среда, 27 июня 2012 г.

Russian business perspective - what's up?

In the 1990's when the world was younger, grass was greener and vodka was sweeter, Russia used to be free market economy with few rules, except for those of the outdated criminal code. Today in 2012 Russia is a country, ruled by Regulations with a big capital "R". Technically, binding businesses into a bureocratic came as a result of government policy of "vertical construction". The results are: Doing anything in Russia requires a paper for it and papers have a life of their own. My favorite example is the situation with the cosmetics market over the past 6 years or so.

One paper is never enough. So it seems, as you always had to have at least 2 documents for every cosmetic product. Before 2010, these were the "Sanitary Expert conclusion", issued by Rospotrebnadzor and the "Declaration of conformity", issued by a multitude of different government testing facilities. The funny thing is, test for both papers were almost identical. They checked the PH value, looked for bacteria, heavy metals and radiation. The paer logic (for imports or inside sales) was the following: "The first paper confirms the safety of the products, the other proves that it corresponds to the Russian standards - GOST's.
In 2008, a new form of "Sanitary conclusion" was introduced. The paper got the name of "State Registration Document". Technically, it was the same, but was supposed to last "for the duration of the product's existence". The old sanitary documents could only be valid for 2 years, while the declaratrions of conformity were only valid for 1 year. The routine was complicated and mildly expensive.

In 2010, Russia formed a Customs Union with Belarus and Kazakhstan. To celebrate the event, all the old papers were abolished, the previously "eternal" state registrations were assigned an expiration date of January the 1st 2012.
Customs Union for more efficient bureocracy and transparency? Well, 2 sets of papers again. New "State Registrations" - now lasting eternaly. The cost to acquire went up 5-15 times, depending on the product. Well, we still have to prove conformity with the standards, don't we? A set of "Declarations of conformity". valid for 1 year was introduced. In late 2011 it was replace with the "Certificate of conformity" valid for 2 years, which was banned in February 2012 to be replaced with "Declarations of conformity" (yes, again), valid for 1 year.

These regulations are reinforced concrete. It is illegal to import any cosmetics without these sets of documents. Of course, any American, European or international certificate, like GMP, ISO, organic labels etc. is not valid in Russia. Currently, a package of documents for importing cosmetics to Russia is 50-70 sheets for a batch of 100 positions.

Other fields see the same development of bureocracy. Construction companies deal with ROSTEHNADZOR. A standard document package for a commercial building is around 350-400 sheets.

The key difference is that Russian regulations are almost never inspired by public organizations. It is strange for a Russian to hear that acertificate is issued by an association. The Russian overlooking institutions prefer the word "Nadzor", which means "Overlooking enforcement".

Stay tuned. I appreciate comments. =)

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