The most important aspect for doing business in Russia
Q&A with Adrian Marley, managing director, DHL Express CIS & South East Europe, during his recent trip to Dubai.
How does the collaboration between the DHL CIS & South East Europe and the DHL UAE work?
The best way to explain it will be to say the strength of our business is the interaction between countries and regions. And by actively involving yourself with what's happening in this country and helping other people to understand better what's happening in my country, that is a great way to facilitate trade. I see our business going forward is the facilitation of trade. One of the benefits of operating in 220 companies is that you have all this expertise which is more than just helping people move a shipment from A to B. There are many more things we can do, in terms of understanding the culture, understanding the way business is done, the processes, and the procedures. That's really the future of our business: to make sure we help customers to better grow their business. There can be no better customer than one whom you have helped really to develop their business in another market.
In what ways can the collaboration between UAE/Middle East and Russian businesses improve?
There are pre-conceived ideas about every market and it is very important that you get rid of those pre-conceived ideas, particularly the negative ones. It is important to seize the opportunity to explain to people that doing business in Russia is actually not as difficult as you think, provided you do certain things.... and we're helping those customers to do these things, because it also helps us; we get more shipments for our businesses.
Russia is an incredibly difficult and demanding place in terms of customs and paperwork. That's a fact, but if you get those particulars right, the process can be as manageable as anywhere else. That's the main message, you need to do your homework before you start to ship into the country, so that everything is right in terms of paper work, and then you will find that it is relatively simple to move forward.
Speaking legally, the whole business is about compliance. In many countries there is an issue about bribery and corruption and we in Russia don't take those issues any less seriously than anyone else. We aim to give a consistent level of security to our customers in that they are opting to use a process which is the right, correct, legal process.
The message is to do the homework before you ship anything into Russia, and we can help you do that homework. I have people who will gladly come from Russia to the UAE, or anywhere in the world, to sit with a customer and advise them as to the right way to ship in terms of documentation and process. And that is the real essence of shipping to or from a place – you have to comply with the regulations of the country, then it is pretty likely that you will get what you need in good time.
I always use an example which I give to customers to explain how things can be in a place like Russia. We have a very large textile customer in Russia, who operates 600 stores. There supply chain model is: they don't have a warehouse; their product comes directly from the plant where they manufacture to the shops. So, for example, in their main store on the Main Street of Moscow, they might sell a shirt today. Their supply chain model dictates that the shirt is replaced (from the manufacturing source) in the next six days.
They bring in two Boeing 747s a week and all of these are cleared in hours – why? Because we have the database of the customer’s products, we have the pictures, we have the Russian translations, the HSS codes; we have everything prepared for customs to be able to do their job properly. And if you do that, then they will approve. The danger arises when I pass something through to customs, and something is missing. What do they do then? They give it back. Now time is passing. You need to have these in place beforehand, because that customer benefits from the process in a way which streamlines their supply chain so they don't need expensive distribution centres in the cities. Russia is a very expensive place for property, and they are able to modify their offerings to their customers quickly. Because whatever they sell today, they replace by next week. So it’s a very fast process. And those are the kind of possibilities you have in a country like Russia, if you set it up right.
I have some hundreds of people working in customs clearance in the airports, just to make sure this process takes place, and that's what it's about. Without question some people do it in different ways, but the outcome of these ways is that you end up with something that is not right down the line. So it’s our duty to protect our customers who are bringing their products into a country. They don't want their brand associated with something which is going to cause an issue in the press.
Can GCC businesses looking to expand their operations into Russia expect easy movement of their goods in these markets, as well as adequate infrastructure? What challenges can they expect?
The critical thing is the documentation and customs. Customs and customs duty is the second largest revenue in Russia after oil, but the customs are still not doing much in terms of trade enablement. They are more concerned with ensuring the safety of the borders, which is fine. Things are moving forward, but they need to move forward more. That's why it’s so critical that the paperwork is done correctly.
With the advancement of the EU customs and the simplification of customs’ requirements there are fewer people nowadays with the skills to be able to ensure that the paperwork you use is right. In my day, you had to know what a CMR was, and an invoice, and all the other documents, because you knew if you didn't, then it would be rejected. Now with electronic transfers, it’s much easier. So you see a lot of big companies sending shipments into places like Russia, and you can tell from the quality of the paperwork that they lack the experience. How do we deal with that? By being people who advise and give consultations. For many of our customers outside Russia, we literally act as a green light service. So before they physically ship anything, they send the documentation to us, and we will say yeah this is OK, ship it. Because there is nothing worse than shipping and finding it's either returned or held in customs bond, or whatever. So that is a really important service that we do.
Once the shipment arrives in Russia: we have a domestic business in Russia that is larger than our international business so we have the ability to deliver all over Russia, using time scales that will be acceptable in Europe and other countries.
Why don't more companies operate internationally?
It’s mainly because they don't have the experience. That's where I believe we come in further into the chain. It’s no longer enough that all we do is answer somebody's question as to how much is costs to move a shipment from Moscow to Dubai? If we see opportunity, we should go with people and this is one of our projects in Russia where we found for domestic companies with products we believe or think might have international value. I will then talk to my colleagues in other countries and I ask whether they think this kind of product has a value in their country. If they agree, I ask if they have companies in their portfolio that will be interested in importing this.
Imagine a situation where I send a salesperson in Moscow to see a customer and say, you've got a great product there, I know some companies in another company that would be interested in buying that. We have the expertise in 220 countries and know the local market. That's where I see the future of our business. We encourage our customers to get involved in international trade. In the age of the internet, anyone can have a site, and sell. The growth of B2C business is enormous, particularly into places like Russia. 10-15 years ago you couldn't set up an international business and attract customers without things like trade visits. Now you can sit in your living room and do business anywhere in the world, if you have a product which is worthwhile. All you need is somebody to help you with the part to get it from here to there: that's us! That’s how I see our future.
The same thing is true here. There are people making things, manufacturing things here, which will have a value in other countries, but perhaps at this particular moment in time, they personally don't see the value. If we can help in some way to do that, that will be our duty. And a customer for whom you do that is never going to leave you. It's an exciting time in the express business.
I believe that we are not just moving shipments. One of the biggest improvements we are seeing in our organisation is SMEs. In a recent study, we found that those organisations that have taken the time to become involved with small businesses are hugely more successful than those businesses that were only involved in/with the domestic environment.
Looking at our business in the last year, what I'm saying is being proved. We have had a very successful time doing business globally and regionally.