Russia: Disenfranchisement, distrust—and opportunity

Twenty years after the collapse of the USSR, Russia continues to present a difficult business environment, with an economy dominated by an elite circle close to the seat of political power. For foreign companies, navigating the nuances of the Russian system can prove particularly challenging, and GlobeScan’s latest polling demonstrates a large degree of social alienation, which could make conditions for foreign investment yet more difficult.

In 2012, more Russians feel that economic wellbeing has improved over the past 20 years than feel it has deteriorated (45% vs 20%). However, we see very different figures on social progress, with only 31 percent feeling there has been improvement, and 26 percent believing the situation to have worsened. This suggests a persistent feeling that the benefits of the new economy are not fairly shared. When such a large proportion feel locked out of the new Russia’s prosperity, it is not surprising that 75 percent of Russians feel the rich do not deserve their wealth.

It is in this context that we find that net trust in foreign businesses stands at -38 percent. Even if this has improved in recent years, this result is well below most countries, and on a par with Spain and Greece. Such a public perception leaves multinationals exposed in Russia’s unstable business environment. Moreover, it discourages incoming investment, particularly in the lucrative energy sector.

However, in a climate that favours domestic businesses, there is little dissatisfaction with the political authorities: 67 per cent of Russians trust their government to act in society’s best interest, a figure that has jumped since Putin’s return and has tended to rise since the early 2000s, shortly after the former KGB officer came to power.

One way for foreign businesses to build trust among a skeptical Russian public may be for them to emphasize their responsible credentials. Interest in learning about responsible business now stands at 67 percent, even if under half (49%) believe businesses communicate honestly about their performance in this area.

It is odd that many Russians remain downbeat about their country’s changes, while approving of the government whose actions have often aggravated Russia’s inequalities. The widely-felt sense of disenchantment at the way society is evolving may not bode well for Russia’s immediate stability—but amid all this, embracing and communicating a responsible approach to business presents an opportunity for dialogue with the Russian public.

Finding from the GlobeScan Radar, Wave 1, 2012 

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