Reviews How to do business with Russia. Guidelines for businesspeople

Katerina Smetanina, Når Ivar møter Ivan. Å gjøre forretninger i Russland [When Ivar meets Ivan. How to do business in Russia] Oslo: Arneberg Forlag, 2014, 548 pages.

Published in the printed edition of Baltic Worlds Baltic Worlds 3-4, 2015, pp120-121
Published on on November 19, 2015

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The primary target group for Når Ivar møter Ivan. Å gjøre forretninger i Russland [When Ivar meets Ivan. How to do business in Russia] is Norwegian businesspeople considering doing business in Russia. The author stresses that this is not a comprehensive guide on how to act when entering the Russian market. However, by presenting a well-rounded background, Katerina Smetanina has written a book that complements the dryer wording ordinarily seen in conventional guide books on economic decisions and calculations.

Smetanina bases her description and conclusions on interviews with more than 70 business people and other market actors, foremost Norwegian. She also draws on her own experience, having worked for more than 15 years with Norwegian-Russian relations in the Norwegian Export Council and the Norwegian-Russian Chamber of Commerce in Oslo, as well as in the Norwegian consulate in Murmansk.

The author discusses not only which specifics of the Russian business world a Norwegian businessperson needs to take into consideration, she also reflects on particular Norwegian characteristics. She notes, for example, that habitual Norwegian behavior might create obstacles to overcome and that sometimes having a more flexible attitude is needed in order to have a business run smoothly.

The author starts with a summary of Russia’s history, followed by a few smaller sections aimed at reflecting what is different and elusive about Russian culture. Cultural encounters are a difficult field because analysis often leads into dead ends of fixed attitudes and fragmentary pieces of history used to support the writing, a problem with this introduction. Its title is symptomatic of this approach: “The enigmatic Russia”. The chapter starts with a stanza of poem by Fyodor Tyuchev, a Russian poet of the romantic early nineteenth century urging us to understand Russia, not with our sense but with our heart: “Either you believe in Russia or you don’t believe”. The author contrasts the mystified Russia with something undefined and generalized called “the West” or “Europe”.

However, the rest of the book contains much more concrete descriptions of Russian life and society focused on market and business, and with this the problem of stereotyped cultural definitions resolve. These chapters are about business in Russia, which has recently become a capitalistic market inhabited with actors learning step by step about what business is in a globalized world. Russia has weighty traditions of being a top down society where personal relations replace trust in the state (the government), something that complicates its transition to a modern market economy. Here and there the author compares Russia not only to the “West” but also to Brazil and other BRICS, and sometimes to Southern Europe. Corrupt economic systems, autocratic and unpredictable bureaucracies, and the importance of personal relations unite the latter as markets, which can create serious obstacles for someone with, for example, a Norwegian background, who is trying to establish a well-functioning business.

Among the problematic issues that the author describes at length are the advantages and disadvantages of having a joint venture with a Russian partner or having one’s own agency. Regardless of what model businesspeople choose, they will have to be in Russia, in place, and should treat the Russian market seriously. They must “believe in it”. When the author talks about being “in place”, she emphasizes the need to have at least one Norwegian representative among the directors. Since Russians have an experience of top down management, it would be risky to outsource activities without providing detailed instructions and being in place to keep things under control. The author posits the critical question: “Can you trust your Russian partner?”

In the book, Smetanina illustrates the differences between Russian and Norwegian ways of doing business using binary opposites: big–small, fast–slow; short-term–long-term thinking; hunger for prestigious achievements–endeavor to find compromises; hierarchical decision making–egalitarian workplace culture.

The multifaceted problem of corruption is brought up in different chapters. However, I doubt that the reader really gets sound advice on how to navigate in this truly complicated and sensitive field. As a reader I wanted to be a fly on the wall in the closed room of negotiations and just listen to the inside talk about the remuneration outside of those in the official agreement — the bribes! Will a Norwegian company be able to follow the author’s advice to conduct a clean business? Perhaps it is impossible to provide truly honest information about such things based on interviews with entrepreneurs, even if promising anonymity.

Lengthy quotations from the interviews make the book vivid and easy to read and create a sense of authenticity. However, this use of quotations creates a methodological problem, since different interviewees quite often contradict each other, making it difficult for the reader to know which of the informants is the most representative for a recommended line of action. The preservation of the interviewees’ anonymity also leads to a lack of clarity about whether various trades and companies differed from each other when it comes to different problems. The author decided to give every company the fictional name “Viking” and refrains from describing the company’s business profile. Again, this is probably the condition under which Smetanina was able to persuade her informants to share information, and she does have a skilled way of creating a coherent narrative from the statements of the interviewees.

Now, what lessons about Russia as a market will stay in the memory of someone like me, who is not in the target audience of this book? I would mention the fact that Russia has been a player in the global market economy for a very short time, only twenty-five years, as something worth keeping in mind. This is a serious factor in seeking to explain the differences between Russian and Norwegian/Scandinavian and perhaps “Western” business cultures. Another thing that caught my attention is what the author had to say about the rapid changes in Russian economic life since the breakdown of the Soviet Union: To do business today is not what it was like in the 1990s! In spite of the corruption and unpredictability in Russia, there is constant work going on to change the legal infrastructure and the way the state bureaucracy exerts its influence over the market. And mafia structures have to a large extent withdrawn from business life. Thus the book ends with a chapter called “Business is developing in a healthy way”.

This book was finished shortly before the Russian-Ukrainian conflict started, with Russia bluntly interfering in the affairs of an independent state. At this moment the economic growth of Russia has turned downward and foreign companies are hesitant to start new businesses and tend to close down those they already have in Russia. Only the future can tell when relations will return to normal and a book like When Ivar meets Ivan can be of help to a fuller extent to those who seek to open a business in Russia. This is a well-written book, a worthy supplement to the existing literature about how to do business with Russia.≈


Note: A revised version of this review has been published in Swedish in Nordiskt Östforum, No 2. (2015), 227–229.