The Far East Russia has been regarded as an attractive market because of its potential and possibility. However, the region with "High Risk, High Return" also has a lot of risk factors for foreign investors. In case of Korea, companies which have entered into the Russian market have some difficulties caused by a strict import clearance and little information on the market.
Various problems exist across the Federation for Korean companies to push into the market in the Far East Russia. First, one of major obstacle is the authority's control policy for its natural resources. The Russian Federation recently accelerate its efforts to upgrade the national status in the world by controlling natural resources and nationalizing energy industries.
Although the region is called the repository of natural resources, it is not easy to develop the resources because of the severe climate and poor transportation infrastructure. In addition, the ocean/air freight charge to the region is too high to promote personal and material exchange. Other barrier is the demand on container is more than supplies. The port in the Far East Russia has great volume of shipment to western Russia and Central Asia, which can lead to the difficulties in securing containers.
Yeonhaeju. the Maritime Province of Russia, aims to develop as a logistics hub on the Asia and the Pacific region into the world-class logistics center using the Trans-Siberian Railroad(TSR). However, a strict clearance and high freight rate become a barrier to achieve the goal.
The underdeveloped practices and systems caused by bureaucracy and corruption have created the problem of lower production efficiency. Furthermore, more regulations and intervention by the government have scared foreign investment.
Russia is not an easy market to enter into, In this regard, investors necessarily have to conduct a thorough survey on the market and establish strategies.
First, they should prepare countermeasures against risk factors including changes in the exchange rate and policies. Pre-survey on tax system, environment law, labor law and social infrastructure is also requisite for developing a new market in Russia.
In addition, investors must check whether the local procurement of raw․
subsidiary materials is possible due to high logistical cost and bad circumstances such as cold weather.
The investigation on business partner in Russia is also required to start a business in Russia. As bureaucracy and corruption spread across the society, investors have to verify information on the partner's relationship, influence, financial situation, experiences and credibility.
Russian language proficiency is essential to keep a partnership with Russian people. That's because it is difficult to employ a Russian-speaking interpreter and keep the business secret.
Russia has still been vulnerable to a financing sector. That's why investors secure sufficient fund for their businesses in Russia. It may be difficult to receive the money from financing industries and burdened themselves with a high interest.
These efforts I mentioned above can be an answer to have an international competitiveness for domestic companies in the market of the Far East Russia. More than anything else, the government-level policies and measures are required to expand the logistics business to the Russian market.