Market Entry FAST TRACK
Are you interested in increasing your business activities in the Eurasian Economic Union, Ukraine and Poland but not ready to make big investments? Then we can offer you the ideal solution. With your service package you can enter the markets within a few days.
A market entry – fast and simple
SCHNEIDER GROUP supports you with entering a new market within just a few days and without the hassle of company registration via our office-in-office solution!
We hire your employee and take over personnel management incl. payroll. Fully furnished working desks are available as well as secretarial services, a business address and conference rooms. In addition, we issue invitations for business visas and support you with our import / DDP services.
Thus, you get access to our comprehensive office infrastructure, enjoy the benefit of our excellent reputation, have an employee who is incorporated into our established company, all under your operational guidance.
SCHNEIDER GROUP – Your global, local partner
Due to our company size, SCHNEIDER GROUP can help with all of the above-mentioned issues. Our legal department can register your legal entity, and, with our Interim Management service, clients can benefit from the services of one of our competent General Directors. These Directors act as, and perform all the essential functions of, a general director for our client’s company, acting only upon the instructions and confirmation of the client. When the time is right, or when the foreign employee has received their work permit, the general director of the company can be changed to a permanent figure and business can continue as usual.
We will also be happy to help out with the transfer or dismissal of the outstaffer from a legal perspective. Since we have over a decade of experience in the
local market, we can solve any of the potential issues that may arise during your business operations in Armenia, Belarus, Kazakhstan, Poland, Russia, Ukraine and Uzbekistan.
Our clients receive the same unrivalled quality services across all locations. In order to increase the efficiency and profits of our clients, we are constantly
developing and implementing modern technology and improving our processes and workflows.
Our Market Entry FAST TRACK service package contains:
- Search for suitable candidates
- Outstaffing: we hire your employee
- Fully furnished and ready-to-use working space
- Business address for marketing purposes incl. a separate telephone number
- Secretarial services through a personally assigned coordinator
- Use of conference rooms in our professional conference center
- Invitation for business visas
- Import / DDP services
- Fast and simple market testing with minimal risks
- Turn-key solution for an immediate market presence
- Accelerated start without the hassle of company registration
- Concentration on core business without administrative overhead
- Simple transition to potential subsidiary at any time
- One invoice only for all monthly expenses
Want more? We can offer you business addresses in 7 countries at the same time: Armenia, Belarus, Kazakhstan, Poland, Russia, Ukraine and Uzbekistan.
Feedback from satisfied clients: Outstaffing is the perfect solution for a fast and target-oriented market entry. Since I am the only employee, it was the best way for us, and we are now able to export without having to register a company. Michael Konon, Logistics Manager
Russia is the world’s largest country and has an immense diversity in natural resources. The overall population amounts to more than 142 million. Approximately one fourth of the population today lives in one of the 15 major cities, including Moscow, St.Petersburg and Ekaterinburg. Russia’s major industries are machinery construction, chemicals, the energy sector (oil and gas), and agriculture.
The Russian economy’s main imports have been consumer goods, pharmaceutical products, cars, semi-finished products, meat, fruits and nuts, optical and medical instruments.
The strength in Russia’s economy is the export of goods, mostly from the primary sector i.e. natural gas, oil, metals, wood and chemicals. Meanwhile, specific incentive programs try to lure new investors and companies to Russia. While the North-West of Russia is the hub for logistics and pharmaceutical
industries, the central region around Moscow is famous for its automotive and mechanical engineering clusters.
Ukraine offers many business opportunities being a market of 40MM+ consumers, with excellent geographical location, European cultural traditions, visa-free entry for nationals of developed world countries and a clear plan for modernization to fit Western values.
Some additional positive qualities of Ukraine as the right country to invest in are: Association Agreement with the EU, good education system, multiple reforms in all sectors, simplified taxation for small business and private entrepreneurs. Property, labor and services have become extremely price competitive as a result of the crisis, significantly reducing the costs of market entry.
For agricultural business Ukraine offers best soils in the world being well-known as “bread basket” of Europe. Finally, Ukraine has been recently reported to become Europe’s #1 IT outsourcing and software development powerhouse.
Despite the year’s getting off to a rough start, 2016’s third quarter in Belarus saw signs of improvement which will almost certainly continue with an increase in the value of oil and gas.
In the past year, oil prices forced Russia to reign in its support for Belarus, forcing the economy to focus on production in order to substitute the revenue that previously came from oil imports.
Consequently, end of 2016 saw a strong rebound in industrial production, and the country’s plans to implement reforms aimed towards integration into the World Trade Organization by 2020, will certainly help the economy to grow independently of Russian assistance. Additionally, Belarus continues to boast a very low unemployment rate that will generate increased revenue especially should Russia pick up its demand for imports of machinery and building supplies.
The major city in Belarus is its capital, Minsk, with almost 2 million inhabitants. It boasts very large deposits of potash and extremely fertile soil, as well as some petrochemicals. Belarus has also benefited from well-developed industrial facilities which contribute to its output of tools, tractors, and machinery, amongst others.
A somewhat similarly to Belarus, Poland’s economy is also poised for an improved economic outlook, albeit for somewhat different reasons. Poland’s population of 38 million is fairly distributed throughout many midsized cities throughout the country. The main city is Warsaw, of almost 2 million inhabitants, followed by Krakow, Lodz and Wroclaw of around 600,000 people.
These cities have implemented policies that have attracted a large amount of foreign investment over the years, and which continue to do so. In only the first four months of 2016, the Polish Agency for Information and Foreign Investment reported that foreign investment contributed to more than 4,200 work places with a total value of 139 million euros being finalized.
The distribution of the Polish population throughout the country, as well as the possibility for regions to adapt their legislation to the needs of specific industries, have rendered the regions very attractive to foreign investment. The strength of this economy lies also in its great diversification as it is does not rely upon any one export, but rather large array of services and products, from financial services to the production of machinery, furniture.
With strengthening oil prices and the completion of certain important infrastructure developments, Kazakhstan’s economy ended the year 2016 with a positive outlook. A significant contribution to the positive situation was the completion of maintenance work at the oil production facility of Tengiz, as well as the beginning of production in the Kashagan oil field.
These two events will serve as strong boosts to an economy whose overall GDP has proven fairly resilient in recent years. The country’s population is
just over 18 million with over a million inhabitants in its capital Almaty, and about 5 cities approaching the half-million mark. It is the largest economy in central Asia.
The country is extremely rich in minerals, especially chromium, manganese, gold and oil. It has considerable agricultural potential which has recently become more of a priority with the volatility of the oil market.
Armenia is a country steeped in mystery and tradition. Boasting a rich and colorful history, the southern Caucasus country is undergoing rapid development. In 2017, GDP growth way outperformed expectations, up 7.5% versus a relatively fl at 2016.
Armenia is the most economically liberal member of the Eurasian Economic Union. With the country coming 44th (from 180 countries) in the ‘economic freedom’ ranking conducted by The Heritage Foundation, Armenia is the perfect gateway country to the EAEU.
SCHNEIDER GROUP has recently opened an office in Yerevan, Armenia. If you’re interested in doing business in Armenia, look no further than our experts who have decades of experience in helping companies expand eastward.
In recent years, a number of activities have been carried out in Uzbekistan to promote the development of small business, because they plays a key role in the development of the economy as a whole. Rapid economic growth, a great amount of resources, and human potential invariably attract foreign business to Uzbekistan. The volume of investments is growing every year. This is due not only to the dynamically developing economy but also to the favorable investment climate created by the state for foreign business. The main export items are cotton and cotton products, gold, uranium ore, fertilizers, metals, textile and food products andcars. The largest foreign trade partners of Uzbekistan are Russia, China, and Kazakhstan. Russia accounts for almost 30% of the total foreign trade turnover.
Exporting directly to the final client
If a company has an existing client base within Russia and the CIS, they may choose to export directly to these clients. This can be beneficial compared with exporting via distributor, some of the negatives of which will be reviewed further on.
However, even though this business model avoids registering a legal entity, business cannot always be developed to its full potential via this method and the pure export of goods to Russian clients can restrict business activities due to the import obligations of the final client; according to local laws, only a local LLC can import goods into Russia/the CIS. This gives the final client the obligation to take care of the import themselves and all of the responsibilities that comes with it, such as registering with the customs authorities and acting as importer of record.
Not only does this discourage potential clients from buying the goods, but also categorically excludes clients only willing to purchase a comparably small amount, since in most cases the price of the actual import process would render the deal as economically unviable.
In Russia, for example, not all companies are willing to take on this formal import responsibility, and the only alternative for the client would be to use the services of a broker or agent. What’s more, all of these options frequently involve communication and documentation difficulties.
An alternative to the above is to find a provider of DDP import services, e.g. a company willing and able to purchase the goods from the foreign exporter, taking on all import responsibilities, coordinating the entire process and selling the goods on to the final customer.
Exporting via a Distributor
One of the possibilities of doing business without a local entity is by operating via a distributor. On the one side, there are certain advantages of cooperating with a distributor in Russia and the CIS.
As well as providing a single contact point rather than having communication with each customer individually, the distributor usually provides a warehouse, inventory management, customs clearance, logistical support, and instant access to a wide range of customers.
On the other side, working with a local distributor entails several restrictions and disadvantages, including the following:
- Without a direct presence on the local market, the foreign company and their sales figures are highly dependent on the distributor.
- It can be difficult to control the pricing or marketing activities of the distributor.
- The distributor may be involved in grey import schemes (causing tax risks and the possible blacklisting of the foreign exporter’s product).
- The foreign company has no direct contact with final the customer.
- The foreign company may experience difficulties terminating contracts.
- Risk of false invoices and other irregularities
- Bad marketing policies of the distributor:
- Low promotion, no advertising campaigns
- Distributor not dedicated/motivated
- Competitor products in distributor’s portfolio.
For avoiding the above mentioned problems the only alternative (or so it would seem to many) is to register a company and take on the import responsibilities, but this also is not as easy as it sounds.
Barriers to registering a company
Instead of, or indeed in parallel to the options mentioned earlier, many companies think of establishing an LLC, representative or branch office right away, however in some cases this commitment could prove to be premature and the obligations and burdens which have to be dealt with are often underestimated.
From a financial perspective, not only the registration fees and costs of setting up a legal entity must be considered, but also funds and work required to keep the business running, including ensuring adherence to local accounting standards, which entails high documentation requirements.
The time taken for the registration of a company with the state authorities can, on paper, be quite quick in post CIS countries. However, in reality, a lot of time and effort is required to gather all documents required for the registration application, open a bank account, recruit and employ the general director or head of representative office, organize a legal address, obtain work visas (if employing foreign workers), and the amount of resources required can be difficult to predict accurately.
Ambitious companies go through this entire setup process in order to get just one marketing or sales manager on the ground and “test” out the market – a significant investment for an uncertain outcome.
Thankfully, there is an alternative.
Market Entry FAST TRACK – The Concept
As a response to the barriers involved with registering a company or exporting without a local presence, SCHNEIDER GROUP has come up with a solution that enables foreign companies to try out or expand within the markets in which we operate, benefiting from a fully established local presence and full import capabilities, but without the need to register a legal entity or make any large investments.
It is a quick and effective, low risk solution that can be implemented within a couple of weeks, or even quicker. The central point to this concept, around which everything revolves, is the overlooked (and often unknown) option of outstaffing.
We call it Market Entry FAST TRACK service.
Market Entry FAST TRACK combines outstaffing and a number of key supporting services to put someone in
any of our offices in Russia and the CIS countries, to work for the client company full-time. It is the ideal solution to companies who:
- Are new to the market and wish to ‘test the water’ without committing to large investments.
- Have existing clients in Russia/the CIS but wish to expand their customer base locally (i.e. by having a marketing/business development representative(s) on the ground) without making significant investments.
- Work locally via distributors, but wish to either increase sales by implementing business development and marketing campaigns, or who wish to bypass the distributor altogether (in this case, for exporters of goods, our DDP import service is a great option).
- Are planning to register a company but wish to initiate the sales and marketing processes during the company registration (so that the ‘ball is already rolling’ when the company is finally registered’).
- Already have an office in one of our countries, wish to hire more employees, but have strict corporate headcounts.
- Are exiting the market (liquidating their company) but have key clients locally they wish to keep working with.
The key elements to this service package are:
- Business Address
- Coordinator/Secretarial Services (4 hours per month)
- 1 Business Visa per quarter
- 10 hours Conference rooms usage per quarter
- DDP Import Services
All aspects of the service are billed in a single monthly invoice for convenience.
As your outsourcing company SCHNEIDER GROUP will hire your personnel and can help to find the candidate who best meets your requirements.
SCHNEIDER GROUP concludes a labor agreement with the employee, but they effectively work for your company to carry out predefined tasks.
As part of our Outstaffing service:
- We pay the employee’s salary, social taxes and payroll tax, and take care of all administrative HR matters as well as insurance matters.
- We carry out all statutory reporting to the authorities.
- In case of additional activities or expenses, for instance business trips, we do the administrative work, the salary calculations and the pay-out via our company.
- We take over the formal responsibility of your outsourced personnel according to Russian labour law, while you focus on and control your staff’s performance and tasks.
Fully equipped workplace
SCHNEIDER GROUP’s fully equipped workplace service provides your employee with a modern, comfortable workplace, as well as all the equipment that will be needed. In line with our slogan “simple structures, simply success”, your dedicated contact will take care of all your needs and wishes in regard to your office space.
You will also benefit from our elaborate network as well as in the office itself. This is an efficient alternative to traditional office spaces, and we will provide you with all your employee will need to start working immediately, including:
- Office fully equipped with furniture, telephones, and cupboards.
- Your own external phone numbers, including unlimited local and international calls.
- An additional internal phone number.
- An internet connection with unlimited traffic.
- Usage of color and black and white printer, A4/A3-Xerox and scanner, including consumables.
- Cleaning service and general office management.
- Usage of toilet and small kitchen on the same floor as well as the whole common office area.
- Access control at security, located at the entrance of the building.
As part of the package you will also benefit from the use of our business address. This gives you a professional point of contact, and our excellent central location, reflected in the address, demonstrates professionalism.
Our business address package includes:
- Your company’s name plate in the entrance area of our office
- Mailbox/address; we inform you immediately about your incoming correspondence
- Information hub; install your information desk and banners and we will provide information about your business to potential clients and partners and welcome your visitors into our office.
Coordinator / secretarial services
You will also benefit from our Secretarial Service. We will provide you with one point of contact who will be your personal assistant, supporting you on all issues you may face. With our bilingual employees, you can be sure that you’re supported by a team of experienced professionals.
Typical tasks that would be taken over by our personal assistant might include:
- Administrative support, office-management (including fixing or scheduling appointments, typing and printing documents, making phone calls, planning business trips, including hotels, tickets,etc.).
- Translations, including presence at meetings / exhibitions
One business visa per quarter
If you plan to visit during the course of the project, we can organize all the documents that must be prepared for the application for a business visa, offering you the necessary business visa invitation. Included in this service package we can provide this business visa support once per quarter.
Conference room’s usage
When meeting with potential clients and business partners, you and your employee will benefit from the use of our conference rooms.
This includes all the equipment that may be required, for example a Wi-Fi connection, projectors, and speaker phones, as well as tea, coffee and water. Within the service package you will receive 10 hours of conference room usage per quarter.
DDP (Delivered Duty Paid) Import Services
This is the service which really allows our clients to get their goods into the Eurasian Economic Union without using a distributor or broker, or registering a company.
Essentially, SCHNEIDER GROUP provides the services of a general importer, purchasing and importing goods on behalf of our clients via a purchase agreement, and then re-selling them to the final customer within the Eurasian Customs Union.
It provides for a transparent import process, allowing you to stay in complete control of all costs and the final price at which the goods are sold on to your final client.
Our service includes:
- purchase and import of goods in our name
- complete handling of logistics including warehousing of conformity documents, certificates
- drafting contracts, payments, formulation of other necessary documents
Our Import Service guarantees 100% transparent and legal import of goods to member countries of the Eurasian Economic Union.
Successful case studies
As well as the more obvious use for our Market Entry FAST TRACK service, i.e. testing out a market without registering a company, there are some more unusually uses too. Below we also look at two such cases; when corporate headcounts are an issue, and when companies decide to leave the market but wish to maintain a certain level of business activities. Following are three real examples from our Moscow office.
Getting Past Headcount Restrictions
For this example we take a look at an American company specialising in the production of printers, one of HPs main rivals on the global market. When entering the Russian market in 2010 the subsidiary was given a defined head count limit from the American Headquarters. They were therefore unable to take on board many specialists that were essential for business, but were not allowed by the HQ. The solution – outstaffing.
The company had prior cooperation with SCHNEIDER GROUP; we had provided them with our legal address service during the company registration, and subsequently our interim management and accounting outsourcing services.
They had also used us to rent office space for their workers previously, so knew that our offices were suitable for the purpose. We took on their first outstaffer in 2013. Concluding a labour contract directly with us, the employee was provided with everything he could need, and the solution proved so effective that by 2014 we already had 5 more of their employees as outstaffers in our Moscow office.
Outstaffing solved another issue for the American company. Concluding a labour contract directly with the Russian subsidiary proved to be a very slow process for the highly qualified specialists. The future employees didn’t want to wait for this tedious process to be completed, and for the company it was important to get people on the ground and working as quickly as possible to start on a new project. By concluding a labour agreement with us, starting work under our roof as outstaffers, the company and their specialists found a quick and effective solution.
As it turned out, two of the six outstaffers did not suit the job, and upon expiration their contracts were not renewed and the employees were not taken on board by the company. This further demonstrates outstaffing’s use as providing a probation period for employees for assessing their suitability for the role.
Out of the 4 remaining outstaffers, 2 have been transfered directly to the Russian subsidiary and 2 still remain in our office.
Exiting the Market
As there are many reasons to enter a local market, so there many reasons to exit. Sometimes there comes a time to acknowledge that it is not (and will not be) economically viable to maintain a legal entity. But, that does not mean that the entire business automatically dries up. There needs to be something in between a full legal entity and a zero presence.
In this case, companies choose to employ several people to continue working the local accounts, to provide services to current clients, continue with attractive sales leads, promote and market new products which the HQ will undoubtedly continue to produce and sell.
In this case study we can address one client who had a legal entity, but decided that it was time to exit the market.
The company was an American IT firm that provided solutions with mobile applications closely linked to ERP systems, who, for a variety of reasons, decided that it was not economically viable to keep and maintain a full legal entity and decided to close it down. Considering the nature of their business, however, it was necessary to continue to provide maintenance and troubleshooting services to the clients on the local market.
As such, they decide to employ not the more standard option of marketing managers or business developers as outstaffers, but rather IT system analysts. This way they were able to keep the critical support structure in place, but remove everything else from the legal entity which was no longer needed. It was a streamlined and convenient solution.
This also highlights another benefit or good trait of outstaffing: it does not necessary have to be a short term solution. In this particular case, it is completely open-ended to how long the company will keep these employees in place. The idea is for outstaffing to be flexible – which is how the concept has been designed.
The next stage
For many of our clients, the Market Entry FAST TRACK service has proved to be a successful way of starting their business in Russia and the CIS. The obvious next step for some, in order to increase business activities and establish a more comprehensive presence on the local market, is the registration of a legal entity. But as we know, this process can prove to be rather difficult. It is not only the bureaucracy and uncertain timescale that makes planning for such a procedure essential.
The choice (and structure) of the legal entity is an important point to consider not only from a business operations standpoint but also a from a tax perspective, and investors must carefully think about factors such as the optimal level of charter capital and the double taxation treaties that exist between the target country and the home country of the founders.
For example, for companies who are using outstaffing combined with DDP importing as a way to see how well their goods sell on the local market, the next stage may be to set up a legal entity and take over the full logistics handling for themselves, and for this they would be required to open an LLC. However, this move raises further problems assuming the imported goods come from the mother company (or another related company) since transfer-pricing issues must be taken into consideration.
That is, all transactions of any kind between related parties must be documented to make sure that they conform to market levels (prices of goods imported, interest rates used on intercompany loans, etc.).
Of equal importance are the issues surrounding the general director (or head of representative/branch office), who is essential for the operation of a Russian/CIS company and who must sign and confirm any and all business transactions. Companies who have not found a local general director, or who wish to employ a foreign general director (but must wait for many months for them to receive the relevant work permit), are forced to either put their local plans on hold until the problem is solved or seek an alternative route.
An interim general director (or management company) can be the perfect solution: a local, competent manager provided by a trustworthy company who temporarily takes over the role of general director until the foreign employee has received the relevant work permit.
Another possible scenario is that the foreign company, when testing the market using outstaffing, realises that the opportunities are limited or identifies potential problems that deter them from entering the market. In this case, the exit costs are a fraction of what they would be had the company been established, and the outstaffer can be transferred to the HQ, should the decision to do so be taken. The idea is for outstaffing to be flexible – which is how the concept has been designed.
Your questions – Our answers.
1. Do I have to set up a legal entity to sell my machines in Russia, Kazakhstan, Belarus or Ukraine?
One common approach, particularly used by foreign companies being new to these markets, is by finding a local distributor(s) to import and sell the goods on their behalf. This can be a quick an effective way of entering a new market, and proves effective for many foreign companies. It can, however, also involve some negatives, for example it is not always possible to have direct contact with your final clients, have control over the pricing structures of the distributor who may also have your competitors products in their portfolio, and, unfortunately, grey import schemes are still widespread which can lead to tax risks for the foreign exporter (as well as the potential blacklisting of their products).
The second option, which can also be used alongside the first to try to minimize some of the potential negatives, would be to take an ‘Outstaffing’ approach. This entails finding a local company to employ staff on behalf of the foreign company, taking on all legal responsibilities (concluding labour contracts with the employees, paying their salary, social contributions etc.) while the staff perform tasks as delegated by the foreign entity. Finding a local partner to provide DDP import services (i.e. buying the machinery from the foreign entity, taking care of import, certification, customs matters and selling the goods on to the final client) can eliminate the need to use a distributor at all, if desired. In this way, companies can have employees on the ground in these markets with full import and sales of goods without the need to register a company. SCHNEIDER GROUP, for example, offers an entire service package for precisely this model, which we call our ‘Market Entry FAST TRACK service’. This includes the services mentioned above.
Finally, foreign machinery producers can also register a company in these markets and take care of all the above via their own legal entity. This can either be a next step after successfully operating via one or both of the above models, or indeed can be implemented from the start. It is worth noting that registering a company, especially in the machinery industry, can bring with it several advantages. The final clients like to see that a foreign company has fully committed to the market and having a local office also gives a good, professional image. Finally, and not less importantly, companies wishing to participate in state tenders in Russia may be heavily restricted from doing so unless they have their local company registered, due to recent changes in legislation regarding state procurement.
If you would like to know more about any of the above, or just wish to talk to one of our experts about the above mentioned markets, please don’t hesitate to get in touch.
2. How can I find potential customers, or partners in Russia, Ukraine, Belarus or Kazakhstan?
For a company considering entering the Russian, Kazakhstani, Belarusian, Ukrainian or Polish market, we consider a good starting point to be to conduct a market analysis. This gives our client the chance to evaluate all possible risks and opportunities for their company in the respective market. We can provide information regarding their industry as a whole and their competitors, and also make them aware of the peculiarities of the country where they are planning their business activity.
The market analysis often also includes a search for potential business counterparts, including potential customers, distributors or other business partners. We give a general overview of the potential partners with all key information, including contacts, and then can get in touch with them to assess their interest in forming a partnership or purchasing the specific goods and services. If required, we can also perform a background check on such partners to assess any further potential risks.
The whole process, of course, involves close contact with the client, a deep understanding of their business needs and products/services, which is combined with our extensive local knowledge to maximize the chances of success and minimize potential risks.
3. How difficult is import into the Eurasian Union and Ukraine?
Importing into Eurasian Union can cause some headache due to the bureaucracy involved with the import procedure. As the customs tariff numbers in the EEU differ from the ones in Europe or U.S. ( 10 digits instead of 6 or 8), the respective customs tariff numbers has to be determined for understanding how much has to be paid at customs and what conformity documents are required for the product. The certification procedure is also complex, as technical descriptions have to be prepared and submitted to the certification agencies. Certification can take from 2 weeks up to several months. This is why having a reliable and experienced partner is highly recommended to ensure full and timely preparation.
SCHNEIDER GROUP supports international companies with the full import process. We specialize in complete handling of the logistic chain, product certification, and the preparation of export documents. Additionally, we provide registration with the customs office, electronic customs clearance, and the delivery of the goods to the final destination:
For foreign companies:
- Customs clearance
- Logistics coordination and warehousing
- Product certification
- DDP Import
For their Russian subsidiaries:
- Customs clearance for third parties via electronic signature or broker service
- Registration at customs
- Registration of the electronic signature
- Logistics coordination
- Development of supply chain and warehousing concept
- Delivery of goods to the final client in Russia
- Preparation of the statistics form for deliveries within the EEU (Eurasian Economic Union)
4. How can I make sure that my pricing policy is applied by my distributors?
Many international companies initially work through distributors or a distributor network to tap into the Eurasian market. This has the advantage that the distributor completely takes care of the customs clearance and logistics and sells the goods on the Russian market. This leads to a minimal effort on the part of the foreign companies and offers the opportunity to participate in this huge market.
But as always the devil is in the details. The customer contact is almost exclusively though the distributors and he determines the selling price. In most cases, attempts are being made to use short-term profits instead of targeting long-term market penetration. In the mid- to long-term, this can lead to market potentials not being fully exploited for the products.
However, there are alternatives to the foreign distributors. We will gladly take your time and show you these possibilities. Please contact us at firstname.lastname@example.org
5. What possibilities are there for minimizing risks when entering the Russian, Belarusian, Kazakh or Ukrainian market?
Entering a new market always comes with certain risks. However, there are several ways of minimizing the risks when entering the abovementioned markets. The possibility of having your own local presence in Russia presents an ideal solution in order to fully exploit the local opportunities, however registering a company straight away, which involves a lot of bureaucratic and financial hurdles, is often premature and the alternatives should be considered.
To enter the Russian, Belarussian, Kazakh or Ukrainian market without registering a company can heavily reduce potential risks, for which there generally exists two options.
On the one hand you could find a good distributor, who promotes and sells your products and services on the local market. In order to help with finding a distributor we can offer an overview of the relevant market situation, and conduct a tailor-made market analysis which exactly meets your needs. Subsequently, a partner search based on the results of the market analysis can follow. The potential partners (distributors, clients etc.) are then contacted and meetings and negotiations facilitated.
On the other hand, you can have your own employees on ground via an Outstaffing service provider. The latter gives you more control and influence about your business activities in the foreign market. Since we are a fully accredited Outstaffing provider, we can provide this as part of our Market Entry FAST TRACK service. With this we employ the candidates with a labour contract at our offices, paying their salary and all associated taxes, and providing them with the full infrastructure required (fully equipped workplace, use of conference rooms and much more) whereas you have the full control over their day to day tasks.
Another possibility of boosting your sales is implementing both options at the same time, the distributor and your own local employees who represent the company on the local market. While the distributor continues to sell your product or service, the employees you set on ground can then boost marketing and sales activities and strengthen your local presence.
Both options enable you to enter the local market with relatively minimal risk, and act as a great way to them out without committing to substantial investments. If the market does not prove to be as fruitful as hoped, these approaches allow for a swift and efficient market exit, but often they actually act as a stepping stone to registering a full legal entity in the market if business goes well.
Russia Briefing – Market Entry FAST TRACK
When expanding into any new market, companies are generally confronted with barriers to entry. For a foreign company entering a CIS country, for instance, the barriers for a typical business setup, including registration of a legal entity, representative office or branch office, can be quite significant both in terms of bureaucracy and time spent. Even the simplest of tasks come with their headaches.
A foreign company will need to devote three to five months to the establishment of a legal entity or representative office in Russia, and must prepare, translate and notarise a mass of documents in order to complete the process. In addition, a lot of time and effort is required to open a bank account, recruit and employ the general director or head of representative office, organize a legal address, obtain work visas (if employing a foreign worker), etc.
This makes for quite an investment of time and resources, which often deters foreign investors from entering the market and making the most of the many investment opportunities which are there to be exploited. This is especially relevant today considering the economic uncertainty surrounding the Russian, and indeed CIS, market.
In response, SCHNEIDER GROUP has come up with a solution that enables foreign companies to try out the local markets in which we operate, without the need to register a legal entity or make any large investments. The central point to this concept, around which everything revolves, is the overlooked (and often unknown) option of outstaffing. We call it our Market Entry FAST-TRACK service.
Click on the image to download the Russia Briefing.
Discover a new market at minimal risk
Entering a new market can be a daunting task for any company going into unfamiliar territory. It may not always be clear which the best approach is, and companies must choose between registering an LLC, a representative or branch office, working via distributors, or any other possible method of market entry. The same can be said about market expansion when operations have already begun.
When it comes to Russia and the CIS region there is, however, a little known alternative which can often prove the best approach. We are talking about the Market Entry FAST TRACK approach developed by SCHNEIDER GROUP for Russia, Ukraine, Belarus, Kazakhstan and Poland. This brochure will take a look at this ‘hidden gem’ as an option for companies entering or expanding within our countries.
Whilst offering a comprehensive presence on the local market whilst reducing risks and financial investments to a bare minimum, the Market Entry FAST TRACK option is certainly worth consideration as a solution to a vast number of business needs.