It was Woody Allen who once quipped: "I took a speed reading course and read War and Peace in 20 minutes. It involves Russia." Though no longer the enigmatic empire of old, it's still surprising how superficial our knowledge in the West remains of the largest country on earth.
For anyone looking beyond the currently troubled European Union to extend their business, it is an opportunity they can't afford to ignore. Last year, Russia overtook Saudi Arabia as the world's leading producer of oil, while it possesses the world's largest natural gas reserves and is the third largest exporter of steel and aluminium. There is an increasing appetite for luxury brands, with Porsche, Armani, Rolex and Bulgari near the top of the wish list and the Russian car market may well become the biggest in Europe by 2014.
While it does not always play by the traditional Western rules – witness its stance over Syria and the recent controversial jailing of a female punk rock band – there is no indication this has caused any diminution in enthusiasm here for conducting trade in Russia. It is the UK's fastest-growing export market with exports up by a massive 39% between 2010 and 2011, and there are some 600 UK companies with a presence in the country.
And while its infrastructure lags behind that of most European countries, it has a workforce that is well educated, has huge natural resources and a fast-developing industrial sector.
Yuri Andreev, international manager at Scottish Development International's Moscow office, was last week celebrating Russia's membership of the World Trade Organization, after 18 years of negotiations. He had good reason to be ebullient: the accession will mean better access for exporters of manufacturing and services, including in the UK, and the World Bank estimates that WTO membership could see Russia's GDP increase by 3.3% in the next three years.
Andreev highlights opportunities in oil and gas, with niche sectors such as luxury goods, food and drink, renewable energy and education all growing. Aberdeen-based Wood Group has more than 100 engineers in the country, while engineering company Howden has an office in Moscow to service the oil, gas and chemical sectors.
In textiles, Johnstons of Elgin has been selling high-end products to Russia for a decade and is among Scottish companies tapping the spending power of the mushrooming middle class that is increasingly discerning – and believes in getting value for money.
Aiming to raise the awareness of Russian buyers of premium consumer goods, says Andreev, Style Scotland next month will present more than 10 of the country's best known fashion and interiors manufacturers to some 200 Russian firms, with the goal of creating new and strengthening existing partnerships.
A significant part of the £200 million worth of Scotland's exports to Russia, he adds, is in fish and seafood products. Again targeting the luxury consumer market, Linn Products, which produces premium audio equipment, has a new distributor in Russia and, says Andreev, is seeing a "huge growth in the sales of their products and is generating a lot of interest."
Distributors and agents are oftenWeb the key to access an unfamiliar marketplace and this is clearly where agencies such as SDI are important when it comes to negotiating the daunting red tape that remains, for many potential exporters, the single biggest challenge.
"We can help people locate distributors, dealer and agents there," says Andreev. "Logistics and distribution of goods can be a problem because of the relative lack of infrastructure across Russia."
Small companies, he adds, can be dissuaded from entering the marketplace because of the relatively entry costs being high.
"This means all the costs that companies face to actually enter the Russian market, even before they get to the stage of selling them to the customer," he says. "This includes verification, which is important but time and resource consuming."
WTO membership will ameliorate the situation somewhat but Russian regulations are strict regarding certificates of conformity for goods coming into the Russian Federation, Belarus, Kazakhstan or Ukraine – with a list that includes technical regulations, fire safety certificates, registration of medical devices, technical passports and exemption letters.
Despite this, he believes there are active opportunities for companies on a much smaller scale than the multinationals such as Royal Bank of Scotland and Wood Group who have had years of experience dealing with Russian trade. There is huge scope for innovation. The Russian government has launched a number of programmes which give financial support to innovative products and there are innovation parks looking for international partners for technology transfer.
One of these is Russia's answer to Silicon Valley: Skolkovo, a new, special economic zone where overseas companies will receive tax breaks and special treatment regarding visas and imports.
Including IT, bio-technology and energy efficiency, the Russiangovernment has earmarked $3 billion over four years and it has already attracted the prestigious Massachusetts Institute of Technology and Strathclyde University, which is collaborating with Russian company Stentex – to which Skolkovo provided funds – to develop medical devices for heart patients. Edinburgh's Heriot-Watt University, which has a pioneering reputation for overseas partnerships, will next month hold a graduation ceremony in Moscow for students who have completed an MSc at the university's Institute of Petroleum Technology via Tomsk Polytechnic University.
David Cant, a Glaswegian and managing director of consultancy Albion Overseas, advises Scottish businesses not to get sidetracked by what he describes as some common misconceptions.
"One of the main things that worries people is getting paid," he says. "The reality is that so far, we have never had a payment problem with the Russians; they generally pay on time and often in advance.
"Some companies also tend to think there will be difficulties concerning language, security and corruption in what appears to them to be an alien culture."
The problem of corruption, he believes, has been over-stated: "It occurs all over the globe and does not mean if you are conducting business in Russia you will by definition encounter people who are involved in corrupt practices. We have never once been asked for a bribe."
Don't assume, he counsels, that Russia is the same as eastern Europe: "The dynamic is different. When Russia builds a pipeline they may have to cross four time zones – the country itself crosses nine – and that's quite difficult for people in the UK to comprehend as we don't even span one. So remember that things aren't the same as they are in Poland, the Czech Republic and Hungary."
And, he stresses, business in Russia is very much based on relationships.
"I've have seen businesses propositions collapse at the first hurdle when people arrive, snap open their briefcase and start to talk about the product," Cant says. "It doesn't work. Russians want to know if you are there because you want to sell them a product or service, or because you actually want to engage for the long-term."
SDI's Yuri Andreev concurs: Don't allow people to think that you might be wasting their time, he says. "It's important to convince prospective Russian business partners that you have done the initial research.
"But when you get acquainted and form a relationship, Russians are very straightforward and have a ready sense of humour which is quite like that of the Scots. They appreciate the same values."
