Features of doing business with foreign counterparties.

Contents:

• Legal aspects
• Advantages of cooperation with foreign contractors
• Search for foreign contractors
• Preparation for work with foreign contractors
• Features of concluding foreign economic contracts
• Features of working with counterparties from unfriendly countries
• Features of monetary settlements with counterparties from unfriendly countries

Legal aspects

Cooperation with foreign partners is a valuable resource for business, which can bring new prospects, customers, and opportunities for development. However, successful cooperation requires a deep understanding of the legislative framework, the specifics of document management and handling of various types of foreign partners. In this article, we will pick apart the key aspects of business with foreign partners, as well as how to work effectively with them.

Advantages of cooperation with foreign contractors

The main advantage of working with foreigners, which can be regarded as one of the most pivotal and substantial, is the ability to set higher prices for exports than if you sell goods to buyers in the domestic market. However, it is still necessary to consider the limitations of the Russian market, where saturation of a certain group of goods can occur at one moment. Entering foreign markets allows you to maintain sales volume at the expense of another country.

Among other advantages for the company are:

• Trust in foreign brands. Of course, it is more interesting for the buyer to buy goods produced in Europe or in the USA. Such trust has been developed over the years. Thus, cooperation with foreign companies is an excellent step towards increasing profits.
• Best quality. Compared to China, Western manufacturers have always been distinguished by the good quality of goods.
• A large selection of products. Fashion reaches our country with a delay – the last squeak of goods appears in the West earlier. If you order directly, you can provide the consumer with the novelties of this season.

Search for foreign contractors

Usually, the search is conducted through open sources or the exchange of contacts in the business environment. In principle, you can find contacts of future partners on the official website or in social networks. After that, you need to call or send a letter with an offer of cooperation. To search, you can also use:

• Aggregators. For example, B2B platforms that provide information about companies from different countries, among which there are both importers and exporters.
• Visiting international exhibitions, where you can not only exchange contacts, but also look at the products of future partners.

Preparation for work with foreign contractors

It is quite difficult to work with foreign counterparties. The legislation imposes more serious requirements on foreign economic transactions. To prepare for working with a foreign company, you need to complete the following steps.

• Reinforcement of the legislative framework and international treaties.

Cooperation with foreign partners is based on the legislation of the country in which the business is conducted, as well as on international treaties and agreements. International treaties, such as agreements on the avoidance of double taxation, can regulate taxation, the legal status and protection of the interests of companies in different countries.

To work with foreign partners, it is necessary to comply with both Russian and foreign legislation.

All data on domestic norms can be found in federal laws and codes. However, the nuances of foreign legislation need to be clarified with foreign partners with whom it is planned to work. Otherwise, you will have to study the information yourself.

Exporters will always be able to seek help from the Russian Export Center, where they can get advice on various issues: from logistics to legal support. You can also read the data on the websites of different departments, where sometimes they also post data on the subtleties of importing and exporting certain products.

It should be borne in mind that some categories of goods may be subject to restrictions in the form of an export ban or a permissive export procedure. This means that it is prohibited to export certain categories of goods for sale. The permissive procedure means that it is possible to export goods, but this requires the permission of the relevant authority.

• Check and select foreign partners.

Before starting cooperation with foreign partners, it is important to conduct a thorough check and evaluation. This may include an analysis of the partner’s financial situation, reputation, work experience and other key factors. Choosing reliable partners contributes to successful business development.

To check a foreign counterparty, you need a resource like sites for checking Russian legal entities, for example, open databases or tax bases from around the world. If a company is officially registered and pays taxes, then this indicates its reliability. Special online resources allow you to get data quickly and at no great cost.

You can also check the company yourself. This is the most budget-friendly way, but it takes the most time. To find all the necessary information, you will need to browse many sites.

• Solve issues with document management and legal aspects.

When cooperating with foreign partners, it is especially important to comply with formalities and legal requirements. The conclusion of partnership and supply contracts, as well as other agreements, should be carried out considering the laws and regulations of each of the countries involved in the business.

• Check the banking details. To do so, you need to request constituent documents from a potential partner (preferably with a notarized translation into Russian), and also check whether a counterparty exists with such details.

Features of concluding foreign economic contracts

Foreign trade agreements are subject to currency control. Some of them need to be registered with the bank. This applies to contracts related to:

• The export and import of goods.
• With the receipt or provision of loans and credits.
• With the performance of works, the transfer of information and the results of intellectual activity and exclusive rights.
• With the sale or purchase in the Russian Federation and abroad of products, stocks and other goods for the operation and maintenance of transport en route and at stopping points.
• With the transfer of movable and immovable property under lease or leasing agreements.

Currency control sets requirements for the contract in the national currency of Russia (rubles). Thus, it is only necessary to register:

• Import contracts worth 6 million rubles and above.
• Export contracts worth 3 million rubles and above.

It is important to know that any company can accept transactions in foreign currency to accounts that are opened in different banks if anti-Russian sanctions were imposed on the financial institution where the company’s currency contract was registered.

The foreign economic activity agreement is concluded considering the laws of two or more countries-registrars of partner companies. To avoid discrepancies in the translation of terms, it is necessary to pay attention to the legislation of each state.

Few people know that there is a special international collection of terms – Incoterms. When agreeing on the terms of shipment, delivery, transfer of ownership and responsibility for the goods, you need to contact him.

The contract is concluded in two languages. However, it is important to pay attention to the clause of the contract, which says which language will be used if there are discrepancies. Russian suppliers would be better if, if they are available, the Russian language is used.

Features of working with counterparties from unfriendly countries

In cooperation with partners from unfriendly countries, it may be necessary to comply with additional restrictions and sanctions established by international organizations or States. It is important to comply with all restrictions and strictly comply with legal requirements.

According to the decree of the Government of the Russian Federation No. 430-r dated March 5, 2022, the list of unfriendly countries includes several dozen states, including all members of the European Union, Australia, Canada, the USA, Switzerland, Norway, the Republic of Korea, Singapore, Taiwan (China), Ukraine and others.

To work with such counterparties, it is important to obtain permission from the Government Commission for Monitoring the Implementation of Foreign Investments in the Russian Federation. You need to get permission for the following groups of operations:

• Transactions related to the emergence of ownership rights to securities and real estate.
• Transactions for the provision of loans and borrowings, except in cases where the provision is prohibited by regulatory legal acts.

It is important to know that it is also necessary to obtain permission for transactions with persons who are influenced by companies from unfriendly countries. It is also necessary to obtain permission for transactions between residents and non-residents from any countries when performing operations:

• Providing foreign currency under loan agreements in favor of non-residents.
• By crediting foreign currency by residents to their foreign accounts.
• For money transfers without opening a deposit using electronic means of payment provided by foreign service providers.

By and large, cooperation with partners from countries with which Russia has already established well-consolidated economic connections, can have an impact on document management and communication processes. In some cases, there may be special agreements between countries that facilitate the simplification of the visa regime, simplification of customs procedures and exchange of information.

Features of monetary settlements with counterparties from unfriendly countries

The temporary procedure for fulfilling obligations to foreign creditors from unfriendly countries applies to:

• Contracts, the value of which exceeds 10 million rubles per calendar month.
• Contracts whose value exceeds the equivalent of the specified amount (10 million rubles) in foreign currency at the official exchange rate of the Central Bank of the Russian Federation, fixed on the 1st day of each month.

For settlement, you can open a type “C” account in a Russian bank in the name of a foreign company, after which a domestic company will be able to transfer the amount of debt in rubles to a deposit.

Conclusion:

Cooperation with foreign partners expands new horizons for business, but requires careful analysis, legal literacy and understanding of international standards and norms. It is important to consider the legislative aspects, the specifics of choosing partners and the rules of document management in order to ensure successful and long-term cooperation in the conditions of the global market.

Question and answer