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Focus On Russia

VitalStatistics

Population: 141,892,000
Monetary unit: ruble (RUB)
Capital city: Moscow
Major languages: Russian
Major religions: Christian 58.4%, of which Russian Orthodox 53.1%, Roman Catholic 1.0%, Ukrainian Orthodox 0.9%, Protestant 0.9%; Muslim 8.2%13, 14; traditional beliefs 0.8%; Jewish 0.6%; nonreligious 25.8%; atheist 5.0%; other 1.2%
Ethnic composition: Russian 79.82%; Tatar 3.83%; Ukrainian 2.03%; Bashkir 1.15%; Chuvash 1.13%; Chechen 0.94%; Armenian 0.78%; Mordvin 0.58%; Belarusian 0.56%; Avar 0.52%; Kazakh 0.45%; Udmurt 0.44%; Azerbaijani 0.43%; Mari 0.42%; German 0.41%; Kabardinian 0.36%; Ossetian 0.35%; Dargin 0.35%; Buryat 0.31%; Sakha 0.31%; other 4.83%
Age breakdown: under 15, 14.8%; 15–29, 24.0%; 30–44, 21.1%; 45–59, 22.8%; 60–74, 11.8%; 75–84, 4.7%; 85 and over, 0.8%
Life expectancy: male 61.8 years; female 74.2 years
Education: Percentage of population age 15 and over hav- ing: no formal schooling 2.1%; primary education 7.7%; some secondary 18.1%; complete secondary/basic vocational 53.0%; incomplete higher 3.1%; complete higher 16.0%, of which advanced degrees 0.3%. Literacy (2008) 99.5%
Urban/Rural split: urban 73.0%; rural 27.0%
Income per household (USD): -
Broadband internet users (%): -

Source: Encyclopedia Britannica

Introduction

With a population of 143 million and a land mass covering one-eighth of the world’s inhabited land area, Russia is undeniably big. As a nuclear power, a major military spender and a dominant force in both Eastern Europe and Central Asia it is also important. And with one of the largest economies in the world as well as vast untapped resources of oil, gas, forestry, and water it is also rich.

So, it is little surprise that its PR industry is sizeable, benefitting from Russian companies and government bodies keen to influence opinions, as well as from multinational brands keen to gain a foothold in this major market.

The country was badly hit by the financial crisis of 2008, but Arkady Matkovsky, head of PR at telecoms giant TTK, reports that as a PR exercise it was a relative success. “The way the Government's PR department managed the crisis was a remarkable example of a job well done, with little panic and timely government statements,” he says.

However, Matkovsky is less impressed with the Government’s reputation management in areas such as the 2008 war with Georgia. “Our Ministry of Foreign Affairs failed to explain to the international media what this military operation was all about,” he says, going on to describe the operation a “disaster on the international stage”.

Working There

In Association With:

Russia has had a turbulent past but it's re-emerging as a proud nation-state with an interesting and complex culture. Most expats come to the country to pursue senior management roles and high-level positions and there are also a large number of expats who go into teaching.

Red Tape

Regardless of the reason for visiting, everybody, almost without exception, needs to have a visa to gain entry to Russia. Not only that, the official procedures involved can be long-winded and painfully complicated, and there are restrictions on how many foreign nationals are granted permission to work in the country. The national quota changes from year to year depending on the state of the economy and includes separate quotas for specific regions, occupations, professions and nationalities.If you're going to be working for a private individual –  au pairs, domestic staff, English language teachers – or

have specialised or highly sought-after skills – the whole process is much easier.

Work permits

There are two types of work permits:

For an expat working for a foreign company: Expats that fall into this category have to get an entry work visa and a work permit. The whole process can take as long as three months and involves undergoing an obligatory medical test at a Russian clinic. Thankfully, most of the documentation has to be organised by your

employer. (Employers must be legally authorised to employ foreign workers.)

For an expat working for a Russian company: The permit process for expats hired by a Russian company is much the same as it is for those working for a foreign company. Work permits are only issued for one year at a time but can be renewed from within the country.

Foreigners are legally required to carry their passports and visas at all times for identification; copies will not be accepted.

Costs

Foreigners who come to work in Russia are often paid very good salaries and many are given housing and education allowances as part of their employment package. In fact, some expats find they're able to earn more than they would in their home country. In 2010, an HSBC study found that 36% of expats in Russia earned more than $250,000 (£162,000) a year.

However, Russia (especially the centres of Moscow and St Petersburg) has a high cost of living. Particularly for expats who favour western amenities and services as opposed to local equivalents that are more readily available. So, although the earning potential is good, it's worth factoring in the high costs and trying to negotiate a job contract that offsets them.

During the harsh winters, most of the fresh fruit and vegetables have to be imported, so these become more expensive. For those who miss their home comforts, a range of European products are stocked in the larger supermarkets, but these are obviously more expensive than local goods.

A loaf of bread costs 20 roubles, an imported can of beer is 100 roubles and going out for a meal costs around 1000 roubles including drinks. Clothing and shoes are also costly.

Taxes

Expats who work full-time in Russia are likely to be classed as residents (it’s based on how many days a year you live in the country) and will be taxed at a flat rate of 13% on their income. This amount is automatically deducted from pay packets, but it’s also necessary to file tax returns every year.

If a tax treaty exists between your home country and Russia then you shouldn’t have to pay taxes in both countries.

Accommodation

Finding somewhere to live in Russia can be a frustrating experience that needs plenty of patience, negotiation and, preferably, the help of a trustworthy estate agent. Flats and townhouses are the primary source of

accommodation; detached houses only really exist in the more rural places.

Generally speaking, the closer to a city centre you wish to live, the higher the monthly rent, but most apartments are expensive considering their size. Central locations are associated with prestige and are therefore more costly. Moscow is the most expensive place to live by far. In fact, some of its suburbs are more expensive than central locations in the minor cities.

Monthly rental payments are often expected to be paid in cash; although bank account transfers are becoming more common. If saving money is a priority then it’s worth looking at some older ‘soviet-style’ flats, which cost significantly less than a more western-style apartment.

For an unfurnished two bedroom apartment in Moscow or St Petersburg you’ll pay about 24,000 roubles (GBP488 or USD767) per month.

Culture Snapshot

Many expats struggle with the change in culture when first moving to Russia and, certainly, lifestyle adjustments definitely have to be made. Russia's past means that the country and its inhabitants are less used to foreigners than other expat destinations. Many expats describe the locals as unapproachable and cold; although, the fact that very few Russians speak a second language may contribute to this impression.

Furthermore, the government-provided versions of certain systems, like education, banking and healthcare, may be of a far lower standard than some expats are used to.

Working life

Building relationships and trust are vital to successfully conducting business in Russia. Close personal relationships are highly valued and many Russian businessmen have a higher respect for their own codes of conduct and informal rules, than for formal laws and authoritative bodies. Business etiquette in Russia is similar to that of most western

countries: dress formally, maintain good eye contact and use a firm handshake when meeting people.

Bribery

Corruption and bribery are a problem in Russia because it’s become so deeply embedded within the culture. It is alleged that very few Russians have never taken part in some form of ‘gift-giving’ to help get something done; it’s perhaps thought of in the same way as the more familiar practice of tipping.

Alcohol

An amusing cultural quirk for expats is that many Russian men like to welcome foreign men to their country by attempting to drink them under the table. It pays to never underestimate the Russian ability to drink vodka like it’s water!

Weather

Russia’s harsh, dark, long winters are notorious. The amount of snowfall varies depending on location but even in the warmer

South snow cover lasts for 60 to 80 days per year. Thankfully, the summers can be warm and pleasant (although brief). Warm clothing is a must and – if you don’t already own anything suitable - this type of clothing is something that Russia is very good at making.

Bizarrely, the interiors of public places tend to be very warm and wearing lots of layers is advisable so you can remove or add items accordingly.

For the resolute and savvy expat that can settle into Russian life, the country has a great deal to offer: theatre, dance, art, music, amazing architecture and a fascinating history. For example, Moscow offers the magnificent Bolshoi Theatre, ballet at the Kremlin Palace, numerous museums, large shopping malls, eclectic restaurants and leafy public parks. Not to mention the excellent salary packages and career opportunities available to expats with the skills and determination to find them.

Shirley Hanley-Ryder

MyMove

Shirley Hanley-Ryder

Regional Director, Grayling Eurasia and South-Eastern Europe

After a few years' break from the big agency scene, I wanted to return but, after over 20 years in London, was looking for a new challenge.  My youngest child was in the sixth form at boarding school, my elder two at University, so for the first time I could consider working outside of the UK and gain some international work experience as well as an expat lifestyle which was appealing.

Without any foreign language fluency this did rather limit my options.  However, I hadn't in my wildest dreams considered Russia.  I grew up in the days of the Cold War and dark images of oppression and freezing temperatures.  My kids however associate Russia with Oligarchs and Roman Abramovich and thought it was 'cool' that I had been offered the top Grayling job in Russia. It would certainly be a challenge, and also coincided with an exciting time for Grayling.  I joined at the time of the merger of Tri Media, Grayling and Mmd to establish a global brand under the Grayling identity.  Previously, the Russian office operated as Mmd.

When you arrive in Moscow the most noticeable thing is the absence of any signage in English (apart from 'hotel' and 'Kremlin') and minimal translation of Cyrillic into a word you can recognise and pronounce.  Even on the metro, whilst you can find translations on the map where you buy your ticket, once you get underground it's only in Cyrillic.  I had to learn quickly because I soon realised that you couldn't

ask anyone for advice or directions - most people don't speak any English, with the exception of young adults who have been educated post Perestroika.

I was also surprised at how expensive it is to live in Moscow.  Forget clothes shopping, prices are several times more expensive than the UK.  And if you enjoy wine then it's a good place to move if you want to cut down on your units!  Cheap bottles of plonk are around 50 pounds, even in cheap Chinese restaurants.  However, for me this wasn't initially a problem - I was bitten by a dog in my first few weeks and had to give up alcohol for three months as it nullifies the effect of the anti-rabies injections!

From a work perspective I was astonished at the standard of English fluency and the quality of the work produced by our Russian staff.  Once in the cocoon of our Moscow office, I could be in London.  We specialise in promoting international brands in local markets and so virtually all client work is conducted in English.  Also, the speed with which our young staff develop from raw trainees to accomplished account managers is astonishing.  There's a real hunger to develop and succeed.  And as quickly as possible.  The downside is that staff will move for a better title or a few more ruble.  They live for today and spend for today, they don't believe in 'tomorrow' and just want the best they can get for the 'moment'.

From a business point of view this is compounded by wage inflation, currently running at 10-15 per cent, and employment law which makes it impossible for effective HR.  The notice period is two weeks, irrespective of seniority, from which holiday entitlement can be deducted.  So, you find yourself regularly in a position where you have to ring a client to say that their account manager or director is moving on and their last day will be tomorrow!! 

But being an expat in an emerging market can be hugely rewarding.  International clients gain comfort from knowing that the person in charge  'speaks their language' , both literally and metaphorically.  If you have a slick, professional operation then it's much easier to stand out in an emerging market than in the UK.  Four months into the job, we had a run of 11 new business wins of top brands.

I'm approaching my two year anniversary which will bring new challenges following my recent promotion to director of the Eurasia and SEE region which includes Grayling's offices in Russia, Ukraine, CIS, Turkey, Croatia, Serbia and Slovenia.  I am preparing to relocate myself to the centre of this region and also our fastest growing office in CEE currently - to Istanbul - where no doubt a new set of challenges awaits!

Media

According to media agency PHD, newspapers are not highly read and are in slow decline, driven by a highly fragmented tabloid landscape. A proliferating magazine landscape, adds the agency, has seen the launch in recent years of such titles as Men's Fitness, Empire, Tatler and Viva.

Key business media outlets, says TTK's Matkovsky, are daily newspapers Kommersant and Vedomosti, a joint venture with the Financial Times and the Wall Street Journal.

TV remains largely state-controlled, led by Channel One and Rossiya.

 

“Media such as web-based TV, video on demand and pay-TV are on the rise, but broadband cable penetration is still low, so they have little impact on the overall media environment,” says Matkovsky. “Foreign TV broadcasters have little or no presence in Russia.”

By June 2010 43% of Russia’s population – nearly 60 million people - were online.

Yandex.ru and Mail.ru join Google as the top three most visited sites according to Alexa. Social media are fast gaining in popularity: the Russian version of Facebook - Vkontakte – is still at number five in Alexa’s rankings, but is losing market share to Facebook itself.

 

Blogging is important in Russia and President Medvedev frequently publishes his own video blog, even publishing an early draft of his Address to the Nation online to solicit feedback from the blogosphere. “The internet is becoming more and more influential,” says Matkovsky. “It brings together the most passionate and politically active part of the public, and provides complete freedom of speech.”

 

Major Brands

The Government is a significant spender on PR, but there are also important private sector players, many of which are in the energy sector. Energy giant Gazprom, says Matkovsky, “has become synonymous with the Russian economy”. Another key energy player is Rosneft, alongside MNCExxonMobil.

 

Matkovsky also singles out mobile telco Beeline for a superior PR operation, and notes that “thanks to a well chosen PR strategy by Roman Abramovich, Chelsea FC is a Russian brand these days.”

 

Agencies

Industry experts report that the Russian market is somewhat unusual in the high proportion of PR activity that is handled in-house - approximately 60 per cent. “Most companies tend to hire in-house staff in order to get a better grip on their public affairs activities,” says Matkovsky.

 

However, there is also a vibrant agency scene. International players are present via joint venture or affiliate deals with local agencies. Joint ventures include Fleishman Hillard, Vanguard and RIM Porter Novelli. Affiliate deals are more popular, led by Maslov PR(Ketchum), Mikhailov & Partners

(Burson-Marsteller), PRP (Weber Shandwick), Imageland (Edelman) and SPN (Ogilvy PR).

Important local players include AGT, Ima Group, Insiders and Kros.

 

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