A recent piece in The New York Times pointed to a growing trend in Russia. Companies struggling with diminished cash flow and/or overstocks are looking to barter with other businesses rather than pay them in rubles.
According to the article, ads in newspapers and on websites are offering up trades on products. This move to barter deals is not new to Russia, which saw half or more of total sales in the country conducted in this manner back in the mid-1990s. Today, bartering represents three to four percent of sales in Russia.
Part of the appeal of bartering is it allows companies to avoid discounting products. "Russians are so arrogant that they never cut prices," Vladimir Popov, a professor at Moscow's New Economic School, told The Times.
Economists do not see private businesses returning to bartering levels of the nineties as most have fully made the transition to a market economy from the communist past. Today, managers are focused on looking for ways to become more efficient and reduce costs.
Still there are those that see value in pursuing barter deals. A Hyundai factory in the town of Taganrog is offering to trade vehicles for "raw materials," "high-tech equipment" or "other liquid goods, including finished products of various branches of industry."
Dmitri Smorodin, who runs a large construction firm in St. Petersburg, has begun trading his services for items of value.
"Food we would happily accept, because it's easy to sell," he told The Times. "Of course, money is always preferable."
Discussion Questions: Do you think we will see anything with bartering in the U.S. similar what is taking place in Russia? Have you had any experience in barter situations and are there a set of "best practices" for doing it right?