OREANDA-NEWS. December 13, 2012. UC RUSAL, the world’s largest aluminium producer, presents the findings of the report "Nothing ventured, nothing gained: Changing international perceptions of Russian business”. The research conducted by the Economist Intelligence Unit (EIU) and commissioned by UC RUSAL reveals that the vast majority of foreign companies that have experience of working with the Russian business are positive in their assessment of the partnership, with over 72% of the respondents saying they are ready to continue business in the medium term.

Foreign direct investment both into and out of Russia is recovering, suggesting a continued upswing in international JVs and M&As. Research highlights that nearly three quarters (74%) of foreign companies believe that partnerships which took place within Russia met their expectations reasonably or very well, rising to 84% for deals outside of Russia and the majority will do business with Russian investors again. Accordingly, the image that the Russian businesses have in the minds of their potential international business partners is becoming more positive, moving beyond the commonly held perceptions.

Despite the fact that Russia’s vast natural resources are still recognised by foreign companies as one of its strongest advantages (67% of respondents noted its access to resources as a key advantage of doing business with their Russian counterparts), the respondents also mentioned a number of other important pluses that allow the Russian business to succeed in international partnerships and speak of its maturity. In particular, 49% of the respondents appreciated the country’s strong technological capacity; 39% of foreign companies see as an advantage the high level of education of the workforce and the qualification of the Russian companies’ managers. Respondents also assess positively the ongoing improvements in fields such as corporate governance and decision-making processes that are highly important for the international business.

However significant concerns remain amongst foreign businesses which Russian businesses need to address to ensure the success of the Russian business on the international arena in the long term. Worries persist over administrative delays and poor management, opaque legal procedures and complex hierarchical structures. Cited by 32%, 26% and 21% of the respondents accordingly these obstacles are viewed as serious drawbacks for foreign executives when contemplating doing business with Russian companies. Companies also complain about the language barrier (36% of the respondents) and about the inefficient policy of the Russian central bank saying that interest rates remain too high for enterprises which might otherwise borrow to expand their businesses.

The actual experience of joint business makes a difference in perceptions: companies which have worked with Russian partners tend to have a higher opinion of Russian businesses’ reliability, flexibility and innovation than the sample average. In the survey, the scores given by the experienced companies were on average 9% higher than the scores given by less experienced companies. The difference in attitudes may be the result of a greater awareness by those in contact with Russian companies of their ongoing improvements and have their practical experience of doing business in Russia.

According to foreign executives, the way forward for the Russian businesses is to differentiate themselves from the commonly held perception. This includes taking such measures as focusing on corporate ethics, ensuring their financial results are transparent to all, avoiding “insider” practices and deals, ensuring fair employment practices, respecting contracts, improving their executives’ foreign-language skills, and focussing on long-term and sustainable business practices.

Commenting on the findings of the research Oleg Deripaska, CEO of RUSAL said:

“This research highlights that perceptions of Russian businesses often do not reflect the reality. It is not surprising that those who have done business previously with Russian companies are ready to continue and develop their partnerships. Russian businesses have the right fundamentals to become significant influencers on the world stage. Over the past decade Russian corporates have made a huge progress in their growth and development and no longer lag behind their foreign peers in such aspects as governance, technology, M&A, realization of large-scale infrastructural projects both in Russia and abroad. Yet there is still a lot to be done and overcoming the stereotypes that exist will not be easy as some of the concerns held by the international community are fully merited. However, the Russian business is moving forward and on-going serious improvements are impossible to ignore.”