Corrections or additions?

This article by Bart Jackson was prepared for the April 17, 2002

edition of U.S. 1 Newspaper. All rights reserved.

The Russians are Buying

The days of America’s wild, wild West, while inspiring

a century of fantasy and mediocre TV, lasted but a few brief decades.

The land of the cowboy fast became a nation of laws. And even the

Tommy Gun blasts of the 1920s gangsters proved a noise offstage to

the real roaring of our nation’s burgeoning business. So it is with

the old Soviet Union. The wide open frontier of the Russian Mafia

and black market has given way to capitalist turf.

Both entrepreneurs and established companies seeking to deal with

some of the world’s wealthiest new democracies may want to attend

"How to Do Business with Russia" on Thursday, April 18, at

8 a.m. at the West Windsor campus of Mercer County Community College.

Cost: $25. Call 609-586-4800, ext. 3639.

This workshop is one in a series of breakfast meetings designed by

the MCCC Global Business Center to help small and medium size

businesses

establish markets abroad. Speakers include Olga Artemenko,

founder

of Collective Consulting International, and Musya Tumanyan,

representative of construction equipment distributor Hoffman

International.

"A wealth of misunderstanding, despite a wealth of need, currently

separates Americans and Russians from joining in profitable business

ventures," says Artemenko. An expert at bridging this cultural

gap, Artemenko was born and raised in Kiev where she studied for the

diplomatic corp and also earned a teaching degree. After gaining

degrees

from Kiev University, she continued her studies in Princeton

University.

In 1994 she founded Collective Consulting International in Basking

Ridge to help ease the flow of trade in both directions.

For decades, Americans have kept to the style of business practiced

within their own borders. And why not? The Chicago businessman could

trade a thousand miles in any direction and never leave his language

or commercial customs. Unfortunately, as we now enter global markets,

the American trader has found himself burdened with a severe

flexibility

disadvantage. On the up side, Artemenko says, American goods hold

an almost mystical appeal in the Baltics and old Soviet states. Those

American businesspersons willing to arm themselves with a little

preparation

and lots of understanding will find great rewards.

Hurdling the cultural barrier. Obviously the more of the

regional language you can learn before you travel, the better. But

since 88 languages exist within Russia and the old Soviet states,

it is not always wise to count on a translator from home. Artemenko,

who herself knows seven languages, suggests that an interpreter be

established in each city or region you intend to visit. While the

small business may not have the capital, even a middle size firm may

profitably seek a consultant’s guidance.

Co-speaker Tumanyan agrees that language is a major separating point,

but argues that the entire culture should be studied before

formulating

travel plans, let alone business deals. In addition to holding its

own set of general customs, each nation’s business community operates

within its own culture.

For the past 25 years, Tumanyan has developed a expertise in several

global business cultures. After immigrating to the U.S. from Moldavia,

where she studied German, Tumanyan studied at the Texas University

Latin American Institute and became a teacher of Russian. Since then

she has worked for Hoffman International, easing the corporate path

in such areas as China, Latin America, the Baltics, and Russia.

Financing. Americans too frequently come into dealings

demanding a letter of credit before any negotiations can begin.

"Frankly,"

says Artemenko, "you are just not going to get it." Russian

capitalism is barely a decade old. Established credit records seldom

exist — and when they do, they may be scrawled on hand written

ledgers. Virtually every other nation negotiating with new Russian

companies offers substantial financing. Americans, once legally denied

this tool, can now employ the financing lever to win contracts.

Dealing with the government. "Patience beyond all

belief is required," says Tumanyan. "In America, laws are

designed to push trade forward. In Russia, they are made to halt the

flow of business and examine it at every step."

For example, five years ago Russia faced an onslaught of new goods

and a cash drain of $20 million a day. To halt this, the government

installed restrictions, forbidding any currency from leaving the

country

for more than 90 days before the goods were delivered. The fact that

you may need that cash for goods which take 180 days to produce or

procure is incidental. Yet, as always, there are little instruments

such as the "passport of the deal" allowing an exception,

or the creatively conceived "comfort letter," which lands

you within the legal zone. Doing business is a matter of learning

how to negotiate these loopholes.

Daily dealings. "Your Russian business day is gobbled

up trying to explain, train, and cajole," warns Tumanyan. Covering

the complexities and benefits of a three-year T-bill can take easily

an hour and a half. Convincing people to ship in cost-saving partial

containers, delving in the exactitudes of Russian or American banking

forms — everything takes an enormous amount of time. In addition,

the old Soviet states operate on a system of trust. Winning this trust

must be done day in and day out; but once won, your dealings further

on are assured.

Adaptive servicing. Russia desperately craves American

goods, but it needs them delivered its way. For example, under

Communism,

the Soviets dealt only with major manufacturers in large lots. This

attitude retains. If you are a distributor, who is supplying only

100 units to a given dealer, you may have to break down this small

lot reticence by including a full accessories inventory and warranty

and service commitment.

Collecting money. Artemenko says that the dollar —

not the ruble — is the preferred currency in Russia. Yet too many

off-site managers have endured losses in this, and other currencies,

by depending on the Western system of long-distance cash collection.

In Russia, out of sight leads to out of pocket. Managers who continue

to present themselves on site, overseeing production and sales, will

discover that businesses and local banks respond, albeit slowly.

However,

managers who show up American-style, exacting payment schedules, will

very likely be disappointed.

Russia holds a somewhat unique position in the global economy. In

one sense, it is a new democracy with an emerging capitalism. But

unlike others in this category, it is massive in area, unrivaled in

resources, and has enormous purchasing power in the hands of both

its government and its individuals. As Tumanyan puts it: "America

and Russia are closer souls than either one thinks. We are sisters.

We learn from them — they learn from us."

— Bart Jackson


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