Reaching the consumers

Marketing opportunities

Consumer behavior

The consumer is impulsive.
He attaches great importance to brands and the quality of a product, as well as its life span for people with a modest income. The price is often only secondary but Russians are nevertheless attracted to "bargains".

Consumer profile and purchasing power

Russians do not save very much and this is expecially due to the bank system's lack of reliability. They often spend more than 80% of their income.
The emerging middle class includes 25 million inhabitants and generates 80% of demand in the country. They appreciate the western way of life.

Consumers associations

The Russian consumer federation (SPROS)

Main advertising agencies

News Outdoor, a subsidiary of NewsCorp
Magma, a member of the Media Arts Group, a subsidiary of Publicis
List of agencies which are members of the WWP group
ADV Group

Distributing a product

Evolution of the sector

In 2006, the Russian market represented 200 billion USD according to the Federal State Statistics Service and has grown by about 13% per year over the last few years. Nevertheless, according to several research bureaux, the market could in fact easily be higher than 300 billion USD and have grown by 30 to 40% per year in reality.
Whereas distribution systems were practically inexistent at the fall of the USSR, the almost total privatization and liberalization of the sector have led to a rapid market transformation. Supermarket chains began to develop in the 1990s and the present structure integrates the components of the western model.

Market shares

An essential part of distribution is still carried out by means of stalls and markets. They represent more than half of sales, with 20% for open air markets. Being able to use these channels is often the key to success in Russia.
As regards chains, the market is dominated by supermarkets which represent more than half of sales.
Hypermarkets have appeared recently (opening of the first Auchan in 2002), and are already reaching 10% of total turnover; they have strong potential. They target a relatively well-off clientele.
The share of discount stores is also about 20%, but the market seems to be more saturated.
Finally, local shops represent from 10% to 15% of chain sales.

Organizations in the retail sector

Sector-based alert
Russian Chamber of Commerce and Industry

Market access procedures

International Conventions

Party to the Kyoto protocol
Party to the Washington convention on International trade in endangered species of wild fauna and flora
Party to the Basel convention on the Control of Transboudary Movements of Hazardous Wastes and their disposal
Party to the Montreal protocol on Substances that deplete the Ozone Layer
Wassenaar arrangement on export controls for conventional arms and dual-use goods and technologies

Main International economic cooperation

Russia is not a member of any Customs Union.
It is a member of the Eurasian Economic Community, heir to the CIS, which is a free-trade zone and aims to build a common economic area.
It has signed a partnership and cooperation agreement with the European Union which aims to create a common economic area. It generally enjoys most favored nation status (MFN) and benefits from the generalized system of preferences (GSP) in its relations with the United States.

Non tariff barriers

The certification of products, a complicated procedure, is a barrier to trade.
The agri-food sector is particularly protected with quotas on certain products and very strict phytosanitary standards.
Exporters often say the heavy and unpredictable Russian Customs procedures are a big obstacle.

Customs duties and taxes on imports

9.89% on simple average according to the UNCTAD (2005). It is a relatively low rate.

Customs classification

Russia implements the Harmonized Customs System. The Customs tariff includes 11 032 tariff lines.

Import procedures

The Customs declaration can be made by the informant of a company that comes under Russian law and sent to the Customs office where this company has previously been registered. A company exporting to Russia can also call in a Customs broker who will take charge of carrying out Customs formalities in its name. Clearance inward, with immediate payment of duties and taxes, is the regime most commonly used by operators exporting to Russia.

Importing samples

Biological samples and samples of medecines must be accompanied by specific certificates.

For further information

Russian Customs Service
Portal for Customs
Ministère du Développement économique et du Commerce

Organizing goods transport

Main useful means

Even if the rolling stock needs modernizing, the rail network is the most used means of goods transport.
It represents 7% of global traffic.
There are no motorways and the infrastructure is inadequate for goods transport (19% of all goods traffic). Nevertheless, projects are underway to open up the country towards the West.
Russia has 41 large ports of which only 11 are equiped with infrastructures for import-export; the biggest one is St Petersburg (42 million tonnes). The country is open to the sea on 3 sides: the Baltic sea, the Black sea and the Pacific Ocean. The government has an ambitious modernization project and wants to increase the capacities of port terminals.
Domestic air freight is not widespread.

Ports

St Petersburg
Vyborg
Vladivostok
Nakhodka
Petropavlosk-Kamchatcka
Novorossiisk
Sotchi

Airports

Sheremetyevo (Moscow)
Domededovo (Moscow)
Pulkovo (St Petersburg)
Koltsovo (Yekaterinburg)
Tolmachevo (Novosibirsk)
Vnukovo (Moscow)

Sea transport organizations

Federal Agency for sea and river transport (RosMorRechFlot)

Air transport organizations

Federal air transport agency (Rosaviatsia)

Road transport organizations

Federal road transport agency (RosAvtoDor)

Rail transport organizations

Federal rail transport agency (RosZhelDor)

Identifying a supplier

Type of production

Industry represents about a quarter of the GDP and a sixth of all employment. The trend is towards a drop.
Traditionally the most developed sectors are heavy industry (metallurgy and chemicals) as well as the automobile industry and aeronautics.

Business directories

The Yellow Pages
Rusmarket
Russian Export/Import
Rusadres
Openrussia

Manufacturers associations of the main industries

Council of Secondary Non-Ferrous Metallurgy Industrial Enterprises
International Metallurgists Union
Russian association of automobile manufacturers
Russian Chemists Union

Trade Agencies and their representations abroad

Russian Chamber of Commerce and Industry
Moscow Trade House

Enterprises federation

Russian union of industrialists and businessmen