In the summer of 1989, I reached a critical moment in my life. My wife’s younger sister decided to emigrate to the US. She had recently gotten married. The young couple wanted a better life and decided to leave for America. A few months before, I’d visited the US for the first time. I spent two weeks studying at the University of San Francisco’s School of Business. I saw a different world there. A society built on different principles. A significantly higher quality of life.
The contrast between American life and Soviet reality was enormous. Everyone who came to America heard the questions arise in their heads: “Do I want to live here? Would I find work? Could I support my family?”
I answered these questions in the affirmative. I can work intensely, and like doing so. In these new conditions, I could obtain more than I had achieved in the Motherland. But, it’s one thing to think about what country is best to live in. It’s another matter entirely to leave everything in your native country and emigrate. Taking that decisive step proved very difficult.
A few months after my wife’s sister left for the U.S., I resigned from the All-Union Institute of Systems Studies. I didn’t want to cause my bosses any unpleasantness on my account. By that time, I had already decided that we needed to go.
In the spring of 1991, my wife and I turned in our applications to the U.S. Embassy. In June of 1991, we received permission to enter America and requested our exit visas from the USSR. In August, the anti-reform putsch began in Moscow. If the putsch had succeeded, tens of thousands of people would have immediately faced repression. The first victims would have been those, like us, who had submitted documents to leave the country.
Luckily for us, the putsch was put down. But it sharply expedited our departure. Whereas before the coup we had taken our time in preparing to go, afterwards we were simply fleeing the country. On September 14, 1991, we left the USSR. So began my second life.
People often ask me about immigration—how was I able to decide? Wasn’t it frightening? Do I ever regret taking that step? I answer these questions truthfully. No, I do not regret it. I had nearly lived that life to its end. I had scaled that peak as far as I was permitted. I would never be allowed to go any higher. But in America, I got a chance to start a second life. To start from nothing. Living two lives is much more interesting than one. So I don’t regret anything. I’m a lucky man.
But sometimes I ask myself a different question. Would I be able to go down this path a second time? Would I have the strength to do it all again, from the beginning? Knowing that I would succeed. Knowing that, after four years in the U.S., I would become vice-president of a major American company and become one of the top five percent highest-paid Americans. Knowing that I would have the luck to build my own business, close dozens of successful contracts and become a truly successful man. Could I do it all again?
Honestly, no, I couldn’t. You can only start down that path not knowing what difficulties lie ahead. Only hoping for the best. Only believing limitlessly in your own strength. Without English, without any American line of work, without the means to guarantee existence. What kind of strength or nerve do you need to overcome all of that? I don’t have enough to go through it again.
We came to America as refugees. In a year’s time, we were receiving monthly government assistance and free health care. There was enough money for rent. We bought our groceries on food stamps. I went to school to study English. My foreign language abilities turned out to be below average. That was strange. In Russia, I had been a successful scholar in academia. I worked a lot with books and articles, and perfectly remembered large volumes of information. But having landed in the new language environment of America, I couldn’t quite master my English.
Like most Russian immigrants, I had no language skills and no American profession. A limited range of choices stood before me. The simplest path would be to take unskilled work—washing dishes, sweeping floors, and other menial labor.
A more difficult path was mastering some American profession—truck driver, sales clerk, accountant, etc. I’d been an economist in Russia, so I could have been an accountant. But you had to pass special tests for that, which required knowing English and professional requalification. Neither way much appealed to me. I didn’t see myself as a teamster or accountant. I wanted much more.
There was a third path—to chase after a pie in the sky and try my hand at business with Russia. This last way makes success seem so easy and close that it intoxicates the senses like the lottery. You wait many years for a big win that may come tomorrow or never at all.
In Russia I was a Doctor of Science in Economics, a management expert. To the Americans, I was a nobody. Nobody in the USA needed a Soviet economics professor. They had plenty of blowhards of their own. America needed people who could work with their hands—construction workers, drivers, electricians, mechanics and engineers.
A fortunate circumstance decided everything. In August 1992, I happened to get into a car accident. When something like that happens in Russia, it’s all very simple. The one at fault negotiates to pay the other party for any damages. Nobody got hurt in our accident. Everyone involved was calm. The insurance company would pay the repair costs. The lady at fault sat in her car and didn’t even get out to look at the damage to the other cars. That held no interest for her.
The driver of the car that had rear-ended me approached. He asked if everything was all right. We started talking. He asked me what I did. Where I’d come from. I told him about myself. He showed some interest. He told me his name—Norman LoPatin. His father had been born in Russia. Norman had been born in America and didn’t understand Russian. He invited me to come to his office and talk about Russia.
Norman set up the meeting a few days later. His office was located in one of the fashionable buildings of Detroit’s business district. The facilities left a big impression on me. Beautiful interiors, spacious, well-furnished rooms, and state-of-the-art office technology.
Norman and I talked about Russia, and opportunities for Russian-American projects. After a few meetings, he proposed that I start working for his father’s company. As a volunteer, without pay. Without any obligations on their part. They gave me a work space with a computer. I got the chance to do business. I was happy.
Norman was an ambitious guy. He was about forty. He felt like the second fiddle in his father’s company. Norman dreamed of finding his own place in the business world. But nothing was working out for him. He’d grab onto different projects, but nothing would ever come of them. And suddenly he met this stranger from far-off, mysterious Russia. Norman decided to try and drum up some Russian business with me at his side. That cost him nothing.
At first, I was left to my own devices. I searched for an interesting idea in Russia. A project that would interest the company. But I didn’t find anything interesting. Then we changed the search parameters. We started looking at how I could be useful to their American projects. Here we found some luck. The company’s main project at the time was constructing an international business center in the Alaskan city of Anchorage.
One important part of the business center would be the Museum of History and Culture of Alaska. They wanted to fill it with exhibits from the National Museum of American History and the Anchorage Museum.
Our attempts to obtain cooperation agreements with the museums ended in failure. The National Museum of American History demanded eight million dollars to rent their exhibition, which was unrealistic under the project budget. The Anchorage Museum refused to cooperate at all.
In the process of negotiations, it became clear that the most extensive collections of exhibits on Alaskan culture and history were kept in museums in St. Petersburg. I proposed organizing an exhibition of the Russian Museum collections and turned for help to the Russian ambassador, Vladimir Lukin. He promised his full support for the idea. The ambassador sent the corresponding request forms to the Russian Ministry of Culture and the St. Petersburg city government.
In February 1993, Norman and I went to Russia. It was my first return visit to Russia since emigrating. During the trip not only did we resolve the main questions concerning the involvement of St. Petersburg museums in the Alaska exhibition, but I also got to meet with Yuri Kalmykov of the Russian automaker Moskvich. After that, in the summer of 1993, I began my new Moskvich-Haden Project.
Thus occurred yet another sharp detour of my fate. I got my first job in America. The company Haden first gave me a temporary position as a sales agent for Russia. A year later, after closing my first contract, I was appointed Business Development Director for Russia. In another six months, I became Vice-President for International Projects.
I worked at Haden for eight years. It became the most successful American company in Russia’s automotive industry. Its trading volume in Russia, by the end of the 1990’s, surpassed that of GM, Ford and Chrysler combined. In 2002, Haden fell on hard times and began laying people off. I understood that it was time for me to go, and I searched for other work. I had two tempting offers—one from the German company Dürr and another from the Italian firm Comau. The positions would have been the same, but Dürr would provide a higher salary and more freedom.
In 2003, I took the job at Dürr. The company named me Dürr’s General Director for Russia and sent me to Moscow to establish an office and sell products on the Russian market. After working for Dürr in Russia for two years, I returned to Detroit and started working at the American firm Holcroft.
For more than ten years, I served as an executive for American and German companies. I did business in Russia for twenty-five years. In all those years, I tried to understand how Russian business was set up. Why does it act the way it does, and not some other way? What’s the best way to carry out business in Russia? Which actions bring about success, and which lead to failure? Who can you fight, and who had you better appease?
Most of those who teach the art of doing business in Russia have never taken part in it themselves. Most often they are passing on the experiences of others, and commit many errors in the process. Beautiful theories have no relation to the practice of conducting business. There is the phrase, “Those who know how to do business do it. Those who don’t know tell others how to do it.” As it truly happens, active businesspeople don’t have time to read lectures or write books on this complex artform.
In describing the particulars of doing business in Russia, I have tried to be objective and to present events just as they truly occur in real life. I have neither put blush upon the events I have witnessed, nor have I thrown mud upon them.
In this blog, I describe how Russian business takes place today. What laws it lives by, what is considered correct and what is unjust. The harsh reality of business in Russia is corruption. It has thrived at all levels of power and determines the logic of decision making. Unfortunately, over the past twenty years, the situation with corruption in Russia has gone from bad to worse. Corruption now is more powerful than it was before. That is the objective reality that cannot be ignored.
Everyone takes bribes in Russia. Rarely a deal goes through without the Russian participants taking a personal interest. What are you to do if you don’t want to break the law and pay bribes? How should American companies act in order not to violate US law concerning foreign corrupt practices? For that, you need to beat out your competitors with higher technical production specs and a fair price. It should be more advantageous for Russian clients to buy higher-quality American goods.
Beyond that, in order to avoid bribery, you need to be able to use the interests of decision makers. As long as you understand and use their interests to your advantage, you can avoid bribery and legal violations. For example, you could help their companies enter the international market, give them access to more modern technology or increase their personal prestige. All those things work better than money. But that’s the hard way. It’s only open to those who have connections and a good familiarity with Russian business.
Russia opened to America in the late 1980s and closed again in the early 2010s. In those twenty odd years, tens of millions of Russians have had the opportunity to come to America, to visit as tourists, to study, or to work in this wonderful country. More than a million Russians have immigrated to the US and become American citizens.
Hundreds of American companies have worked successfully in Russia. They built factories, imported food, various technologies and equipment, and helped to develop the Russian economy. The mutual sympathy of the two nations rose sharply upward, reaching its peak in the 2000s, before decisively falling in the mid-2010s.
By 2019, relations had hit a low point of recent decades. Hacking attacks, economic sanctions, mutual antipathy and distrust towards one another’s actions. One hopes that common sense will win out, and Russian-American relations will become normalized in the near future.
In this blog, I recount the many things I have encountered in my life. In some situations, I won, in others I lost. Their telling may prove useful to other people. It will help them avoid unnecessary mistakes.
As I gained experience, I started making fewer mistakes and had more success. I began to understand what was best to do in various situations. It is better to learn from the mistakes of others than from your own.
Lev Lester
How Business Is Done in Russia 