Can Russia overcome its reputational challenges?

Selling Russian business is a tough ask right now but it is a challenge that needs to be met if the world's largest country wants to improve trade relations with the West.

Pulling the strings Shrewd operator President Putin (centre) has used his comms prowess to good effect, most notably towards German corporations
Pulling the strings Shrewd operator President Putin (centre) has used his comms prowess to good effect, most notably towards German corporations

Whether through the country’s intervention in Ukraine or Syria, its stance on gay rights or the stereotype of corrupt oligarchs, one thing is clear: Russia continues to have a serious reputation problem in the West. Almost every week seems to bring a new incident between the world’s largest ­country and its counterparts in the US and EU in particular, leaving relations between the former Cold War rivals arguably at their lowest ebb since the fall of the Soviet Union.

To compound the problem, the Russian economy is in choppy waters. GDP is expected to shrink 3.8 per cent this year, not helped by the recent US/EU sanctions.

It presents a huge challenge for those ­wanting to portray Russia in a favourable light, especially for businesses. PRWeek saw this first hand at the Russia Calling conference in Moscow. The two-day event last month featured around 2,000 delegates, mostly business leaders from Russia and ­regions with a stake in the host country.

The speaker list was topped by President Vladimir Putin himself, who spoke on a panel session entitled ‘Promoting durable co-operation, unlocking growth opportunities’.

So how can Russian business overcome  these reputation obstacles? And is Putin necessarily a hindrance? On the face of it, the ans­wer to the second question is a big ‘yes’.He is a leader whose popularity at home often seems to be at the expense of his and his country’s reputation elsewhere. ­Putin’s image as a cold autocrat, with a love of peculiar and sometimes comical photo opportunities (posing topless on horseback or immersed in a submarine) perpetuates in many Western countries. But the conference was a chance for the president to show his skills as a communicator to the outside business world, and in truth, his performance was impressive.

Unsurprisingly, questions were dominated by the economy, and Putin stressed his government was taking the challenges seriously and had a plan in place. "Things are starting to look up," he said. "Processing industries feel more confident, and we are ­accommodating lower commodity prices including ­hydrocarbon prices. It’s true that in this country we are highly educated and [have a] skilled population. Still there’s room for advancement, but the basis is quite OK."

Putin's power play

Putin does not exactly exude charisma, and certainly not warmth. But he is clearly a very shrewd political operator, and the Russian leader uses two other notable rhetorical tactics that demonstrate his comms prowess. Flattery is employed to good effect, most notably towards German ­corporations, which he praised for their "well-balanced" relations with his country. "They don’t fluctuate with respect to the political situation and they are quite pragmatic, building on their interest and the interest of their partners, and we appreciate that," Putin stated.

This may be a calculated move. With ­German firms said to be particularly susceptible to Russia’s economic sanctions, they could be a useful ally to pressurise the German ­government on the sanctions.

Another strategy is to shift blame to others. Asked about the Russian economy, his first ­response was to mention changes in the US Federal Reserve and falling prices on export goods in emerging economies.

This approach is even more evident on the topic of military interventions, where Putin plays, if not the victim, then at least the ­innocent party. Russia informed the US about its plans to bomb targets in Syria prior to the action, he said, "because we would like to show respect and establish business contacts with them".

Putin insisted that America was asked which targets were terrorist cells, and which it did not want Russia to attack, but no reply was received. "So how shall we work together, then?" he asked.

While Putin employs tough rhetoric supported by military might to further his aims, it is interesting that VTB Capital head of comms and marketing Olga Podoinitsyna (pictured below) uses the term "soft power" to describe the bank’s comms.

Asked if recent developments, including sanctions, have meant people are now more questioning of Russian businesses, Podoinitsyna replies: "Definitely, it’s a direct impact on the situation." VTB’s approach is to reach out to the business ­community as a whole, she explains. This is reflected in the delegate and speaker line-up at the conference, which includes senior business leaders from all corners of the world.

Putin’s panel session, for example, included Idan Ofer, principal of global shipping business Quantum Pacific; Stefan Schulte, chairman of German transport firm Fraport; and ­Lazarus Zim, CEO of Mexico-based industrial developer Atisa.

"Each country should use this great tool, soft power, because this is an efficient tool that allows every country to keep ­sustainable development and sustainable involvement in the international community, any time and in any challenging market," Podoinitsyna explains.

"Russia is part of the global business community. Despite challenging times in the ­financial markets, it keeps its anchor positions in business, and VTB Capital’s strategy is to continue our communications in accordance with market requirements, and to keep the open dialogue with the international community."

A lost cause?

Others appear more resigned to the reality that, as a Russian business, selling your brand in some countries is simply too ­difficult to be worth the bother. Russia-based InfoWatch, which provides software to protect against cyber breaches, operates its global business almost entirely outside the EU and US, in regions such as the Middle East, South East Asia and Latin America. PR manager Olga Gorshkova tells PRWeek: "Of course there are different global regions that perceive Russian brands and Russian technologies differently. Some regions have good attitudes, positive ­attitudes, some are not very happy to have a Russian security product in their infrastructure. That is why we are working with those markets that are friendly to Russian software."

She adds: "The world is very big and there are lots of other countries that are interested in Russian products except Europe or the United States so it’s not a problem for us."

Could the problem also be one of self-image? One business leader questions whether ­Russian corporations are stuck in a post-Cold War malaise, lacking the confidence befitting a nation of its size and power. This may ­explain Putin’s appeal as a leader fighting to regain the country’s lost pride.

"The West has to come to terms that Russia is a force that it has to deal with, ­industrially, financially, in terms of population, in terms of knowledge. The trouble now is that since the fall of the Soviet Union, they are themselves missing something. They’ve lost this strength that they used to have to be like a world power," says Rene Awambeng, group head of global corporates at pan-African bank Ecobank.

Excluding VTB, he says Russian businesses in general are "not present" in Africa compared with their Chinese, European or American counterparts. "More has to be done to change perception," Awambeng adds. "Russia should be more confident, and go out to show a different message about its country and itself and what it can offer to the world."

He highlights another problem: "We don’t see the Russian media. It’s all from the West."

Some say the fact Russia’s ­modern media industry started after the fall of the Soviet ­Union means it lags behind Western media rivals. The reported crackdowns on press freedom, particularly related to criticism around military activities in Ukraine, presumably do not help. The result is that Russia’s ­image ­globally is largely filtered through a Western lens.

Paul Cohen, partner and director of international corporate and institutional affairs at Ketchum, has this take on the challenges faced by Russian firms: "Current sensitivities coupled with outdated stereotypes create an extra hurdle that Russian businesses have to overcome – they don’t get the benefit of the doubt that counterparts from other parts of the world enjoy.

"Russian businesses operating in today’s environment have to do everything Western businesses have to do, but they have to communicate their operational and commercial ­nature more forcefully and gracefully. They must tell their narratives with tremendous patience, consistency and credibility."

Whether this will be enough to overcome decades-old ­stereotypes and political flash points, only time will tell.

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