Magazine article Communication World

Six Strategies for Doing Business in the Former Soviet Republics

Magazine article Communication World

Six Strategies for Doing Business in the Former Soviet Republics

Article excerpt

Capitalism is an idea many grow up with. From the time a U.S. kid buys his first candy bar, to the time signs for his first student loan, all of the complicated concepts that underlie this economic system weave their way into his daily life. However, in the former Soviet republics, nearly four generations of kids have grown up in a world where supply and demand have no necessary relationship, where the |plan' means everything and innovation is a scary word, and where -- wonder of wonders -- stockings cost more three to a pack than they do individually.

In spite of this, businesspeople flock to the former Soviet Union with the expectation that their counterparts will understand intricate concepts such as depreciation, gross profit and subordinated debentures. Once in the country, these expectations are quickly shattered. Take the case of the vice president of marketing who blithely presented his business card at a preliminary meeting.

"Marketing?" he was promptly asked. "What is marketing?"

Strategy One: Get to know the communist mind set

To begin communicating with business people in the former Soviet republics, you have to understand where they came from and what they grew up believing. Only in this way can you develop a strategy to help them understand what you have to say.

Anyone who has worked within a state-run institution understands something about life in the Soviet Union. Every facet of Soviet life, from education to art to "advertising" was bureaucratized to an unbelievable extent, and as happens with bureaucracies, the paperwork took on a life of its own. For example, by the time you received your medicine at a Soviet pharmacy, seven or eight little pieces of paper had been affixed to your original prescription, covered with stamps and signatures and authorizations.

If you imagine rampant shortages in a land of rampant bureaucracy, you begin to get a picture of Soviet life. People reacted to conditions in a very human way: They found their own power wherever they could.

Blat is the word used for "influence" or "pull," and as the saying goes, "everyone has got a little blat..." The secretary with access to a photocopier has some, likewise the professor who can help you pass your entrance exams. Perhaps nobody has more blat than the grocery store worker with first pick of fruits and greens, which can be traded for medicine or car parts -- or even better grades for the kids.

As a result, the people you'll be meeting in Russia and other republics will probably feel they have a great deal at stake when they bargain with you. You will represent to them an important potential source of power and connections, at a time when their own economic lives have become incredibly insecure. They'll be sizing you up, of course, trying to determine the source of your blat and the extent of your connections. And they may seem to be trying to "wheel and deal" a little more than you're comfortable with, taking you to elaborate dinners, making elaborate toasts, proposing elaborate deals.

The frustrating part is that once a deal gets rolling, and you are to some extent dependent upon your partners, all the enthusiasm may seem suddenly to vanish. In part, this may mean that your partners are experiencing resistance from bureaucratic channels, or that they intentionally overestimated their ability to do business to gain your backing.

In part this may mean that they are beginning to wield the only word that helps a bureaucrat feel powerful -- and that word is "No."

Strategy Two: Seek creative ways of getting to yes.

Some people used to say that in the Soviet Union, whatever is not prohibited is not permitted.

Although business law is rapidly being liberalized in the post-coup era, this situation of flux can create more confusion than opportunity, and bureaucrats, ironically, may seem more unyielding than ever. …

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