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 Erik Loijen of Kuijken Logistics Group, and Bert Panman of Project Delta Group.
Bert Panman
'Pooling resources makes for a better connection'
The objective of Project Delta Group (PDG) is to facilitate intensive business cooperation with Russia in the field of Energy and Energy Infrastructure. The foundation was established in 2009 to showcase the knowledge and expertise of Dutch businesses. PDG is the panacea in the cooperation between the two countries, operating under the auspices of its executive director Bert Panman. A Gasunie veteran, Panman has extensive experience in doing business with Russians.
Bert Panman: "A showcase for businesses, that is an excellent way of describing Project Delta Group. We present a carefully selected range of Dutch companies that use state-of-the-art innovative findings to operate in and around energy and energy infrastructure, including Shell, Van Oord, Boskalis and Mammoet. Our members currently include 14 companies and six knowledge organisations. This allows the Russians to see at a glance precisely what our country has to offer.
"We are not a consortium but a network. I sometimes refer to our organisation as a 'sectoral business opportunity initiative'. We see to it that the Russians know what the Netherlands has to offer in terms of knowledge and expertise. If companies subsequently wish to enter into agreements, they must approach each other themselves. We step aside once the rubber hits the road. We are one of the options available to companies to further strengthen and deepen their ties with the Russians. But of course businesses are free to have more than one iron in the fire.
"PDG showcases the Dutch companies and knowledge organisations at several bilateral meetings. The Netherlands-Russia year in 2013 is a harvest year for us, offering wonderful opportunities for making or reinforcing contacts. And that is precisely what is needed. People on both sides first have to meet each other. This gives us the opportunity to explain exactly what the added value of Dutch business and knowhow is, and makes it easier for Russian and Dutch parties to form often highly complex partnerships for vast energy projects.
"One of PDG's trump cards is that under our guidance businesses, organisations and the government pool their resources. In addition to companies, research institutes, universities and [the Dutch employers' federation] VNO-NCW our membership includes the Dutch ministry of Foreign Affairs. The ministry is very pleased with our initiative because the sitting cabinet wants to devote more time and attention to promoting trade. They can use us to do so. The public-private cooperation embedded in our organisation makes for a better connection with the Russians. Because in Russia – as is also the case in other BRIC countries – the public and private sectors are more closely intertwined than here. This mixture of businesses and governments on both sides makes it easier for delegations to get on the same wavelength. It's nice to be able to raise the flag if it's also flying on the other side.
Panman's rules
for doing business
with Russians "In dealing with Russians it is important to always explain honestly and at length what your position is. I learned this in the period that I was negotiating on behalf of Gasunie with Gazprom regarding the Nord Stream gas pipeline, from 2004 to 2007. At the time there were issues we did not agree on. That wasn't a problem; just as long as it is clear that the situation is that we agree to disagree, everything's fine.
"I believe that Russia offers great opportunities for Dutch businesses. We have enjoyed excellent trade and business ties for a very long time. And this huge emerging country has a need for our advanced knowledge in order to modernise. An example is the issue of energy efficiency. Russia consumes 500 to 600 billion cubic metres of gas a year; they could cut this by 15 to 20 per cent. We Dutch have a major role to play in this, with our knowledge of energy infrastructure and for example efficient central heating boilers. What is important is that in doing so we do not come across as know-it-alls. Russians have plenty of abilities of their own and are rightly proud of them. It is precisely the understanding and flexible Dutch attitude to forming business relationships that they find appealing."
Panman's rules for doing business with Russians
1 "Russians can come across as a little cold to start off with, but they are in fact anything but, as you will find out once you get to know them better and meet them in an informal setting. Then they may surprise you by how emotional they are. You will notice how rooted they are in their own culture. For example, once a business contact of mine suddenly started passionately declaiming a poem by Pushkin - for ten minutes, all off by heart! You won't catch a Dutch person doing that in a hurry. Our cultural awareness is somewhat lower. We are also somewhat flatter in our emotions, just like our neat and tidy little country. I love that exciting, unpredictable side of the Russians. They show huge appreciation if you are able to value their character traits and cultural heritage."
2 "Say what you do and do what you say. That is important to Russians. They like their contacts to be solid. You have to be reliable and stay so in the long term."
3 "What the Russians and the Dutch share is a direct style of communication. They like things to be no-nonsense, and are not sticklers for decorum. Once you know a Russian, it's fine to tell it like it is, without this necessarily ruining the atmosphere. Russians are tough, they do not upset easily."
4 "Be patient and be flexible. One of the reasons why Russians like doing business with the Dutch so much is the fact that they are adaptable. The Dutch are not dogmatic. We have a history of wheeling and dealing with other nations."
Erik Loijen
'It helps that we are a family business with a long-term vision'
Constantly investing in your contacts is the key to success in Russia, according to Erik Loijen, general manager of Kuijken Logistics Group (KLG). Russia is one of the sixty countries in which this family-owned all-round logistics business with its staff of 700 and annual revenue of 105 million euro operates. And an important country that is a strong but challenging growth market. Nowhere is optimum document management – one of the group's specialities – as vital as in Russia.
Erik Loijen: "Of course Russia is a growth market. Nobody doubts that. But that does not mean that it's a walk in the park. Absolutely not. Nearly six per cent of our revenue is currently generated in Russia. We have to work hard for it and accept that growth in Russia might not be as rapid as we might have hoped. But I am very optimistic about the future. Demand in Russia for Western products will grow, especially now that consumers are having more to spend.
"Doing business in Russia and neighbouring countries requires a long-term vision and perseverance. For example, we have already invested a lot of time and money in the development of a warehouse and national distribution centre in Belarus. And we commissioned a study by a university and spoken to the authorities. But we still haven't received the final green light.
"We remain full of confidence and are going for it. I think that's the only mentality that will bring you success in the region. Be patient, continue to invest, and always look for new solutions. As a family business we are financially able to have a long-term vision. We can focus on the future but also make snap decisions if we have to. That is an unmistakeable advantage.
"One of the characteristics of Russians is the way they value personal contact. They have to know you and there has to be a relationship based on trust. This is not something you achieve by calling a couple of times and then emailing the contract. Russians want to look you in the eye. Negotiations take longer than we are used to. You have to keep investing in that personal contact. And be sure you are talking to the real decision-makers. Once I found myself talking to someone from the government for hours, which in itself is quite an honour of course, but it led to no specific actions.
Loijen's rules for
doing business
with Russians "I build new relationships by taking part in trade missions and going to trade fairs. Never assume that they know you after a while. Keep in mind that the hierarchy is more important than it is in the Netherlands. And never hurt a Russian's pride by assuming that you know it better. I personally have never made a major faux pas. But I did once make the mistake of wanting to move too fast. Patience is not a virtue in Russia, it's a necessity.
"Another characteristic about doing business with Russia is the bureaucracy. It means that documents have to be 100% in order. Rules and taxes also change from time to time. That's why we have native speakers at our head office. They speak the language but also know the law in Russia. We have devised a separate protocol for our transports to Russia in order to make the process as reliable as possible. This is where I can see the added value of KLG. Another thing we do well is to think outside of the standard scope of logistics services. We don't do 'No' and I'm not just saying that. There is always a solution and it's up to us to find it. If necessary for a higher price, but customers have to know that we have gone the extra mile for them. Russians in particular really appreciate that attention. That's what wins them over.
"The added value of Dutch logistics services providers is their knowledge of automation. But it's also their approach and mentality. Russians think big, often too big. The Dutch are used to starting off smaller and growing once the concept has proved successful. Russians can think big but the business world is actually remarkably small in that enormous country. That's just as well; it makes it easier to know who to do business with and who to avoid." .
Loijen's rules for doing business with Russians
1 "The customs union between Russia, Belarus and Kazakhstan (from 1-1-2012) enables Dutch businesses to be close to the Russian market at much lower costs. Keep an eye on this development. The import duties have been virtually aligned but a lot still needs to be harmonised. Various other countries in the region are considering joining the union (similar to the EU situation)."
2 "Always be sure to have the correct documents. Russia is a bureaucratic country. If one detail does not meet their approval, it can result in huge delays and problems. Check and double-check to ensure that everything is correct and done completely according to the rules."
3 "Russian business people are more focused on the short term than the Dutch are. They live in the here and now. It is therefore difficult to reach agreement on long-term contracts or prices, even though these can be attractive for both parties due to currency and price fluctuations. Accept the fact that Russians think differently about this."
4 "Even though a Russian may speak English or German well, he or she may feel more confortable working with an interpreter. Don't make too much of this and don't be surprised if the translation provided by the interpreter is much longer. Sometimes more words are needed in Russian."
