Russia: Have Patience and a Unique Product
A steadily growing economy and a rising middle class make Russia an attractive market.
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It used to be that Russian commerce conjured up images of menacing MiG factories or long lines to buy beets. Not that it mattered to American companies; they were frozen out by the Cold War. Today, though, Glenn Coggeshell, 39, is excited about the prospects for Black Dot Coffee, his $3 million gourmet coffee business in Camano Island, Washington. Like many entrepreneurs, Coggeshell sells his products online. What's more surprising is that his coffee is also sold in a number of casinos across Russia, as well as in Moscow's international airport.
Coggeshell isn't alone in his enthusiasm for doing business with Russia, which has a population nearly half that of the United States. When the Iron Curtain fell in the early '90s, businesses swooned over the idea of trading with the world's other superpower, but a Wild West economy dampened prospects. "The image of the '90s Russia as a kind of lawless and not very functional economy and political environment is gone," says Marat Terterov, author of Doing Business With Russia. The economy has grown about 7 percent annually for the past decade, and personal incomes have been up more than 12 percent each year for the past six years.
"They have a middle class that's growing," says Coggeshell, whose Russian wife, 32-year-old Svetlana, is president of the company. Having a Russian spouse certainly helped Glenn break into the Russian market--she can translate documents, for example, and some of her family members in Russia work for the company. But he insists he'd be doing business there even if he didn't have the advantage of being married to someone intimately familiar with the country. "I didn't start this business over there because my wife is Russian," he says. In fact, he first noticed the country's promise while traveling during his previous career in the music industry.
Still, seeing green takes more than new money and post-perestroika attitudes. According to Terterov, "The overall business environment in Russia is not overly favorable to [small and midsize enterprises]. You'd have to have something really interesting." Black Dot's high-end product--the first American brand of roasted coffee to be imported, says Glenn--stood out in this market, which had been saturated by instant coffee. However, Russian authorities would not let him bring in his beans without a sanitation certificate from the U.S. government assuring the product's safety, even though American food regulators told him it was unnecessary.
When trading with Russia, get set to wait; Terterov says Russians often "see time on their side." They also have a "guilty until proven innocent" mentality, so they won't automatically trust you, either. Breaking the Russian ice often happens during late evenings of socializing--along with a healthy (or, as the case may be, unhealthy) quantity of spirited toasts. "You sometimes have to drink a little vodka and have a few dinners and really understand who you're getting into business with," says Glenn. And if you're going to storm Russia, you'll need to convey success in how you dress, what you drive, where you eat and where you stay. "I don't wear a suit too much over here," he says, "but I'll put one on when I go over there."