Fresenius Medical Care in Russia
How does a German-based dialysis company manage to achieve success in Russia – a market so large that is has eleven time zones and conditions that sometimes vary significantly from region to region? For Fresenius Medical Care, the answer is clear: a pioneering spirit, long-term commitment, intercultural expertise, and the strong belief that there is hardly a more worthwhile investment than the transfer of knowledge.
When Dr. Aleksey Myagkov was studying medicine in Moscow in the 1980s, a certain “SGD-8” became famous in Soviet dialysis. To be more exact, it was rather infamous. Dr. Myagkov’s smile is a little bitter as he speaks the name again today. “This abbreviation was not a code name or a secret agent like 007,” he explains, “but a dialysis machine built according to Soviet design.” Dr. Myagkov describes the machine as “exasperatingly robust.” It never worked well, but it always worked. After all, the governmental authorities lacked the money to buy new, better dialysis machines.
Aleksey Myagkov tells this story with slight disbelief. He lived through perestroika, a coup d’etat attempt, the collapse of a former superpower, wars, and crazy inflation rates. He also made his own contributions to a few much smaller chapters of Russian history. In 1988, he placed the first USSR state order with Fresenius Medical Care when he was head of the dialysis unit at Municipal Hospital № 7 in Moscow. The agreement was the delivery of several dozen machines. Finally, the invincible SGD-8 was being replaced, something that would have been inconceivable only a couple of years earlier. But all that is ancient history. Today, he is the Managing Director of the Russian subsidiary of Fresenius Medical Care in Moscow.
Fresenius Medical Care was one of the first foreign companies to form a joint venture in Russia back in the days of the Soviet Union: a cooperation in 1990 with a Moscow hospital. “We were real pioneers back then,” Myagkov says with a certain pride in his voice. Fresenius Medical Care has since acquired all shares in the subsidiary, which is now market leader in Russia in the field of dialysis products. “In recent years, Russia’s society and economy have again changed fundamentally,” Myagkov says. “Even a few years ago, it would have been completely unthinkable to open a private dialysis clinic in Russia.” “The Russian market” is a term that almost seems too modest in view of the dimensions involved. From west to east, Russia stretches eleven time zones and 9,000 kilometers. The country is heading for the future at breakneck speed – yet at the same time large areas of it have not even caught up with the present day.
Growth and investments
The company has continued to grow and invest, even in periods of economic crisis and political instability. Even in today’s political and economic environment, we see Russia as a strategic growth country.
Fresenius Medical Care has gradually expanded its business in Russia over the past decades from a mere product distributor to a clinic operator and manufacturer. In Ulyanovsk, 700 kilometers east of Moscow, the first new clinic for around 330 patients was built in 2008. In the same year, the Russian production site in Izhevsk started operations.
Known for good quality
“One problem is the public health budget, which is often limited,” Myagkov says. The situation today is no different than it was during the days of the notorious SGD-8, and no different than in many other countries around the world. “Doctors and politicians want our products and clinics because they are known for their good quality,” Myagkov says. “But the question is always what resources are available to regional administrations for purchasing products and reimbursing dialysis services at our clinics.” That’s a question which is all the more difficult to answer because Russia’s regional administrations and social systems still vary substantially in terms of their development and equipment. “That’s why we always adapt our business model to the local conditions,” Myagkov explains.
Making knowledge available to all
“Trust and strong local partnerships will continue to be crucial. We must convince each local responsible party of our quality, experience, and reliability as well as develop sustainable models together,” Myagkov says. Fresenius Medical Care wants to expand its number of clinics in Russia in particular. “However, this will take some time under the current conditions,” he emphasizes.
Every time Fresenius Medical Care acquires or opens a new dialysis clinic within Russia’s vast expanses, staff from the headquarters in Bad Homburg, Germany, are also involved. They inspect and approve the acquisitions and new buildings and consolidate the financial and medical quality control of all clinics from Moscow to Ulyanovsk and Krasnodar. “Nowadays, it is so much more than just selling products as we did in the beginning. In addition to the strategic and financial management of existing business, we are also responsible for the organizational establishment and expansion of new and existing sales structures and business areas,” says Christina Winter who has been working for Fresenius Medical Care in Bad Homburg and has been responsible for the company’s business in Russian-speaking countries. “For example, we decide in which region to develop additional dialysis service business or whether to establish further production sites. In doing so, we essentially define the general strategy for the business. Our Russian colleagues then have full responsibility for local management.” Christina Winter says that it is also one of her team’s tasks to ensure that the company’s business philosophy is clearly recognizable at each of its locations and “that we make our expertise and knowledge available to all employees.”
Proximity to customers
When Christina Winter started her career at Fresenius Medical Care around 20 years ago, she was a sales officer responsible for the Ukraine and Belarus and immediately enthusiastic about the company’s internationality: “You could hear a different language coming from every office. The fact that business outside Germany was also handled by staff who were either from those respective countries or fluent in those countries' language was an understanding of proximity to customers I had not experienced at other companies before.” For her, learning Russian was a fundamental condition for gaining true access to the region and its people. All members of the team now speak Russian or at least have basic knowledge of the language.
“Business is conducted differently in Russian-speaking areas than in Germany or the Western world in general,” Christina Winter says. “We Germans are matter-of-fact. In meetings, we like to get straight to the point, we like set rules, fixed schedules, procedures. When in doubt, a contract is worth more than anything that was previously said. And we often criticize plainly. By contrast, Russians or Eastern Europeans are more relationship-oriented, even professionally: They form an opinion of a person as a whole – and if they have the feeling that a person can be trusted, then there is a basis for a working relationship.” Warmth, openness, and long-lasting personal contacts are also crucial values in business, as are spontaneity and flexibility. Paper is just paper, so the spoken word is at least as important as a plan or contract. And criticism is expressed indirectly at best – so being able to read between the lines is vital.
Anyone open to this business style can establish a stable basis of trust, “but must prove that the trust gained once is justified in the long term through consistently good performance,” Christina Winter adds. That requires a thorough understanding of the other culture and a willingness to compromise.
Apart from intercultural sensitivity, the sales manager also names the ongoing transfer of expertise as a further major reason why the company is now the market leader in Russia. From the outset, the company placed great importance on not only introducing its products to the country and the entire region, but also communicating its medical and technological expertise in all matters related to dialysis. “We train the doctors and dialysis nurses in our clinics according to Western standards and make sure that they are able to participate regularly in scientific events and forums. Our customers and the patients are thoroughly trained in handling our products. We organize and support specialist conferences in Russia with international nephrology experts,” explains Christina Winter. Managing Director Dr. Aleksey Myagkov also considers these efforts to give Russian employees training and further education very important. “So much is changing in our country and the professional requirements are different from what they were just a few years ago. We need employees who are able to meet these demands,” Myagkov says. To spread a company’s philosophy, the employees must also be able to experience it. This is why international exchanges and education programs are supported.