Why locate in Alaska for business in Russia?

• Author: Borell, Steve

Here's first-hand insight on how establishing a base in Alaska can increase your profits in Russian markets.

Alaska and the Russian Far East share a very special relationship, and companies wishing to do business in the eastern half of Russia should strongly consider locating their Russia contact office in Alaska. This applies not just to mining companies and mining industry suppliers, but also to others wishing to do business in Russia.

In July of this year, the Alaska Miners Association sponsored a tour of mines in the Russian Far East. I have had the sense that there was an Alaska advantage to doing business in Russia for several years, and our tour confirmed this in many ways. I now estimate that this is worth at least a 5 percent and possibly a 10 percent advantage over having a contact office in another location.

PERFECT FOR PROXIMITY

The first reason for this advantage is the close proximity of Alaska to the Russian Far East, important for travel and for communication. Magadan is four time zones west of Alaska, the same as the time difference between Alaska and the East Coast. Alaska has a four-hour business day overlap with the East Coast and with the Russian Far East. The further east from Alaska, the more difficult it is to keep good contact with a project, partner or customer in Russia.

Air travel is another reason Alaska has a distinct business advantage. Magadan is about four flying hours from Anchorage, and there are now regularly scheduled flights between Anchorage and Magadan, Khabarovsk and Vladivostok on both Alaska Airlines (currently during the summer only) and on Aeroflot. The time lost traveling back and forth is significantly increased when you add the various connections required when fly up from Canada or the Lower 48. Although a four-hour jet lag is still a bother, it is better than a six- or eight-hour jet lag.

The same arguments hold for shipping parts, supplies and products to or from the Russian Far East or Siberia. Which of these alternatives would you prefer: (1) shipping your parts or products through New York (where there are 10,000 customs employees in an area of several square miles) into Russia (where there are 15,000 customs employees covering a similar area); or (2) shipping directly from Anchorage (where there are six customs agents you get to know by name after a few shipments) into Magadan, Khabarovsk or Vladivostok (where your partner similarly knows the eight local agents by name)?

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