Russia is a lousy place to do business, but a great place to make money.

That’s how one panelist put it Thursday at a Toronto conference on investing in the “R” of the BRIC — Brazil, Russia, India, China — emerging market nations.

Corruption, for one, remains a serious impediment to investment in the country, but there are huge gains to be had for companies that can navigate the business climate.

Daniel Thorniley, president of DT Global Business Consulting, said jokingly, “I’ve always said, if you do business in Russia, you will lose all your money and die.”

Mr. Thorniley, who was moderating panels at the conference hosted by the Canada Eurasia Russia Business Association (CERBA), called that view of Russia “rubbish” and insisted that business success in the country is one of the best kept secrets in the world.

“For Western companies, the political risk is not in the Kremlin, it’s at the local level ... That’s where you’ve got to make the relationships and make sure it’s going right,” he said.

Konstantin Sonin, a professor at the New Moscow Economic School, said the high cost of entry but potential for payoff, means companies that invest in Russia should be large and risk-loving.

“Once you’re in Russia, your margins are high — corruption, to some extent, once you’re in, it protects you from competition,” he told the audience of about 150.

Alex Shifrin, a Moscow-based entrepreneur spoke about the challenges for small and medium- sized businesses in Russia, summing up the sentiments of many with his comment that “doing business in Russia can be pretty lousy. ” But he insisted that the country remains a great place to make money.

He noted that working with regulators and accessing venture capital are both difficult. But he insisted there are significant opportunities for SMEs in Russia. For instance, the Russian soup market is valued at $32-billion per year, he said. This prompted him to start SoupChik, which offers the only cup-of-soup-to-go option in Moscow.

Other panelists, while noting Russians’ respect for contracts, said hiring good accountants and lawyers and doing due diligence can mitigate the risks.

Tye Burt, president and CEO of Toronto-based Kinross Gold Corp., said corruption hasn’t been a problem for his company in its Russian operations, which make up about 20% of its worldwide portfolio after recent investments of about $3-billion in the Kupol and Dvoinoyne gold properties in Siberia.

A clearly articulated zero-tolerance policy has helped with this, he said, something Warren Browne, vice-president of AutomotiveCompass LLC also observed of his business experiences in Russia.

Mr. Burt said Russian bureaucracy compares favourably to other jurisdictions Kinross works in around the world and pointed to the government’s recent approval of 100% ownership by Kinross of its two Siberia projects.

“The Dvoinoyne approval sent a strong positive signal to the global mining community that Russia is open for foreign investment and business,” Mr. Burt said, lamenting that there isn’t more foreign investment in the resource and mineral sector in Russia.

“I would note, incidentally, that the Russian tax rate at 20% per year and royalty rate of 6% makes Russia one of the lowest government participation rates in our portfolio,” he said.

Warren Browne, vice-president of West Chester, Pa.-based AutomotiveCompass LLC, said the automotive sector is ripe for investment, with 2.5 million cars set to be built in the country this year. With stringent local content requirements — 60% of supplies must be built in the country, Mr. Browne said — manufacturers who have committed to building cars in Russia need suppliers.

“Magna [International Inc.] is there, but there’s room for many more suppliers,” he said. “Because of those [supplier] requirements you’re probably going to get more margin in your business than you would in Brazil or China.”

Mr. Thorniley said that like any other emerging market investing in Russia can be challenging, but it comes with growth opportunities that are worth the risk.

He predicts the Russian economy will churn out solid growth of about 4% regardless of the current global outlook.

According to CERBA, while investors from around the world poured US$13.8-billion in direct investment into Russia in 2010, just 2% of that came from Canada.