Export Market – Russia

Business environment and the challenges to importers were the topics at a recent Global Business Educational Session sponsored by Wisconsin Economic Development Corporation (WEDC), Foley & Lardner, and Ineureka-Russia.  WEDC Trade Representative, Valeriia Zasiedatieleiva, gave a breakdown of this growing US trade country –

  • Russia has a population of 150 million
  • Unemployment 6.2% –  inflation 5.3% (considered stable)-  medium household income of $24k per year converted to USD$
  • Manufacturing comprises 37% of GDP
  • Total Imports of $221 million from Wisconsin companies – Top imports:
    • Machinery –                    39%
    • Vehicles and parts –       18%
    • Medical –                         17%

Business consultants and legal experts on the Russian market presented opportunities, import strategies and intellectual property protection for Wisconsin companies currently or contemplating doing business in Russia.

  • Import Tax of 5% to 20% – 18% VAT
  • Distributor or a vetted 3rd party agent should be used to transact business
  • Payment Terms – Cash in Advance – Credit terms are not recommended, letters of credit are costly and not widely used
  • Medical diagnostic equipment is in demand as 70% of in country equipment is obsolete
  • Advance manufacturing equipment and parts remain a growth market

Partners from Foley & Lardner finished off the meeting by emphasizing the importance of having a company policy to address the Foreign Corrupt Practices Act (FCPA).  Many Russian businesses and government officials may request “gifts” to obtain permits or access.  Under FCPA, the US requires companies doing business abroad to operate within US law regarding bribes and unlawful incentives.   Since even small Russian companies may be operated by the government, any of those employees may be considered a government official under FCPA – no matter what their position in the company.

Thinking of exporting to Russia?

  • Find a vetted intermediary to transact in country business – English is not widely spoken and an inconsistent rule of law may impede closing the transaction.
  • Engage counsel to ensure all certifications and duty requirements are identified and obtained before moving forward.
  • Watch out for any last minute 3rd parties inserted into your business transaction or fees and charges unsupported by actual work
  • Get paid in advance in USD$

www.fcedc.com

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