BUS633

The price of a presence in Russia

 

        While investors say Russia's retail sector is likely to be the chief beneficiary of its petrodollars over the next decade, many western multinationals are questioning how large their involvement in Russia can be given the risk of corruption.  The problem makes Russia a less appealing place to work, as do related issues of bureaucracy that contribute to time and cost overruns.  Many western businessmen say any real changes will have to occur at the local, well as federal level.

        Russia remains very lucrative in terms of size and very lucrative in terms of population.  The fruit is still too tempting.

        Many companies have to invenst a lot more money in the factory than the business would even get out of it; simply but as higher tarriffs started making importing unprofitable.

        When companies start talking about expanding into Russia, says Mr Mellings, Kkea's experience is usually cited.  "One story, one company's bad experience can have an enormous knock-on effect," he says.  Most companies do not fare quite so badly, he adds:  "A lot of it is luck.... a lot of it's misfortune.