Getting your product into market
The most effective way to enter Russia is to find a business partner who understands the market and who knows the complex Russian ‘system’.
Dealing directly with retailers is generally not recommended because of potential language barriers and high levels of corruption. Personal contact with the distributor is a must, since emails and telephone calls are not enough to maintain a trustworthy business relationship.
Because of Russia’s size, it is recommended you consider a region in which to promote a product and then give a distributor exclusivity for a certain time in that region.
Import tariffs and quotas can change at short notice. Often imports are restricted by making Russian importers apply for licences.
Import tariffs can vary from 5 to20 percent depending on the product and whether the export country has most favoured nation status.
Russia does not recognise many international standards. Imported products must have a Certificate of Conformity issued by the Russian State Standards Committee to show that the product complies with Russian standards.
For foodstuffs, the Russian State Health Authority issues Hygienic Conclusion Certificates.
Labels on most products have to be in Russian.
Tax
A goods and service tax of 18 percent is levied. A lower rate of 10 percent is imposed on pharmaceuticals, medical equipment, some food stuffs and periodicals.
Logistics
Common routes from Auckland to Moscow are through Seoul, Shanghai, Hong Kong or Bangkok. To get to Vladivostok, flights usually go through Hong Kong and Seoul.
The main Russian ports are St Petersburg and Kaliningrad on the Baltic Sea, Novorossiysk and Sochi on the Black Sea and Vladivostok, Nakhodka, Magadan and Petropavlovsk-Kamchatskiy on the Pacific coast.
Opportunities
- Many airports outside of those serving Moscow and St Petersburg are on a waiting list for development. Various projects are also in the pipeline to modernise and upgrade airports for the Sochi 2014 Winter Olympics and APEC 2012 in Vladivostok
- There are niche opportunities for New Zealand designer fashion labels and luxury products. Mountaineering and outdoor activities have also become very popular
- High quality beef and sheep meat are not subject to quotas. In the middle to upper price segment very high prices are being paid for premium cuts in top-end Moscow supermarkets
- Russian boat manufacturers are starting to emerge and appear to be able to produce boats 20 to 30 percent cheaper than Western companies. This might offer potential for New Zealand boat equipment manufacturers.
Challenges
- Russia still faces a range of serious problems including a declining population, widespread corruption, an oppressive and inefficient bureaucracy, income inequality, inflation, weak rule of law and environmental degradation.
Cultural and business tips
- Foreigners must have a valid visa to travel to Russia.
- All foreigners entering Russia must register within 72 hours of arrival
- Younger Russian business people generally speak English
- Russians have a different attitude towards official documents - they do not place as much significance on them.
