Rusia: Vender

Distributing a Product | Market Access Procedures

Distributing a Product

Distance Selling

Most Popular Forms of Direct Marketing: Essentially by post (70% of the total).
Private direct sales are also widespread, but belong mostly to the unofficial sector.
Type of Products: Beauty products and cosmetics, clothes, electronics, cultural products.
Evolution of the Sector: The total turnover of direct selling in Russia was 2,300 million EUR in 2009. The sector employs around 5,000,000 people. The distance selling market is showing sustained growth and prospects are excellent.
In fact, with an average spending of 16 euros per inhabitant in 2009 (as against 223 euros in France or 25 euros in Poland), the market is not yet well-developed. Experts estimate that the potential for demand is at least 4 times greater, especially by reason of the size of the country.
The development of the activity is made easier by the rapid growth in the number of Internet users and the density of the postal network, even in rural areas, but it is still restricted by the lack of reliable on-line means of payment.
Direct Marketing Enterprises: RADM, Russian direct marketing association
RDSA, Russian direct selling association

Big Names in Distance Selling

PPE	Catalog and e-commerce	Textiles, cosmetics, jewelery, books, DVDs, music and electronic material
Mir knigi Ltd	Direct marketing and catalog	Books, DVDs and music
PostShop	Post and e-commerce	Cosmetics, books, health and fitness products

Distribution Network

Types of Outlet

Hypermarkets: Located on the outskirts of large towns.
Food, cleaning products, cosmetics, clothes, jewelery, electronics.
Real, Auchan
Supermarkets: Located in residential areas, near a metro station or on a main road.
Food, cleaning products, cosmetics.
Perekrestok, Ramstor, Sedmoi Continent, Mega
Specialized stores: Located either on the outskirts, or in the city-center, generally in shopping malls.
Sports items, furniture, DIY, clothes, hardware.
Intersport,Sportmaster, Ikea, Shatura, Leroy Merlin, Castorama, Collins, Sela, Mexx, Arbat Prestizh, Douglas-Rivoli
Discount stores: Located in residential areas.
Mainly food.
Diksi, Magnit, Kopeika
Local shops: Located in residential areas.
Mainly food, open 24/24.
Kvartal, Pyaterochka
Stalls: Located on main thoroughfares and also near metro stations or markets and shopping malls.
Each stall is specialized in one type of product: drinks, underwear, CDs and DVDs, jewelery, icons, fruit and vegetables, tobacco, etc.
The products sold are generally poor quality and low price.
Open air markets: These are usually regulated places where individuals can rent a stand. Food markets are relatively small and there are a lot of them.
Other markets, especially for stereo systems, electric appliances, etc. are fewer in number.
Gorbushka, Savelioskaya,Izmailovskyi, VDNKh à Moscou

Evolution of the Retail Sector

Growth and Regulation: The Russian market represents 200 billion USD according to the Federal State Statistics Service and has grown by about 13% per year over the last few years. Nevertheless, according to several research bureaux, the market could in fact easily be higher than 300 billion USD and have grown by 30 to 40% per year in reality.
Whereas distribution systems were practically inexistent at the fall of the USSR, the almost total privatization and liberalization of the sector have led to a rapid market transformation. Supermarket chains began to develop in the 1990s and the present structure integrates the components of the western model.
Market Shares: An essential part of distribution is still carried out by means of stalls and markets. They represent more than half of sales, with 20% for open air markets. Being able to use these channels is often the key to success in Russia.
As regards chains, the market is dominated by supermarkets which represent more than half of sales.
Hypermarkets have appeared recently (opening of the first Auchan in 2002), and are already reaching 10% of total turnover; they have strong potential. They target a relatively well-off clientele.
The share of discount stores is also about 20%, but the market seems to be more saturated.
Finally, local shops represent from 10% to 15% of chain sales.
Organizations in the Retail Sector: Sector-based alert
Russian Chamber of Commerce and Industry

Commercial Intermediaries

Trading Companies
Type of Organization: It is generally a question of import/export companies, specialized in one type of product.
These companies are useful for penetrating the retail market at a lower cost. In fact, without setting up on the spot it is difficult to access the market. This is mainly due to the relative underdevelopment of buying groups.
Main Actors: The market is very segmented.
We can name : Novoexport (cross category), Prommashimport (machine-tools), Prodintorg, Vneshintorg (foodstuffs), Rusimport (wine), Dina International (medicines), Elektromedoburovanie (medical equipment).
Wholesalers
Type of Organization: The sector is made up of relatively small companies specialized in one type of product and larger companies offering especially logistic and storage services. Generally, wholesalers carry out import business.
Main Actors: Metro, Stock-Planet (clothes), TC-Belcom (chemicals), Exima (food), Morozilnik (household appliances), Mebel-Russi (furniture)
The import/export companies mentioned above also act as wholesalers.
Useful Resources: Global E-commerce network
Catalog of wholesalers
Russian importers
U.S Commercial Service Guide to commerce

Using a Commercial Agent

The Advantages: Allows you to start up business locally at reduced cost and to extend your business later.
Allows you to widen your business to another geographical area if your company is already established in the country.
Where to Be Vigilant: Because of the size of the country, it is not usual to depend on only one agent, but rather on a distribution network.
Counterfeit invoices and other irregularities are sometimes reported. Generally speaking, finding a trustworthy partner is not easy and you need to keep up a certain level of supervision.
The notion of a commercial agent is not often found in Russian business culture.
Elements of Motivation: Exclusive rights, a fixed term contract, sales objectives.
You must ensure active follow-up. Your physical presence and the development of personal relations are often useful.
The Average Amount of Commission: Generally from 5 to 10%.
More if the market is limited (equipment), less if the volumes are large (raw materials).
Breach of Contract: The company has the right to terminate a contract at any moment. It will then have to compensate the agent for any losses.
If no term has been specified in the contract, the agent may terminate it by giving a month's notice.
Finding a Commercial Agent: RVE Russia, RVE Russia assists you to identify your prospects, partners and advises you on your local business operations.
E-ligne Agency
Alibaba

Learn more about Traders, Agents in Russia on Globaltrade.net, the Directory for International Trade Service Providers.

Setting Up a Commercial Unit

The Advantages: Allows you to have direct contact with consumers and the control of the distribution chain.
Can be useful if a company wants to find growth opportunities or establish its presence in the medium or long term.
Where to Be Vigilant: Interpretation of the laws varies according to the region. It is advisable to call in a legal consultant when carrying out registration formalities.
Different Possible Forms of Settlement
A Representative Office: A representative office must be approved and registered with the Ministry of Justice. It allows you to employ up to 5 foreigners and to send out business invitations.
Opening a representative office is a complex legal process that provides little opportunity. It is better to build a OOO (LLC) which is cheaper, simpler to implement and offers more possibilities.
A Branch Office: A branch office is not considered to be totally independent. It cannot conduct commercial business, but it can negotiate, prospect, supervise the distribution network and give the parent company commercial support.
It is advisable to register with the Ministry in charge.
A Company: A company must register with the Chamber of Commerce and Industry and with the local Tax Office. That takes considerably more time.
It can be a joint-venture or a subsidiary belonging 100% to a foreign company.

Franchising

Evolution of the Sector: Over the last 10 years, franchises have developed in the automobile sector, company services (post, cleaning, logistics, consulting), education, health, leisure and tourism.
There is large number of franchises in the retail trade and especially in fast food and cafés.
It is advisable to be particularly vigilant when drawing up contracts which must be registered. According to Russian law, the franchisor cannot impose standards or prices on his franchisee.
Some Big Franchises: Baskin-Robbins, ice creams
Sbarro, pizzeria
Bagatelle, gifts
Hirsh, real estate
For Further Information: Russian association for the growth of franchising

Finding Assistance

Export Trading Companies: Prodmashimport , machine-tools
Prodintorg , food
Rusimport , wine and spirits
Dina International , pharmacy
Catalog of international trade companies
Portal for Russian foreign trade

Learn more about Selling to Russia on Globaltrade.net, the Directory for International Trade Service Providers.

Market Access Procedures

Customs Procedures

Import Procedures: The Customs declaration can be made by the informant of a company that comes under Russian law and sent to the Customs office where this company has previously been registered. A company exporting to Russia can also call in a Customs broker who will take charge of carrying out Customs formalities in its name. Clearance inward, with immediate payment of duties and taxes, is the regime most commonly used by operators exporting to Russia.
Specific Import Procedures: There is a license system for certain specific products (pesticides, jewelery and precious materials, electrical material, etc.) which represent about 3% of all the goods imported. These licenses are issued by the Ministry of Foreign Economic Relations and controlled by the State Customs Committee.
Importing Samples: Biological samples and samples of medecines must be accompanied by specific certificates.

Customs Duties and Taxes on Imports

Average Customs Duty (Excluding Agricultural Products): 9.89% on simple average according to the UNCTAD (2005). It is a relatively low rate.
Products Having a Higher Customs Tariff: Finished products (15%), foodstuffs (20%), agricultural products.
Preferential Rates: The rates displayed in the Customs tariff are applied to countries which benefit from the Most Favored Nation clause (MFN), i.e. the majority of third countries, including those of the EU.
Russia has a free trade agreement with the CIS countries and Serbia. In addition, a common economic area with Belarus and Kazakhstan within the framework of the Eurasian economic community has been created.
Customs Classification: Russia implements the Harmonized Customs System. The Customs tariff includes 11 032 tariff lines.
Method of Calculation of Duties: 85 % of tariff lines are taxed on an ad valorem basis. Russian regulations provide for methods of determining Customs value, generally the CIF standard in conformity with the rules of the WTO.
The rest uses a combined system: the tariff applied is the maximum between the ad valorem tariff and a specific tariff, often fixed.
Method of Payment of Customs Duties: Duties and taxes are collected by the State Customs Committee.
Customs also collects fees for carrying out Customs formalities.
Payment is made in cash when making the Customs declaration. Clearing Customs is only authorized with a certificate proving payment has been made.
Import Taxes (Excluding Consumer Taxes): None

List of tariffs and local taxes that apply to your product on our service Aranceles.

Labeling and Packaging Rules

Packaging: There are no specific rules: the packaging must be whole and sealed but it must be able to be opened by Customs officers.
Languages Permitted on Packaging and Labeling: Product labeling must obligatorily be in Russian. The other official languages of certain federal subjects or ethnic minorities are optional.
Unit of Measurement: Russia uses the metric system. See the "Russian Classification of Units of Measurement" Act
Mark of Origin "Made In": Obligatory
Labeling Requirements: Generally the name of the product and the producer.
For foodstuffs, add the weight or volume, the ingredients, the nutritional values, storage conditions and expiry date.
For non-food products, the characteristics and instructions for use.
Specific Regulations: None

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