The FINANCIAL — According to research conducted by The FINANCIAL 18% of companies in Georgia are managed by foreign CEOs. Out of them 82% are male and only 18% are female. The FINANCIAL’s survey was carried out among 550 middle sized and large entities based in Georgia.
According to the research the highest presence of foreign CEOs was in the NGO sector, where more than half of the CEOs – 51% are foreigners, followed by the energy sector where the presence of Georgian and Foreign CEOs is 50/50, financial sector (22%), international and local business companies (21%), telecommunication sector (20%), consumer staples sector (18%), consumer discretionary sector (16%), transportation sector (15%), commercial services (10%), consumer service (9%), capital goods sector (8%), and health care sector (0%).
Moreover, the highest presence of foreign male CEOs was in the consumer discretionary sector (87%), followed by international and local business companies (61%), and the capital goods sector (49%).
Female CEO presence was highest in the consumer service sector (35%), consumer discretionary and capital goods sector (12-12%).
In the sectors of finance, telecommunication and consumer staples there were only male CEOs.
In their interviews with The FINANCIAL the CEOs of MagtiCom, HSBC, Georgian American University (GAU), Citadines, Poti Sea Port, Nestle and Georgian Lottery Company (GLC) spoke of the benefits and challenges of being a CEO in a foreign country, and what challenges and opportunities they see in the Georgian business environment.
“One of the advantages of being a CEO in a foreign country is that it’s fascinating to work in a different culture. I have been a CEO in Russia, Singapore and in Georgia. Each country has its different culture and atmosphere which keeps life and work very interesting,” said David Lee, General Director of MagtiCom and President of the American Chamber of Commerce.
“One important benefit of being CEO in a foreign country is the chance to realize plans from scratch. During this process you find the best strategy for your company. This process is an opportunity to learn more about yourself through the reaction of your colleagues to your decisions and the success of daily operations which will reflect, like a mirror, all your virtues,” said Farhod Tashtemirov, General Manager of Hotel Citadines.
Allen Cheng, CEO of GLC, said that being CEO, apart from job satisfaction, provides the benefits of great experience from different environments in every social and cultural aspect encountered.
“There is a satisfaction in any CEO position that you are at least trying to make a difference with your organization – which is surely true in the field of education. If you are successful and socially responsible there also comes a certain amount of respect for the difference your organization is making in society,” said R. Michael Cowgill, President of GAU.
“I personally enjoy working in and experiencing the new. You come to a new country, explore it, you work in a different business environment and this is usually a professional challenge. In my case I have worked in 5 to 6 foreign countries before. Every time you move to a new country you encounter new challenges, and you have to familiarise yourself with a new culture and business practices,” said Guy Lewis, CEO of HSBC Georgia.
Rony Saab, CEO of Poti Sea Port, says that fringe expatriate benefits, exposure to new culture and meeting new people, and widening one’s business network are the short list of benefits of being CEO in a foreign country.
“Each time you move to another country, you have to understand a new culture, a new language, and a new team. Some people find it difficult, but this is not my case. On the contrary, I very much enjoy these moments where you discover something new,” said Jean-Michel Puyserver, Country Manager of Nestle.
In their interviews the CEOs accessed the Georgian environment, challenges, country’s attractiveness and the potential of several sectors’ development in the region. The majority of CEOs underlined Georgia as a country with no corruption and one with an easy business environment.
“Georgia is very easy to do business in. There is less red tape, corruption levels are extremely low in the country, according to Transparency International, and the environment is relatively crime free.
Georgia has got large potential in a number of sectors, for the country’s development, hydroelectric power, the healthcare sector, agriculture development and businesses which are export focused will be very important,” said Lewis, HSBC.
“In my 12 years in Georgia I have seen much change in the business climate. The ease of doing business has improved greatly. There are still many challenges that remain though. The August 2008 War and the global economic crisis together slowed greatly the FDI and internal investment so necessary for the economic growth of Georgia. It is also my belief that the continued activities of Russia in the region further hurt the investment climate in Georgia.
I have started to see some slight improvement, but believe that we are 2 to 3 years away from where we were prior to the middle of 2008,” said Cowgill, GAU.
“The Georgian business environment is very open and investment friendly, there are a lot of opportunities for foreign companies for partnership.
Business friendly legislation and no corruption at all, these are the most attractive points for any foreign investors in Georgia. As well as location and a rich environment the great hospitality of the Georgian people is also extremely welcoming,” said Farhod Tashtemirov, General Manager of Hotel Citadines.
“Georgia is interesting because almost no sector is saturated so there are no areas where investors have no room for business.
Probably the most heavily invested areas are telecommunications and at the same time the hotel industry is quite well invested. The sector I find most interesting is agriculture, but there is also huge potential in water and in any kind of manufacturing,” said David Lee, MagtiCom and AmCham.
“Georgia is still a young country, with many issues to solve. But it is also a very open country where many people, especially young ones, are very keen to learn and to implement what they learn. I am a strong believer that the best thing any state can do is to give education to its people, and then progress and let stability flow from that,” said Puyserver, Nestle.
”The main thing that attracts foreign investors is that the Georgian business environment has globally improved in the last few years, and local regulations are step by step shaping a safe and stable basis for business. Despite the August 2008 events and the worldwide economic crisis, it looks like growth is back, even if only slowly. Anyway as a business in Georgia you have to accept that there is an element of risk, and act accordingly,” he added.
“The economy of Georgia has shown impressive growth rates year by year due to favourable conditions in external export markets, balanced state budgets, controlled inflation, expansionary fiscal and monetary policies, growing capital investments by domestic and foreign investors and significant growth in domestic consumption.
The country is well positioned to remain one of the fastest growing economies in post soviet countries due to a qualified labour force and unique business opportunities, and thus represents an attractive destination for investments. The main goal of the economic policy of the Georgian Government is to promote the development of private entrepreneurship by creating a favourable business climate. Economic reforms are aimed to ensure economic and private sector development. To this end, the Government has made a number of important steps: lower tax, fewer licenses, technical regulation system, customs reform, lower import duties, and aggressive policy for privatization.
A new progressive and liberal tax code has been introduced, which along with reduction of taxes and taxation rates has created solid foundation for promotion of business development in Georgia,” said Rony Saab, Poti Sea Port.
Strategically, Georgia, located at the centre of trade and commerce between the East and West, is well-positioned to serve and access markets in the Middle East, Africa, the Indian Subcontinent and CIS countries.
Moreover, Georgia occupies a time zone that allows it to connect markets like the Far East and the US. Georgia is developing world-class infrastructure, air and port facilities, to make it the most well-connected hub in the region. Georgia is a resource rich country, its location on the “Silk Road” between Europe and Asia made it a transit route for goods shipped throughout the Caucasus,” he added.
Allen Cheng believes that when business and politics can be segregated and a harmonious relationship with neighbour countries formulated, Georgia is going to have even greater potential for development.
“A low profit tax rate and high literacy and university graduates rate makes Georgia a great business environment, and forms Georgia’s potential to become a business hub among the Caucasus region, similar to Hong Kong, Singapore and Dubai,” Cheng added.
The CEOs said that the main challenge for them in Georgia was the language barrier.
“There are many challenges if you are in new place and in a new country. They can be divided in to personal and professional, in terms of personal challenges I would cite the language barrier. However I love to learn foreign languages. Mastering the Georgian language is helping me to become better acquainted with my friends and understand life in Georgia more. As for the professional aspect, I consider avoiding asymmetric information among colleagues and between departments. Creating team work is another challenge, which is the most important and as in sports it is the same in business – if you do not behave as a team then you will never win. The last challenge is how quick I will be able to turn our strategy from a defensive mode to an offensive one,” said Farhod Tashtemirov, General Manager of Hotel Citadines.
“Regardless of your country of origin, there are unique cultural differences here in Georgia which shapes all aspects of society. Some come from Soviet times and many from much farther back. Understanding and working with these differences are challenging,” said Cowgill, GAU.
Rony Saab said that for him the main challenges were the language barrier and lack of service, while for Allen Cheng it was the feeling of homesickness.
The language barrier was one of the main problems cited by most of the CEOs who said that as a result they were unable to watch Georgian TV channels, however they still, at least once a week, try to watch Georgian channels.
“Since I don’t speak Georgian, I prefer to watch Georgian news by means of foreign media,” said Rony Saab.
“At home we switch back and forth between almost all of the Georgia TV channels in the evenings and weekends. I tend to live a more Georgian life rather than an expatriate one and as things can change so quickly and often in Georgia, I feel a need to be kept informed,” said Cowgill, GAU.
“I speak a little bit of Georgian, and when I have free time I love watching TV,” said David Lee.
Tashtemirov said that he watches Georgian TV 1-2 times a week.
“As in any country in a period of transition, you have to understand very quickly where the country has come from, and what is most probably going to be its future: this is the basis of your business strategy, whatever you sell, whether its banking, cosmetics or food.
In your personal life you have to adjust your lifestyle to what the country can give you, and simply forget about the rest. For French people like me, Georgia offers delicious food, excellent wines, wonderful monuments and people with passion: it is already an excellent common ground,” said Puyserver, Nestle.
The majority of CEOs said that they had account on Facebook, followed by LinkedIn and Odnoklassniki.ru. However not all CEOs are registered within social networks.
“Nowadays social networks are becoming part of one’s life, not only as individuals but also corporate,” said Tashtemirov.
“I like to stay in contact with friends, family, and previous colleagues so I try to manage my accounts whenever possible,” said Rony Saab.
Cowgill says that he likes a little more privacy in his personal life and does not have an account on any social networking sites.
“As I don't understand the language, I don't watch Georgian TV very often, except to get a “feeling" from some programmes about the possibility of Nestle advertising,” said Puyserver.