“Your first 50 right steps to enter the Russian food market”.
Step №19 – “Always collect all the information about your Russian partners”
Trust but verify.
Do you know how foreign companies differ from Russian ones? For some reason, foreigners trust their Russian partners whereas Russian businessmen never trust foreigners when they do business in another country.I often see that Russian companies tell foreign partners that they are “the best” or “the biggest” in their segment in order to get a bigger discount or better contract terms. But in fact they are even not in the top hundred of their business.
I communicate with a lot with foreign companies from all over the world and they believe that to enter the Russian market they need millions of dollars and good connections. However, in fact, at the beginning you just need to have simple logic, common sense and a one to two thousand dollars.
Usually when a foreign company finds a partner from Russia, they immediately believe that this partner is their only chance to enter the Russian market and blindly follow the instructions of this partner. This is a very big mistake. In Russia there is a saying “Trust but verify”. This is what you should do.
Always collect all the information about your potential (or existing) Russian partnering companies. ALWAYS!
Bankrupt industry leader.
I decided to write this article after I met one Asian company that supplies ingredients for food industry to Russia. They were very happy that they had a client in Russia, but they were very upset that this client bought very little. They bought about 300 kg per month while their other customers bought 20-40 tons per month. That Russian client told them that they were the leader in their industry in Russia and sold the most of this ingredient. They insisted that apart from them, the Asian company would not be able to find anyone in Russia. The Asian company kept its word and did not deliver to Russia for several years, having believed the Russian company.
A couple of months ago they asked me in a friendly way to check information about their Russian company and help them with advice on why sales did not grow for a few years and were so small if they dealt with the industry leader in Russia.
It took me 30 minutes to check all the information about this company on the Russian Internet and carefully study their website. I also called this company as a potential customer and spoke to their sales manager and head of sales. The information I gathered was enough to understand that this company was not at all the “industry leader”. It could hardly keep its share on the market because they had no money for marketing and very weak sales. Salaries in the company were very low and good professionals did not work for it. The company had many debts to suppliers and employees. It was almost bankrupt. In the end, I explained to my Asian friends how to proceed further to avoid problems.
Open sources of information.
Most information about any company in Russia is open to public. You can easily check any Russian company yourself for free. Who is the real owner of this company? Has it got any debts to the government budget? Is this company in bankruptcy? Is its property seized? Is there a lawsuit against this company? You can check all this on official websites of the Russian authorities.
You can start from the simplest and the most accessible website of the Federal Tax Service of Russia (www.nalog.ru/eng/). Its information is provided for free.
If you already work in Russia and you have employees, below are some links you can use to check individuals:
1. Resources containing information about individuals on a wanted list (Interpol, Ministry of Interior, Federal Bailiffs Service, Federal Penitentiary Service, Federal Financial Monitoring Service:
2. Resources intended for checking validity of official documents of an individual (passport, TIN, university diploma):
3. Resources containing information about distressed debts of an individual (loans, taxes, enforcement proceedings and collaterals, bankruptcies):
4. Resources containing information on participation of an individual in legal proceedings (criminal, administrative or civil):
5. Resources containing information on participation of an individual in business activities (legal entities or individual entrepreneurs):
These links will also be good if you plan to hire an official representative or your brand ambassador in Russia. You do not want your company’s reputation to be hurt if you hire a fraudster who can deceive your customers in Russia while acting on behalf of your company.
Online Government Services
Several years ago the government launched a single electronic portal for all citizens of Russia called Gosuslugi (Government Services): www.gosuslugi.ru/foreign-citizen?lang=en
I am giving you the link of its English version developed for foreign citizens. On this portal governmental services are available not only to Russian citizens. As for Russian citizens, they can apply or get necessary official documents in electronic form through this portal.
Russian Speaking Internet
Of course, you should use not only Google, but also Yandex to search the Internet. Here is a link on a more detailed step where I explain how to find any information on the Russian Internet without any problems.
On the Internet, for example, you can find out that your potential Russian partner is one of the most powerful Russian businessmen or he/she is close to the Kremlin and Vladimir Putin, so you can conduct big business with him/her without any fear and trust him/her.
On the other hand, you can find absolutely no information about your potential Russian partner. Do not be surprised, but in Russia it is normal. There are businesses that do not advertise themselves, they have enough customers who recommend them and “word of mouth” works perfectly well for them.
In such cases, you can ask your Russian partner to provide some references. This will be considered normal.
Business Adviser on Russian Food Market
Please read the same my other steps: