4 Reasons to Expand Your Business to Russia

April 2, 2015 DVNK Consulting

Small businesses today are far more prosperous than they were a decade ago. This is because terms of trade in many countries all around the world present favorable economic conditions for small businesses to broaden their horizons and capture the markets internationally.

One such country that presents an opportunity for small businesses to grow exponentially is Russia. If you are a small business owner who is looking for some viable investment opportunities like expanding the business internationally, here are 4 reasons why you should choose Russia to expand your business.

The Russian Market Overview

The Russian market with more than 140 million consumers belonging to the growing middle class category has unlimited needs for infrastructure which is why it can be considered as one of the most promising markets for small US based businesses. Taking statistics into account, Russia stands tall as the 11th largest country by economy in terms of nominal GDP.

It can be categorized as an upper middle-income country where citizens are highly skilled and educated; having sophisticated needs and wants. In 2011, Russia was listed as the 31st largest export market and 14th largest exported to the United States. With 1.16% of the total trade of the US, Russia was the 20th largest trading partner.

Business Opportunities

The financial meltdown in the previous years has given rise to a huge consumer market in many different areas such as construction, real estate, telecommunications, automotive, banking, and consumer products. This shows that every city in Russia with population of at least 500,000 citizens is a target for international and local stores as shopping has become quite a popular activity.

Some of the other industries booming currently are apparel, aviation, agriculture equipment, chemicals, plastics, medical equipment, refinery machinery, and electric power generation.

Market Challenges for US Exporters

Since the infrastructure in Russia is seriously underdeveloped, it poses imminent challenges for small US exporters in terms of logistics especially when it comes to accessing markets outside of major Russian cities. Some of the other major challenges that small businesses looking to expand their operations in Russia will have to tackle are the disparities in geographical and demographical wealth distribution that have resulted in an insufficiently integrated economy with weak central planning.

Although, the English language has recently become part of the Russian educational curriculum, it is still not spoken widely thus creating a communication gap.

Strategy for Entering the Russian Forefront

Expanding a business in Russia may be challenging but it is certainly worthwhile once the business is well settled. In the initial stages, small business owners are required to commit their personnel, time and capital to the business entirely to give it the boost that it requires since developing businesses in Russia are highly resource intensive.

It is also important for small business owners to carry out thorough research of the Russian market and consult experts before entering the market. In order to get better ideas regarding the norms, culture, and current market scenario of Russia, small business owners must also consult US based companies that are operating in Russia already.

These are the four main considerations that US based exporters should look into before expanding their local business to Russia. If you are thinking of starting a new business in Russia or expanding your local business internationally, it is, important to take help from a consulting agency that will guide you through the expansion process and help you every step of the way.

Read more about international business expansion and get free consultation from DVNK Consulting.