Russians, especially Muscovites, exaggerate the importance of their capital, partly because society has not caught up with the economic transformations following the fall of the Soviet Union.
Market forces have overtaken the Central Planning Ministries of Soviet times, and business investment and purchasing decisions are now distributed across Russia. For example, the largest supermarket chain, Magnit, has its headquarters in Krasnodar (a thousand miles from Moscow), and it wasn't until 2012 that it opened its first three outlets in Moscow.
The public sector has always operated beyond the scope of Moscow. Russia’s 83 provinces and their local insurance organisations, make independent decisions about the their suppliers and the health, education, transport and social security provisions they buy.
In more mature economies, consolidation in the market economy sector has resulted in professional managers being based at group headquarters, but this hasn't happened in Russia. In the past, establishments were usually privatised by site rather than as chains of businesses. New, local owners then took over all decision-making and this change took a lot of power away from Moscow. Therefore there is less private sector decision-making in the corporate headquarters of the capital city, not only compared to Soviet times but also to most mature capitalist economies. The Russian private sector is still dominated by these first-generation owners living near their businesses. Therefore, selling to the private sector requires a willingness to travel.
The big utility networks, such as water, telephony and electricity, are regionally or municipally based. Their headquarters and supplier networks are outside Moscow.
Federal government spending decisions are not concentrated in Moscow, but distributed across the eight federal districts. The 1,867 Raiions (similar to county councils), with a further 44,000 municipalities (rural districts), all make their own buying decisions. Organising large purchasing co-operatives, has not yet taken place on an big scale.
Few markets can support distributors able to track the tender processes in such a vast country. Having a single distributor in Moscow is usually not the best solution, as most customers are out of reach with only one distributor. In Russia, distributors take orders but they do not sell.
One way to enter the market is to work with an importing specialist who maintains contact with local agents that know the officials managing local tenders. This way of working ensures national coverage but the downside is that control of brand image, pricing and service, is weak. Yet product management can overcome these problems. Unlike in Europe, investment in local product management, service and sometimes final assembly, is often necessary.
Against these trends, there has been some consolidation of remaining state assets, particularly in defence. This has been under the control of a Moscow ministry and large defence contractors, but this is atypical of the present Russian climate.
Market forces have overtaken the Central Planning Ministries of Soviet times, and business investment and purchasing decisions are now distributed across Russia. For example, the largest supermarket chain, Magnit, has its headquarters in Krasnodar (a thousand miles from Moscow), and it wasn't until 2012 that it opened its first three outlets in Moscow.
The public sector has always operated beyond the scope of Moscow. Russia’s 83 provinces and their local insurance organisations, make independent decisions about the their suppliers and the health, education, transport and social security provisions they buy.
In more mature economies, consolidation in the market economy sector has resulted in professional managers being based at group headquarters, but this hasn't happened in Russia. In the past, establishments were usually privatised by site rather than as chains of businesses. New, local owners then took over all decision-making and this change took a lot of power away from Moscow. Therefore there is less private sector decision-making in the corporate headquarters of the capital city, not only compared to Soviet times but also to most mature capitalist economies. The Russian private sector is still dominated by these first-generation owners living near their businesses. Therefore, selling to the private sector requires a willingness to travel.
The big utility networks, such as water, telephony and electricity, are regionally or municipally based. Their headquarters and supplier networks are outside Moscow.
Federal government spending decisions are not concentrated in Moscow, but distributed across the eight federal districts. The 1,867 Raiions (similar to county councils), with a further 44,000 municipalities (rural districts), all make their own buying decisions. Organising large purchasing co-operatives, has not yet taken place on an big scale.
Few markets can support distributors able to track the tender processes in such a vast country. Having a single distributor in Moscow is usually not the best solution, as most customers are out of reach with only one distributor. In Russia, distributors take orders but they do not sell.
One way to enter the market is to work with an importing specialist who maintains contact with local agents that know the officials managing local tenders. This way of working ensures national coverage but the downside is that control of brand image, pricing and service, is weak. Yet product management can overcome these problems. Unlike in Europe, investment in local product management, service and sometimes final assembly, is often necessary.
Against these trends, there has been some consolidation of remaining state assets, particularly in defence. This has been under the control of a Moscow ministry and large defence contractors, but this is atypical of the present Russian climate.
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