Five Issues for American Companies to Watch in Russia

Russia and the U.S. may be increasingly at odds, but many American companies still have business interests there

Morton Grove, Ill.Oct. 8, 2014—Russia and the United States may be increasingly at odds over geographic boundaries, spheres of political influence, commerce, energy and defense, but many American companies still have strong business interests in Russia. McDonalds, John Deere, Wrigley, Caterpillar and BayRu are just a few Chicago-based companies with a presence in Russia.

Aaron Block, chairman of BayRu, an international shopping and shipping specialist firm based in Chicago, notes there are a few key issues domestic-based companies should watch for.

  1. Severe Exchange Rate Fluctuations: In the last two months alone, the ruble lost 10 percent of its value against the dollar. These continued fluctuations and sharp declines have consequences for American companies doing business in Russia. “A weaker ruble means consumers can buy fewer goods,” adds Block.
  2. Tit-for-Tat Sanctions: The growing tension between the U.S. and Russia is causing an influx of sanctions. Imported U.S. goods and services, in particular, are subject to these penalties, fueling the divide.
  3. Changes in Internet and Data Laws: The Russian government plans to implement new laws to centralize control over information flows and require foreign companies to store data on Russian soil, adding cost, complexity and risk to U.S. businesses with Russian customers.
  4. Big Changes in Payment Systems and Money Flows: A national payment system is being rushed through development. Visa and Mastercard will need to pay new security fees, and Russia may no longer participate in the international Society for Worldwide Interbank Financial Telecommunication (SWIFT) program. This will make it tougher for American companies to transact with partners and clients in Russia.
  5. U.S. Foreign Corrupt Practices Act (FCPA) Compliance: Russia is under a microscope. American companies that do not abide by the FCPA are likely to face big penalties. Taking the necessary steps to meet compliance protects shareholders officers, and employees, while ensuring the right internal controls are in place and operating.