Business Set-Up in Russia
With structure and plan
to long-term business success in Russia
Expansion, market entry and business development to and in Russia offer numerous opportunities for foreign companies. The largest country in the world offers not only an enormous, still unsaturated sales market with consumers who are keen to consume, but also very good conditions for the localisation of local production due to its moderate wage costs and at the same time emerging economic regions.
Political stability and high growth potential make Russia an attractive market for many companies from a wide variety of industries and regions around the world. Essential for a successful expansion into the Russian market is above all the necessary professional expertise and intercultural competence. The strangeness or otherness that has become anchored in the minds of many people from the western world in connection with Russia cannot be denied. Despite the ongoing liberalisation of the market and the geographical proximity to Europe, topics such as lack of transparency, corruption and a bureaucracy that differs significantly in many areas are still very topical. In addition, there are cultural differences which are noticeable in the appearance of business partners as well as in the way Russian employees work and behave.
In order to be able to profit as a company from the various possibilities of the Russian market, it is therefore particularly important to be sufficiently informed about the country-specific features before entering the market and building up business. Negligent and inconsiderate action can cost companies a lot of money in a very short time and seriously jeopardise their success.
From export to own subsidiary in Russia
For foreign companies wishing to take the first step on the Russian market there are various possibilities to initiate local business actities. Basically, success begins with a well thought-out business development. Starting with pure export business, with or without a distributor, through a joint venture with a Russian partner, to local branches or subsidiaries.
Choosing the right legal form
The choice of legal form sets the course for future business activities right form the start. In Russia, as elsewhere, there are different legal forms that differ from each other in terms of their tax, liability and other characteristics. The most relevant legal forms for foreign companies are the representative office, branch office and the Russian Ltd..The choice of one of these three options depends directly on the objectives, the industry and the market development strategy of an expanding company.
Location of a company in Russia
Essential for the start as an independent company in Russia is the choice of the company's registered office, which must be fixed when registering a company or accrediting a branch office. In accordance with the respective project on the Russian market, different opportunities for foreign investors are also opening up.
In many cases, it is a good idea for foreign companies to rent a legal address temporarily until the Russian legal form has been officially approved by the authorities, employees have been found and all further steps for a successful market entry have been taken. An extension of this legal address, which can be considered either directly or at a later date, is a virtual office.
The third option, which is often only necessary when all administrative hurdles have been overcome and the operational business needs to be tackled, is to rent a physical office in which employees can be employed and business activities actively pursued.
Recruitment in Russia
In order to be able to act in Russia from the outset, a company should look into the search for suitable employees at an early stage, preferably before or at the latest during the start-up process. The Russian market demands experienced employees, especially at management level, who are familiar with the particularities of dealing with business partners and customers as well as with Russian employees.
The Russian labour market is extremely opaque in many respects. The very different quality of the training of Russian workers, from region to region and teaching institution to teaching institution, requires an intensive examination of each individual applicant for a position. In addition, there are cultural differences that can have a significant impact on working methods, understanding of the work and direct cooperation with foreign colleagues and managers. This not only requires highly developed intercultural competence on the part of foreign executives, but also, as a rule, an adaptation of the management style to country-specific characteristics.
Work permit and Visa for Russia
Basically, there are three different levels of personnel recruitment in terms of the origin of an employee, which have a direct effect on the legal approvals and documents required for employment. A distinction must be made between Russian citizens, people from the former Soviet Union (today the Commonwealth of Independent States (CIS) or the Eurasian Economic Union (EAWU) and all other foreigners, such as those from Central and Eastern Europe.
In addition to a work visa, foreign nationals require a valid work permit in order to enter Russia and to carry out business activities there. Depending on the type of visa and the applicant's personal specifications, it may take several weeks to apply for and receive the relevant documents. If temporary bottlenecks occur in personnel planning, it is also possible to fall back on an external employee on a temporary or long-term basis and thus make use of interim management.
Business Set-Up, accounting and reporting in Russia
Ausserer & Consultants is an international tax and accounting company based in Moscow, St. Petersburg and Vienna. Since our foundation in 2012, we have made it our mission to support small and medium-sized companies in local accounting including tax returns, reporting, business Set-Up and expansion in Russia. We also advise on individual questions regarding the Russian market and support our clients at all times.