Negotiating International Business - Russia

This section is an excerpt from the 2017 edition of the book “Negotiating International Business - The Negotia-
tor’s Reference Guide to 50 Countries Around the World” by Lothar Katz.

Previously the leading state of the USSR, Russia became a separate country in 1991. Most businesspeople
and officials in the country have little experience with other cultures except for its neighboring countries.
There is still a widespread lack of free-market knowledge. It may be necessary to discuss and seek agree-
ment over the definition of concepts such as fair play, good will, profit and loss, turnover, individual
accountability, proprietary rights, and so forth. Even when you do, people’s expectation may frequently
be that things are done ‘their way.’

You can find vast cultural differences within this pluralistic country. Not only does the Russian Far East
include a broad mix of cultural influences, but also there are notable differences between the western
European region, with St. Petersburg as its most influential city, and the eastern European part around
Moscow. On top of that, the dynamic political and economic changes of the past few years brought about
a wide range of acceptable business behaviors. The information in this section can only provide general
guidelines. When doing business in Russia, expect the unexpected.

Most Russians are very proud of their country. It would be a serious mistake to belittle its accomplish-
ments or to refer to it as a ‘loser’ of the Cold War.

Relationships and Respect

Russia’s culture expects its members to have a sense of belonging to and conforming with their group.
At the same time, it leaves some room for individual preferences. Building lasting and trusting rela-
tionships is very important and can be crucial for your business success. If Russians engage in business
without first establishing personal relationships, proceed with great caution. They may be looking to
take unfair advantage of you if they get a chance. Generally, it is best to give your counterparts time to
become comfortable with you. This includes letting them see your personal side, as Russians often mis-
trust people who are ‘all business.’ Relationship building is normally a slow process here, since people
dislike being rushed or having to follow the fast-paced western approach. Patience is of critical impor-
tance in this country.

Business relationships in Russia usually exist both at the individual and company level. Russians may
want to do business only with those they like and trust. However, if you introduce someone else from
your company into an existing business relationship, that person may quickly be accepted as a valid
business partner.

You may be able to establish trust by emphasizing common ground. For example, express your own dis-
trust of authority or bureaucracy whenever there is an opportunity for it. However, refrain from praising
or rewarding anyone in public. Unlike in many other cultures, doing so may raise suspicion about your
motives.

In Russia’s business culture, the respect a person enjoys depends primarily on his or her rank and status.
Age and education are less important than in most other countries. Be careful never to come across as
patronizing a senior Russian manager. Admired personal traits include firmness, sincerity, and depend-
ability.

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Communication

In addition to Russian, the country’s official language, a number of minority languages exist. Not many
businesspeople speak English fluently. In addition, Russians may insist that they understand everything
you say even when this is not really the case. It may be necessary to have an interpreter. In these cases,
ask beforehand whether an interpreter should be present at a meeting. However, keep in mind that even
some interpreters may not speak and understand English at a fully proficient level. It may be in your
best interest to bring your own interpreter, rather than depending on one provided by the Russians, to
ensure an unbiased translation. When communicating in English, speak in short, simple sentences and
avoid using slang and jargon. It will help people with a limited command of English if you speak slowly,
summarize key points, and pause frequently to allow for interpretation.

While celebrations and social events can get very noisy, being loud may reflect poorly on you in most
business settings. However, emotions are often shown openly. People generally converse while standing
around two to three feet apart.

Communicating with Russians can be anything from very direct to rather indirect. On one hand, they
may say nyet (no) frequently and you will have to figure out ways to get past that. In contrast, people
may say things they think you want to hear as a way to lure you into a business deal.

Russians keep physical contact infrequent. While several gestures may be used, be careful to control your
own. The American OK (thumb and index finger forming a circle) and ‘V’ signs are obscene gestures in
Russia. Slapping the open hand over a fist can also be a vulgar gesture. Standing with your hands in your
pockets may be considered rude. The thumbs-up gesture is positive as it signals approval. Eye contact
should be frequent, almost to the point of staring. This conveys sincerity and helps build trust.

Initial Contacts and Meetings

Choosing a local intermediary who can leverage existing relationships to make the initial contact is use-
ful. Assuming you identified someone who is respectable and trustworthy, this person will help bridge
the gap between cultures, allowing you to conduct business with greater effectiveness. In addition, the
person’s help in getting things organized can be very important in Russia’s sometimes-chaotic business
environment. Negotiations in Russia may be conducted by individuals or teams of negotiators. Teams
should be well aligned, with roles clearly assigned to each member. Russians can be very good at exploit-
ing disagreements between members of the other team to their advantage.

If possible, schedule meetings at least two to three weeks in advance. Since Russians want to know who
they will be meeting, provide details on titles, positions, and responsibilities of attendees ahead of time.
It is unlikely that you will meet the top executive of an organization at the first meeting, so be prepared
to deal with subordinates. They may have significant influence over the final decision. Confirm your
meeting several times, and be prepared for your counterparts to cancel or postpone meetings with little
or no notice. Unless you are sure that your counterparts are sufficiently fluent in English, keeping your
correspondence in Russian is strongly advisable.

While meetings may start considerably late, Russians expect foreign visitors to be punctual. Being late by
more than 10 to 15 minutes without having a valid and plausible excuse can be an offense. Do not show
signs of impatience if you have to wait, even if the other side is an hour or more late.

Russian names are normally given in the order of first name, middle name (derived from the father’s
first name, for instance Ivanovich = ‘son of Ivan’), family name. In formal situations, the order may re-
vert to family name, first name, middle name. People may sometimes be addressed with all three names.
Otherwise, use Mr./Ms. plus the family name. If a person has an academic or professional title, it is very
important to use it instead, followed by the family name. Before calling Russians by their first names,

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wait until they offer it. In that case, use a combination of first name and middle name, for example Vlad-
imir Ivanovich. Introductions are accompanied by firm handshakes.

The exchange of business cards is an essential step when meeting someone for the first time, so bring
more than you need. You may not always get one in return. It is beneficial to use cards with one side
in English and the other in Russian. Show doctorate degrees on your card and make sure that it clearly
states your professional title, especially if you have the seniority to make decisions. When presenting
your card, ensure that the Russian side is facing the recipient. Smile and keep eye contact while accepting
someone else’s card, then take a few moments to look at it. Next, place the card on the table in front of
you or into your card case.

Meetings usually start with small talk, which may range from short to extensive. Let your counterparts
set the pace. The Russian side’s primary objective for the initial meeting is to feel you out and assess your
and your company’s credibility. Remain firm and dignified without being distant, and avoid any patron-
izing or aggressive behavior. Business may be discussed, but do not try to hurry along with your agenda.
It is unrealistic to expect initial meetings to lead to straight decisions. Meetings can often be lengthy and
still not reach agreement.

Russian negotiators may try to convince you that they have the background and experience required
to be successful, exaggerating their capabilities or making questionable promises in order to maintain
foreign contacts.

Presentations should be short and concise. Making a good first impression is at least as important as
coming with a compelling proposal. It is characteristic of Russians to be pessimistic, so a lack of en-
thusiastic responses should not discourage you. Your presentation materials should be attractive, with
good and clear visuals. Use diagrams and pictures wherever feasible, cut down on words, and avoid
complicated expressions. Russians may expect to discuss many details, so bring enough background in-
formation. Having your handout materials translated to Russian is not a must but helps in getting your
messages across.

Negotiation
Attitudes and Styles - In Russia, the primary approach to negotiating is to employ distributive and con-
tingency bargaining. The buyer is often in a strongly favorable position and may try to push the respon-
sibility to reach agreement to the seller. Given the country’s relatively unstable political and economic
situation, negotiators may focus mostly on the near-term benefits of the business deal. The primary
negotiation style in the country is very competitive and people may become outright adversarial. Most
Russians view negotiating a zero-sum game in which one side’s gain equals the other side’s loss. Nego-
tiations may become more personable and at least a little more cooperative if strong relationships have
been established between the parties.

Should a dispute arise at any stage of a negotiation, it is advantageous first to let some time pass to allow
things to blow over. Then, you might be able to reach resolution through logical arguing, presenting
lots of supporting information, or making a different, though not necessarily better proposal. What you
offer may be more valuable to your counterparts than is apparent from their behaviors. Russians love
technology, have great respect for western expertise, and are easily impressed by size and numbers. Do
not underestimate the strength of your negotiating position.

Sharing of Information - Information is rarely shared freely, since Russians believe that privileged in-
formation creates bargaining advantages.

Pace of Negotiation – Expect negotiations to be very slow and protracted. Especially during the early
bargaining stages you may feel that you are making little progress; discussions often stay high-level for

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quite some time until your counterparts eventually decide to get down to the details of the deal. Success
requires extreme patience in this country.

Russians generally employ a polychronic work style. They are used to pursuing multiple actions and
goals in parallel. When negotiating, they often take a holistic approach and may jump back and forth
between topics rather than addressing them in sequential order. It is not unusual for them to re-open
a discussion over items that had already been agreed upon. Negotiators from strongly monochronic
cultures, such as Germany, the United Kingdom, or the United States, could find this style confusing,
irritating, even annoying. It is crucial to keep track of the bargaining progress at all times.

If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing down
the process indicates that they are evaluating alternatives or that they are not interested in doing busi-
ness with you. More often than not, though, this behavior indicates an attempt to create time pressure or
‘wear you down’ in order to obtain concessions.

Bargaining – While quite a few Russians are highly skilled negotiators, the majority of businesspeople
in the country have only limited experience in the field. They may expect to do some bargaining and
occasionally haggle a lot, but this is rare. None of this makes them easy prey, though. Russians can be
extremely patient, persistent, and stubborn negotiators. It can be very difficult to obtain concessions
from them. They often view compromise as a sign of weakness and may frequently refuse to change
their position unless the other side offers sufficient concessions or shows exceptional firmness. Similarly,
they may make minor concessions while asking for major ones in return. Negotiating with Russians in-
evitably includes much posturing and maneuvering. The best approach is to be polite but remain tough
throughout the bargaining process.

The bargaining stage of a negotiation is usually very extensive. In spite of the Russian reluctance to com-
promise, prices may eventually move by 40 percent or more between initial offers and final agreement.
Concessions never come easily, though. It is not advisable to make significant early concessions, since
your counterparts expect further compromises as the bargaining continues.

Deceptive techniques are frequent and Russian negotiators may expect you to use them as well. This
includes tactics such as telling lies and sending fake non-verbal messages, pretending to be disinterested
in the whole deal or in single concessions, misrepresenting an item’s value, or making false demands and
concessions. Russians may play stupid or otherwise attempt to mislead you in order to obtain bargaining
advantages. Do not take any such tactics personally and consider that your Russian counterparts may
not view such behavior as detrimental to the business relationship. Lies may be easy to see through; if in
doubt, verify information received from the local side through other channels. Similarly, locals generally
treat ‘outside’ information with caution. ‘Good cop, bad cop’ may be used on either side of the negotia-
tion table. Russians may also claim ‘limited authority,’ stating that they have to ask for their manager’s
approval. More often than not, this might be the truth. However, you may not always be able to force the
true decision maker to participate directly in the negotiation, meaning that you may have to accept this
indirect negotiation approach.

Russian negotiators often use pressure techniques that include opening with a ‘best offer,’ showing in-
transigence, making final or expiring offers, applying time pressure, or nibbling. Final offers may be
made more than once and are almost never final. Time pressure can be difficult to counter. If negotiators
learn that you are working against a deadline, they may exploit this knowledge to increase the pressure
on you to make concessions. Even if you allowed plenty of time, they may suddenly request last-minute
concessions and ‘take-it-or-leave-it’-type changes near the end of a negotiation. It is important to define
in advance what concessions you are willing to make. Russians may often chose to play hardball. It is
ok to take a similar stance yourself; otherwise, be patient and wait it out. When using your own pres-
sure tactics, clearly explain your offer and its benefits to your counterpart. Time pressure does not work
against them since Russians can be very patient and fatalistic. However, convincing your counterparts

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to hold the negotiation in the West does give you a strong advantage. They will now be the ones under
time pressure, which deprives them of a strong negotiation tool.

Negotiators can be aggressive or outright adversarial, and negotiations in the country often include
strong confrontational elements. In extreme cases, this could include official problems and possible ha-
rassment. Extreme openings are frequent as a way to start the bargaining process. Negotiators may make
direct threats and warnings, openly display anger or lose their temper, or they may walk out of the room,
even several times in a row. While it is ok (and can be quite helpful) to respond in kind, you should be
careful not to outdo your counterparts. While maintaining a strong and firm position is respected, it is
advantageous to insist at various points that the negotiations emphasize mutual benefits and needs.

Other emotional techniques, such as attitudinal bargaining, attempting to make you feel guilty, grimac-
ing, or appealing to personal relationships, are often used. Russians may also resort to defensive tactics.
They may change subjects frequently, revisit previously agreed points, introduce all kind of distractions,
or ask very direct questions, attempting to take you by surprise. Prepare well for any of these.

As the country is moving from a socialist country to a free-market economy, corruption and bribery have
become quite common in Russia’s public and private sectors. Personal benefits may be requested openly
as part of a deal. It is important to prepare for this upfront. Keep in mind that people may draw the line
differently, viewing minor payments as rewards for getting a job done rather than as bribes. Also, con-
sider that there is a fine line between giving gifts and bribing. What you may consider a bribe, a Russian
could simply view a nice gift. Introducing and explaining your company’s policies early on might help,
but be careful not to moralize or appear to imply that local customs are unethical.

Decision Making – Companies can be very hierarchical, and people expect to work within clearly estab-
lished lines of authority. Openly disagreeing with or criticizing superiors is unacceptable. Decision mak-
ers are usually senior executives who consider the best interest of the group or organization. They will
likely consult with others before making the call. Subordinates may be reluctant to accept responsibility.
Decision makers also rarely delegate their authority, so it is important to deal with senior executives.
Decisions can take a long time and requires patience.

In Russia’s still-shaky political and economic environment, company decisions are rarely independent of
outside influences. Never underestimate the role of government officials and bureaucrats, who may have
to support and approve company decisions. Similarly, crime groups have gained significant influence
across many industries. It is important to come prepared to deal with these outside forces. In extreme
cases, you might be well-advised to withdraw from a negotiation should you feel personally threatened.
It can be advantageous to indicate to the Russian side that threats would only motivate you to look for
other markets and partners.

When making decisions, businesspeople usually consider the specific situation rather than follow uni-
versal principles. Personal feelings and experiences may weigh more strongly than empirical evidence
and other objective facts do. Russians are often reluctant to take risks. If you expect them to support a
risky decision, you may need to find ways for them to become comfortable with it first. You are much
more likely to succeed if the relationship with your counterparts is strong and you managed to win their
trust.

Agreements and Contracts

Capturing and exchanging written understandings after meetings and at key negotiation stages is useful
since oral statements are not always dependable. The Russian side may insist on having a protokol (meet-
ing minutes) signed by both parties at the end of a meeting. It serves to record what was discussed, is not
a contract, and should not be mistaken for a final agreement. Any part of an agreement may still change
significantly before both parties sign the final contract.

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Written contracts should be clear and concise, without too many detailed terms and conditions. Signing
the contract is important not only from a legal perspective, but also as a strong confirmation of your Rus-
sian partners’ commitment. Including an arbitration clause in a neutral country, for instance Sweden, is
wise. Your counterparts may request that details of the contract be kept secret.

Although your legal rights may not be enforceable, you should definitely consult a local legal expert,
ideally throughout the negotiation or at the very least before signing a contract. For the time being, it
is wise to recognize that the country’s legal system is in a transitional mode, so be prepared for laws to
change on short notice. Because of that, bringing an attorney to the negotiation table may not help much,
while it could make the negotiation even tougher.

After signing the contract, invite your counterparts to a lunch or dinner to celebrate the beginning of a
long-lasting personal and business relationship. This will help your local partners to see you not only as
a business partner, but also as a trustworthy contact.

Contracts alone are not dependable. Russians may continue to press for a better deal even after a contract
has been signed, or they may ignore some of its terms. Your best chance to ensure that your partners fol-
low through on their commitments is to stay in regular contact and nurture the relationship throughout
your business engagement.

Women in Business

While in theory women enjoy the same rights as men, few Russian women have made it into senior man-
agement positions, and most are still struggling to attain positions of similar income and authority. As
a visiting businesswoman, emphasize your company’s importance and your role in it. This will be even
more effective if you can get a male colleague to explain these aspects while emphasizing that women
are treated differently in your home country. A personal introduction or at least a letter of support from
a senior executive within your company may also help.

Female business travelers should exercise caution and act professionally in business and social situa-
tions. Be prepared for flattery, obsequious politeness, and apparent deference. None of this translates
into clout at the negotiation table. It is also possible that you will face offensive humor or remarks with
sexual connotation. While these are usually best ignored, it may sometimes help to point out that such
comments are not practiced in your home country. Displaying confidence and some degree of assertive-
ness can be effective, but it is very important not to appear overly bold and aggressive.

Other Important Things to Know

Conservative attire is important when doing business here. Male business visitors should wear suits on
most occasions. While you do not want to appear overdressed, make sure shoes and suit are in good
condition.

Business lunches and dinners are common, and evening entertainment can be lavish. These events fre-
quently include heavy alcohol consumption and may also extend to visits to the banya (Russian sauna).
Such events are very important as they help advance the vital process of building relationships. Refusing
to participate in these activities could be taken as a clear signal that you are not seriously interested in
doing business with your counterparts. Having a drink with your Russian partners is an easy way to
establish good will. However, realize that they may use the opportunity to continue negotiating. Some
may even pretend to be more drunk than they really if they can use this act to their advantage.

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Punctuality is expected in most social settings. It is best to be right on time for dinners, and to arrive at
parties within 15 minutes of the agreed time.

Russia is a high-crime country. International visitors potentially face mugging, burglary, and even kid-
napping. It is strongly advisable to dress inconspicuously and leave status symbols such as expensive
watches or briefcases at home.

Negotiating International Business (CreateSpace, 2017 edition)

is available from [Link] and other bookstores for $29.99. A
reference guide covering 50 countries around the world, the 479-
page book includes an extensive discussion of the negotiation
principles and tactics frequently referred to in this excerpt.
Please recommend this Country Section and others to colleagues who
might find them useful. Country Sections are available individually at

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