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Why Russia Is Just as Good as China

Published: December 18, 2013 (Issue # 1791)

Russia and China are both two large, emerging markets. Both have growing middle classes topped with a frothy layer of the super-rich, and both have thorny, challenging business environments that are fraught with corruption. So why do investors leap at the chance to get into China and balk at Russia?

What a difference a billion customers makes.

How mesmerizing to think of selling something to a billion people. Who could say no to an opportunity like that? In reality, few do, despite the considerable challenge corruption poses in China.

But when talk turns to Russia, with only 143 million customers, the conversation grows difficult. For some reason, investors find Russian corruption harder to metabolize. It is puzzling. The problem is as corrosive in one country as in the other.

This divergent approach to investing in Russia and China puts investors in both countries at a disadvantage. If you dismiss Russia only because its small size relative to China fails to justify the never-ending battle with corruption, you will miss a key market. If you rush into China because its enormity dwarfs any concerns about corruption, you risk crashing on the China superhighway.

It is not just a question of market size. The split stance on doing business in Russia and China echoes the equally split public dialogue on the two countries. Russia gets far harsher treatment than China for the role corruption plays in its economic and political systems. Everyone keeps complaining that corruption seems to be part of Russian culture. In the West, this kind of talk verges on reflex, rooted in decades of anti-Soviet invective that finds its modern incarnation in Russia-bashing.

That criticism is applied unevenly. Though China was the power-behind-the-throne during the Korean war, the West seems to have forgotten that and re-engaged with China in the early 1970s through ping-pong diplomacy and eventually full recognition over the Taiwan upstart. Although a Communist system, China never grabbed the West’s attention as the “evil empire” as the Soviet Union once did and as Russia still does to a large extent.

This does not mean that every investor rushes headlong into corrupt transactions in China without considering the implications. On the contrary, many international companies doing business in China prepare exhaustive anti-bribery and corruption policies to protect themselves from taint and regulatory zeal in their home jurisdictions. The U.S. Justice Department looks at China as prime hunting ground to catch companies breaking Foreign Corrupt Practices Act statutes.

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Thursday, Apr. 24

Learn more about Denmark during the Danish Business Delegation’s visit to SPIBA this evening starting at 5:30 p.m. at the Danish Culture Institute. Danish Consul general Klaus Sorensen will be in attendance and the buffet following a presentation on Danish companies in Russia will be the perfect opportunity to network with the assembled businessmen.

AmCham’s Human Resources Committee Meeting is scheduled for 9 a.m. this morning in their St. Petersburg office. Check their website for more details.

Friday, Apr. 25

Light Music presents the main events for their Cultural Kitchen project at Loft-Project Etagi today. A B2B event that focuses on Finnish food, arts, travel, music and design, the evening will conclude with a dinner by chef Jyrki Tsutsunen and dancing to music by Aino Venna. The event, which began yesterday with presentations by tourism and cultural institutions, concludes today with a preview of Finland’s Flow festival and other musical events. Invitations are available from

Saturday, Apr. 26

At 6 p.m. this evening, stylist Liliana Modigliani offers 50 simple ways to up your style quotient with beauty tips at the Galeria shopping center on Ligovsky Prospekt. The event is part of the final day of the shopping mall’s Fashion Saturday sales event, this week focusing on top brands located on the ground floor as well as presentation from fashion experts on sprucing up your spring look.

Sunday, Apr. 27

Families shouldn’t miss Childhood Planet 2014, the trade fair that started yesterday and concludes today at LenExpo. Not only will goods and services be provided for children and families but the event hopes to promote Russian brands and eco-friendly products using the latest technology available in the childcare industry.

Monday, Apr. 28

The Hotel Indigo will be the site of SPIBA’s Acting Skills for HR and Other Managers master class this morning starting at 9 a.m. The event will begin with coffee before moving on to the class itself and conclude with a tour of the recently opened hotel. Confirm attendance by Apr. 24.

Tuesday, Apr. 29

Improve your English at the British Book Center’s Interactive English Lesson tonight at 6 p.m. Students at pre-intermediate and intermediate levels are welcome discuss topics that are selected to help learners master the more difficult aspects of English grammar and vocabulary.