Russians, especially Muscovites, exaggerate the importance of their capital, partly because society has not caught up with the economic transformations following the fall of the Soviet Union.
Market forces have overtaken the Central Planning Ministries of Soviet times, and business investment and purchasing decisions are now distributed across Russia. For example, the largest supermarket chain, Magnit, has its headquarters in Krasnodar (a thousand miles from Moscow), and it wasn’t until 2012 that it opened its first three outlets in Moscow.
The public sector has always operated beyond the scope of Moscow. Russia’s 83 provinces, excluding Crimea and Sevastapol, and their local insurance organisations, make independent decisions about the their suppliers and the health, education, transport and social security provisions they buy.
In more mature economies, consolidation in the market economy sector has resulted in professional managers being based at group headquarters, but this hasn’t happened in Russia. In the past, establishments were usually privatised by site rather than as chains of businesses. New, local owners then took over all decision-making and this change took a lot of power away from Moscow. Therefore there is less private sector decision-making in the corporate headquarters of the capital city, not only compared to Soviet times but also to most mature capitalist economies. The Russian private sector is still dominated by these first-generation owners living near their businesses. Therefore, selling to the private sector requires a willingness to travel.
The big utility networks, such as water, telephony and electricity, are regionally or municipally based. Their headquarters and supplier networks are outside Moscow.
Federal government spending decisions are not concentrated in Moscow, but distributed across the eight federal districts. The 1,867 Raiions (similar to county councils), with a further 44,000 municipalities (rural districts), all make their own buying decisions. Organising large purchasing co-operatives, has not yet taken place on an big scale.
Few markets can support distributors able to track the tender processes in such a vast country. Having a single distributor in Moscow is usually not the best solution, as most customers are out of reach with only one distributor. In Russia, distributors take orders but they do not sell.
One way to enter the market is to work with an importing specialist who maintains contact with local agents that know the officials managing local tenders. This way of working ensures national coverage but the downside is that control of brand image, pricing and service, is weak. Yet product management can overcome these problems. Unlike in Europe, investment in local product management, service and sometimes final assembly, is often necessary.
Against these trends, there has been some consolidation of remaining state assets, particularly in defence. This has been under the control of a Moscow ministry and large defence contractors, but this is atypical of the present Russian climate.
Russians, especially Muscovites, exaggerate the importance of their capital, partly because society has not caught up with the economic transformations following the fall of the Soviet Union.
Market forces have overtaken the Central Planning Ministries of Soviet times, and business investment and purchasing decisions are now distributed across Russia. For example, the largest supermarket chain, Magnit, has its headquarters in Krasnodar (a thousand miles from Moscow), and it wasn’t until 2012 that it opened its first three outlets in Moscow.
The public sector has always operated beyond the scope of Moscow. Russia’s 83 provinces, excluding Crimea and Sevastapol, and their local insurance organisations, make independent decisions about the their suppliers and the health, education, transport and social security provisions they buy.
In more mature economies, consolidation in the market economy sector has resulted in professional managers being based at group headquarters, but this hasn’t happened in Russia. In the past, establishments were usually privatised by site rather than as chains of businesses. New, local owners then took over all decision-making and this change took a lot of power away from Moscow. Therefore there is less private sector decision-making in the corporate headquarters of the capital city, not only compared to Soviet times but also to most mature capitalist economies. The Russian private sector is still dominated by these first-generation owners living near their businesses. Therefore, selling to the private sector requires a willingness to travel.
The big utility networks, such as water, telephony and electricity, are regionally or municipally based. Their headquarters and supplier networks are outside Moscow.
Federal government spending decisions are not concentrated in Moscow, but distributed across the eight federal districts. The 1,867 Raiions (similar to county councils), with a further 44,000 municipalities (rural districts), all make their own buying decisions. Organising large purchasing co-operatives, has not yet taken place on an big scale.
Few markets can support distributors able to track the tender processes in such a vast country. Having a single distributor in Moscow is usually not the best solution, as most customers are out of reach with only one distributor. In Russia, distributors take orders but they do not sell.
One way to enter the market is to work with an importing specialist who maintains contact with local agents that know the officials managing local tenders. This way of working ensures national coverage but the downside is that control of brand image, pricing and service, is weak. Yet product management can overcome these problems. Unlike in Europe, investment in local product management, service and sometimes final assembly, is often necessary.
Against these trends, there has been some consolidation of remaining state assets, particularly in defence. This has been under the control of a Moscow ministry and large defence contractors, but this is atypical of the present Russian climate.
Russians, especially Muscovites, exaggerate the importance of their capital, partly because society has not caught up with the economic transformations following the fall of the Soviet Union.
Market forces have overtaken the Central Planning Ministries of Soviet times, and business investment and purchasing decisions are now distributed across Russia. For example, the largest supermarket chain, Magnit, has its headquarters in Krasnodar (a thousand miles from Moscow), and it wasn’t until 2012 that it opened its first three outlets in Moscow.
The public sector has always operated beyond the scope of Moscow. Russia’s 83 provinces, excluding Crimea and Sevastapol, and their local insurance organisations, make independent decisions about the their suppliers and the health, education, transport and social security provisions they buy.
In more mature economies, consolidation in the market economy sector has resulted in professional managers being based at group headquarters, but this hasn’t happened in Russia. In the past, establishments were usually privatised by site rather than as chains of businesses. New, local owners then took over all decision-making and this change took a lot of power away from Moscow. Therefore there is less private sector decision-making in the corporate headquarters of the capital city, not only compared to Soviet times but also to most mature capitalist economies. The Russian private sector is still dominated by these first-generation owners living near their businesses. Therefore, selling to the private sector requires a willingness to travel.
The big utility networks, such as water, telephony and electricity, are regionally or municipally based. Their headquarters and supplier networks are outside Moscow.
Federal government spending decisions are not concentrated in Moscow, but distributed across the eight federal districts. The 1,867 Raiions (similar to county councils), with a further 44,000 municipalities (rural districts), all make their own buying decisions. Organising large purchasing co-operatives, has not yet taken place on an big scale.
Few markets can support distributors able to track the tender processes in such a vast country. Having a single distributor in Moscow is usually not the best solution, as most customers are out of reach with only one distributor. In Russia, distributors take orders but they do not sell.
One way to enter the market is to work with an importing specialist who maintains contact with local agents that know the officials managing local tenders. This way of working ensures national coverage but the downside is that control of brand image, pricing and service, is weak. Yet product management can overcome these problems. Unlike in Europe, investment in local product management, service and sometimes final assembly, is often necessary.
Against these trends, there has been some consolidation of remaining state assets, particularly in defence. This has been under the control of a Moscow ministry and large defence contractors, but this is atypical of the present Russian climate.
With twelve million people (including unregistered immigrants), Moscow attracts worldwide attention, but the market is highly saturated. Finding Moscow-based importers and distributors, who do not already stock multiple brands of competitor’s products, is very difficult.
Of course, as the capital city, Moscow retains its leading position as a market for luxury goods, super-elite homes, lower level fashion, defence, lawyers and accountants (but not operations managers) for large companies, state assets and very large construction companies.
But Moscow is home to only 7% of the Russian population whereas London, for example, is home to 12% of the UK population.
With a population of 4.7 million people, St. Petersburg is also a large city. As the Russian Empire’s capital, it retained many important political and social institutions after the Bolshevik revolution. St. Petersburg enjoys a leading position in the media industry, with great strengths in television and film production, and classical culture, such as ballet. Its position as a leading trading port reinforces its economic position, particularly for commodities traded in bulk.
Referred to as the “Venice of the North”, St. Petersburg has gained major political influence in the last decade. President Medvedev and Prime Minister Putin, were both born there and they both describe it as a twin capital to Moscow.
As a trading city, St. Petersburg has a well-developed infrastructure for international business, from trading banks, major customs offices and test houses, to a large and well-developed pool of English-speaking employees. The latter group, in particular, contrast favourably with their Muscovite counterparts, with realistic salaries and lower labour turnover. Gazprom, the largest company in Russia, is moving its headquarters to the city.
The third biggest city in Russia, is Novosibirsk. Yekaterinburg and Nizhny Novgorod follow closely behind. Russian statistics however, do not account for conurbations. This point is frequently overlooked even by the largest corporations leaving high quality market locations open for the astute.
The Saratov-Engels and Volgograd-Volzhk conurbations, where the large centres of population are split between the two river banks, are amongst Russia’s top ten largest urban areas, but the individual cities are not in the top twenty.
Taking the agglomeration into account, the third largest population centre is the area around Samara, a place few foreigners recognise.
The provincial cities boast major industries, such as the Russian main and locally-owned supply chain for vehicle components and assembly (cars, vans, trucks, trolley buses, aeroplanes, etc) in the Volga region.
Saratov has important opto-electronic and modern petrochemical industries.
Rostov-on-Don is a major port and centre for manufacturing agricultural equipment. Russian manufacturing has increased in general, due to improved exchange rates and car scrappage schemes.
Not all of Russia is a frozen waste in the winter. The South is subtropical. The Russian elite can be found at the “Russian Riviera” around Sochi, off the Black Sea Coast. Nearby in the Caucasus Mountains, there is a long skiing season at Krasnaya Polyana and the 2014 Winter Olympics were held there. Since, a Formula One racing track will has been built to stage the annual Russian F1 races, until 2025.