I have chosen to export IT-based medical treatment services to Russian, as it would enable U.S-based physicians and doctors to do remote diagnosis in major public and private hospitals in Russia. This services based exporting would tap the un-saturated Russian health-services where there is huge potential for future growth as the Russian is the 9th largest country in the world by population, where only 20% people have access to quality healthcare services (USRussiaTrade, 2011). At present, its health expenditures remain low as represented by per capita health care spending of US$ 42 which is lower than European standards. There is also poorly managed medical insurance which does not ensure proper medical treatment in every region. Furthermore, its bureaucratic and inefficient healthcare system provide healthcare which varies from region to region. Nonetheless, due to sustained GDP growth and the government’s national health projects to improve the healthcare system, IT-based medical treatment services would tap growing needs of the Russians for quality healthcare services.
Strategic Alliances:
IT-based medical treatment services export to Russian market can be started by making strategic alliances and partnerships with major national and private hospitals in Russia. This entry model would enable the business owner to manage the wicked problems and hurdles in the Russian market. This strategic alliance would improve the medical treatment services in major hospitals and provide cost-effective treatment to Russian masses that often have to rely on their out-of-pocket payments for availing healthcare services.
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North American Free Trade Agreement (NAFTA) among U.S, Mexico, and Canada has enabled these countries to create a largest free trade area in which U.S exports to NAFTA partners reached to $411.5 billion in 2010. However, due to lack of such agreements, U.S exporters have to significant trade restrictions and barriers from Russia for creating the strategic alliance with local Russian partners. Since Russia has signed the bilateral agreement on its accession to the WTO and both the governments are putting efforts for Permanent normal trade relations (PNTR) for Russia, U.S exporters may expect stable climate for doing business in Russia. This Normal trade relations” (NTR), or “most-favored-nation” (MFN) for Russia would lower the tariff and trade barriers on U.S exports.
Challenges/Barriers to entry for business:
For US exporters to extend off-shore IT-based medical treatment services to Russia which is a geographically vast market stretching over 11 time zones and encompassing over 17 million squares miles is not an easy task to accomplish. Apart from tariff barriers, there are numerous non-tariff barriers for this proposed medical services export business. For instance, IT-based medical treatment services business may have to face complex tax system applicable in Russia. It may also have to face the challenge of local languages to coordinate with local hospitals in Russia (U.S Small Business Administration, 2010). One of the biggest challenges in Russia for the service provider is that they have to pay a range of fees to obtain licenses form local authorities, which, however, may be bypassed via bribes to local authorities. U.S based exporter may also have to face the hurdles of wide-spread bureaucracy in Russia, which requires a lot of paperwork to run a service-oriented business in the Russian market. Hence, arriving at a successful strategic alliance with some national hospital in Russia may take a huge time and make the potential entry a cumbersome process. Furthermore, the foreign exporters of services to Russia may also have to face the challenge of corruption to conduct their businesses with local partners smoothly. However, this hurdle is manageable at the cost of doing business.
Opportunity for business:
Russian market, with a sound scientific base, presents opportunities for IT-based remote treatment possible to wide-spread hospitals national-wide. Since the country does not face the dearth of the latest medical equipment and tools, the proposed business can easily take advantage of this infrastructure to expand operation throughout the country. Furthermore, this IT-based business will have to face the least amount of tariff barriers due to its off-shore nature. It is also interesting to note that the proposed IT-based medical services export business can tap the growing Russian healthcare market which is expected to receive nearly $93 billion expenditures and growth rate of 14 percent over the last year. Since the Russian government has planned to increase the Russian’s life expectancies and provide medical insurance to the country’s entire population by the year 2020, the export of medical services may take advantage of this un-sutured and growing healthcare market.
