Customs clearance in Russia: risk management, cargo searches and consequences

The Russian customs service works according to the Customs Codex of the Customs Union of Russia, Belarus and Kazakhstan. It is often wrongly assumed, that the Customs Union is made up of all the CIS-countries. Well, this is not so, as there are only three member-states, all listed above.

As you might have heard, customs clearance in Russia is full of surprises. It is recommended to work via a customs brokerage company for this very reason. Customs regulations are subject to changes, which are impossible to track without specialized software packages and being close to the customs. Some changes may make importing some products illegal without a certificate. Thus, on January 23^rd 2013, plastic bags were assigned the status of “certificate requiring goods”. Basically, issues regarding the certificates are the most complex ones.

Most consumer goods, such as clothing, processed foods, cosmetics, perfume etc are subject to certification in the Customs Union. This means, that a certificate or two is required for every product, imported to the Customs Union. Only official certificates of the Customs Union are valid in this case. ISO-9001 will not do. The rules for issuing the certificates are changed annually, so the information from 2011 is useless today.

The declaration

Once the goods arrive on the Customs Territory of the Customs Union, they can only be used after a customs declaration is accepted and processed by the customs officials. In Russia thiscan only be done using special software and includes all the information about the goods: origin, manufacturer, cost etc.

Now, I will introduce the idea of a good customs declaration, as opposed to the one that will get the declarant into trouble.

A good declaration:

-        Lists all the items, that seem like products in the shipment

-        Does not combine “0-priced” products with products with a price. Either declare free-of-charge products in a separate declaration, or assign them values in the invoice as-if-paid for.

-        For most consumer goods: the price of the goods is above the minimum control point value, set by the customs. These are generally for internal use only and may even vary from customs to customs. Cosmetics, for instance, are supposed to cost not less then 40 USD per kilo.

-        Contain no products, which require, but lack a certificate.

-        Has a value per kilo not less then the previous declaration of the same goods.

To clarify the issues:

After the cargo is unloaded, it is stored in a special customs warehouse until approved by the officials. Usually, there is a free period of 2-4 days, after which the cost is usually about 12 cents per kilo per day. This makes having any sort of trouble with the customs costly, as procedures take time, if the declaration is not approved on first try.

Price control points: in case, the Customs thinks, the goods are too cheap, they may start a procedure, called “correction of the customs value” by basically inventing the proper price. There is no way proving the customs wrong, except in court. Normally, companies pay what is assigned and then file court cases only to retrieve the lost money 4-6 months later, if they are lucky.

Products with no required certificates are to be shipped and declared separately. They can be imported upon request by a certifying institution as samples for testing.  If there are products with no certificates in a regular shipment, the declaration is called off, then the procedure to remove the products from the shipment is run, followed by an administrative case against the company. Only after all these steps are taken, will the cargo be cleared. The company is then obliged to declare the confiscated items under a suitable customs regime,

Complete customs searches are assigned at random ,following risk-management recommendations. Not meeting the price control points and having declaring issues as well as illogical weights increases the risks to almost 100%.

Searches are conducted directly in the warehouses. In winter, the temperature is just above zero. In most cases, only one inspector is assigned for the job. It is assumed that 2-3 employees of the importing company are to assist, otherwise the search may last up to 2 weeks. 

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Back from the holidays

Just came back from India and Nepal. Well, hot water in plenty. Finally.

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Depardieu, welcome!

We welcome Gerard Depardieu as a new sitizen of Russia! Yes, we have a flat 13% income tax. So please, explain this to Renault, Stallone, Riddley Scott, Mark Knopfler, Brad Pitt and others. It is time we have good movies and music here!

Streets of Benares (Varanassi)

Is democracy a solution?

I am curently in Nepal. It is my second time in the country and it seems, things are going badly here. All the walls are covered with posters, people seem to rally daily, the maoists spread propaganda, while failing to provide a constitiution. At the same time, there is a poor electricity supply and many stores, which used to sell local goods are now selling chinese rubbish.

Well, they shuld remember what Lenin said: Communism = power of the Soviets + electrification of the entire country. Yes, those who solved the equasion got free meals and guaranteed jobs for a decade. 

Indian marketing

- Hello, madam! Want to see snake? Five rupies and I show snake! Good snake!

- Please don't! I am afraid of them!

- Madam, madam, fifty rupies or I show snake!

GOT RSS

Good

Shifts in the Russian military tops - Qua bene?

Well, there were new of many changes in the Russian military. The minister od Defence, Serdyukov has been firead and replaced by Mr. Shoigu, a well-known ex of the Ministry of Disasters and the ex-governor of the Moscow region.

I have heard an interesting opinion regarding this issue. Well, it was obvious, the military hated Serdukov bacuse he was a civilian, a reformist and an accountant by nature.

He was also hated by the Russian arms production industry. The reason why was simple. He dared to challenge the view, that Kalashnikovs are the best rifles in the world and other munitions are the best, no matter how old, reparable and expensive they are.

Well, farewell Mr. Serdukov

Early sleep

Sending to orders tomorrow

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My.OHECampus:



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The Lost World of Communism (Part 1)

Russian Railways - 170 years anniversary

Russian prank calls - humor with a twist

Well, I have originaly devoted this blog to dull things like business, customs, sales and other things. Tonight I am taking a break and writing an article about prank calls in Russia. I hope that this article of mine may provide some insigt into the Russian culture and perharps would allow to understand us, Russians better.

Russian prank callers may or may not be part of a large internet-based subculture. If they are, they may join one of several groups, centered around particular leaders and often theme websites. The history of Russian prank calling began in the late 1980's when a cassete with records of conversations with an old man started flowing from hand to hand between Moscow's young men. The old man sure was a hard man for his voice was charismatic, full of special terms and very, very addictive. "You are all under the glass cap. We are watching your every step. There are serious people from the Spetsnaz watching your every step"... so he adressed the caller. The man, who is still alive hasbeen named "Ded IVZ" - "Information-Detection-Center old man". He remains an icon to this day.

Currently, the culture of prank callers is complex and quite different from, say, American jokers. Russian pranks involve long-lasting relations over the phone. The person recieving the calls is often referred to as "The victim" and the term may not be too far from accurate. Russian prankers are in constant search for "victims" who would last for several months or even years. This almost certainly means either mental problems or worst cases of human vanity, often found in TV-stars. There has been a case of a third-rate tv persona gaining publicity by becoming a renowned prank victim.

The most famous prank victims include:

- TV and movie stars. There used to be a prank website, dedicated to harassing famous Russians by phone. Some were involved in 20-40 conversations long stories.

- True "victims". One old lady with issues defined the callers as the company of the son of the local school principal, who "sells drugs and practices sodomy" and carried on cursing every caller viciously for 5 full years.
An old doctor with a prison term for illegal abortions behind his back was lured into believing he was being pressed by an old colleague of his. Threats, curses and often clever definitions lasted for a full year. As he began to turn the phone off, pizza delivery services, household moving companies, prostitutes and vets were sent to his doors to get the old man angry.

One particular trend in the Russian prank is dedicated to annoying officials. Police departments and especially the Army's recruiting offices often get pranked.

Russia's WTO opportunities: small business perspective.

It happens som that I work in small business and deal with the Russian customs regulary, so I can think of myself as a reliable source of informationn regarding the issue. What dis Russia gain by officially entering the WTO? What do small businesses gain or lose? What happens to the general population? Well, most populist polititians from all directions found a way to bark at the WTO. I remembe speeches and articles, stating that WTO would:
- Kill the Russian agriculture
- Kill the Russian manufacturing companies
- Force Russia to privatize many enterprizes
- Fill the Russian market with GMO's and other evils

As a consumer, I have noticed none of those. There are no interesting changes on supermarket shelves. The balance between imported and local foods remains pretty much the same as it used to be before the WTO bill was signed.

Apart from ideology of freedom and transparency, the WTO is mainly about customs regimes. Technically, it is little more except the agreement to limit customs bills and to restrain from pouring money into failing sectors of the economy. The latter never aplies to banks, it seems. Well, they never produce anything anyway.

So, now to the customs we go. I always ask my customs broker: "Any WTO news?" The reply is steady "No, the regular Bedlam". The meaning of this can be explained by the following:
- Russia has agreed to shift the customs import fees down for some groups of products over a period of 6 years.
- No shifts that I know of have happened by November 1st 2012.
- There are no changes in the customs procedures

What does this mean for an international company moving something across the Russian border? Well, remember that Russia is not part of the EU. You should get acquainted with the Customs Code of the Customs Union to determine, on what grounds can your goods or equipment be brought to Russia. No matter what a company brings to Russia, submitting a customs declaration is inevitable and in case the goods are subject to certification, the procedure may become a nightmare. You are welcome to ask me directly and I will try to answe as best I can.

Moscow Exhibitions: Booth design, trends etc

I just came back from an exhibition in Moscow, called Intercharm. The event was large, expensive and hard as usual. 4 days of 12-hour shifts with little sleep and a lot of presentation work. Since I work in St. Petersburg, some of the issues regarding this Moscow event were somewhat strange to me. Not that I did not know about them, but rather that they seem worth underlining to me.

The event takse place in the Crocus Center outside Moscow. The complex includes 4 exhibition halls a mall, a concert hall and a hotel. The hotel is a 3-star, but during the Intercharm, room rates went up to 400 USD per night. So, we had to live in Moscow and take an hour-long ride in the Moscow subway to the exhibition.

We had the booth designed by a St. Petersburg exhibition company we've been working with for over a decade. They are good guys, but the designer seems a bit lazy. Generally, I draw the booth oiutline in Google Sketchup and send them a Jpeg so that they know, what I mean.

They do the graphics, we approved the final design, which looked somewhat like that:

We have abandoned the idea of using standard-issue constructions, as it is very important to stand out on a major exhibition, given that forst-row booths are somehow NEVER EVER given to anyone except the big Moscow companies.  So, during the planning, my major concerns were:
- The booth should stand out
- The booth should allow to vizualise the goods
- The booth should have a large storage space
- The audiovisual systems should work all right durig the show

I designed some kind of an original system for this exhibition. Out company is not rich enough to compose a 2 meter wide screeo of 4 HDTV's mounted on a frame, so I found a cheaper solution. The wall of the storage room is actually a screen for the projector, mounted on the side of the tower stand to the right. The distance is about 4 meters, so, given the slight shade from the banner, the 3000 lumen projector provides a sufficiently clear picture. It has to be on top, so that the image does not get abstructed by people, working at the booth.

I used my notebook as a source for films, presentations and slide shows, while the camera, connected via HDMI allowed to show large images of cosmetic procedures on the improvized screen. This is very useful, when presenting products for the use on the face. In the nail business, not having a system with a camera feed on a large screen is suisidal.

I have my favorite sound system, composed of a 3 "in" mixer from Mackey, a SHURE wireless system and a  pair of studio monitors (I have been usiung the M-Audio BX 5A for the last 3 years). The studio monitors are powerful enough, still, they are small and can be used at home for the rest of the year. A total of 18 meters of audio cables allows to move the gear freely across the booth.

I always start the exhibition by taking a walk around, asking the neighbours, if the level of sound on my booth is comfortable to them.

Now back to the Crocus center.

Surprises are:
- Paid acess for trucks with exibition materials ($250)
- No printing facilities (only one copy machine at the service reception, making copies for 50 cents a page and printing for 90 cents a page. We always take a printer to the exhibition, as 1500 pages is not the limit for "suddenly run out papers".
- Bad food
- Paid wifi in the exhibition hall. Wifi acess costs $150 for 4 days for 1 computer and mobile internet fails frequently inside the exhibition complex.

Now to the market trends.
It seems that Russian cosmetologists and their clients have decided to go mad. I have repeatedly heard the following phrase: "Blah, you've got c-o-s-m-e-t-i-c-s! Ahh, that stuff never works. We are here for injection therapy only! Well, seems like most of Moscow's well-to-do ladies start having botox at 25 and a multitude of mesotherapy coctails, fillers, gels, placenta extracts, stem cell extracts and the like injected int their skin. This may sound stange for European ears, but it is generally true for the Russian metropolia. Take into account the fact that some cosmetologists often can't boast anything except a degree in nursing and most "injection therapy classes" last 2-3 days "on condition of a purchase" and you will get the idea of what a market that is.

After it all ended, I went to a knife exhibition to hear a lovely story of one of the knife-selling companies having had an exployee arrested right at the exhibition after the police managed to trick her into skipping the paperwork. =) Well, I am so glad I left Moscow for home!

Building a virtual business

Well, my venture is slowly moving on. My curent goal is simple - I need to collect the money for the next purchase of materials.

So what have I managed to do? Now I hava an internet-store and a small operation selling Kydex across Russia.

Now some things I've managed not to introduce:

- Rented office
- Staff
- Store

Travelling around St. Petersburg

This summer I have been travelling around St. Petersburg, Russia to find the not-so-well-known places of interest and here's what I have found....

The 16-th century Swedish fortress of Kopor'ye some 40 kilometers from St. Petersburg

 The Naval Cathedral in Kronschtadt, the city's historic naval base. The cathedral is being restored.

 A historic truck at the walls of the magazine building in the Red Hill fort, 50 km from St. Petersburg. This 6-wheel drive monster is still running, even though it has been set on fire 3 times by the local err...people.

 The magneficent 300mm artillery train in the same Red Hill fort (Krasnaya Gorka). We saw a group of activists (people who fight to conserve the monumental complex, which is being attacked by the local government who are backing a residential complex project on the spot). The people were painting the wheels and checking if everything was in place.

 The loading mechanism for the 300 mm cannon.

Subscibe for more =)

Fresh air

Well, let me share, what a business with a $2000 of starting capital looks like. Let us ignore the formal figures, as if i get down to them, I'd wish I never started. Well, like any business.

So, what I have done with my $2000?

I established a firm and opened a bank account.

I bought 8 sheets of Kydex and cut them into 400 pieces to be sold separately.

I opened an on-line shop, made a page in a Russian facebook clone vk.com

The operations started on September the 9th.

By now:

- I have sold my kydex to 9 different customers in Moscow, St. Petersburg, Samara, Ryazan and Yoshkar-Ola.

- I am currently working with 4 new customers and keep up with the previous 9, expecting new orders.

I sell via a delivery firm, as they send the cash to my firm's account right away.

My e-stoe is almost useless. There has only been 1 sale through it. All the other 8 come from the social network. I keep my database with the social network accounts of my customers, because these proved to be the superior contact method.

I have sold for a total of $300.

Am I depressed? No. Selling a completely new product with no experience in sales, no advertisment and no help is not that bad. I wish to get to #500 by October 15th and increase the sum firther by November.

Finally, a nice pic of a sheath by one of my group members

Oh, btw. I should offer him a deal!