Motors for Russia.
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B y E. A. BrayIey Hodgetts, Assoc.Inst.C.E., Hon. Vice-President of the Russia Society.
In my last article, I demonstrated how vast a field Russia offered for the motorcar industry. The present and final article will be devoted to the morepractical question of the measures to be adopted to introduce this business into Russia.
A Practical Guide.
Before taking any steps whatsoever, it is necessary. to acquaint oneself with the legal position of foreigners in Russia and the formalities to be observed by foreign companies trading in Russia, the appointment of representatives of such companies, etc.' etc. A great deal of information on this subject will be found in an excellent work from the pen of Baron de Heyking, the Imperial Russian ConsulGeneral in London, entitled A Practical Guide for Rnssian Consular Officers and all Persons Having Relations with Russia," published by P. S. King and Son, Ltd., of Orchard House, Westminster, S.W. The second revised and amplified edition of this work was published this year, and all persons desirous of doing business with Russia should consult it before embarking in trade in that country, more especially should they read Chapter II, page 375, entitled "Rules to be Observed by Commercial Travellers in Russia." It would not, however, be advisable to be content with a perusalof this book.
The Law in Russia.
Russian law is peculiar ; it has grown and developed independently, and it possesses features which are not to be found in other legal systems, Any firm outlining for itself a particular programme of operations in Russia should consult one of the very excellent Russian lawyers, resident in London, who have come here in anticipation of the opening up of more intimate business relations between England and Ruisia, and who are prepared to advise on all legal questions connected with Russian trade. By application to the Russia Society, 47, . Victoria Street, London, S.W., a list of such legal advisers may be obtained, and consultation with them will be well worth the small outlay in fees which this may .involve, and may save many mistakes and disappoint.
• ments. Russians Resent Inappreciation.
After all, It must be borne in mind that Russia, is a great empire with a population of close on 200 millions, with la,ws.and customs of its own which the foreigner will do well to observe and respect. In the past, we have beeir to much in the habit of regarding Russia as a barbarous country with the laws of which civilized people cannot be expected to comply. But Russia resents being treated as though she were another China, or Turkey, or Persia, and more than half the difficulties encountered—more especially by English business men—are due to this attitude. If, on the contrary, the Russian people and officials see that foreign firms' evincean earnest desire to conform to their laws and customs and to respect their national characteristics, they will meet them halfway, and even go out of their way to facilitate their operations. Here, again, as I observed in my previous article, an ounce of tact is worth a ton of gold.
Three Alternative Methods.
But what should be the programme of a firm desirous of introducing its wares, and more particularly its cars or lorries into Russia? There are, broadly speaking, three methods One is to found a branch of their industry in the country, erect their own works, and become to all intents and purposes a Russian firm. This, in the case of the motorcar industry, is not an easy matter. Whether it is proposed to manufacture the component parts of ears in Russia, caamerely, after importing them, to put them together there, much capital will be required, and a great deal of time will have to be spent in preliminary work, erecting a factory, etc., before any results can be obtained. Such a course may possibly recommend itself when a cannection has been acquired, and the prospects of business warrant it.. In the first place, however, it will perhaps be wiser to proceed slowly and to begin by selling ears or lorries which are manufactured in this country. In order to do this, agents will become necessary. There are two courses open. Either to employ existing firms already doing an agency business, or to establish agencies of one's own. There are numerous firms in Russia prepared to take up agencies of this kind, and no doubt assistance in finding a. suitable firm can be obtained from our consular officials. The third method is to create an agency, appoint a carefully-selected representative, rent offices, and make the agency a branch of one's own firm.
The Choice of Mien and Personnel.
In all cases, it is very important to choose the right kind of persons. In selecting an established firm to represent one, great careshould be exercised. Whereverpossible, it is desirable to select either a Russian or .British firm. There are several excellent British firms in existence, and from among them a choice should preferably be made. The difficulty with Russian firms is that so many of them are not really Russian at all, but aliens or Russian-Germans in disguise. Among the most-pushing business people in Russia are the Jews, but their employment Is too often followed by unpleasant experiences. The disguised German firms will betray their principals, and too often use them as a means of subsequently introducing goods of German origin by under-selling.
Credit and Bankruptcy.
A very difficult question is the question of credit. The bankruptcy laws in Russia, still leave much to be desired; fraudulent bankruptcy is not infrequent, and cannot be guarded against. Such useful inquiry agencies as Stubbs's, for instance, do not exist in Russia.; it is, therefore, necessary to trust almost entirely to the discretion of the agent. When it is remembered that Russians, who used formerly to pay cash, have been accustomed of late years to obtain as much as from six manths to two years credit from German firms, it will be understood that the credit quesatta bristles with difficulties. In their eagerness to a latch business, the Germans, by their system of long credit, have often had to pay dearly for their commercial enterprise and rashness. The Germans have lost heavily in Russia, but they have recouped themselves. If sound firms, preferably British, can be found to take up an agency, it is of course desirable wherever possible to make them responsible for bad debts. • The Agent Should Speak and Write Russian.
Where an agency is founded by the manufacturing firm, the representative in charge should preferably be a British commercial man with some technical knowledge who can speak and write Russian. Before appointing agents, the country should be visited by a representative who should make careful inquiries, both from our consular officers and local banks, regarding the status of the agent to be appointed.
Russian Legal Assistance Essential.
The agent or representative will, of course, have to have an office, a staff of clerks, etc., and in this connection certain legal formalities will have to be observed. These will vary in every individual case, and, as I have stated before, it will be necessary to consult a Russian lawyer before embarking on business in Russia.
Personality Means Even More Than Usual.
In Russia, the success of a business enterprise depends largely if not entirely on the personality of the agents as representatives. They should be people of high-class standing who should command the respect not only of customers but of the authorities ; they must have tact, and they must have the social qualities which are so much appreciated by Russians, without which qualities, indeed, it is practically hopeless to do business of any kind in that country. The Britisher is far and away the best man to push a business in Russia. The Russians like the British personally ; there is a certain similarity of character between :them. The Russian has a keen sense of humour, a great contempt for a prig, and can give and take. The rigid character of the German is unsympathetic to him, and the German, to be successful in Russia, has to assume the virtues of goodfellowship and geniality which he too frequently does not possess. Another point in favour of the British man of business is that he is trusted. In Russia, an Englishman's word is regarded as being as goad as his bond.
Staffs Can Be Secured in Russia.
With regard to foremen and workmen to execute repairs, etc., less difficulty will be found. The Russian mechanio is ingenious and works well ; care must, of course, be used in selecting the right sort of men.
Petrograd, Moscow, or-----?
We now come to the vexed question of locality. • I have often been asked by .people anxious to launch out in business in Russia whether Petrograd or Moscow is the more-suitable town. This is a question which is not so easy to answer as some may suppose. There was a time when the official capital of Russia was in name and to all intents and purposes a foreign town, inhabited by aliens, officials, and courtiers. In those days, the real industrial and commercial capital of Russia was Moscow. But since then there have been great changes. Petrograd is to-day not only the seat of the supreme Government ; it is also the town in which the Duma meets and the political life of the country is centred. Hence the commercial and industrial importance of Petrograd has, in recent years, grown enormously. On the other hand, it would be an exaggeration to say that Moscow has taken a back seat. Moscow, by her geographical position, situated as she is in the very centre of the railway system of the country, must continue to play for years to come a, very important role in the commercial life of Russia.
Perhaps it is a little ingenuous, after all, to imagine that a huge empire, extending over very nearly onefifth of the entire habitable globe, could be effectively served from one town alone.
Let us take the United States of America for an illustration. Would a firm seeking to do business in that vast Republic content itself with an office in New York ? What about Chicago ? What about an Francisco ?
Germany is another case in point. Berlin is certainly the capital, but some think that Hamburg and Cologne are also important centres: The same applies to Italy where Naples, Rome, Genoa, and Milan all claim consideration.
The Provinces and the Fairs Must Not be Neglected.
In the case of Russia, a firm, to be well represented, should have agents in Petrograd and Moscow, in Kielf, Odessa, Vlaelivostock, and possibly also Rostoff on the Don. Of course, to begin with, it would be unwise to spread the net too wide ; otherwise, the expenses of representation might conceivably swallow up all the profits. In the first instance, the agency, especially in the case of a motor firm, should be established in the capital, in Petrograd, but the representative should be encouraged to travel, to look out for suitable firms to represent his principals in Moscow, and more especially to visit the large fairs, notably that of Nijni Novgorod. It almost goes without saying that the agent must have shoiv-rooms, and that all the cars on view will have to pay full duty on importation into the country, whether they are intended for sale or not. Catalogues, show-cards, price lists and circulars should be printed in Russian, the name of the firm being preferably printed in Roman as well as in Russian characters. All prices, measurements, etc., should be indicated in Russian terms, so as to be comprehensible to the Russian customer, who may not know a word of any foreign language.
Faint Heart Will Not Win in Russia.
A good deal of what has been written above may have the effect of discouraging the faint-hearted. In ..that case. these articles will not have been written in vain. "Faint heart never won fair lady," and, unless we enter the Russian market with true British pluck, never allowing ourselves to lose faith in ourselves or in our ultimate success, on account of a few preliminary set-backs, we shall not do much good. To the sanguine, keen, high-spirited but practical firm, Russia may easily become an Eldorado. In the past, the British have made large fortunes there, and there is every reason to believe that good business awaits them in the future, for Russia, after this war, is going to boom ; she will be compelled by a, variety of factors to enter the arena of modern industrial life in a serious and professional spirit, throwing her past amateurishness aside. We shall be expected to take a hand in developing her and placing her on her feet, and in doing so let us cast from us some of our old prejudices. Let us study Russia's requirements and endeavour to supply them., and not dietate to her as to what she ought to buy from us. Above all things, do not let us go to that country in the old pharisaical spirit, throwing up our hands in horror of her commercial dishonesty and her official corruption. Other countries in NI/1kb we do business are just as corrupt, and yet we get along all right. Moreover, let us refrain from insisting that Russian laws and customs should be exactly like ours.
NOTE.—Since writing the above article, it has come to my knowledge that five new motorcar factories, estimated to produce a total of MO cars and lorries between them annually, have recently been started in Russia. Of these, the Ajax Co., of Rostov-on-Don, is probably American, the Russian Renault Co., of Rybinsk, French, the Russo-Baltic Car Works, of Moscow, the Riabushinsky and Kouznetzolf Co.. of Moscow, and V. Lebedyeff and Co., of YarosIav, Russian.