The First Step: Starting to Do Business With Russia

|Russia

A Cricket Match

On Friday 11th May, an international goodwill match took place between the Hokkaido Cricket Club, which is mostly made up of foreign residents of Hokkaido, and the Sakhalin Cricket Club, which consists of managers from European and American companies involved in the Sakhalin oil and gas development projects. As it was an international match, and cricket is rarely seen in Japan, it was quite a lively affair, with a team of umpires being sent from Tokyo to keep an eye on proceedings. The organizer of this match was Simon Jackson (Australian). In addition to being the chairman of the Hokkaido International Business Association, he also acts as the representative of his own trading company. Originally he imported marine produce from Australia, among other countries, and exported second-hand Japanese cars to Oceania, but since visiting Sakhalin in 1999 to lecture on e-business, he has strengthened his links with Europeans and Americans living in Sakhalin and, despite being virtually a one-man band, has begun trading with such leading oil majors as Exxon and Shell. In the background to this has been such factors as his participation in Halloween parties in the area, and his dedicated support of related people when they visit Japan. This cricket match was also realized thanks to his single-handed efforts and understanding of the needs of those involved in resource projects who find tedious their stay in Sakhalin, where there are few recreational diversions. Given that there are hardly experienced cricketers in Hokkaido, I have great admiration for his motivational powers in being able to put together an impromptu team. As a result of his superb get-up-and-go, he is active in a wide range of fields, not only acting as a contact in Hokkaido for foreign residents of Sakhalin, but also opening a branch of his company and an Indian restaurant in Sakhalin.

In holding this event, I also provided what support I could on a personal basis, but it was particularly effective PR for Ishikari City, which provided and prepared the cricket ground on condition that the oil majors visited the local port, as the port became the focus of a major article in the English language newspaper in Sakhalin. Simon’s achievements are also having a favorable effect on Hokkaido companies.

Interaction Between the Hearing-Impaired Provided Impetus

Sekihara, Ltd. is a small company involved in the painting business in Hokkaido and which became independent of a major painting company in Tokyo. Thanks to the knowledge it gained from carrying out painting work on oil tanks in coastal areas while still part of the major company, it has anticipated the need for painting and related work arising from the Sakhalin projects and has continued to undertake steady PR activities. The company president also has experience in volunteer welfare activities, and has supported interaction between hearing-impaired people in Sakhalin and Hokkaido. The representative on the Sakhalin side felt exceedingly grateful to him and, when they met again the following year, he was introduced to the representative’s son. The son is the owner of the largest haulage company in Sakhalin and receives quite a bit of work related to the Sakhalin projects. The president of Sekihara has also voluntarily welcomed into his home for homestays (working holidays) a Russian student learning Japanese in Sakhalin. Last year, when visited Sakhalin, he was introduced to American managers from Exxon as “someone indispensable to your future business”, at a welcome party held for him at the home of that student’s parents. Sekihara does not at present have any experience of doing contract work in Sakhalin, but it is the only company listed as a potential partner for Japanese energy companies in Sakhalin. Moreover, there are signs of dynamic activity, such as a seminar for local engineers, which was held jointly by these energy companies at the end of July. I sincerely hope that this will become part of the resource projects that will commence in earnest next spring.

The First, Second, Third Steps

The first thing one can say about the examples of the foregoing two companies is that they are using an approach that is within their means. This is probably the secret of their continuing links. In addition, they have also precisely mapped out their ultimate attainment targets, so it has not merely ended up as friendship. There are also examples in Hakodate and Wakkanai of the human interaction built up over numerous years leading to business.

On the other hand, there are cases in which, although major construction companies in Hokkaido have submitted estimates relating to the Sakhalin projects jointly with major consulting firms, they have not been able to fulfill the basic criteria about local content (the rule about giving priority to Russian companies). As a result, they have become something of a joke among companies in Sakhalin, in that they have failed to meet this basic condition despite having spent large amounts of time and effort in compiling materials and translating them.

The theme of this paper is “The First Step”. Firstly, one must have the ability to explain what one’s company can do. One must ascertain its cost competitiveness and assess its future prospects. This seems easy, but it is the thing most lacking among local companies. In addition, one must always be alert. At present, the biggest problem with advisors on Russian business is that they try to judge everything based on their knowledge from ten years or so ago. Systems and business sense in Russia are changing at a much faster speed than in Japan. The hardest thing is getting people to understand this. The “second step” in business with Russia is discarding stereotypes.

The third thing is having “get-up-and-go” and the ability to act quickly. At the end of last month, I said at a gathering in a town in Hokkaido that “the Sakhalin Projects will begin in earnest early next year.” One of the participants (chairmen of construction companies) concluded that, “if the projects are that far advanced, then we have no role to play.” This may well be the case. However, I remember that he was the self same participant who, when I gave a similar speech at the same meeting last year, said that, “there are no definite movements so we will just have to wait and see.”

[Translated by ERINA]