Market Opportunity
With the Russian Ruble gaining strength against the dollar, and the recent dramatic rise in average disposable income, Russia is one of the most attractive emerging consumer markets in the world. Russia has far and away the largest population in Europe, at 141 million, which is over 60 million more than second place Germany. And the Russian economy is burgeoning, experiencing nine consecutive years of growth since the financial crisis of 1998, during which the average growth rate has been above 7%.
"The most striking thing [about the Russian economy] is the overall growth of consumer potential," according to an article recently published in Business Week. This comes as no surprise, as a recent Economist article found that never before have Russians shopped or traveled so much. Former President Putin has proclaimed that salaries in Russia are climbing at a rate of 16%, and the business section of Pravada.ru, a Russian news service, found that real wage growth has advanced more than 12% every month in 2008. Even those with low real incomes find most of that to be disposable, as many Russians reside in subsidized housing with low utilities costs. With disposable incomes (and retail trade) growing twice as fast as GDP, Russian domestic productivity has yet to catch up to the sixth largest consumer market in Europe, creating increased demand for imported goods. And this trend does not appear to be slowing down, with the Russian retail market set to grow 84% by 2011 to exceed retail sales in both the UK and Germany.

Best Import Markets
As an emerging middle class with disposable income fuels consumer demand, US exports to Russia increased by 57% in 2007 to over $7.4 Billion. According to the US Department of Commerce, automotive products, household goods, financial services, and retail products are particularly sought after. Additionally, a construction boom has created a need for equipment and materials, high oil prices are driving demand for oil and gas field equipment and services, and computer accessories and electronics are also in demand as the telecommunication industry in Russia continues to take off.

Regulatory and Tariff Climate
Perhaps the greatest challenge for a business looking to expand into the impressive Russian market is navigating the regulatory and tariff landscape. According to an article in Management Today, a UK magazine, the biggest headache for international businesses is the unpredictability and unreliability of the Russian bureaucracy. While import tariffs are not particularly steep, usually ranging from 5 to 20 percent on manufactured goods, non-tariff barriers to trade are a reality in the Russian market. Russian import legislation is often selectively interpreted, intellectual property rights are poorly enforced, discriminatory charges and licensing persist, and specialist firms like the Russia Import Company ensure that small levels of corruption remain. Despite these potential challenges, things are looking up on the regulatory front in Russia. The US and Russia have tentatively agreed to bilateral terms for Russian accession into the World Trade Organization (WTO), and Russia is currently in the process of negotiating further multilateral terms to gain entrance into the WTO. If Russia were to be accepted, their import practices would come under much closer regulation.

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