A flash of red, a spray of ice, a zigzag of perfect passes, the puck plunges into the back of the CSKA net at the Luzhniki ice-hockey stadium. Meanwhile, at the Bolshoi, the corps de ballet executes a graceful series of pirouettes across the stage in perfect unison. Several time zones to the East, in a cloud of flame and smoke, another Russian-made rocket streams away from the Baikonur launch-pad laden with satellite technologies and the latest space tourist.
Judging by their competitiveness in the arts, sports and sciences, with their military discipline, asceticism and dedication to years of training, Russians’ team-work would seem to be a model to be emulated. But the qualities that underlie some of Russia’s greatest achievements have escaped business management. Here, the fundamental features that would normally be associated with a successful team – good communications, trust, collective responsibility, leadership, and a conviction that a team is greater than the sum of its parts and that more can be achieved by working together than by not doing so - is lacking in Russian business culture.
You can see it everywhere: appointments missed, chaotic planning, mistakes, misjudgements, misunderstandings, rows, tantrums, sulking, finger-pointing, blaming others and above all top-down, short-term, decision-making which leaves companies exposed to the vagaries of the market. At the same time, there is a positive side of this spontaneous and often intuitive approach: pragmatic and creative solutions and rapid results (even if not those desired). Yes, things do somehow often come right in the end, but it’s usually by accident, luck or fate, and you certainly can’t plan it, or predict the outcome. Such is the contained anarchy lurking below the surface of many business operations in Russia that it would be fair to ask: “Can teams really exist in Russia?”
SummaryOut-bound travel by
Russian tourists is tracking at 15-25% below figures recorded for the
equivalent periods in 2008. The market weakness is expected to continue through
the northern summer period (June/July/August). China is now a major tourism
destination for Russians. Bucking the negative trends, travel to Asian
destinations appears to be holding up.
Moscow Q1 2009: Transport Today:The Russian Federation has introduced a visa-free regime for foreign tourists arriving in Russian on passenger liners. Tourists will be permitted to stay a certain number of days. In 2008 almost 500,000 tourists visited St Petersburg on cruise ships. The Head of the Russian Tourism Agency, Anatolii Yarochkin, considers that the decision will have a positive effect on in-bound tourism numbers.
Although the majority of visitors to Russia require a visa, the Russian Law makes a special provision for cruise ship passengers. If you arrive by cruise ship which stays less than 72 hrs in port and you plan to overnight aboard the ship, NO VISA IS REQUIRED to go ashore. There are a few conditions governing the VISA-FREE provision:
- You may disembark only if accompanied by a registered tour guide. You cannot disembark independently;
- You must present a valid passport and a tour ticket to the border control officer;
- The tour is flexible but you must re-board the ship at the time determined by you prior to arriving in Russia. For example, if you intend to finish the day at 6pm you cannot return at 7pm. But if you intend to finish the day at 9pm you can return earlier.
RIA/Novosti: Q1 2009: The number of out-bound tourist departures from Russia in 2009 could be reduced by 20-25% in comparison with 2008, the head of the Russian Federal Agency for Tourism (Rostourism), Anatolii Yarochkin, said a week before the opening of the MITT, one of the five most well known world tourism fairs. He recalled that in 2008 more than 11.3 million Russians had travelled abroad for tourism purposes, up by 21% on the year before, while 30.3 million Russians had holidayed in Russia during the same period, up by 6%.
In his words the biggest out-bound traffic growth in 2008 had occurred to China. The number of Russians travelling to China had increased by 25% and had gone over the 2 million level. The growth of outbound tourism to Turkey had been in the order of 15%, with 2.2 million Russians visiting that country in 2008. The third place, in numbers, was Egypt, to which 1.4 million Russians made their way, a growth of 14%. Israel also showed good results: after the removal of the visa regime (to a no-visa regime for Russians – Ed) tourist flows to Israel more than doubled, to 98,000 tourists...
Mikhail Prokhorov, Russian richest man, urged foreign investors to seize opportunities in Russia, saying previously inaccessible assets have been put up for sale.
"This crisis presents a unique opportunity for all investors willing to take on Russia risk, to have access and a possibility where there has been no access before," Prokhorov said.
Investors may take stakes in Russian companies seeking to restructure borrowings in debt-for-equity deals or at a later stage, when the government begins selling stakes in companies it obtained during bailouts, he said.
Companies have taken loans from state-run Vneshekonombank to repay foreign borrowings, pledging some of their holdings as collateral.
"I'm sure that the state bank will sell collaterals," Prokhorov said. "It's inevitable, because for them it's practically impossible to organize proper management." (Bloomberg)
_____________________________________________________________________________________________
Sberbank to Buy GM Plant
Sberbank will pay 65 million euros ($91 million) for GM's assembly plant in St. Petersburg, RIA-Novosti quoted a Sberbank source as saying June 6, 2009.
Sberbank may offload its stake in Opel in the future to local car producers GAZ, IzhAvto, Sollers or TaGaz, a high-level Sberbank source said.
On Thursday, Sberbank chief executive German Gref announced a 500 million euro cash injection for Opel to help it save jobs at home while totally restructuring its assets abroad. (Reuters)
______________________________________________________________________________________________ Wal-Mart Sees Russia Spot
Wal-Mart Stores may expand into Russia with an acquisition or by building its own stores, the company's international chief said June 5, 2009. Doug McMillon said he visited more than 30 stores in Moscow and St. Petersburg operated by six to eight retailers two weeks ago. Some outlets had run out of some items or offered aging produce, validating Wal-Mart's belief that it can win customers in Russia, he said. "There's an opportunity there to help us serve customers more effectively and, over time, help create a supply chain that's more effective in keeping goods in stock and keeping them fresher," McMillon, 42, said during a break in Wal-Mart's annual shareholders meeting. (Bloomberg)
This chapter was written before the global economic crisis and at the time of submission the full effect of this remains unclear for Russia.
If you are a foreign businessman reading this in a very expensive hotel bedroom in Moscow or St Petersburg it probably means you have come to Russia to work on your existing investment in the country or to look at new opportunities to invest.
I have been living and working in Russia since 1997 and, in that time, have seen enormous changes in the country. Some good, some not so good, but on the good side is the opportunity to invest and the returns that can be made from that investment IF you get the investment right. Sadly, there are plenty of examples of companies who got it wrong here. Some of them are household names.
One important factor to bear in mind is that, from an investment perspective, everything here is relatively new. The current economic regime only began when Russia climbed out from the rubble of the economic crash of 1998 and the increase in oil prices that followed from 9/11. The Russian Tax Code only came into effect from the year 2000 and the whole Tax Code is contained in one volume (and it’s much smaller than most of the Harry Potter novels).
In one of its more inspired moves, Russia adopted a flat tax system (initiated by President Yeltsin though President Putin enacted the legislation after he took office) in the year 2000. The standard tax rates are low with personal income tax at 13% and corporate profit tax at 24% (though the effective rate can be higher). The standard rate of VAT is 18% but there has been much discussion about lowering this, despite the inflationary pressure this may cause. The rates may be attractive but whether the flat tax system does boost economic performance while also providing improved tax revenues has never been satisfactorily proved in Russia due to the distorting effect of oil prices and the massive tax take from that sector.
NZ INVESTOR MAKES $700M IN TWO MONTHS
(c) 2009 New Zealand Press Association
Wellington, May 2009 NZPA - New Zealand billionaire Richard Chandler has nearly doubled the $US430 million ($NZ727m) he invested in a Russian bank two months ago. "Chandler made a huge bet at the end of March shortly after the main Russian stock market index (RTS) passed its low, buying a 3 percent stake in Russia's state-owned Sberbank for about $US430m,'' the businessneweurope website reported. "In just two months, Chandler has almost doubled his money already''.
Russian business newspaper Kommersant daily paper reported in March that Mr Chandler had bought his stake on the open market, and Sberbank's chief executive, Herman Gref, said: "We know that this is a friendly investor. He has consulted us.''
The following perceptive article written by a highly-respected New Zealand stockbroker and published on 14 May 2009 comments on developments in New Zealand as the effects of the global economic crisis continue to be felt in New Zealand. His comments, an edited version of which appears below, could equally be a comment on some of the issues being faced by lenders, investors and ordinary citizens in Russia at this time of major economic adjustment.
One regular and highly relevant observation is that the gimmicky “Rich List” has been shown to have as much substance as a balloon. As often noted here previously, it is childish, voyeuristic nonsense; a means of selling advertising. Te relevance of the inane rich list is that it deluded many of its named “rich” people, and many moneylenders, into believing these wild calculations of “gross” wealth were in any way connected to “real” wealth. Literally scores of property developers’ portfolios, based on “valuations” of the underlying assets, have revealed that debt levels are constant even when property values are falling. Rich List estimates of who are “rich” will be seen to be risory because they never had meaningful information on debt levels and because asset valuations are rarely constant.
Per Kaufmann, the Head of IKEA Russia, talks about the homeware
giants response in Russia to the economic downturn, and its longer term
plans for Russia.
The title of this chapter should make the reader assume that Russians,
as differing from all other people, have a special “Russian” attitude
towards foreigners. This, in turn, dovetails neatly with the general
mythology of Russians and Russia being “different” – “a riddle, wrapped
in a mystery inside an enigma” (Churchill), the mysterious “Slav soul”,
etc.
Now I, for one, have always argued that the Russians are not any
more different from the English than, say, the Portuguese are from the
Swedes, that the so-called Slav soul is not any more mysterious than
the German one. I have always insisted that what we have here is a lack
of curiosity, a laziness of mind, the absence of any real desire to
understand what, for lack of a more sophisticated term, makes the
Russian tick.
While this has an ancient history, as testified to, for instance, by
the writings of Giles Fletcher the Elder, who visited and wrote about
the court of Ivan the Terrible in the 16th century, it was not always the case. Once upon a time (in the 11th and 12th
centuries) Russian nobility often married their counterparts from
Western Europe, contacts flourished on many levels, specifically trade
and culture. But all that came to an abrupt halt with the Tartar-Mongol
invasion of Russ in the 13th century, and for nearly two
hundred and fifty years Russia disappeared from the map of Europe. It
is almost impossible to assess the extent to which the Tartar-Mongol
yoke affected Russia, to what degree it had a formative impact on the
Russian character. But what we do know is that when Russia re-emerged,
it was no longer regarded as part of what then was considered the
“civilized” world, rather, it was seen as a mysterious, threatening,
incomprehensible country. Thus, “the foreigner’s” attitude towards
Russia was not the same as towards any other country, it was, indeed,
special...
Norway is the runaway winner of this year’s Eurovision Song Contest. Violinist and singer Alexander Rybak triumphed with "Fairytale" after a spectacular show in Moscow. Iceland came second with Azerbaijan in third place.
After Russia sealed the victory in Serbia last year, Moscow is playing host to the contest and has gone to great measures to ensure it will be a night to remember.
“At the moment it’s cost over $30 million. That includes a mobile TV station which was built for the Beijing Olympics,” said Konstantin Ernst, general director of Russia’s Channel One, which has organized the international broadcast of the show.
The head of Estee Lauder says Russian sales are soaring, despite the financial crisis. Some economists expected consumers to go downmarket, but Moscow's top fashion retailer says there's a flight to quality.
April 2009: Stephen Jennings talked to John Campbell about what
motivates him, the opportunities Russia and Africa present, and how
Kiwis can use their own opportunities better. Running time 4'25 ...more.
April 2009:
Stephen Jennings talked to Nine to Noon's
Kathryn Ryan on 7 April about the world's new emerging powers, the
economic crisis, and the Sir Ronald Trotter Lecture. Running time 32'46
...more.
A flash of red, a spray of ice, a zigzag of perfect passes, the puck plunges into the back of the CSKA net at the Luzhniki ice-hockey stadium. Meanwhile, at the Bolshoi, the corps de ballet executes a graceful series of pirouettes across the stage in perfect unison. Several time zones to the East, in a cloud of flame and smoke, another Russian-made rocket streams away from the Baikonur launch-pad laden with satellite technologies and the latest space tourist.
Prokhorov Urges Foreigners to Invest
This chapter was written before the global economic crisis and at the time of submission the full effect of this remains unclear for Russia. 
New Zealand stockbroker and published on 14 May 2009 comments on developments in New Zealand as the effects of the global economic crisis continue to be felt in New Zealand. His comments, an edited version of which appears below, could equally be a comment on some of the issues being faced by lenders, investors and ordinary citizens in Russia at this time of major economic adjustment.
The title of this chapter should make the reader assume that Russians,
as differing from all other people, have a special “Russian” attitude
towards foreigners. This, in turn, dovetails neatly with the general
mythology of Russians and Russia being “different” – “a riddle, wrapped
in a mystery inside an enigma” (Churchill), the mysterious “Slav soul”,
etc. 