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Artem Koker_Country Notebook

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Page 1: Artem Koker_Country Notebook

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1 Country Overview

Population

Population of Russia is 143.6 million, the population rank is 9th, and the percent of world population is 1.991. According to the Russian Census 2010 Final Results lbid,

Of the total population lbid,

                                                                                                               1  “Demographics  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  en.wikipedia.org/wiki/Demographics_of_Russia  

male,  46.30%  

female,  53.70%  

rural,  74%  

urban,  26%  

89.10%  

3.90%  

1.40%  

1.20%  

1.10%  

1.00%  

2.30%  

Ethnic  Russian  

Tatar  

Ukrainian  

Bashkirs  

Chuvashs  

Chechens  

Other  

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Projected Population Growth Rate

Projected population growth rate is 0.23% and although that does seem small, it is an improvement over the recent years of a trough in 2009 where the population was at it’s decade lowest just peaking 142.7 million contrary to the current 143.6 million in 2013. But unfortunately those numbers are on the decline as by the year 2020, the Russian population (if nothing changes) will be just peaking the 132 million mark, by 2030, those numbers will shrink to 125 million, and by 2040, they will drop to 117 million, an all-time low for the Russian Federation, but again, that is if nothing is changed2. The relevance of this is that there has been talk of new systems and reformations that should encourage the natural birthrate. One of the strongest factors is actually not the government but in fact the Orthodox Church (which will be described with detail in a later part) has been a driving part in creating and encouraging the growth of large, healthy, strong families. Also notable is the life expectancy, which the disparity in Russia is the greatest in the world. Women live from 9-12 years longer than men do. The general live expectancy as of 2010 for men is 64.3 years and 76.1 years for women.

Age Distribution

Age distribution in Russia as of 2013 is3

                                                                                                               2  “In  Early  2013,  Russia’s  Demographics  Are  Showing  Ominous  Signs  of  Worsening.”  Forbes.  Forbes.com  LLC  2013.  http://www.forbes.com/sites/markadomanis/2013/04/30/in-­‐early-­‐2013-­‐russias-­‐demographics-­‐are-­‐showing-­‐ominous-­‐signs-­‐of-­‐worsening/  3  “Demographics  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  en.wikipedia.org/wiki/Demographics_of_Russia  

17%  

70%  

13%  

0-­‐14  years   15-­‐64  years   65-­‐over  

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Home Ownership

Home Ownership: to define home ownership in Russia, one must look first at the fact that the majority of Russians don’t have houses but rather apartments. Keeping that in mind, as of 2011, Russian home ownership rate is 87.4% and it stands 7th in rank, with Bulgaria and Lithuania at number 1 (97% home ownership) and comparing with the United States who stands at number 20 with 65.4% of home ownership4. One of the reasons as to why home ownership is so high in Russia is because after the collapse of the Soviet Union, around 1990, Russian citizens could own their homes through “Privatization”, in which one basically fills out a couple forms of residency claim, pays a fee of roughly 10,000 rubles, and the deed is done.

Per Capital Income

Russia’s GDP (nominal) per capital income in 2012 was $12,800-25,6005.

Poverty Rate

The number of people with income below the survival minimum in Russia in 2012 went down to 15.8 million people from 18 million in 2011, Russia’s Statistics Agency Rosstat has reported. Poverty rate (the percentage of people with incomes below the survival minimum) in Russia in 2012 decreased to 11.2 percent from 12.7 percent in 20116.

                                                                                                               4  “List  of  countries  by  home  ownership  rate.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate  5  “List  of  countries  by  GDP  (nominal)  per  capita.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita  6  “Poverty  rate  in  Russia  went  down  in  2012  –  Russia’s  Statistics  Agency.”  Russia  Beyond  the  Headlines.  Rossiyskaya  Gazeta.  2007-­‐2013.  http://rbth.ru/news/2013/03/25/poverty_rate_in_russia_went_down_in_2012_-­‐_russias_statistics_agency_24208.html  

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Educational

The Literacy Rate in Russia is7

Primary education in Russia is first through fourth grade.

                                                                                                               7  “List  of  countries  by  literacy  rate.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/List_of_countries_by_literacy_rate  

99.60%  

99.70%  

99.50%  

overall   male   female  

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Secondary education in Russia is fifth through eleventh grade. It’s going through a reform, the current stage of this reform was taken in Jan 2013. The reform is changing the structure of the education, and the financial side as well. The biggest problem is that there is an introduction of the testing element of the Standardized Unified Test, which is in a written format and is for two purposes: graduation from high school, and entrance test to colleges. This test has already been used for four years and decreases the education level of students in school, because instead of focusing on the subject, students are focusing on preparing for the test. In turn, the quality of education suffers which in combination with inadequately low pay rate for teacher’s wages, creates a situation in schools where good teachers are leaving, and student’s are learning how to take tests rather than learn subjects. Higher education in Russia is currently in the reform period of adapting the Western model of Bachelors and Masters, rather than its traditional Specialist System where an individual must study for five years to earn the specialist’s diploma.

Labor Force

The labor force in Russia as of 2013 is8

                                                                                                               8  “Unemployment  in  Russian  Federation.”  Unemployment  in  Russia.  2010-­‐2011.  http://unemploymentinrussia.com  

94.70%  

5.30%  

employed   unemployed  

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Additional statistics and shifts between 2012-2013 are as follows.

Unemployment Rate in Sep 2013 was 5.26%, The change is 0.08% compared to Aug 2013 (5.19%), and 0.04% compared to Sep 2012 (5.23%). The number of people in Labor Force in Sep 2013 was 75,752,000. The change is -608,000 (-0.80%) compared to Aug 2013 (76,360,000) and -420,000 (-0.55%) compared to Sep 2012 (76,172,000). Out of those in labor force, 71,761,000 were employed. That is -638,000 (-0.88%) change compared to Aug 2013, when 72,399,000 people were employed and -426,000 (-0.59%) compared to Sep 2012 when 72,187,000 had jobs. At the same time the number of unemployed people in Sep 2013 was 3,991,000. The change is 30,000 (0.76%) compared to Aug 2013 (3,961,000) and 6,000 (0.15%) compared to Sep 2012 (3,985,000).9

2 Environmental Analysis

Geographical Characteristics

Geographic characteristics of Russia are many. No country in the world is as large as Russia so it has some great continental power. Russia has a lot of nature and a top of natural resources. Some of the main vegetation is as follows: Arctic Tundra, subarctic dwarf pine thickets, Boreal stone-birch forests, Boreal larch forests, Boreal spruce forests, and mixed broadleaf Korean pine forests. Cold terrain covers most of Russia’s land. 75% of Russian territory lies in Asia, and 25% is mostly in Northern Europe. Surrounding Russia are 12 seas and 3 oceans, including the deepest, oldest, and one of the most useful sources of freshwater in the world: Lake Baikal, or “The Blue Eye of Siberia”10.

                                                                                                               9  “Unemployment  in  Russian  Federation.”  Unemployment  in  Russia.  2010-­‐2011.  http://unemploymentinrussia.com  10  “What  are  some  of  Russia’s  Geographic  Features?”  Answers.  Answers  Corporation  2013.  http://wiki.answers.com/Q/What_are_some_of_Russia%27s_geographic_features  

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Transportation

The modes of transportation in Russia are by car (mostly Lada’s), subway, bus, trolley, train (two main types: overnight, and “elektrichka” from city to city), taxi, marshrytka (large passenger van). Transportations also include boat, ship, jet and airplane, as well as some form of helicopter; bicycle, scooter, motorcycle, tractor, and truck. 11 The availability of all of these forms of transportation (except helicopter, airplane, and subway/ water forms) are in most cities and within the bigger ones like St. Petersburg and Moscow, subways, airports thrive. The only places limited with transportation are the countless of villages that are all over Russia, but the trains usually cover them, and there are usually cars, motorcycles, bicycles and sometimes trucks and tractors in those villages. The usage rates go as follows:

• Aircraft departures (329,400) • Motor vehicles (124 motor vehicles per 100 people), • Rail usage: freight rail by billions of tonne-killometers (1,801.6) • Rail usage: passenger-km of rail transport, in billion/year (164.26)12

Russian ports/harbors include: Aleksandrovsk-Sakhalinskiy, Arkhangel'sk, Astrakhan', De-Kastri, Indigirskiy, Kaliningrad, Kandalaksha, Kazan', Khabarovsk, Kholmsk, Krasnoyarsk, Lazarev, Mago, Mezen', Moscow, Murmansk, Nakhodka, Nevel'sk, Novorossiysk, Onega, Petropavlovsk-Kamchatskiy, Rostov, Shakhtersk, Saint Petersburg, Sochi, Taganrog, Tuapse, Uglegorsk, Vanino, Vladivostok, Volgograd, Vostochnyy, and Vyborg lbid.

3 Norms, Traditions, and Culture

Customs

Society and culture in Russia are composed of the Russian family, pride, and communal mentality The Russian family is circled around all of its members, and most of the families live in apartments (some more wealthy live in houses in the suburbs of mostly                                                                                                                11  “What  are  the  modes  of  transportation  in  Russia?”  Answers.  Answers  Corporation  2013.  http://wiki.answers.com/Q/What_are_the_modes_of_transportation_in_Russia#slide2  12  “Russia  Transportation.”  Nation  Master.  NationMaster.com  2003-­‐2013.  http://www.nationmaster.com/country/rs-­‐russia/tra-­‐transportation  

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Moscow and St. Petersburg) with in many instances of two or three generations sharing the same little amount of space: (it’s common for Russian children to live with their parents until marriage).

What one might commonly see though is a small family with only one child due to the fact that women must also work in addition to taking the sole duty of taking care of the household and parenting the child.

The Russian pride is as large as the country is itself. To put in in simple words, Russians are really proud of their motherland, and they tend to show this through patriotic or folk songs and poems, which praise the glory and wonders of their country. Most Russians tend to accept that their lives are quite difficult and they pride themselves on being able to manage and in some cases prosper in such conditions that others could not. Russians also tend to take great pride in their culture and heritage and they also expect others and the rest of the world to admire it. The communal mentality of Russians was centered on the agricultural common village commune, in which the land was held in common and the decision-making was the responsibility of an assembly of the heads of each household. These ideals and traditions of the collective spirit and the group still remain intact today. It is still seen in everyday life, one example would be that most Russians would join a table with random strangers rather than eat alone in a restaurant.

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Another good thing to note is that everybody’s business is at the same time everyone else’s, so strangers might just stop and tell someone that they are breaking the rules or jump into their conversation uninvited13. The etiquette and customs in Russia are not that far apart from its Western counterparts. A typical greeting from a Russian is a firm, almost bone-crushing handshake while also maintaining direct eye contact and also saying the proper greeting for the time of the day. While when Russian men shake hands with women, the handshake is more gentle and less firm. But when female friends meet, they usually kiss on the cheek. Also, when close male friends meet, they usually pat each other on the back or just hug. When it comes to naming conventions, Russian names are comprised of first name (person’s given name), middle name (the patronymic version of father’s first name formed by adding ‘-evich’ or ‘-ovich’ for male and ‘-evna’ or ‘-ovna’ for female.) For example if Peter had a son, his son’s middle name would be Petrovich, and if Peter had a daughter, her middle name would be Petrovna. The last name however, like in most cultures is the family’s name. To be noted: in formal situations, people use all three names or the first and patronymic like when a student addresses his or her teacher that would always be the case. But close friends and family members would call each other by their first name only or even by their nickname. The gift giving etiquette usually takes place between family members and close friends on birthdays, invitations to a party or a friendly dinner, Orthodox Christmas, and New Year. The Russian’s hearts and hospitality is large so as stated before, if you get invited to a Russian home for dinner or a meal, bring a small gift; also to note that male guests are expected to bring flowers for the hostess and number of flowers should be odd (in Russian tradition, even number of flowers is associated with funerals). Also do not give any yellow flowers, or any baby gifts if the child is still not born, as that is associated with bad luck. Russians would also often object when they are offered a gift due to their modesty; a proper reply should be that ‘it is a little something’ and offering the gift again would generally have its acceptance.

                                                                                                               13  “Russia  –  Language,  Culture,  Customs  and  Etiquette.”  Kwintessential.  Kwintessential  Ltd  2012.  http://www.kwintessential.co.uk/resources/global-­‐etiquette/russia-­‐country-­‐profile.html  

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Dining Customs The dining protocol has many resemblances with that of Asia. If a Russian invited you to his home, don’t arrive early, do so on time but no more than fifteen minutes later than invited. There are usually no shoes once inside someone’s home so better take them off; you may be given a pair of slippers to wear. One should dress in formal clothes because dressing well shows respect for your hosts. You should expect to be treated with honor and respect in a Russian’s home. Offering to help the hostess with the preparations or clearing up the table after the meal was served is a polite gesture of appreciation. Although this may be turned down out of politeness, asking ‘are you sure?’ allows the hostess to accept your offer.

The table manners are your regular Continental: fork is held in your left hand, knife in your right while eating. The oldest or the most honored guest is served first, but do not begin eating until the hostess invites everyone to start. Also resting your elbows on the table is frowned upon, but your hands should be visible. The hostess may often urge you to take second helpings; also leaving a small amount of food on your plate specifies that your hosts have offered plentiful hospitality. The men should pour drinks for women seated next to them, and do not get up until you are invited to leave the table as that would be quite rude, and at formal dinners, the hostess is the first to get up from the table14.

                                                                                                               14  “Russia  –  Language,  Culture,  Customs  and  Etiquette.”  Kwintessential.  Kwintessential  Ltd  2012.  http://www.kwintessential.co.uk/resources/global-­‐etiquette/russia-­‐country-­‐profile.html  

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Business Customs When it comes to business etiquette, the relationships and communication with Russians are transactional overall and they do not need to establish long-standing personal relationships before business with others may begin, but nevertheless, having or developing a network of people you know or may trust is a good idea. There is almost always needed connections and having friends in the right places to cut deals, but if one is doing international business, it usually expected – the word that Russians use for that is “svyasi”. With Russians, patience is crucial, if your representative does not have that or if you like to cut deals fast, best keep a good eye for that. Honesty is crucial and it is highly recommended to build trust, which is needed to build a relationship. The majority of Russians will not trust people who are ‘all business’ so try to avoid diving straight to business and try to get to know your partner first; your indication that you have successfully developed a close relationship is usually being asked for a favor by that person. On the business meeting etiquette, what one should keep in mind is appointments are necessary and should always be made as far in advance as is possible (it often takes approximately six weeks to arrange a meeting with a government official). Confirming your meeting when at the time of your arrival in the country and once again a day or two in advance is necessary for smooth sailing.

Something to keep in mind is that May 1-9th has several important public holidays so that time is best avoided as well as another holidays on January 1-8th. Arriving promptly for meetings is important. Some typical Russian schedules are ones that unfortunately fluctuate and are constantly changing and everything may end up taking longer that was originally expected so be prepared and keep in mind of extra time as that could most likely come in handy. Take notice that the first meeting is almost always a pilot to determine if you and the company you represent are reliable and worthy of consideration for any future business dealings. Time should be spent effectively to show the difference between you and competition and what makes you stand out. You should expect a long period of conversations that have nothing to do with the business and are just for the sole purpose of getting to know you before the actual business commences. Take care to have all of your business material printed in both English and Russian so everyone can understand. Russians expect to have a detailed presentation, which include a history of the subject to learn its origins and so forth and a review of the current examples. Be prepared because meetings could be often interrupted and sidetracked with conversations that have nothing to do with the subject at hand. Once the meeting is through, you should be ready to sing a protocol, which states the summary of what was discussed.

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Russians do not like being rushed, so business meetings are often slow. In meetings it’s always a good idea to have a technical expert to make sure that things run smoothly, especially through the negotiations. When it comes to negotiations, Russians like hierarchy, so the senior most person should reach the decisions, as age, rank, and position is respected and if you have a young senior member, it is advisable to have someone older otherwise the young senior member will not be taken seriously or might be taken advantage of. When it comes down to the negotiations table, the win-win philosophy is not part of the Russian mentality, rather they believe in win-lose situations; they frown at compromise as weakness, so be prepared, as they will endure negotiating until you offer concessions. Russians are known walk out of a meeting, lose their temper or even walk out of the meeting in order to get you to change your position and gain the upper hand. In other words, negotiations could be brutal.

Don’t mention to Russians of your deadline, as they will use that against you. They are known to stall time even more so when they are aware of your deadline so keep that to yourself as much as possible. After all of that, nothing is final until the contract is signed and that’s normal, but Russians will modify a contract after it was signed to their liking if they really want to, to better suit their purposes. On a last note, using high-pressure sales tactics will work against you so stay away from them. On the topic of dress etiquette, you should dress formal and conservative; there is a guarantee that you will lose your meeting if you dress casual. Men should wear business suits while women should wear passive colored business suits with skirts that cover the knees. Note that shoes should be highly polished, that always shows professionalism. A good businessman/women always has his or her business cards ready to exchange with their counterpart after the initial introductions have been made. Make sure to have one side of your card be translated into Russian (using Cyrillic text); having your degree(s) is a good sign of confirmation of your credentials and take care to hand the Russian side up of your card to get the strongest effect. Also make sure to introduce anyone’s appropriate information that does not have a business card15.

                                                                                                               15  “Russia  –  Language,  Culture,  Customs  and  Etiquette.”  Kwintessential.  Kwintessential  Ltd  2012.  http://www.kwintessential.co.uk/resources/global-­‐etiquette/russia-­‐country-­‐profile.html  

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Religion

Russia’s religion is by large Orthodox Christianity. Orthodoxy (meaning traditional) was the first church that was established by the Apostles, and through several council meetings throughout the first centuries after Christ, the traditions and rituals were established and have not been changed since. Russia was largely pagan from the beginning, but under Prince Vladimir of Kiev in 988, when he baptized Kiev Russ in a ceremony based on Byzantine tradition, thus the rise of the new Russian Orthodox Church had begun. From then on the Orthodox Church continued to thrive mostly with some ups and downs. For example, during the reign of Peter the Great, Peter cancelled Patriarchy and forced government control in the form of Synod in the Russian Church, which limited the power of the Church.

The biggest catastrophe came in 1917 with the takeover by the Communist party. The early years of the Soviet regime were particularly wearisome for it. The Land Decree of October 26, 1917, deprived the Church of the majority of its lands; the monasteries took the worst hit. In the government’s another decree that was

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made public on January 26, 1918, the Council of People’s Commissars (the government) separated the church from the state and specifically school. Because of that, all church organizations lost their powers of legal entity and most notably, the right to own property. Thankfully though, by late 1980s, attempts were launched to restructure the country’s economic and political system, major changes were made in the relationship between the state and the Church in the hope of revival. Later in 1990, a series of laws were passed on the freedom of religion, under which many of the existing restrictions were removed from religious communities, allowing them to step up their activities. The rapid expansion and revival of all the churches and monasteries is beyond the projected rate that many had expected. Today, Orthodoxy is the official religion of Russia, and according to various forms of data, the number of various churches/associations are16

The majority of religious Russians are Christians that include 207 Bishops, 28,434 priests and 3,625 deacons that serve the 30,000 Russian Orthodox churches. There are also 788 monasteries including 386 for men and 402 for women. On top of that, many new churches and monasteries are being built or are under repair on parish and local budget’s money.

There are nineteen million Muslims, who are the second largest religious community in Russia, that have over 800 parishes and mosques. There are approximately 83 Roman Catholic parishes run under four bishops and 165 priests, working among the approximately 1,300,000 Catholics in the country.                                                                                                                16  “Religion  in  Russia.”  Diplomacy  Online.  The  Ministry  of  Foreign  Affairs  of  Russia  2012.  http://rusemb.org.uk/religion/  

30,000  

3,000  450   200   200   120   120   80   68   50   39  

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The two million Protestants have 1,150 communities. Although Buddhism is not widespread, the Russian Federation currently has ten Datsun monasteries, with the total monastic body approaching 200. Another ten monasteries are under construction. Lastly the Russian Federation has 42 Jewish communities. Moscow accounts for over 10 per cent of Russian Jews, and has three synagogues, one of which is Hasidic lbid.

Languages

Russian is a Slavic language, in the Indo-European family. Its closest relatives are Ukrainian and Belarusian, the other two national languages in the East Slavic group.

The principles of word-formation, literary style, and, to some extent, inflexions and basic vocabulary, of Russian have been influenced by Church Slavonic, a developed and partly adopted form of the South Slavic Old Church Slavonic language used by the Russian Orthodox Church.

The vocabulary and literary style of Russian has been greatly influenced by Greek, Latin, French, German, and English.

Russia’s official language is Russian of course, but there is a considerable number of other languages with a million or more speakers, which include:

• Tatar (6,500,000) • Chuvash (1,640,000) • Bashkir (1,450,000) • Chechen (1,340,000) • Ukrainian (1,300,000)17

Despite leveling after 1900, especially in matters of vocabulary, a large number of dialects exist in Russia.

Some linguists divide the dialects of the Russian language into two primary regional groupings, "Northern" and "Southern," with Moscow lying on the zone of transition between the two. Others divide the language into three groupings, Northern, Central and Southern, with Moscow lying in the Central region.

                                                                                                               17  “List  of  languages  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/List_of_languages_of_Russia#Official_language  

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Dialectology within Russia recognizes dozens of smaller-scale variants. The dialects often show distinct and non-standard features of pronunciation and intonation, vocabulary, and grammar. Some of these are relics of ancient usage now completely discarded by the standard language18.

Russians’ preference and tastes vary quite a bit. On the topic of food, Russians prefer something not spicy, but something with a lot of pickled and salted flavors and tastes such as sour croute, pickles, marinates, or salted haring. The tastes are largely salty, pickled, fatty, and many heavy foods (i.e. salads, grains mushrooms, barley, buck weed, rice, farina, oats, and most bakery goods).

On the topic of music tastes, Russians enjoy singing and playing on the guitar. They also know and love Russian folk, Soviet, bard, and modern pop songs. Russians like to sing together collectively during parties, on trips, and even throughout concerts. Many Russians also appreciate and know very well classical music.

When refereeing to leisure preferences, Russians like to grow their own vegetables and fruits in their country house (dacha), fishing and hunting, going out to steam houses (banya). They also love to go out into the nature, make campfires and cook shish kebabs and baked potatoes. Many Russians also love to go mushroom hunting and many are very skilled in that art form. Going out to the beach, swimming, sunbathing, and playing volleyball is also everyone’s favorite.

                                                                                                               18  “Russian  Language  Facts.”  Language  Helpers.  LanguageHelpers.com  2012.  http://www.languagehelpers.com/languagefacts/russian.html  

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Recreation

Russians are well known throughout the world for their competitive nature, especially when it comes to sports. Russia rings true to that statement and it is evident in that she has produced many Olympic champions year after year in various areas of athletics. There are a few very popular sports in Russia and some of those include: soccer, hockey, cross-country skiing, ice-skating, tennis and judo.

There are a number of sport and recreation facilities in Russia, in places like Moscow, St. Petersburg, and most other cities. Moscow is a great place of many forms of culture and entertainment. According to various forms of data, these include: theatre, opera, museums, exhibitions, concerts, cinemas, bowling alleys, casinos, discos, nightclubs and bars. Moscow is also very famous for ballet, and the world-renowned theatre, Bolshoi Opera and Ballet Company, also the Moscow Circus and a number of other philharmonics that have regular evening performances. Leisure and entertainment can also be found in the numerous traditional festivals that are celebrated in Russia which have a lots people, drinking, and fun. New

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Year is a big holiday in Russia, celebrated by much gift giving and partying. Orthodox Christmas and Easter (called Pascha in Orthodox Church) are also big holidays. Some of the main traditional festivals in different parts of the country include White Nights festival at the end of June, St. Petersburg’s Spring Classical Music festival, and the Russian Winter Festival in Moscow, St. Petersburg and Novgorod in the late December/early January, which is marked by many customary performances.19

Communication Systems

There is a wide range of communication systems in Russia that include, telephone, mobile phone, television, Internet, and radio. In fact, Russia was one of the first countries to introduce radio and television due to it’s enormous size, and today it leads in the number of TV broadcast stations and repeaters. On average, most Russians have access to and own a telephone, mobile phone, radio, and have a television set; even the little countless numbers of villages that cover Russia, usually have at least one phone and a radio somewhere nearby. As for the Internet, it is a bit slow to expand, but it is well established in most of the cities, and for other Russians that do not own a computer, there are always “computer clubs” where one could go to and use a computer for whatever purposes. When it comes to the usage rates, the mobile phone usage has doubled in the last 6 years. Today when it comes to cities, 90% of Russians own a mobile phone and that is a huge increase in potential for a mobile market. According to the latest analysis from Yandex, the mobile phone system of preference in Russia is20

                                                                                                               19  “Russia  –  Leisure,  Entertainment  and  Sports.”  Expat  Focus.  GNU  GPL  2013.  http://www.expatfocus.com/expatriate-­‐russia-­‐leisure-­‐entertainment  20  “Market  of  mobile  devices  and  platforms  in  Russia.”  Russian  Search  Tips.  Russian  Search  Tips  2013.    http://www.russiansearchtips.com/2012/04/russian-­‐mobile-­‐internet-­‐usage-­‐had-­‐doubled-­‐during-­‐2011/  

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Although Russia still remains one of the lowest Internet users in Europe, its usage rates have certainly been growing and have quadrupled since 200621. Television is by far the most popular medium in Russia. Over 74% of Russians watch national television channels regularly, and 59% regularly watching regional channels. There are a total of 3,300 television channels, making the television sector in Russia by far the biggest profit wise: 143.2 billion rubles worth revenue in 2012. The three biggest channels are First Channel, Rossiya, and NTV, which span and have 90% coverage of Russian territory.22

4 Economic Analysis Major Industries

The major Russian industries are composed of mining, oil and gas, processing precious stones and metals, aerospace production, aircraft building, electric engineering weapons and military machinery manufacture, automotive industry, pulp-and-paper production, road and agriculture machinery production, transport, and light and foodstuffs industries.

                                                                                                               21  “Russia’s  Internet  Use  Is  Exploding.”  Forbes.  Forbes.com  LLC  2013.  http://www.forbes.com/sites/markadomanis/2013/05/18/russias-­‐internet-­‐use-­‐is-­‐exploding/  22  “Telecommunications  in  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/Communications_in_Russia    

Java,  44%  

iOS,  24%  

Android,  18%  

Symbian,  12%  

Other,  2%  

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Industry Structure

International Trade Statistics

According to various sources, Russia’s major exports and percentage of total exports are as follows:

• Mineral fuels including oil - $375,423,947,000 (71.6%) • Iron and steel - $22,601,664,000 (4.3%) • Fertilizers - $11,176,846,000 (4.3%), • Inorganic chemicals - $7,835,699,000 (1.5%) • Machinery - $7,609,061,000 (1.5%) • Aluminum - $7,281,329,000 (1.4%) • Wood - $6,731,569,000 (1.3%) • Cereals - $6,246,547,000 (1.2%) • Copper - $5,787,339,000 (1.1%) • Organic chemicals - $4,516,890,000 (0.9%) 23

Russia’s major imports and percentage of total imports are

• Cars - $13,425,730,147 (6.28%) • Packaged Medicaments - $9,331,394,072 (4.36%) • Parts and accessories of motor vehicles - $5,376,008,710 (2.51%) • Automatic data processing machines - $4,881,776,678 (2.28%)

                                                                                                               23  “Russia’s  Top  10  Exports.”  World  Stop  Exports.  Wordpress  2013.  http://www.worldstopexports.com/russias-­‐top-­‐10-­‐exports/2350  

40%  

36%  

7%  

6%  

5%  5%  

1%  Processing  

Retail/Wholesale  

Other  

Transportation  

Construction  

Energy,  Gas  and  Water  

Agriculture,  Hunting,  Timber  

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• Transmission apparatus for radio, telephone and TV - $4,881,776,678 (2.28%)

• Telephones - $3,137,972,136 (1.47%) • Petroleum oils, refined - $2,347,223,426 (1.10%) • Footwear, with leather body - $2,206,155,272 (1.03%) • Raw sugar, cane - $1,963,158,885 (0.92%) • Printers and copying machines - $1,927,327,530 (0.90%) 24

Russia’s balance of trade is at a surplus as of 2012 mainly due to the high oil prices which have helped maintain a decade long positive position. According to official Russian report in 201225 each quarter had a surplus with the overall being 72,0176.26

Russia does have some trade restrictions that are most notable in Lithuania where the Russia’s customs restrictions on Lithuanian goods have been applied specifically at the customs clearance points by Russian authorities since 12 September 2013.27

                                                                                                               24  “Learn  More  About:  Trade  in  Russia.”  The  Observatory  of  Economic  Complexity.  Creative  Commons  Attribution  2013.  http://atlas.media.mit.edu/country/rus/  25  “Russia  Balance  of  Payments.”  Shrewsbury  International  School.  Business  Studies  2013.  http://blogs.shrewsbury.ac.th/business/2012/03/07/russia-­‐balance-­‐of-­‐payments/  26  “Balance  of  Payments  of  the  Russian  Federation  for  2012.”  Bank  of  Russia.  Bank  of  Russia  2000  -­‐  2013.  http://www.cbr.ru/eng/statistics/print.aspx?file=credit_statistics/bal_of_payments_new_12_e.htm&pid=svs&sid=itm_48213  27  “On  Russia's  trade  restrictions  on  Lithuanian  goods.”  Europa.  1  November  1993.  http://europa.eu/rapid/press-­‐release_SPEECH-­‐13-­‐794_en.htm  

39,494  

16,159  

5,828  

10,534  

Q1   Q2   Q3   Q4  

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5 Political and Legal System

Political Structure Russian political structure is made up of what is on the surface, which is their claim to democracy, and what lies underneath, which is essentially a quiet but firm dictatorship. Russia is one of the more recent countries to embrace “democracy” after the fall of the Soviet Union in December 1991. After the constitutional crisis in 1993, Russia adopted a new constitution in December of that same year in which Russia was described essentially as a federal presidential republic.

Russia’s democracies although, in terms of democratic credentials, has many holes and gaps that have not been filled. This democracy is packed with an overwhelming amount of corruption, and one man, Vladimir Putin, basically, wholeheartedly runs it. The government consists of three branches, Executive, Judicial and Legislative. The Executive branch consists of the President, the Judicial branch consists of Constitutional Court, and the Legislative branch consists of the State Duma and the Federation Council.

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The President has strong powers and authority provided by the constitution of 1993, and can issue rulings and orders that have the force of the law without legislative review. According to the Law on Presidential Elections, a candidate has to receive more that 50% of the votes to win; otherwise the top two candidates in term of votes must face each other in a run-off election. The President then resides for four years until the next election, but in November 2008, the constitution was amended to make this a six-year term. After serving two terms in office, the President is barred from a third consecutive term; in other words, the President can run an endless amounts of time as long as he or she does not run for a third uninterrupted term. The Prime Minister of Russia is appointed by the President with the approval of Duma and is the first in line to the President seat in case of the President’s death or resignation. The State Duma, headquartered in central Moscow, is the lower house in the Russian Federal Assembly, containing 450 members called deputies. Duma’s power is very limited and it can’t express a vote of any confidence in the Government even if it had the majority vote of all the members of the Duma, but the President is allowed to disregard this vote. Originally under the 1993 constitution, elections were held every four years, but in November 2008, the constitution was amended to make Duma’s term five years. The Federation Council is the upper house in the Russian Federal Assembly. The Council is consisted of 168 members who are known as senators. Each of the 84 federal subjects of Russia sends two members to the Council.28 Political Parties

The political parties vary; the party that hold majority, which was essentially created by Vladimir Putin, is called United Russia, holding 238 seats, which describes itself as a centrist, but in reality supports Putin in Duma and the Federation Council. The second largest party, which is also the main opposition party, is the Communist Party of the Russian Federation, holding 92 seats. There are two other parties that have seats in the Duma who are the fake opposition. The first one is A Just Russia, holding 64 seats, and the ultra-nationalist Liberal Democratic Party of Russia, holding 56 seats lbid.

                                                                                                               28  “A  Short  Guide  To  The  Russian  Political  System.”  Roger  Darlington.  Roger  Darlington  2010.  http://www.rogerdarlington.me.uk/Russianpoliticalsystem.html  

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Stability of Government

Russian government is pretty stable as it is ruled under the firm iron fist of Vladimir Putin, and as far it is evident, nothing major goes on in the country without his approval. But within recent elections, as in 2011, the United Russia’s share of the vote fell by 15% to just over 49% and the number of its deputies also fell by 77 to 238, which shows a potential future shift in the tide of other parties’ power in the next election in 2016 which could bring either instability or a move towards a state of less authoritarianism lbid. Special Taxes

Russia’s special taxes are mainly the VAT rates for 2008 that would remain fixed at 18%, and the changed in UST mechanism and rate curve, which are effectively split into the unified tax into separate payments. Meaning that all wages and salaries up to 415,000 roubles (16,210 US dollars) per year are subject to a 26 percent pension contribution; income in excess of 415,000 roubles is not taxable.29

Economic System

Russia’s economic system used to be one of a central nature, but today Russia’s economic system is experiencing a major transformation where it is trying to move toward a free market economy. At this stage, it is best described as a diversified, mixed economy, where certain aspects of the economy are controlled by the state while the free market controls others; in other words, Russia has a command economy, market economy, a mixed economy, and a free enterprise system.30

Legal System

Russia’s judiciary system is the Constitutional Court of the Russian Federation, which is made up of 19 judges, one being the Chairman and the other being Deputy Chairman. The President with the approval of the Federation Council appoints each judge. The 1993 constitution empowers the Constitutional Court to intercede disputes between the executive and legislative branches as well as in between Moscow and the regional and local governments. Furthermore, the court also rules on violations of constitutional rights, examines appeals from various bodies, and participates in impeachment proceedings against the

                                                                                                               29  “Tax  code  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/Tax_Code_of_Russia#Major_amendments_and_revisions  30  “Economy  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/Economy_of_Russia  

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President. Although, the judiciary seems independent, most believe that its major elements are under Kremlin’s, and more specifically Vladimir Putin’s control.31

Russia is under the Civil Law system that is based of the Roman Law through the Byzantine tradition. Russia’s Civil Law is also heavily influenced by the German and Dutch norms build in 1700-1800’s, then by the Socialist-style modifications in 1900’s, and finally by the Continental European Law influences that were established in the 1990’s.32

6 Recommended Marketing Strategies

Exporting

When it comes to exporting into Russia, it is vital to decide what kind of exporting is best fit for your product or service and your company (i.e. direct or indirect exporting). If you chose direct exporting, then establishing an office on the other end of the line is crucial. In fact having a joint venture, consortia, or a contractual agreement with another company in Russia is highly recommended, as there are numerous difficulties in operating alone or independent. Furthermore, Russian government could impose all kinds of quotas, tariffs and restrictions on foreign investment or specific companies which the Russian government views as a threat. As a result, doing business can become much more difficult and may even result in the company withdrawing.

Therefore it is important to work with a company on the inside or having influences in the lobbying section of the Duma, that could help your company stay afloat in its exporting by having a hand on the inside. This is also vital to not only prepare for the worst but also strengthening your company’s ability to perform and bring in more revenue. Hence, having a strong lobby group hired in place could ensure that if any restrictions were to be made, your company would be the exception. This exporting strategy is creating support and reinforcement on both sides of the equation and keeping the roads wide open to more business and traffic flow to and from Russia.

Licensing

Licensing should be done very carefully and thoroughly with the aid of local experts that can assure you that the job will be done right and without any holes or flimsy binding and or agreements. Whether it is for equipment, franchising,                                                                                                                31  “A  Short  Guide  To  The  Russian  Political  System.”  Roger  Darlington.  Roger  Darlington  2010.  http://www.rogerdarlington.me.uk/Russianpoliticalsystem.html    32  “List  of  national  legal  systems.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/List_of_national_legal_systems#Common_law    

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trademark, registration, patent, or anything else in between, there are too many barriers, loops, and traps that investors and companies from abroad do not know about. So hiring a professional is the best choice and will yield the best and firm results that you can rely on and safely precede with your business.

If though, you chose to do things yourself, your opponents might take advantage of your ‘innocence’ or lack of experience and knowledge in dealing within the country and its rules. Therefore keep that on the lookout if you plan to handle things yourself; and although the progress and details are a lot more evident since you are doing all the work, it is still a lot more difficult and it is advisable to have a local professional help you in these matters for the sake of moving things along faster and more smooth.

Franchising

Going about achieving franchising rights in Russia should be straight through the legal system, but having associates and professionals in the right places (i.e. Duma, lobbying) could help you pull together and make the process a lot faster and less tedious. The procedure could be stopped or stalled for various political or personal reasons, so having the right people when entering and registering in the country that know how to steer clear from trouble is always needed.

If not done with the aid of local agents and experts, you will be facing difficulty and long periods of waiting as being unfamiliar with the specific details of laws and procedures for such matters could give you a bigger headache than there needs to be. Hence for solid and faster results, hire a local professional.

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Joint Venture

On the topic of joint venture or a contractual agreement (i.e. long-term, or non-equity association between a company and another in a foreign market), as stated before, establishing a business relationship with another entity in Russia is crucial to be able to blend in to a certain extent and be under the wing of a local to help with the smooth sailing.

The downside is that there are more responsibilities and sharing that will have to take place but that is the means that must be taken in order to be able to get past all the rough waters. Otherwise, you can choose not to share more assets and parts of the business with a local joint venture and instead face the rough waters alone and keep more profits for yourself. But keep in mind, those early times are going to be extra challenging if you don’t have anyone on the inside to help you sink in your roots at landing.

Contract Manufacturing

It is extremely important to have local and your personal experts with you when you are hammering out any type of a contract with Russians because they are tough, stringent, sometimes problematic, and will use pressure tactics to get the better end of the bargain. Remember that Russians don’t believe in a win-win philosophy. In their eyes, it is win-lose, and they better be the ones wining or there won’t be a contract. Therefore use strategies that give you some bargaining space so you can give way to make it appear that you are giving up some ground and the Russians are getting the better end of the deal. That way the ends will meet and if done properly with your personal and local professional, then you should have a fair contract that can allow you to proceed as normal.

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However, without the use of local or technical help at your side when you are hammering out a contract or a deal, you will most likely face a number of troubles, and might end up getting the lower end of the bargain, or maybe nothing at all if no compromise is made or if there is a lack of communication which can be a burden. So keeping those two in mind, it is always better to have local expert and your own technical help at your side when hammering out a deal or a contract.

Foreign Direct Investment

Invest carefully, because laws and rules can change quickly if you or your enterprise is seen as a threat. Direct investment should be done strategically with the advice of an analyst and a professional in your field of business. Decide what kind of an establishment is best for your product or service (i.e. a direct sales force may be needed for high-technology and big ticket industrial products). Again, it is better to partner up with a local company as chances are, they are already established and are very familiar with the area better than you are and can guarantee you a foot in the door.

It is advisable to do a beta-test first by doing the analysis and introduction of a small quantity of a product or a service into the market to see how well it will do. Then based on that, making micro adjustments to suit the environment and then finally rolling in the big guns and going full speed forward. It is important to determine how your product relates to each age and sex groups. Based on that, you could determine your city(s) of interest and launch your campaign, adjusting as it moves and improving it with every step to make sure that the investment was spent wisely.

7 Global Market Strategy

Media

Approaching the media should be done in the specific target areas only (getting your first strong chain of customers and or clients is crucial, from which you can expand into different areas and directions).

With radio, there are three main stations: Radio Russia (covering 96.9% of population), Radio Mayak (92.4%), and Radio Ynost (51.0%),33 most of them focusing on streaming music, news and analysis. That in mind, using the top three can get your product a wide range of audience (that audience coming at a price of course since it’s the national stations), which gets you an incredible amount of exposure.

                                                                                                               33  “Media  of  Russia.”  Wikipedia:  The  Free  Encyclopedia.  Wikimedia  Foundation,  Inc.  22  July  2004.  http://en.wikipedia.org/wiki/Media_of_Russia#Radio  

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Another option is to target the smaller radio stations in and around your targeted areas (preferably cities). Targeting the cities is more focused and narrows down to the closest possible range of customers/clients that will have interest in your product. It is more advisable to use the latter as it is relatively cheaper and more effective, tracking down your clientele and focusing on your specific target group(s). With television being the most popular form of media in Russia, it is going to have the most opportunities, but also the biggest amount of difficulties unless you play your cards right and keep your eyes sharp. Since the top 10 out of the 15 channels are owned by the government one way or another, you are most likely going to have to deal with government agencies if you want your product to be shown on their commercials. This could be a rather tedious task, especially if your company is viewed on as negatively or if there are bribes and other things that could be involved in the process as well. So the best strategy is to hire a local technical expert and have them help you get through the process quickly and thoroughly.

The other way is to tackle the commercial channels or any other smaller channels and break it down to your specific target level. With those, you should have less trouble and an easier time, just as long as you have the money and patience because getting your product out through television is one the most expensive ways of advertising.

Internet is by far a more cheaper and better choice if you know how to use it right (which is where the complexity comes in). Although slow to expand, Internet has reached most cities and the PC is making its way into the average home of a Russian. Most Russians have access to the Internet one way or another, so the vital part is establishing your goal and implementing it.

Strategies on that subject depend on your product or service, as well as your target and that comes down to you and your experts. Having that said, your best bet is to target the radio websites, social media, and other local websites that fit into your product/service category. An easy way to figure this out is to translate your product, choosing its category and Googling it in Russian to figure out and distinguish which websites are associated with it, then taking the necessary steps to contract the owner and hammer out a deal with them.

Printing is another option that you could consider. Putting ads in newspapers, magazines, billboards, banners, and so on is a possibility. The top three newspapers in Russia are Rossiyskaya Gazeta (government owned daily), Izvestia (popular daily), and Komsomolshaya Pravda (mass circulation, left-leaning daily). The positive side is that there are fewer newspapers being owned by the government and more being privately owned. But the downside is that there is a smaller amount of Russians reading newspapers than watching television or going to online websites (mostly government owned) for their updates. Thus it is a double-edged sword when it comes to printing, including if

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you wanted to tackle magazine ads, billboard and banners in various places such as around busses, buss stops, and various other road billboard types.

The best course of action is to strike a deal with any number of local city newspapers and see what kind of feedback you get from that (i.e. sales or clientele go up or do not change). It could be more difficult to approach your audience through papers or printing, so your best bet would be via Internet, television, or radio. But a combination of all four in a massive push could prove extremely effective. If you launch a campaign through specific targeted papers, radio stations, television channels, and Internet websites, your product or service will be exposed to various forms of media, with the highest chances of success rate.

Other media resources and places of interest could be special events, cinema, shops, stores, and smartphones. There are numerous strategies and combinations that could be used in and around them (i.e. billboard signs with smartphone app advertisement to your product/service) with key translations such as back-to-back translation to create a catchy slogan or a line to run your campaign on.

Show innovation (i.e. exotic new ideas or ways of doing things that have not been seen before), or focus on country-of-origin effect (i.e. ethnocentrism) to make your label (through joint-ventures or other ways of partnering with local businesses), blend in as one made at home. Russians like quality, so showing that in your ads/commercials through things like style, features, packaging labeling, trademarks, brand name, price, and other aspects of your product, along with a clever sign, symbol or design that is intended to identify your goods or services with you or your company will increase your chances of success.

Marketing Strategy

Marketing strategies will vary from product to product and it will ultimately depend on you and your business. But there are some key ideas and strategies that are good to keep in mind. On the matter of adaptation (as mostly listed above), there are several ways to go about it: one such using country-of-origin effect by partnering up with a local entity through joint ventures and so on. Translating your slogan or name, which should be done through back-to-back translation to ensure that the interpretation is accurate and not misleading. Also focusing on all aspects of the media, meaning decentralized, or on a particular interest area or a hotspot through centralization could both help you sink your product or service deep into the ground and adapt as well as warp it together with what is already local. Then if done correctly, you should finally create a stable ground to work on and expand at a smooth and steady rate.

Standardizing your enterprise and product or service is down the same alley. Infusing your product or service with the local content and people, advertising it through centralized or decentralized matters via media (i.e. radio, Internet, television, printing, smartphones), and sinking your roots deep into the ground

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through a country-of-origin effect by partnering up with a local entity, will all help you ‘break into’ the market, thus being part of standardization. The second aspect of that ball game is making it the norm with eminence, attributes, value and so forth to make it entirely warped within the local markets and its standards. So in a sense, get your product or service to the point where it simply becomes the standard.

8 Conclusion

Since the fall of the USSR, the Russian Federation has become an opulent and a lustrous country on the matter of opportunity and potentiality. The country is filled with countless of possibilities and surfaces that could be openly explored and tapped into. Russia is also part of the BRICK countries, so it is in the expansion stage, which is the best time to invest with the greatest number of possibilities to be explored and taken advantage of. The market, resources, businesses, and demographics all point toward the same fact, that there is big amount of room for expansion and profitability. Therefore, if a company or a business is looking to expand abroad and outside of the U.S., then considering the Russian Federation as one of its outlets would be a wise choice.


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