World City Guide

Business

Business Profile
St Petersburg, as the second largest industrial centre in Russia, is a major manufacturing and research centre. Most of the engineering output was, however, geared to meet military needs and went into a sharp decline with the break-up of the Soviet Union. Industrial output fell by some 75%, between 1992 and 1995. The last few years have, however, seen a major transformation towards modern technologies, with new industrial leaders emerging, taking over old city-centre factories for conversion or building new facilities on the eight industrial zones on the periphery of the city. New players on the local scene include multinationals such as Coca-Cola, Unilever and Rothmans. The main artery of the city for business is Nevsky prospekt, with most office situated on or near it.

The construction work associated with this transformation has in itself provided a significant boost to the local economy. St Petersburg also benefits from having a well-educated workforce, coupled with world-class educational and research facilities making it very attractive to inward investment, particularly in the field of high-tech industries. It is also a major transportation hub and the country’s largest seaport. The leading industries are engineering, shipbuilding, transport, food processing and paper processing. Tourism is fast emerging as a contributor to the economy and, with St Petersburg already attracting more tourists than any other Russian city, this looks set to increase, bringing with it more construction work and employment in the service sector.

The labour force of St Petersburg, at 2.6 million, is approximately half of the resident population, of whom some 3% may or may not be unemployed. Official statistics on employment and unemployment are notoriously unreliable, owing to the lack of financial incentives, under social security legislation, to register, as well as the size of the black or hidden economy. Unemployment in the Russian Federation officially stands at 11%. However, no account is taken of workers still registered with employers but receiving no remuneration, as many Russian workers continue to go to work but receive no pay and some stop going to workplaces that do not have the funds to pay their wages, although they may still be officially on their books.

Business Etiquette
Formal business etiquette is very important in St Petersburg and both men and women should wear smart, sombre business suits. Business visitors should start each meeting with a handshake and exchange business cards, printed in both English and Russian. Appropriate gifts are pens, key rings and lighters bearing the company logo. Visitors should always wait for the senior Russian present to start the meeting and participate only when invited to. They should also do some research and know a little about everyone at the meeting. Referring to colleagues by their first name and patronymic is a reliable way to show some knowledge of Russian culture. There are not very many women in Russian business but Western businesswomen will not be treated much differently, they will simply be regarded as honorary males. When shaking hands, foreign businessman should never extend their hands to a Russian businesswoman, unless hers is already outstretched, as such a gesture is considered very rude.

Normal office hours are Monday-Friday 1000-1800, with a lengthy lunch break, usually 1200-1400, during which no work is done – even telephones are left unanswered. Although working outside business hours may be frowned upon, a business colleague may offer an invitation for a night on the town or dinner at home. If invited to a Russian businessperson's home, visitors should bring an odd number of flowers and wine as a gift, take off their shoes and try not to discuss business until the host initiates it. One should never refuse to drink a toast but beware of the effects of Russian vodka and learn when it is allowed to say no. Visitors should avoid agreeing with their host if criticising Russia but concentrate instead on the positive aspects.