INTERNATIONAL BUSINESS

MANAGEMENT COUNTRY
SNAPSHOT PROJECT

COUNTRY- RUSSIA
 Capital: Moscow

COUNTR
(Москва) Language:
Russian President:
Vladimir Putin Prime
Y Minister: Dmitry
Medvedev
Centre of Ruling: Kremlin

PROFILE Currency: Ruble (Bank

Of Russia)
Continent: Europe and
Asia Time Zone: UTC +2 to
+12
Population: 144, 192, 450
In Russia, you must always
remember the principle of
reciprocity: “I give to you, you give
to me”. It is a main factor in
collectivist cultures in which the
loyalty to in-groups (eg. extended
family, friends, work team) is very
important. You help your network
find solutions to their business and
personal problems, and they help
you in return. It is natural for your
Russian partner to ask you to look
for a vacation place for his family
in your country,
CULTURA
L
ANALYSIS
RUSSIA - Hofstede’s
model
RUSSIAN
DEMOGRAPHY

Largest cities of Russia (2020)

 Age structure
0–14 years: 17.21% (male 12,566,314 /female 11,896,416)
15–24 years: 9.41% (male 6,840,759 /female 6,530,991)
25–54 years: 44.21% (male 30,868,831 /female 31,960,407)
55–64 years: 14.51% (male 8,907,031 /female 11,709,921)
65 years and over: 14.66% (male 6,565,308 /female 14,276,798)
Literacy
Total population: 99.7%
Male: 99.7%
Female: 99.6%
Unemployment
Youth ages 15–24
Total: 16%. Country comparison to the world: 83rd
Male: 15.3%
Female: 16.9%
 UNIQUE BUSINESS & CUSTOM ETTIQITES
• Business Mentality - It is difficult to do business in Russia
without the help from a local “connection”. To help with this,
small gifts are often a good idea when doing business in Russia.
• Greetings – shake hands firmly and maintain direct eye
contact. Avoid shaking hands and giving things across a
threshold a house or room, Never use first names unless
invited to do so
• The Art of Conversation - Russians appreciate an interest
from foreigners in the Russian language, so an attempt to learn
or at least partially speak with them in their language is a good
idea
• Business meetings and meals - Dress in formal, more
conservative office clothes for both men and women. There is a
keen appreciation of punctuality, be on time if not early if you are
meeting with Russians.
 ECONOMIC & BUSINESS
ANALYSIS
• Wealth concentrated at the top.
•World Bank estimates total value of Russia's natural
resources at $75 trillion US dollars.
•Russia also has the second-largest volume of illicit
money
outflows ($880 billion)
• GDP growth positive at 0.6% but economy shrunk by
3.5%.
• Media content are owned and controlled by government
officials.
• A slowly growing IT market.
GDP & PER CAPITA INCOME OVER THE
YEARS

·Currency exchange rate - 1 United States Dollar equals 73.63 Russian

Rubble
 INFLATION RATE OVER THE
YEARS

The annual inflation rate in Russia slowed to 5.5 percent in April of 2021 from 5.8 percent in
the previous month and in line with market expectations. - Inflation Rate in Russia is
expected to be
5.80 percent by the end of this quarter
Major exports and trading
partners of Russia

China - 39.1.
Netherlands - 27.7.
Germany - 19.9.
LABOUR MARKET
ANALYSIS
Being the largest economy in the
Eurasian region, Russia's labour
market affects economic
performance and well-being in
several former Soviet countries.
Over the period 2000–2017, the
Russian labour market survived
several deep crises and
underwent substantial structural
changes.
 POLITICAL
ANALYSIS
• Democratic Federal Assembly
• Unite the responsible political forces of the country, aiming to minimize the
differences between rich and poor, young and old, state, business and society.
• Combine state regulation and market freedoms, with the benefits of further
growth.
• Showing off influence through weapon production.
• Russia’s large government system.
• The citizens don’t feel free?
 •System of Government: Federal semi-presidential republic,
•Current president: Vladimir Putin (2012 – present, 3rd & 4th term)
•Current prime minister- Mikhail Mishustin (Since 2012)

•Elections: Presidential
elections are held every
6 years
•Corruption - remains
one of the main
problems
•Russia is a territory
notorious in reputation for
the level of governmental
regulation and red tape
that accompany business
 MARKET OPPORTUNITY
ANALYSIS
Despite the tumultuous the
political and economic
climate, Russia still remains
very attractive compared
to other emerging markets,
like Brazil or Nigeria, over
the long term, because of
its large population, public
and private spending
capacity, and strong
resource base.
First, companies should pinpoint
exactly what elements of their
operations are most vulnerable to
abrupt changes in foreign policy
relations. Then, firms need to think
through the types of political and
macroeconomic events (e.g.
further sanctions, oil price drop,
protests, etc.) that could influence
the economy (e.g. ruble volatility)
and policy (e.g. import bans), and
also affect their operations, local
partners, and customers. These
can be laid out in scenario plans
with specific mitigation actions
assigned to help businesses react
quickly if necessary.
Second, firms should
strengthen their
government affairs
teams to stay ahead of
any regulatory changes.
Multinationals can even
team up with
competitors (both
foreign and domestic)
and industry
associations to lobby the
government on policy
decisions affecting their
sector and customers.
 MARKET OPPORTUNITY
ANALYSIS
Third, companies should consider localizing more of their operations. The
more local you are, the better your chances at obtaining government tenders
and the more leverage you have to push back against potentially harmful
government regulation. With greater tax contributions, local labor, and
sourcing from local suppliers, firms can more easily show how government
interference negatively affects Russian businesses and workers.
Despite the turmoil in Russian-Western relations, having a plan to
respond quickly can help multinationals weather, manage, or even
capitalize on political developments.
MARKET OPPORTUNITY
ANALYSIS
Even though apparel was not the most demanded customers' good amid the
coronavirus (COVID-19) outbreak in Russia during 2020, the industry has been
emerging with promising prospects for the future. The  retail turnover volumes
have shown a steady recovery since 2014, with key production indices measuring
at over a hundred percent. While Russian households' spending on clothes has
exhibited a gradual annual growth rates, value and discount remains a dominant
segment in the market .
 MARKET OPPORTUNITY ANALYSIS
Production and trade
Russian textile production
has been in a decay over the
past
years, leading therefore to a
substantial drop of over 900% in
employment rates in this sector
by 2019 relative to the 2000
levels.
Especially marked reduction was
reported in volume of suits for
men and boys, women and girls
and also bags and accessories
manufactured across the country.
Low production rates
contributed to the trade
deficit, leading to the
highly import-dependent
market.
The clothing trade overall,
has experienced a
significant decline
throughout past years in
the country. Italy, Germany,
and Spain remain as major
apparel providersof
European origin to Russia.
 MARKET OPPORTUNITY ANALYSIS
Retail
The 2020 pandemic-related crisis
boosted e-commerce sales in Russia,
which had a positive impact on online
apparel trade too. However, offline
sales were hardly hit by the COVID-19-
induced regulations. Yet, customers'
clear predilection for traditional
shopping experience versus online
one, despite nearly identical average
spend via both the channels, is
projected to be the main driver for
offline channel recovery over the
post-pandemic period.
In aggregate terms, while
apparel retail share in the total
retail turnover keeps shrinking,
the market remains on it's
way of recovery from the
2014 setbacks. As for market
payers, wildberries.ru has
been dominating the online
segment for several years
already, while O’stin
accounted for largest sales
countrywide.
 MARKET OPPORTUNITY ANALYSIS
Russia: Signs of Resurgence in
a Polarized Market The depreciating rouble has
Slower economic growth provides a made Russia more attractive
challenging backdrop for the Russian for fashion-seeking tourists,
fashion sector, but players have seen
particularly from China.
success supporting price-conscious
consumers, as well as high-spending
tourists lured in by attractive prices
and visitor-friendly policies. Since
online channels are ultimately
winning market share and new
platforms continue to emerge in this
highly dynamic space, a strong
digital presence can be a route to
success.
SECTORS TO BE TAKEN
CARE THE KEY SECTORS-
National Economy
LOW POTENTIAL SECTOR-
Mining sector, heavy
Monopolistic Sectors Distribution of water and electricity,
industry, automobile export and distribution of natural gas, rail transport,
industry, real estate. postal services to individuals, and long distance landline
High Potential Sectors telephone.
Transport and
communications,
SECTORS IN DECLINE-
information technologies
Textiles, machine tools
(services in particular),
automobile (spare parts
and after sales service
especially), aeronautics,
distribution.
 RUSSIAN APPAREL
MARKET
During the last 5 years the Russian fashion market has changed from rapidly growing and
unsaturated into saturated and highly competitive market characterized by broad offer in all the
segments, well-developed trade infrastructure, intelligent and exacting customers as well as by wide
exposure of various international brands.

The market infrastructure and strategies of the players have been changing. In spite of the fact
that the mass demand steadily continues to shift to the low-price segment, large international
companies of the middle segment as well as Russian large retail chains of the middle segment have
temporarily slowed down implementation of their programs for development and installation of
new stores.

The growing number of local players of small and medium business and small stores of local
designers that enter the market via the online marketplaces and local shopping centers.
RUSSIAN APPAREL MARKET
 OPERATING
MODEL
Brands make their first entrance at the market in a different way.
Those brands that intend not just to test out the market but to firmly
establish itself at the market seek opportunities to achieve a strong
position at the Russian market rather than to confine themselves to
single sales.
The different ways to strategize some operations are as follows-
• Local agent/distributor that is engaged both in retailing and in
wholesaling respectively. In this case such person is the exclusive
wholesaler that buys out commodities of the manufacturer/brand at the
dedicated market. Such distributor keeps the commodities at his own
warehouses and further, based on agreements with the
manufacturer/brand owner, sells those commodities as a wholesaler or
as a retail chain, being, in essence, the second hand. Such relations are
often formalized as master franchise. In such a case, success/failure of a
brand at the Russian market entirely depends upon success and activity
 OPERATING
MODEL
Local show room that is engaged in wholesaling- such show room usually manages
the whole pool of customer brands networking them with retailers. The format of the
agency or representative show room implies agency fee that is from 5 to 15% of the
turnover for arranging of preliminary order for collections as well as for support of
information, financial and logistic processes of fulfillment of the order as between
the brand/manufacturer and the customer.

Representative office of one’s own – all the costs and expenses for the
representative office are born by the manufacturer and the customer database is
limited only to your relations. The advantage of this format is that there is no
middleman in communications between you and the market and the customers.
Operating directly, brands reduce expenses for agents and are in a position to pursue
more flexible price and marketing policies, to respond faster to domestic demand
and to make prompt decisions on the local managerial strategies.
 wThy
coca
cola
failed?
 CONCLUSIO
N
The economic crisis in Russia, which started
already in 2013, hit the fashion industry as
well. Due to value decrease of the Russian
Ruble, prices of non food products increased
by around 20% in the last years. This also
affected the import dynamics of apparel,
shoes and fabrics.

However when taking a closer look at the

footwear and apparel exports from Europe to
Russia it shows that in 2016 exports from
Germany and Italy are already growing again
and for 2017 the market is expected to grow
further.
AMRENDRA KUMAR PATWA
100%

PRESHITA SOLANKI
100%

ANKIT SINGH

100%
ASHWIN ADDENCHERRY

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