This year, at least 17 international companies are expanding their businesses into Russia. The difficulties in making this move are well-known: cultural, economic and political differences between the US and Russia mean that tapping into the Russian market requires an extra degree of skill and careful planning. However, with the Russian middle class predicted to rise to 86% of the population by 2020 and amount in spending to £852bn ($1.3trn), Russia is too valuable an opportunity for businesses to pass up. So, how is it done? Here are three global brands that have had huge success in the Russian market.
Samsung holds around 50% of the handset market (2013) and topped a recent survey of Russians’ favorite brands. Nokia’s share has fallen to less than a quarter, while Apple’s iPhone holds only a 9% share of the overall Russian smartphone market. Undoubtedly, part of Samsung’s success comes down to the fact that it has been able to establish contracts with major carriers in Russia, in a way that Apple has failed to achieve. Last year, following MTS and Megafon’s refusal to renew contracts with Apple, Vimplecom’s Beeline brand (the third biggest carrier in Russia) has also cut its ties with the technology giant. Instead, Beeline negotiated a deal to sell Samsung phones, because of the more favorable partner carrier requirements offered by the Korean company.
High street fashion retailer Zara opened its first store in Russia in 2003 and since then it has gone from strong to stronger. The global fashion brand recently made the top 20 in the survey of Russians’ favorite brands, and in 2012 was ranked 47th largest retailer in Russia. Much of its success is due to the fact that the company produces where it sells, and plans its logistics extremely efficiently. For instance, store managers order products twice a week and orders are executed for Russian stores within two days. In the fast-paced world of fashion retail, keeping stock freshly updated to keep up with the trends on the catwalk is crucial, and as a non-luxury retailer, Zara has done well to establish itself so firmly in the Russian market.
Launched in Russia in 2013, online fashion retailer Asos has reported strong sales for its first year of trading and in March took home the Wipro International Growth Initiative of the Year award. Breaking into the difficult online retail market is a considerable accomplishment that Asos achieved by treating Russia as a market in its own right – it reviewed and adapted its business model to fit Russian consumer behavior and preferences, including modifying product names, providing a speedy delivery service, and researching local events and festivals in order to refine its marketing.
These three global brands have demonstrated how to be successful when launching a business in Russia. Paying attention to detail, building strong relationships and getting contracts with Russian distributors your business may be reliant on, and going beyond expectations in terms of service and delivery all play an important part of this. Most importantly, taking the time to research the market, getting to know the cultural nuances your business will face, and modifying your business model to reflect these findings all have significant impact on business success in Russia.