he mostly finds them on sites that have been adapted to the Russian situation. When making websites for multinationals we are noticing that brand recognition grows when companies adapt more to the Russian internet.
“Our company does different things that fall under the categories of social media analysis, internet marketing and search engines. We are probably one of the few companies that advise on search engine optimisation while at the same time making the search engines. We made a search engine for the Vietnamese market, for example. And on other projects we also do not shy away from the challenge of developing a completely new service ourselves. Like building a robot for a large Russian bank that answers customer questions.
“It is no coincidence that Russian companies operate beyond merely the field of marketing. In Russia we are good in fundamental knowledge and research, for example in programming and mathematics. One of the best linguists in the world works for Ashmanov & Partners. He is the man who developed the technology for Microsoft that is used by the spellcheck to detect typing mistakes. There are a lot of these whizzes in Russia.
Fedulov's rules
for doing business
with Russians“I think that this fundamental knowledge will take Russia far. But we can still learn from you when it comes to applying and marketing this knowledge. Russians are very creative and have many ideas, but they are less good at applying and marketing them. In that respect a country like the Netherlands is clearly better. I think a good example is the business incubators that are set up by universities in European countries to create opportunities for young entrepreneurs. It is great to see how large companies like Philips work together with a university. We should do more of that here too.” .
Fedulov's rules for doing business with Russians
1 “Become well-acquainted with the local Russian situation. Russia is, when it comes to the internet for example, clearly different than other countries. Companies that adapt can build up a presence quickly. Russians appreciate it if you show an interest in their own different traditions and culture, and that includes when it comes to the internet.”
2 “I am a firm believer in the business saying: ‘if you fail to plan, you are planning failure’. Russians could learn a thing or two from the West when it comes to planning business. That is why you see large Russian multinationals also recruiting top-level managers from abroad. By doing so they want to change the mindset of middle management.”
3 “Do not underestimate the younger generation of Russians. It may still apply that the older generations are less good at planning and processes. This does not necessarily apply to young Russians, particularly if they work in the ICT sector. The younger generation is hungry and they often draw their know-how from international sources. They are also increasingly experienced in cooperating internationally.”
4 “Russians embrace ‘social’. We are a people that loves to tell and pass on stories. Take advantage of this.”
