How foreigners implement their business in the Russian Federation.

Aug, 10 2022

Business leaves Russia mainly through the conclusion of mergers or acquisitions of companies. Many companies announced in March their desire to reduce investments in the Russian Federation, at the same time, the actual projects implemented are no more than 50 percent of the announced ones.

This trend shows that many Western companies want to keep business in Russia, and they preserve their detail, reduce investments or transfer management to local management. Which makes it possible to think about the prospects of doing business in Russia in the future.

Moreover, the companies do not intend to lose a significant part of the global business profits, after breaking off relations with their Russian subsidiaries.

Another reason is the difficulties of selling the asset in Russia. Many buyers are counting on a significant discount, which Western business does not intend to give. Additionally, for the implementation of each transaction with a foreign business, the approval of a profile commission is required, because of collecting an impressive package of documents.

Thus, we can distinguish two ways for Western business to exit the Russian market:

1. Sale of the business to a Russian investor.

2. Appointment of local management. The latter scenario has been implemented by more than 40 percent of outgoing companies, which is encouraging, as it clearly shows their intention to return after the stabilization of the situation in Russia

Author of the article
How foreigners implement their business in the Russian Federation.
Valentina Khlavich
Managing Partner
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