Do you need a bodygard? Not anymore!
There are still businessmen abroad who are convinced that doing business in Russia is dangerous because anarchy and lawlessness reign here. Some of them even think that the first thing a foreign businessman has to do after coming to Russia is hire a bodyguard…
Actually, the times when the first thing a foreign businessman did after coming to Russia was hire a bodyguard are long gone. This was the case in the 1990s, right after the collapse of the Soviet Union, when Moscow took a sharp turn for perestroika and glasnost. Those times are remembered as “the wild 90s.” In a country that had been building communism for over 70 years, harsh capitalism began to emerge. The switch from a socialist to a market economy was a very painful transition. Crime played a significant role in business; criminal gangs terrorized honest people who wanted to conduct their business calmly and by the book. The symbol of that time was the so-called “new Russian” – a man who became rich quickly, but at the same time, as one sociologist put it, was “poorly educated, devoid of moral prohibitions.” The image of the “new Russian” was also distinct in its appearance – an expensive crimson jacket, a thick gold chain around the neck, a heavy golden ring and a large golden watch with precious stones from a well-known brand.
Today, these crimson jackets can only been found in museums. Modern Russian businessmen have stopped wearing clothes that were popular among their predecessors in the 90s. Along with their appearance, their attitudes have changed as well. These days, Russian businessmen want more than to make a lot of money.
Here’s for example what Bill Conerly, consultant, speaker and writer published at the end of the last year in Forbes: «Business leadership in Russia is transitioning from people raised in the Soviet era to people raised post-Soviet. The change in attitudes affects many facets of the country and constitutes the best argument for opportunity in the country.
The communist era is not completely gone, but it’s certainly going away. One westerner who travels regularly to Russia told me, as an example, that the passport control officials used to be rude, but now are friendly and courteous. I told him that one surly official remained, based on my personal experience. But I generally found helpful, friendly people in Moscow, and I heard that attitudes were similar in other cities.»
But a few months ago, in February of 2019, suddenly Michael Calvey was arrested in Russia. As Mark Galeotti, senior research associate of the Royal United Services Institute, put it recently in The Guardian, “the spectre of the American businessman Michael Calvey, whose arrest earlier this year caused shockwaves in the international investment community.” According to experts, the move once again illustrated that doing business in Russia is difficult. At least the whole business community immediately jumped to the American investor’s defense. For example, here is what Boris Titov, Presidential Commissioner for Entrepreneurs’ Rights, told Euronews right after Michael Calvey’s arrest in February: “There is no damage to society here. There is damage done to one of the parties in the conflict. There is a strictly corporate conflict…”. According to Chairman of the Accounts Chamber Alexei Kudrin, the arrest of Baring Vostok’s founder is an “emergency situation” for the Russian economy. “I want to point out that the President’s directive to avoid arrest for economic crimes has been violated,” Kudrin wrote on Twitter, “I consider this situation to be an emergency for our economy.”
Be that as it may, regardless of the challenges that come with doing business in Russia, the majority of foreign entrepreneurs are convinced it’s worth it. “Yes, it’s a challenge, but a positive one,” said Juergen Koenig, President, CEO of Merck in Russia. This point of view was shared by every single participant of the “International Company in Russia: CEO’s view” discussion at the Gaidar Forum. Antonio Linares, Director General at Roca Group in Russia and the CIS, said that there is no other place on earth he would like to work in more than Russia. “Look, for example, at the kind of grandiose construction that’s happening in Moscow, although there is still room for improvement in the regions,” he said.
Chairman of Mangold Consulting Klaus Mangold during his meeting at the end of June in Moscow with Advisor to the President of the Russian Federation Anton Kobyakov expressed his satisfaction that economic cooperation between Russia and Germany are returning to pre-sanction levels. In particular, German investment in Russia over the previous year reached a record high of EUR 3.5 billion. Partnership is continuing to strengthen in both industry and commerce, with the German business community showing growing interest in Russia with each passing year, and Russian exports to Germany increasing.
“Russia has become an important location for manufacturing facilities, and products made in the country can then be exported elsewhere. There are many companies which view locating their production in Russia as offering good opportunities for exporting. I believe this to be an unprecedented situation, and one which demands our attention,” Mangold said.
Russia keeps climbing up in the Doing Business rating, which is published every year by the World Bank. Doing business in Russia became easier again over the past year, but the country needs to deal better with protecting minority investors and regulating corporate responsibility, the World Bank said.
Russia advanced to 31st out of 190 countries in the World Bank’s 2019 business rankings, from 35th in the 2018 report and 120th seven years ago.
“Russia has once again demonstrated its commitment to improving the business climate for private enterprise,” said Andras Horvai, World Bank country director and resident representative for the Russian Federation.
The jump in rankings takes Russia closer to an ambitious target set by President Vladimir Putin to enter the top 20 by the end of the decade.
Russia is now one notch below Spain, ranked 30th, but above France in the 32nd place. New Zealand is the best place for Doing Business in the world, according to the World Bank, while Somalia is the worst.
In Russia, obtaining construction permits and connecting to electricity became faster over the past year, while trading across borders was made easier thanks to online customs clearance and a shortened time limit for its completion, the World Bank said.
The paying taxes procedure has also improved as costs declined, the World Bank said, adding that there was still room to improve in areas it labeled as Resolving Insolvency, Protecting Minority Investors and Trade Across Borders.