Russian Federation: E-commerce In Russia: The Way Forward

Last Updated: 16 October 2002

Article by Igor Motsnyi

E-commerce in Russia is a fast growing and highly promising for foreign investments industry. This has been confirmed by the Annual International conference "Independent Software Developers Forum (ISDEF)" that took place in Moscow in the end of September-beginning of October this year.

Independent software developers forum has been formed earlier this year by several Russian shareware companies. The idea behind the foundation was to join efforts of software businesses operating through the Internet to facilitate their better market performance.

The first conference organized by the ISDEF was designed to get potential competitors and partners closer to each other and stimulate fruitful exchange of ideas. However no one expected such a great interest to the conference from the foreign e-commerce companies.

Representatives of the one of the biggest market players, Digital River Inc., www.digitalriver.com, were not only present at many of the sessions and round tables but also made an in-depth and very informative presentation explaining the ways for success on the European and the US markets. Digital River were not the only foreigners interested in the Russian market. There were also SimTel.net (www.simtel.com), TuCows (www.tucows.com), Element 5 /share-it (www. shareit1.element5.com/) and some others.

The issues discussed at the conference were extremely diversified and included advertising on the Internet and its strategy, choosing the right e-commerce provider for shareware business, case studies of the shareware successful stories, marketing in Europe and its peculiarities and many others.

There was a session on the legal aspects relevant to the shareware business that became one of the most interesting events of the conference. Apparently Russian legislation in the field of e-commerce is not yet developed and there are too many gaps to fill in. This has been stressed by the Chief of the legal department of the Ministry of Justice professor Morozov.

However we consider the lack of governmental regulations in the field of e-commerce in Russia as an advantage rather than a drawback. The only significant law that exists in Russia in this area now is Electronic Digital Signatures Law that virtually does not work. The Digital Signatures Law set up a cumbersome system that is extremely unattractive for both users and Registration centers. Therefore, at this stage it is better to leave e-commerce self-regulated thus making it possible to create internal rules and ethics that will be observed by the industry.

Other speakers at the legal discussion have brought special attention to the US corporate legislation and the rules that have to be fulfilled by the persons who desire to launch a separate business in the US and so-called anti-circumvention and anti-device laws. The latter prohibit manufacture and trafficking in devices that can be used for circumvention of copyright protection technologies.

Computer programs can fall within the category of circumvention devices quite easily plus doing business through the Internet can make your company subject to jurisdiction of any state in the world with different applicable laws. Therefore software developers should be aware of that risk offering their products on-line.

The audience was quite receptive to the speakers and a lot of questions were asked both after the round table and during the break.

The conference undoubtedly achieved its results and probably even went further then its organizers expected. For the first time Russian shareware community had an occasion to meet and discuss its problems and perspectives of their business. The conference however went beyond traditional meetings of a narrow circle of people since there were also quite a few lawyers and journalists. The presence of both Russian and foreign legal counsels indicates that Russian e-commerce business is about to change the way of operation and pay much more attention to juridical matters than before.

Last, but not least, the mere fact that quite a few foreign e-commerce companies decided to take part in the conference demonstrates that at least in this area Russia is not seen as "terra incognita" and it is time to take Russia shareware business seriously. There are plenty of opportunities on the Russian shareware market now and some western companies already realized that.

Any one interested in the conference is invited to visit http://www.isdef.org/en/ and http://www.isdef.org/en/contacts/index.php

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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