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Russia: no place for novices

It's not a market for the fainthearted, but Russians are dead straight and don't steal from you. Amanda Cropp looks at an export market with huge potential

Thursday, February 11 2010 || Features || BY Amanda Cropp

Auckland’s Honorary Russian Consul John Macnaughtan administers the organisation and says a New Zealand company wanting to sell a product in Russia can be put in touch with prospective buyers vetted by the Russian Chamber and vice versa.

So far about 18 New Zealand companies have used the service and Macnaughtan says about a third have good prospects for making sales in Russia. By way of example he cites a live goat export deal potentially worth $8-10 million over the next three years.

“It all comes back to finding that good reliable partner at the other end and if you can do that you’re home and hosed.”

That was certainly the case for 2CLight’s solar powered caps (fitted with LED lights powered by solar cells in the peak), which are under consideration by the Moscow police for inclusion in the police uniform.

Christchurch inventor and 2CLight founder Simon Dyer has already sold 30,000 caps to Russian multimillionaire businessman Vitaly Begar, who has ordered another 120,000, worth $2.1 million.

Super rich Russians like Begar don’t beat about the bush and on a visit to meet Dyer, rather than waste several hours in heavy traffic, he spent $3500 on a charter flight from Auckland to Hamilton where 2CLight had a stand at the Mystery Creek Fieldays.

Dyer says it is important to understand the politics of negotiation in Russia. “It’s all about rank. You have to make sure that the right level person talks to the right level person otherwise you lose face and credibility.”


He puts his success down to the efforts of Ron Dards, a Russian-speaking expat Brit who runs export seminars for the Canterbury Employers and Manufacturers Association and is helping about 20 local companies to crack the Russian market with products ranging from possum fibre garments to bottled water and hovercraft.

Dards says Russian companies have a circular structure with the ‘moneybags’ at the centre, often an old school ex-Soviet who took advantage of the changes around Perestroika and Glasnost.

Penetrating the various tiers can take up to two years and it’s all about finding the right allies in the right places.

“Say you’re selling wine; you have to get to the manager of the wine division. He doesn’t have purchasing power, he has recommendation power. But convince him and he will convince the guy in the inner circle directly above him, and if he’s convinced, when and if he can get the ear of the boss man, you will get your money.

“I know I sound like an evangelist but if you do business with Russians they are dead straight and honest and they don’t steal from you. They have money, they pay their bills, they know quality and value and they don’t buy rubbish.”

Devereux echoes those comments and says getting money out of Russian customers isn’t a problem.

“We let them know the order is ready for shipping, they send the money and when it’s received and in our bank, the order is shipped the next day, and the next day it’s in Moscow. There’s graft and corruption in the country but we see very little of that and we’ve had no problems with the Russian mafia.”

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