Tips for Entering the Russian Far East Market
13 March 2012
While the Russian Far East region offers good business opportunities, it remains an unfamiliar market to most Hong Kong companies. From climate conditions to order size and payment terms, Hong Kong companies should be aware that this unchartered territory can be quite different from other markets. Also, one should take into account the risks and hidden costs of doing business in this market. Here are some tips for getting your foot in the door.
The Russian Far East is a vast region with sparse population while economic activities and population is concentrated in two territories, namely Primorsky Krai and Khabarovsk Krai. Vladivostok and Khabarovsk, the two major cities in these territories, should be the first ones for businessmen to investigate in the region. Both cities can be reached by international flights while those connecting Vladivostok are much more frequent. Currently, direct flights between Hong Kong and Vladivostok operate three times a week. The Russian Far East region borders on China and Japan (maritime border). One may also consider the routes of international trains between Harbin, China, and Vladivostok or ferries between Fushiki, Japan and Vladivostok. Trains and domestic flights are available between Russian cities.
The region is fast developing with specific focuses managed by local governments. If your company can provide the goods or services which the local governments are searching for, you may simply approach the relevant government office. It is willing to offer all kinds of assistance such as land or tax concessions. Information on the region’s priority projects and areas of focus can be found on the websites of government offices. To small- and medium-sized companies, this model is particularly desirable because, with the support of the local government, business risks can be greatly reduced.
For others who seek business opportunities that are not the focus of local governments, they are advised to look for local business partners to minimise risks and hidden costs. For example, customs procedures in Russia are often cited as one of the main barriers to business while local businesses often have better knowledge than foreign companies about dealing with the formalities. Hong Kong companies may get to know some local businessmen via chambers of commerce or associations in the Russian Far East.
Currently, the presence of Hong Kong companies in the Russian Far East is pretty small. However, there are still good networking opportunities out there. Quite a number of Chinese mainland companies, especially those from the north-eastern part of China, are doing good business in the Russian Far East and they formed the Primorye Chinese Chamber of Commerce which welcomes networking with Hong Kong businessmen. Hong Kong businessmen who have established business links with the Russian Far East region are also advised to get in touch with the Chinese Consulate-General in Khabarovsk and Vladivostok in Russia, so that they can seek advice in case of business or trade disputes. The Consulate General of the Russian Federation in Hong Kong and the HKTDC’s Russian consultant based in Moscow can be of help too.
Knowing the Weather
The climatic conditions in most parts of the Russian Far East region are very severe and even extreme. Even in Khabarovsk and Vladivostok, the average temperature in winter is below zero. Companies should consider if their products or services are suitable for such climate conditions. For those interested in visiting the two cities, the best time could be from April to October.
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