In this guide, we’re going to share with you the basics of what you need to know about business negotiations in Russia so you can actually close deals successfully.
If you want to:
- Understand the common mistakes that cause you to lose money and result in broken deals
- Identify the key differences between Russian business etiquette and best practices in the Western markets
- Learn a proven framework for a more intelligent way of reaching your strategic goals in international business negotiations
Why you can’t afford to underestimate cultural differences when negotiating in Russia
If you are exporting to Russia or managing a Russian team, your business success depends on your ability to understand, implement and master several of the things we will cover in this guide.
However, I have to warn you there is more to it than just applying a set of clever tactics.
The first thing to understand is that Russia is a relatively collectivistic and very hierarchical country. That means that a lot of your success depends on your ability to build personal relationships with people and the ability to play by the unwritten rules of the hierarchy.
In general, pushy sales pitches or beautiful visions do not easily convince Russians. Instead, they expect you to be an expert who knows the details. You should have a plan in place before you ever set foot in the meeting room.
With over 20 years of experience in sales, managing teams in Russia and other Russian speaking countries, and helping foreign companies enter the market, we’ve had our share of situations where things did not seem to follow the expected game plan.
In other words, if you want to be successful at negotiations as an exporter or manager, you need to learn the cultural values and Russian business etiquette.
Why is that?
Why can’t you expect your partners to adjust your way of doing things and follow the ‘Western’ best practices?
- It is easier to create trust with your Russian business partners. Trust generates a feeling of uncertainty control and therefore eliminates hesitation. This is important because it allows decisions and actions in a shorter time.
- If you can learn ‘their way’ and build a resemblance that trust is based on, it gives you a competitive advantage.
- Adjusting to local social norms and having cultural intelligence allows you to reach your strategic goals with less friction.
- ‘In Rome, do as the Romans do.’ You are in a foreign country, and you can’t expect them to change their ways to something else. You can only really change your own behaviour.
For example, I started working as a regional manager in Russia at the end of the 90s in the teleoperator business. The Russian partners often asked me if I need to ask for my CEO’s permission to negotiate the contract with them.
I learned to firmly state that I negotiate the contracts’ terms, and the CEO will sign the contract. They only accepted it as they had no choice.
The strategic importance and culturally intelligent solution didn’t really become apparent before I got the CEO to pay a visit to the clients. Suddenly I understood how important the visit was for our partners: it was a sign of respect from our side. They had a deep need to speak to the “big boss”.
If I want to get something from you, I need to understand a few things which are closely linked to culture, including:
- How do you perceive me?
- How do you judge if you can trust me as a business partner?
- What do you think of my offer and its value?
- If you are hesitant, how openly do you express it?
- Who makes the final decision?
All of these things work differently in Russia compared to most Western countries.
Without that knowledge, we easily communicate and behave in a way that causes distrust, friction, and unnecessary roadblocks.
You can, of course, expect the other side to learn to understand you, but they usually have other vendors to work with too and might lose motivation and interest if they have to put too much effort into trying.
Approaching international business negotiations with cultural intelligence, on the other hand, can be your competitive advantage and help you reach your strategic goals.
Once you adjust, it will be a lot easier to get key information that will make running the business easier and faster. This is why we have put together this 7 step guide on your Russian negotiation tactics.
How to get results in business negotiations in 7 proven steps
Step 1: Create your plan and negotiation strategy
When creating your negotiation plan, you usually have a clear target you want to achieve. In most cases, you want to build a good export business with an existing or local partner, so you must take the long game approach.
The long game is never about win-lose but about win-win. That is why you should prepare by taking both sides’ interests into account.
In the Russian collectivistic culture, it is crucial you understand the basic rule of reciprocality: when you ask for something, you must be ready to offer something in return (not necessarily right away but in the long run to keep be the balance of reciprocal favours). Russians are quite sensitive to this balance which you need to understand to build a successful long-term relationship.
Step 2: Decide who will attend the meeting
In Russia, there is usually a collective of managers and experts on the other side of the table, so you want to avoid going alone. Choose a team of two representatives at a minimum.
Russian decision-makers will also expect to speak to decision-makers at their level who have a high enough title. If you want to make sure the negotiations result in decisions, send your top manager and the export manager who handles the daily business.
This ensures the management of the other company will attend the meeting as the status of the people attending increases the status of the meeting.
Sometimes the top manager does not even have to take an active role; his or her presence can meet the needed status and underline the top management support behind the business development.
If your general manager never goes to the meetings with the export manager, things can slow down and proceed at a sluggish pace.
This is simply because the partner perceives this as a lack of respect and interest: the matter must be unimportant to your company as it doesn’t deserve your top management’s attention.
Step 3: Set up the meeting
Meetings in Russia are usually organised at relatively short notice. Russians do not plan meetings months ahead because something always comes up. Plans are flexible.
When you set up a meeting, two-three weeks’ notice is usually acceptable for a foreigner. It’s much easier to organise that first sales meeting if you can get a recommendation from someone they know and trust. It will save you a lot of time and effort in organising your meeting instead of dealing with gatekeepers whose job is to block all unnecessary contacts.
If you are used to setting up meetings in the Western business culture, you probably do not usually confirm multiple times you are coming to the meeting. But in Russia, this kind of control is key when you want to make things happen.
If you trust that a meeting is in someone’s calendar as it was agreed a month ago and neglect to remind them a week beforehand and the day before, it’s very likely no one will be expecting you on the day.
Last-minute changes are common as people will adjust to top managers’ schedules and consider it acceptable if more important people keep you waiting, too.
Step 4. Respect norms and hierarchy in business negotiations and meetings
The first few meetings are usually formal. Avoid jokes, broad smiles and addressing your counterparts too informally.
Decision-makers should behave firmly and often be more assertive than they are used to in their home country. This goes especially for the Nordic countries like Finland, where I am from.
As people, we make judgments about others within just a few seconds of meeting them. Those impressions are often cemented for a long time. This is why it is important to understand some things about the hierarchy and norms in Russia.
The first thing is that the meetings are leader-centric. Sometimes the main negotiators sit in the middle or the main seat, but this can vary.
The Russian side’s main negotiator will lead and then gives the floor to the other team members. It would be best if you respected this arrangement, as other people on the Russian side will often not have the mandate to speak for the company.
Avoid asking direct questions from others on the Russian side. They would never disagree with their superior in public.
Step 5. Build relationships first
This advice applies especially to vendors entering their first sales meetings. Concentrate on building relationships and trust before you deliver your pitch.
Rushing a sales presentation will rob you of the opportunity to create a pleasant atmosphere with small talk first. Like in any sales situation, it is important your audience likes you as a person, too. But in a collectivistic culture, it has to go to another level.
Another thing you need to consider is to be prepared to answer very detailed technical questions. “I don’t know” is not as widely accepted as an answer to these questions as it might be elsewhere.
So, in addition to your normal presentation of your company’s value as a possible vendor and your product or service, make sure you are prepared for questions. You can also arrange a direct line to the main office to talk to people who know the answers.
Step 6. Adopt the circular approach
In all honesty, meetings in Russia can look a little chaotic to foreigners. There will be many interruptions, calls, people coming and going. The main difference to the Western negotiation style, though, is that meetings don’t proceed linearly.
What does that mean?
It means it’s typical in Russia to shift the topic and come back to the same topics and questions again and again. This is why the approach is circular.
In practice, this provides a gentle way to approach difficult topics like pricing or problems in the cooperation between the two partners. You get a complete picture of the situation by touching on each topic you will discuss on the day.
This style might seem strange and counterproductive to those used to more linearly structured proceedings. But the circular approach leads to results and decisions by the end of the meeting.
Step 7. Contracts in Russia
In Russia, as a relationship-oriented (collectivistic) country, the meaning of a contract is slightly different than in more task-oriented (individualistic) countries.
The contract is a piece of paper that enables the operations that the partners agreed upon verbally. It is a formal document mainly for the Russian customs, tax office, banks, etc. Both parties need to finalise the contract with the company’s round seal.
You might be used to thinking the contract is a fixed document that sets the rules of the cooperation and maybe would be reluctant to make changes to it. Russians, on the contrary, think of the terms of cooperation with certain flexibility.
In Russia, a contract is not seen as the holy book that everyone needs to follow to the letter from now on. It would help if you were prepared that your Russian partners will try to renegotiate any unfavourable terms for them in a new market situation. What’s more, if your response is too stiff and unaccommodating, that would affect the relationship based on trust, which is the main point in all business.
If you get to this point, though, it means you have probably done a good job in your negotiations to get the deal.
How to negotiate better contracts and build better partnerships in Russia?
Hopefully, you have found this guide to negotiating in the Russian culture helpful.
If you are an exporter, vendor, or manager working with Russian business culture, you know that mastering this one aspect of your business skills is just one of many cultural issues you have to tackle successfully to reach your strategic goals and drive sales.
We think you’ll find our articles and training on the other steps as good or even more helpful than this simple guide on business negotiations in Russia.
I highly recommend talking with a specialist in the country where your prospective business partner is located. InCultures consultants can provide just this experience. E-mail me at pia.kahara@incultures.com and I will connect you to a specialist today.