The Russian Federation holds substantial importing and exporting opportunities for Canadian and American businesses. If you’re considering expanding your goods to the Russian market or bringing Russian products to your domestic customers, there are several questions you should ask yourself before getting started.
General questions
1. What are Russia’s main imports and exports?
According to the Observatory of Economic Complexity (OEC), Russia’s top imports are:
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- Cars
- Packaged medicaments
- Vehicle parts
- Broadcasting equipment
- Planes, helicopters, spacecraft
Top exports include:
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- Crude petroleum
- Refined petroleum
- Coal briquettes
- Wheat
Knowing Russian’s top imported and exported goods can give you a sense of how well your products might fare in the Russian market.
2. Who are Russia’s top trading partners?
According to the CIA World Factbook, Russia’s main exporting partners are China, the Netherlands, Belarus, and Germany as of 2019. Russia imports the most from China, Germany, and Belarus.
3. Where is Russia’s busiest container port?
Russia’s Balctic ports see the most activity, with the port of St. Petersburg being the busiest for container cargo. When deciding which regions of Russia to market your products to, consider the ease of moving goods to and from Russia’s bigger ports.
4. Where is Russia’s biggest cargo airport?
Sheremetyevo Airport in Moscow is one of the busiest airports in Russia for handling air freight. Cargo passing through the airport has increased significantly in recent years.
5. Does your country have a free trade agreement with Russia?
Before you commit to exporting to or importing from Russia, check if your country has a free trade agreement (FTA) with Russia. An FTA may make it more financially viable to trade in some goods but not others. Canada does not have a free trade agreement with the Russian Federation, but it does have a Foreign Investment Promotion and Protection Agreement (FIPA). The U.S. and Russia do not have an FTA, but both are members of the World Trade Organization (WTO), which eliminates some trade barriers.
Want to import from China? Read our guide.
Questions about importing from Russia
6. Does your country have packaging requirements for imported goods?
If you’re importing into Canada or the U.S., your goods may have certain labelling requirements. You will be unable to use labels in Russian, so you’ll have to speak with your Russian supplier about packaging to ensure all labelling requirements are met.
7. Will imported Russian products interest domestic buyers?
Are the Russian goods you’re importing available from domestic companies? Do some market research to determine if your domestic customers are willing to pay for foreign goods, or if it’s possible to compete with domestic suppliers by importing from Russia.
8. Does your country place tariffs on imported products from Russia?
As neither Canada nor the U.S. have free trade agreements with Russia, you will probably have to pay tariffs on imported Russian goods. All three countries are members of the WTO, which sets tariff rates at 7.8% to help encourage and stabilize trade.
9. Do you already have a supplier in Russia?
You’ll have to find a Russian supplier to work with before you can start importing goods into Canada or the U.S. It’s important to meet with your supplier before conducting business, to ensure that you both understand your agreement. If you don’t speak Russian, you may have to bring a translator with you when meeting suppliers because it’s not guaranteed they will speak English. Also, when negotiating your supplier agreement, ensure that it includes INCOTERMS.
10. How will customers pay for your products?
Will you have your brick-and-mortar store for your imported products? Will you distribute to other retailers, or sell to customers online? Your business model will inform decisions you make about importing and logistics.
Want to export to the EU? Read our guide.
Questions about exporting to Russia
11. Will your products be successful in the Russian market?
If your products appeal to consumers in the U.S. and Canada, does that mean Russian consumers will buy them too? Consider the unique attributes of the Russian market; the preferences and needs of Russian consumers, before deciding to export your products. Distribution channels in Russia are well organized, as in Western countries. Large supermarkets abound in Russia’s largest cities, as well as specialized retailers. Residential areas see more local shops and discount stores, as well as open-air markets.
12. Do you need an export license?
Canadian exporters must register for an export business number (BN) to submit export declarations to Canada Border Services Agency (CBSA). Most exports from the U.S. do not require an export license, but it’s up to you to confirm that you don’t need one for your exports. Keeping customs paperwork in order isn’t always straightforward, and delays at the border can cost your company thousands of dollars. A certified customs broker can help you navigate the customs regulations.
13. Are imports to Russia subject to VAT?
All imports into Russia are subject to VAT. Foreign trading companies in Russia must register for VAT with the tax authorities, as well as with the Customs Authorities for a trading license.
14. Do you need a local representative to import and sell goods in Russia?
Russia requires foreign companies to have a local manager who can deal with the Russian Customs Authorities. In addition to registering for VAT and customs clearance, foreign companies must also file paperwork with the Trade Register and apply for a trade license with the Ministry of Industry and Trade in Russia. Having a local firm or entity handle these matters will make importing goods into Russia much easier.
15. How will your marketing target Russian buyers?
Selling goods in a foreign market comes with advertising considerations as well. How will your marketing strategy address your foreign consumers? How will your advertising efforts address the language barrier? It’s important to know how you’ll target your new customers in a foreign market before you start exporting.
16. Do you need international cargo insurance?
Have you accounted for all the risks your cargo will face in transit? Without cargo insurance, lost, damaged, or stolen goods can set your business back significantly. Whenever importing or exporting goods to any country, you should have a good cargo insurance policy.
A customs broker to help you expand your import-export business
One of the most troublesome parts of moving your goods across borders is dealing with customs. At BorderBuddy, we take the hassle out of importing and exporting so you can focus on running your business. Contact us today with your questions about customs clearance.