IT WAS THE END of the 90’s and the famous IT era was hitting its peak. The Swedish market was burning hot, new IT companies were formed each day and the competition for skilled IT personnel was adamant.

– You could hardly find personnel, people were approaching students still in school and the salaries were high. We decided to look outside the Swedish market, says Marcus Landgren, Managing Director at Kentor East (former Connective before Kentor acquired the company in 2006).

MARCUS LANDGREN arrived in St Petersburg in 1999 and, in contrast to Sweden, the unemployment was high after the Rouble crisis and it was easy to find personnel. Today, nine years later, it is still easy to recruit personnel and the salaries are still lower than in Sweden. Russia’s economy is recovering after the fall of the Soviet Union. The devaluation of the Rouble in the end of the 90’s resulted in a heavy deterioration of the standard of living for the major part of the population. This was also due to foreign investments and basic exports. In 2006, a record year for foreign investments, investments increased by 13.5 percent. The major part of the capital was deployed in the process and mining industries. Basic exports of petroleum, natural gas, metals and timber make up 80 percent of the country’s total export and sustain the trade balance surplus.

IN SPITE OF the downward tendencies in the world economy, Russia keeps showing black numbers. This year, Russia’s GNP is estimated to increase by 7.3 percent - the fastest increase of all countries in Central and Eastern Europe.

– The local market is exploding right now. Each day you feel society moving forward and getting stronger. There is incredible purchasing power and since the Russians don’t have the same strong tradition of saving like the Swedes, consumption has increased enormously as they get more money in their wallets. It is a shame that only a few Swedes realise the opportunities that exist here. H&M are setting up, but should have been here a long time ago. IKEA on the other hand, was established eight years ago and today they have more than 10 department stores around Russia.

The Resurrection of Christ Church, St Petersburg.  Source: rucksack.se 

EVER SINCE MARCUS Landgren set up his business in Russia, he got many questions from Swedes wondering about the risks.

– In general, Swedes are quite conservative and have lots of prejudice against Russia and Russians. The most common question is about problems with the mafia. There is a lot of prejudice about the dangers, but I disagree.

HOWEVER, HE ADMITS that there are differences between Sweden and Russia.

– There are a lot of differences but there are also similarities. A big difference is the speed of the business decisions. Swedes reflect longer in order to feel confident before making up their minds while Russians in general take more risks. Swedes, being slower to decisions may create frustration with the Russians. When the Swedes finally make up their minds, the Russians could have moved their business to a new partner.

Russians are known to be quite opportunistic - which goes together with taking risks. If they see a chance, they take it. Long term thinking is not their strong side. Another big, and probably the most obvious, difference between Sweden and Russia is the language.

– They have a completely different alphabet and the language is nowhere near Swedish. In the beginning, this was a rather big obstacle for me. Traditionally, Russians are not used to sharing their knowledge. Count on finding out and learning things on your own. Like in many other countries, the personal contact is important in Russia. Marcus Landgren says that in some businesses a handshake could be more powerful than a written contract and it is important to build personal relations.

ONE MAJOR PROBLEM with the Russian economy today is that there are not enough small and medium sized companies. The Russian banks, owned by the oligarchs, are terribly corrupt. This has resulted in major difficulties to get assistance with financing and setting up a business. Subsequently, the government is trying hard to simplify business laws as well as putting more pressure on the oligarchs. The World Bank and EU have started a project to build a more independent banking system in Russia.

MARCUS LANDGREN HAS a bright view of the future in Russia and his business plan is to continue expanding in St Petersburg and eventually in Moscow.

– There are a little more than 5 million inhabitants in St Petersburg and almost 11 million in Moscow. It is an enormous market that keeps growing.

                                                                                              Emelie Ring