HINTS ON ESTABLISHING DISTRIBUTORS NETWORK IN RUSSIA

Creating Distributors Network is one of possible ways to enter the market with minimum costs.

In this case you do not need many employees or resources as sales to End Users are handled by Distributors.

Another benefit is that you do not need to interact with local tax people, Customs or other authorities as this will be done by Distributor.

Also with distributors network you can cover bigger territory than just using your own sales office.

Among negative factors is less control on communication with End Users, so you can not be sure for 100% that your product is positioned correctly and sold for correct application.

This should be considered especially for technically complicated products where engineering advices are so important from the Seller to choose right product for right application.

HINTS:

1. To create effective distributors network it is better to have 2-3 distributors covering the area.

If you create only 1 distributor selected Company-distributor might start to be too demanding, because they will understand that your sales targets are relying only on them.

If you create too many distributors it will most likely be not interesting for distributors as cross competition on the products will be too high meaning contribution margin by distributor should be set to minimum.

2. Please prepare winning arguments for distributors and ensure these arguments are applicable for exact market.

It might be extended warranty, free samples, increased quality, reduced price, variety of choice or combination of above.

3. Please make training to distributors and ensure they understand your product correctly.

4. Please ensure good Customer care and timely reply on questions of distributor.

5. It is always better to have a specialist with local market knowledge coordinating distributors network.

Regards, Yury

HINTS ON DOING EXHIBITIONS IN RUSSIA

One of promotion methods is exhibiting on thematic exhibitions.
Main exhibitions are usually held on annual basis or every second year.

When you are already operating on the market exhibition is a good chance to demonstrate new items, meet existing Customers and search for new Customers, but we will mainly talk  of exhibiting before entering the market.

Exhibiting before entering market can have following advantages and disadvantages.

Advantages: 

1) Inviting potential Customers and existing sales leads to stand and possibility to conduct big number of meetings in 3-4 days in one place with possibility to show samples of goods you produce.

2) Getting general input and information about the market visiting stands of Competitors and conferences which are normally a part of business programme of main exhibitions.

3) Growing brand awareness in specified region.

Disadvantages:

1) You might be visited by not relevant businesses or not decision makers unless you have sent invitations to key persons of potential Customers in advance.

2) Without preliminary market research you might find out that your competitors have better offer on the market or that your product is not ready for local market.

3) Costs for exhibiting are relatively high and there is possibility that future profit and opportunities will not cover costs.

HINTS:

- Before taking decision to exhibit in Russia please do marketing research first to get general understanding of the market.

- Some of the tasks can be first time performed by attending exhibition as a visitor which can save your budget.

- Usually exhibition have long-term effect and not always bring short-term results or immediate orders.

If you have decided to go ahead and have exhibition stand below action plan can be used to proceed.

a) Choose stand location and define stand area and setup.

HINTS:

- It is better when your stand is situated alongside main walkways or crosses of main walkways.

- If your stand area is less than 20 m2 it is better to book near smaller stands, than your stand will look bigger in comparison.

- Please ensure sufficient light to highlight the stand.

- Make your stand higher to ensure stand dominates the area and can be seen from different angles.

- It is better to built locker room on the stand to avoid pilferage and place fridge, coffee machine and spare samples or give aways.


b) Make a tender for building a stand and appoint stand builder. 

Even if majority exhibition organisers offer ready solutions you might need to hire an independent Company to build your stand. From experience sometimes if you go for standard solution offered by organisers you get ordinary looking stand with old furniture, problems with electricity, etc.
Professional stand builder will make design and ensure all your expectations are met including graphics, furniture, fridge, coffee machine, snacks, etc. Goodlooking stand can be built even on small area as below example (design is by Expostroy LLC)

c) Ensure that samples and marketing aids are sent on-time and you have proper partner to clear goods in Russia and bring them to the stand.

Russian certification might be needed for goods being imported, so please take care about it in advance. As an example TR CU certificate was required to import catalogues to the stand.

d) Make visitors of your stand feel comfortable.

- Coffee or tea with chocolate or sweets will make conversation longer if needed.

- Give aways are always appreciated by visitors.


HINTS:

- Make sure you have written down visitors contacts and topic of discussion as otherwise it will be hard to remember the subject of discussion.

- Please take into consideration that last day of exhibition is usually no good for business contacts after lunch and many exhibitors are  starting to pack the stand.

- Follow up sales leads continuously after exhibition. From our experience it is normal practice when
everybody is following up new contacts in 1 or 2 weeks after exhibition but after 2 months majority of contacts and sales leads are being forgotten. It is always better to make several approaches.

Note: (To drink or not to drink - that is the question.)

Some visitors prefer alcohol to be present on the stand but we do not recommend to attract visitors with alcohol. Even if alcohol to some extent might be used during meetings with already established partners / customers, with new Customers regular business discussion with tea or coffee is more recommended.

Best Regards, Yury

BUYING PROPERTY FROM BANCRUPCY AUCTIONS IN RUSSIA

BANCRUPCY AUCTIONS IN RUSSIA 

How it works?

When Company is going bancrupt in Russia its property is being sold on auction. Auctions details are being published in "Kommersant" newspaper on weekly basis every Saturday. Goods which are being sold on auctions include all type of property, equipment, machinery, cars, etc.  We are mainly buying on third stage of auction known as a public offer. Difference from first two auction sessions is that Price during public offer (3rd auction) is going down over a period of time before asset is being bought or minimum price is reached. 

Bancrupcy auctions are held on web-based electronic trade portals. Now it is more than 150 different electronic platforms where bancrupcy auctions are held, but principles of operation are the same for all of them. Buyer should register in advance and get authorisation by providing necessary legal documents. Also a prepayment to specified account is being made before your bid is being submitted. After changes in legislation on bancrupcy auctions in 2014 winner is defined as a Company which offered maximum price during corresponding active period of auction provided it has all necessary documentation in place.

Are foreign Companies able to buy from bancrupcy auctions in Russia?

Yes, foreign Companies are able to buy from bancrupcy auctions but all required documents should be translated and verified into Russian. Also some type of land is only available for rent to foreigfn companies (for example land near state border, farm land, sea ports land, etc). Taxation for foreign Companies differs from taxation to Russian Companies as well.

What are main benefits of buying from bancrupcy auctions in Russia?

Main benefit of buying from bancrupcy auctions is that you can buy property, production facilities, warehouses and other assets in Russia with considerable disount from market price. Usually it is 20-30% discount, but in some auctions it reaches 70% discount. 

What are main concerns when buying from bancrupcy auctions in Russia?

Main concern is that you are buying from bancrupt company. It means you need to check assets very carefully, because it is really hard to get your money back in case you bought something and did not like it. In fact money goes not to bancrupt company but to its creditors who are not likely to give money back after they get it.

What does Saint-Petersburg Business Gate offer our Customers?

We offer agent services for buying from bancrupcy auctions in Russia including monitoring of required property or other assets, requesting documents for assets being considered, preparation of documents for auction, handling auction procedure on electronic platform.

ADVANTAGES OF USING SALES REPRESENTATIVE IN RUSSIA

What advantages international business can recieve by using Sales Representative in Russia?

1. Sales
Main advantage of using Sales Representative in Russia is that you gain access to really big market. Russia is a huge area which is more than one-eight of the Earth's inhabited area.

2. Minimization of your business risks on the market
Using Sales Representative in Russia you do not need to register branch office or representative office in Russia. This means you do not need to interact with numerous Russian Authorities which will definately save your time and nerves.

3. Flexibility 
When using Sales Representative you can quickly change your presence on the market depending on the situation and market condition.

4. Cost Effectiveness
When using Sales Representative you pay monthly fee plus percentage from sales turnover. You do not need to pay for office costs, salary to your employees, payments to social funds, etc.

5. Overcoming market peculiarities
Russian business model still have some peculiarities, using Sales Representative gives you knowledge of tricks and traps which cannot be seen from first sight.

These are advantages of using Sales Representative in Russia, but there are disadvantages as well:

Main disadvantage is that Sales Representative Company is not your Company but your Representative Company. If Sales Representative is not professional or does not have necessary experience in international trade it may have negative influence to your sales figures.

Another possible disadvantage is misunderstanding between Parties which may occur especially on first stages of collaboration.

HINTS: 

1. Discuss your proposal to Customers in Russia in details. Ensure your Sales Representative understands your Company sales policy the same way that you do. (Sales pricing, Discounts, Terms of Payments. Minimum Order, Incoterms, etc.)

2. Use professional Sales Representative. This will save your time and money.

Regards, SPB BUSINESS GATE

SENDING SAMPLES TO RUSSIA HINTS

When you start operations in Russia you might need samples of your product to be shown to Customers. (updated 14.11.2020)

According to Russian regulations majority of products must be certified and marked in accordance with TR TU regulations (Technical Requirements of The Eurasian Economic Union of Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan). This marking should be done before goods entry into Union territory marketing it necessary to mark and certify goods before they are imported into Russia or other Countries-members of the Union.

Before this is done you have possibility to send samples to Russia via following ways:

1. Sending as a parcel to private individual. (Limitations are 30 kg weight and 200 EUR per 1 parcel and number of parcels is not restricted, value is updated 01.01.2020, previously it was 500 EUR per 1 person per month), value includes cost of goods and does not include freight cost). 

If samples are sent as a parcel to private individual it will be duty-free to receive in case limitations are not exceeded. TR TU certificates are not required as parcel is considered not commercial.
There should not be more than 3-5 pcs of 1 item in the parcel, otherwise parcel might be considered commercial.

Parcel can be sent either using international Courier services (please check in advance, because not all of them deliver to private individuals in Russia after Customs rules were changed in 2014) or 
using partner network for fast courier department of Russian post called EMS.
You can find list of partners on EMS website at http://www.ems.post/operators/europe 

I have tried DPD (Aramex) and EMS and they both worked ok. 
My personal experience is that EMS cargoes are being Custom cleared
with less problems / questions.

Normal transit time by EMS is 2-3 weeks for a parcel from Europe.

Note: Before sending out goods please check the list of goods which are accepted to be sent via Courier service and a list of goods accepted by Russian Customs 

2. Sending to Company registered in Russia using simplified Customs clearance procedure. (Limitations are 200 EUR value per month per 1 person, value includes cost of goods and freight cost).

Samples should be sent on free of charge basis to avoid contract registration at tax control.
Consignee should receive samples for inter-Company use only, samples should not be sold or distributed further on. (When Customs clearance is made Consignee sends a letter to Russian Customs that samples are not for sale) 

TR TU certificate is not being requested in this case, but Chestniy Znak marking should still be done for a number of products.
There should not be more than 3-5 pcs of 1 item in the parcel, otherwise parcel might be considered commercial and TR TU certificate will be required for Customs clearance.

Note: Before sending out goods please check the list of goods which are accepted to be sent via Courier service and a list of goods accepted by Russian Customs

3. Sending samples for exhibitions as a temporary import which will be returned after exhibition.

This option requires use of professional Customs broker as issues with Customs might arise.
Please request clear confirmation from Your Customs Broker before proceeding this way.

Important note for all above: To avoid any confusions with Customs Clearance the most important thing is to inform Consignee in Russia about shipment in advance and send all shipping papers for review before sending out goods.This simple action will save much money and time for You and Your Partner / Consignee.

Regards, Yury

SHIPPING INVOICE EXAMPLE TO BE USED TO EXPORT TO RUSSIA

When you are preparing to send goods to Russia attention should be paid to filling in shipping invoice to reduce questions from Russian Customs.

Shipping invoice along with transport documents (CMR, RWB or B/L) is one of the main
documents used for Customs clearance. All terms and conditions, goods value and description mentioned in shipping invoice should 100% correspond to what was mentioned in Contract.

Invoice can be eighther made in dual languages (In English and in Russian) or it can be made only in English with translation on a separate page. Very often the translation is made by Consignee in Russia, but you should take into consideration that the translation cost money and might cause some delays in Customs clearance.

Please find below attached example of shipping invoice which was successfully used for several years in my previous experience to import goods to Russia. Important fields and comments are marked by red color.




Important notes:
1) If Shipper and Seller are not the same, information on it might be added to Contract and shipping invoice.
2) Normally Invoice date should be not before the Contract date, Invoice should be issued the same date or after the Contract has been signed.
3) If Invoice does not have information on weights and cargo places quantity a packing list wll be needed. In this case it should be clear that packing list corresponds to the exact invoice.
4) Commodity code according to Russian Customs code in first 6 digits corresponds to HS code, 4 following digits may vary.

HINT:
Please send shipping invoice to Consignee for review before shipping out the goods.

Regards, Yury

HOW TO EXPORT GOODS TO RUSSIA (IMPORT INTO RUSSIA)

One of the first steps in case you are going to sell products in Russia is to export goods to Russia (import into Russia). 

It is obvious that all goods entering Russia should be custom cleared.

Before sending out the goods following steps should be made:

Step 1: Inform your Partner or Customer in Russia that you are going to send goods to him.

Please notify you Partner or Customer in advance and please ensure that he has duly received notification.

Step 2: Send all shipping documents for review. Do not send goods before getting OK for the documents.

Main documents to be provided by Seller for import of goods to Russia are:

a) Contract, signed and stamped. If Contract total value is equal or more that 50 t.USD currency transaction certificate should be issued by receiving bank in Russia before first transaction is made or import of the goods to Russia is done.

b) Invoice. Invoice should have reference to the Contract, clear description of the goods, quantity, weights, Customs commodity codes. It is highly recommended but not obligatory to have net and gross weights for each commodity code in invoice (if invoice does not have this information, packing list is required with this information, packing list should have reference to corresponding invoice). Invoice should either have above mentioned information in 2 languages (English and Russian), or separate translation should be provided.

c) Technical description of the goods giving clear idea what materials goods consist of and what is the use of the goods. This information is needed for Russian Customs to identify goods correctly.

d) Certifications and Licenses if required according to Russian rules. 

Requirements for certification are mentioned for each commodity code in Russian Customs code and should be checked prior to shipping the goods.

e) Shipping documents depending on means of transport. (CMR, sea bill of lading, rail waybill, air waybill)

f) Other documents. Other documents mean wide range of commercial, shipping and technical documents which might be requested by Russian Customs if they start question the price or correctness of commodity code applied. (Example: Certificate of origin, Export declaration, Market prices for the same commodity codes in exporting country or on local market, etc)

Hint: Please do not send any shipments without notifications. Lack of required documents or documents made not in full compliance with Russian legislation may result in goods being stuck at Russian Customs.

Step 3: After getting OK for sending goods please check that you have all required contact details and addresses at destination.

This is needed for swift communication when the goods are being delivered. This will also help you to avoid extra costs for demurrage. It is better to ask what are the optimal entrance time to the terminal, this will help you Customer save costs on terminal fees.

Step 4: Provide your Customer in Russia contact person in case Russian Customs requires additional documentation or explanations.

Russian Customs is checking the goods and documents at the border and then at the Customs terminal.

Border control is mainly checking documentation:
- pre-advice note for the goods
- licenses and certification if required
- documents for means of transport
- shipping documents
- TIR carnet or another types of Customs guarantees to cover delivery from border to terminal

Truck might be also opened and goods might be inspected or weighed.

When trucks arrives at Customs terminal documents will be checked once again.
During Customs clearance procedure Russian Customs might request additional documents, request weighing, visual inspection or taking samples for testing to identify the goods.

Hint: Numerous requirements from your Customer in Russia may give you impression that something is wrong. If you question any of the requirements you can contact independent Company in Russia for consultation or ask your local office of one of international forwarders for consultation.

Hint: Please use professional forwarder and Customs broker.

Regards, Yury