danny rames, linon & per strandqvist, advakom 1 establishment & outsourcing in russia danny...

Danny Rames, Linon & Per Strandqvist, AdDanny Rames, Linon & Per Strandqvist, Advakomvakom

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Establishment & Outsourcing in Russia

Danny Rames - LinonPer Strandqvist - Advakom


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Agenda

Danny Rames (Linon) 15 min• Establishment• Business culture

Per Strandqvist (Advakom) 20 min• What is Advakom?• What to do in Russia• Management experiences

During the presentations – Prepare your questions!

Questions & discussion 25 min• Establishment• Business culture• Industrial start-up• ...


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PresentationPresentationof LINON AB and its managing director of LINON AB and its managing director

Danny RamesDanny Rames

LINON´s core activity is to support industrial LINON´s core activity is to support industrial corporations, investment banks and funds to corporations, investment banks and funds to implement projects and investments in Russia.implement projects and investments in Russia.

Danny Rames, who has been working in Russia Danny Rames, who has been working in Russia last 16 years, has a successful and proven record last 16 years, has a successful and proven record of competence, coupled with specific knowledge of competence, coupled with specific knowledge of rules and regulations, among others managing of rules and regulations, among others managing a spearhead investment of Volvo Trucks for an a spearhead investment of Volvo Trucks for an assembly of trucks outside Moscowassembly of trucks outside Moscow


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Establishment1. General conditions2. Legal issues3. Financing4. Authorities & bureaucracy5. Personnel

Business Culture1. Socializing2. Question of time3. Language4. Management style5. Networking6. Corruption


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General conditions

Establishment process takes time, resources and should be carefully prepared.

It takes time to find suitable & trustworthy partners. It takes time & resources to obtain correct information

about other companies. Criminality is not a big issue. Visa procedure is time consuming and trouble-some. It is important to take advantage of a trustworthy person,

as a match-maker during an initial stage, who has a deep knowledge and a successful record of doing business in Russia. Preferably with a good knowledge of the Russian language.


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Legal issues

Verbal agreements have no legal value. Written & very detailed contractual documents are

considered norm. All agreements may be renegotiated at any time. Theoretical legislation is one thing, applicability is a

different issue. Generally, Russian legislation is logical. The legislation is dynamic, changes all the time. Legislation is often contradictory. ”High street firm” is not always the best. A smaller

local firm may know local conditions better.


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Finance & Administration

Russian banking system does not yet provide all services you are used to.

Russian Accounting System (RAS) is slightly different from IAS, but the gap is closing.

All transactions must follow contractual agreements (banks have a control function).

Local transactions between Russian banks work well.

Rouble inflation is not considered as a problem


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Authorities & Bureaucracy

Russia is the ”Mecca” of formalism and documents are almost considered holy.

Bureaucracy is complex and rigid with long proceeding times.

There is no coordination between different authorities.

Customs and tax are the worst.


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Personnel

In Russia the boss is a Czar. It is absolutely necessary to have a

Swedish person in the management. Young managers (<35) may be shaped. Managers and engineers are used to study

and like education. Follow the laws of employment. Use your own head when recruiting.


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Socializing

To do business in Russia, you have to be physically present and take time to build personal relationships

There are several unwritten business rules (dress code, shaking hands, drinking, remembering birthdays etc.)

Nowadays the vodka drinking is not that necessary, but do not say no to a toast


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Question of time

“Time is a movable feast” Be on time


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Language

Russian language is a mentality. In a long term, knowledge of the

Russian language is necessary. A trustworthy interpreter is a key

factor.


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Management style

(Once again) The boss is a Czar. Information is power. Consensus is an unknown

conception.


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Networking

In order to receive as much correct information as possible, Russian managers socialize frequently across professional and social boundaries.

To meet and shake hands with somebody at an informal occasion might have an important impact later on.


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Corruption

It is everywhere Do not cut corners by bribing your

way through. Instead, push authorities by constantly being in their face, using trustworthy people.


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Some Good Advice

There is nothing mystic about the Russian market, so do not treat it that way

Enter Russia wholeheartedly, or do not enter

Trust is good, control is better Use a good lawyer Prepare for irritation and frustration Be distinct and pedagogical


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LocationLocation


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Business Idea & MarketBusiness Idea & Market

Business IdeaBusiness Idea Production of passive data- & telecom Production of passive data- & telecom

components in Russiacomponents in Russia Subcontractor to current market playersSubcontractor to current market players Contract manufacturingContract manufacturing

MarketMarket Russian system integrators & distributorsRussian system integrators & distributors International market leaders (subcontracting for International market leaders (subcontracting for

the ex-USSR markets)the ex-USSR markets)


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Products & ApplicationProducts & Application


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Foundation StructureFoundation Structure

European BankFor

Reconstruction & Development

SwedishManagement

PrivateSwedish Investors

Holding

Advakom


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Human ResourcesHuman Resources

Swedish top managementSwedish top management More than 15 university engineers in More than 15 university engineers in

technical departmentstechnical departments More than More than 15 employees speaking English15 employees speaking English More than 30 with university educationMore than 30 with university education Russian ISO 9001 & QS 9000 specialistsRussian ISO 9001 & QS 9000 specialists Totally ≈Totally ≈125 employees125 employees


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Current projectsCurrent projects Local production of data enclosures for Local production of data enclosures for

German market leaderGerman market leader Local production of electric enclosure Local production of electric enclosure

components for French corporationcomponents for French corporation Tailor made safety enclosure for large Tailor made safety enclosure for large

broadband provider in Europebroadband provider in Europe Metal components for a European bus Metal components for a European bus

manufacturer’s production in Russiamanufacturer’s production in Russia Metal products for large furniture supplierMetal products for large furniture supplier Cable assemblies for a major telecom Cable assemblies for a major telecom

equipment manufacturerequipment manufacturer


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Sample productsSample products


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SafecaseSafecase


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Why to Russia?

Reach a new market – increase sales? Reduce manufacturing costs? Reduce design costs? Manufacture for Russia? Manufacture for Russia & Europe? Exploit Russia’s raw material resources? ...

=> Analyse your business & define your objectives


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Marketrequirements

SalesProductionDesignSpecification

What to do in Russia?

What part of your business to be done in Russia? Interface to customer (sales & logistics)? Production (local needs and/or multinational needs)? Design work (for local production, for localisation of

products, for general needs, ...)? Specification (to meet local specifics)? Requirements (local requirements as base for total

process)?


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Well Done in Russia

Medium to large seriesMedium to large series Few different components or raw Few different components or raw

materialsmaterials Stable & repeating businessStable & repeating business Engineering intensiveEngineering intensive Labour intensiveLabour intensive SoftwareSoftware


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Less Good in Russia

Prototypes & specialsPrototypes & specials Short seriesShort series One-off businessOne-off business Scattered component & material Scattered component & material

supply chainsupply chain ““Sweat-shop” production only aiming Sweat-shop” production only aiming

low labour costlow labour cost


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Management Experiences (I)

Compartmentalisation (everyone has his box) Group working is an unknown method Strong hierarchy To do nothing is OK (or sometimes even good!) Weak internal & external communication Time is considered “free of charge” and a “non-

definite resource” It is normal to argue and demand Do not expect “common sense” to guide the

organisation


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Management Experiences (II)

Russian managers are hard working Deadlines work Bonuses & performance/task oriented rewarding

work Friendship & social relations are a part of the

business Russian language is a must Think for yourself and learn the details, do not

take “facts” for facts


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One Advice

HANDS-ON!

danny rames, linon & per strandqvist, advakom 1 establishment & outsourcing in russia danny...

Documents

russia danny rames linon

moscow danny rames

strandqvist advakom

agenda danny rames linon15

strandqvist advakom20

moscow slide

russian legislation

time resources