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

That’s not to say that exporting to Russia is without its perils. The global downturn meant sales of Villa Maria Estate’s wine was half of what it would have been, leaving it with a large quantity of Russian-labelled bottles.

Company founder Sir George Fistonich says Russia is still quite a good market and a visit in October by a delegation of Russian clients from top hotels, restaurants and wine shops was a promising sign of an upturn.

But he warns that Russian authorities are picky about paperwork. “You’ve got to be extremely accurate and if you make the slightest mistake in interpretation or translation, or the format of the label, you can very easily get your whole shipment rejected.”

Pre-credit crunch Russia was estimated to represent about 25% of the global super yacht market and back in 2006 Christchurch-based Fi-Glass Boats dipped a toe in the water selling half a dozen boats priced from $30,000 to $80,000 through a Russian distributor.

Company head Griff Simpson says the high value of the Kiwi dollar against the American greenback has killed the market for the time being. “We’re competitive up until about 70 cents and after that it just makes it very tough.”

He is not about to pull the plug on Russia but warns would-be exporters they’ll need deep pockets: he spent $40,000 on research, airfares and accommodation to establish a presence there.

John Macnaughtan readily admits Russia is not a market for the fainthearted and he says in order to realise its potential NZTE needs to open an office in Moscow.

Dards supports that idea. In July he did a sales presentation of New Zealand products to a group of Russian businesspeople at the New Zealand Embassy in Moscow and he was furious when NZTE initially turned down his request for $1250 to cover the cost of catering and room hire.

Since that function, Dards says 22 Russian companies have shown an interest in doing business here and he wants NZTE to set up a showroom in Moscow for permanent exhibition of New Zealand products, charging exhibitors a rental fee to cover costs.

Trade Commissioner Scoular says the level of interest in Russia from New Zealand companies is not sufficient to justify the cost of employing a fulltime staff member in Moscow, and opening a showroom like those already operating in Hong Kong and Shanghai is not a high priority.

Dards says that attitude must change if we are to reap the rewards that Russia offers.

“The truth is that NZTE just puts Russia in the too hard basket. Russia is just another market. It has its twists and wrinkles and all markets do, but it’s not that difficult that we have to say we can’t trade there; and on the credit side, they’ve got money.”