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Russian Expat Chefs closing the Gap

At the beginning of the 1990s there was a popular saying � �Help will come from abroad.� Russians adopted foreign political institutions, adjusted foreign business models to Russian conditions and hired foreigners as consultants to supervise the changes taking place in both politics and business.

Are expats still in demand in Russia in the 21st century? Experts say that foreign specialists still have some advantages compared to their Russian colleagues. However, the young generation of managers in Russia could soon win back jobs that so far have been traditionally occupied by foreigners.

�Previously, western companies operating in Russia had to hire expats for top management positions. Now, hiring expats is an image decision rather than a necessity,� said Yekaterina Protasova, consultant at AVANTA Personnel.

However, the continuing difference in salaries proves that expats are still highly valued in Russia. �As a rule, foreign specialists are paid a higher salary than their Russian colleagues,� said Alexei Zelentsov, regional manager for the Northwest region at Kelly Services CIS.

�But the difference isn�t so dramatic. Most foreign specialists and mid-range managers expect a monthly salary of 3,000 euros to 6,000 euros. Only about 10 percent of expats enjoy an annual income of 200,000 euros to 300,000 euros. Most of them are senior managers, heads of local branches of multinationals or partners of consulting and audit companies,� Zelentsov said.

According to Kelly Services, expats are paid 20 percent to 50 percent more than Russians. However, this gap is gradually diminishing.

�Specialists from Eastern Europe are hired more and more often, and they have moderate claims compared to Americans or Western Europeans,� Zelentsov said.

While in the mid-1990s, foreigners could earn several times as much as Russians in similar positions, the situation is changing with the general growth of salaries in the country.

�During the last 10 years, salaries in Russia have increased by eight- to ten-fold, which is far ahead of the salary growth in the West,� Zelentsov said.

Protasova indicated that hiring expats for senior management jobs became a common practice in Russia in the early 1990s, when Coca-Cola, Pepsi, Philip Morris and other international corporations entered the country.

�At that time, Russian managers knew nothing about western business models, quality control systems and other �essentials� of foreign production companies,� Protasova said. Besides the FMCG companies, foreign financial institutions hired expats to manage their Russian branches and subsidiaries.

�Almost all foreign banks in Russia were run by expats. Russian financial specialists simply lacked experience and knowledge of international banking standards, products and distribution systems,� Protasova said.

Later, expats were welcomed into Russian retail companies.

�While the retail industry was underdeveloped, the market unsaturated and consumers unspoiled by numerous stores and shopping centers, the retail techniques exercised by Russian managers were quite acceptable,� Protasova said.

�However, the market is still growing. If a company lacks qualified managers, competitors will force this company out of the market by taking a considerable part of its profits. Business owners in Russia understand this very well. They started hiring foreign managers soon after foreign retail chains like Auchan, Obi, Castorama and Leroy Merlin entered the Russian market,� Protasova added.

Expats have the obvious advantage of knowing how to organize shopping areas and buying operations and how to use merchandising techniques.

Another industry where expats are welcomed is premium class hotels.

�Traditionally, expats are employed as general managers, food and beverages managers and chefs in luxury hotels. The quality of service in Russia still does not quite correspond to the price, and foreign specialists are still in demand. Besides, foreign managers could be �a special offer� that to some extent justifies the high prices in the hotel,� Protasova said.

However, in general Russian managers and specialists are not a priori inferior to expats any more.

�Business growth is important, but it�s not the only objective of a top manager. Managers have to develop businesses and then sustain the achieved level, which could be very tricky if a person has a poor understanding of the region and the national mentality,� Protasova said.

She suggested that the combined efforts of Russian specialists and expats in project management could be beneficial since, �there are still a number of business areas in Russia where the skills and knowledge of foreign managers are necessary for success.�

�We are seeing a new generation of Russian managers with considerable business background and knowledge of the local market. It�s a strong competitive advantage, in addition to a complete understanding of the national mentality,� Zeletsov agreed.

Nevertheless, according to Kelly Services, approximately 70 percent of international companies prefer expats to run their Russian branches.

�My personal view is that Russian managers are able to perform any jobs in Russian subsidiaries of international companies. But multinationals keep hiring expats. Foreigners still do not quite understand Russia. It�s easier for the companies to have their compatriots in top management, because it is less risky in their opinion and allows them to understand what is going on in the Russian subsidiaries,� Zelentsov added.

�But practice shows that Russian managers are able to cope with the responsibilities of a top manager and often decide on non-typical steps, which push the company forward,� Zelentsov said.

However, in some specific positions foreign specialists are still preferred. �Russia is introducing new technologies in production and business. In some areas there are only a few specialists, and in such cases, experienced professionals are hired from abroad,� he said.
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