Russian in Emacs (Linux, UTF-8)

I finally learned how to edit Russian texts in Emacs (Linux, UTF-8). Since I was not able to find this technique on the net, I'd like to share it here. This, in particular, allows to include Russian substrings into the command line using M-x shell command, for example:

echo "Привет"

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Update: grep is capable of searching for utf-8 strings from this shell.