Summary of Russia insights
Conducting business abroad has become more difficult than 3 years ago according to Russian mid-cap CFOs. Despite the economic and regulatory difficulties facing all businesses, 92% of Russian mid-cap CFOs we interviewed are confident that their three year plans to expand internationally will succeed. On average, they expect 39% of their revenues in 2014 to come from sales outside Russia, up from the current 27%.
Russian businesses are focusing on expanding into Ukraine, Kazakhstan, Belarus, Germany, Poland and Czech Republic while Russia plays an integral part in the expansion plans of UK, German and Dutch businesses.
Market size, access to new customers and higher growth rates are the most important opportunities for companies looking to expand into Russia.
Red tape & bureaucracy, intensity of local competition, currency fluctuations and finding the right local management are the biggest challenges faced by Russian companies when expanding internationally.
Russian businesses act fast once a decision to open a new office is made - 42% open an office in less than a year. According to Russian CFOs, clients/customers (50%) and internal sources (48%) are the most trusted sources when expanding abroad.
Outlook for cross border growth
- Ukraine, Kazakhstan, Belarus, Germany, Poland and Czech Republic are important markets for Russian outward expansion
- Russian expansion abroad is driven by market size, familiar culture and growth opportunities
- Russian businesses are more likely to ‘play it safe’, expanding in their core sector and with both new and existing products and services
- Investment in channels of distribution will be the main focus over the next 3 years for Russian companies expanding abroad
Factors driving inward Russian investment
- Market size
- Access to new customers
- Higher growth rates
Challenges for companies expanding in Russia
- Red tape & bureaucracy
- Cultural or language barriers
- Corruption or ethics
Challenges faced when expanding internationally
- Red tape & bureaucracy
- Intensity of local competition
- Currency fluctuations
- Finding the right local management
Top insights for growth
- Do thorough research to improve your knowledge of the market
- Find good contacts/ strong partners in the region
- Ensure the product itself is right
The in-country summaries are given as general commentary only. The global BDO Ambition Survey 2011 is based on 751 CFOs’ responses of mid-cap companies across 13 countries (50 in Russia). The survey was conducted by StrategyOne between 23 May – 8 July 2011