Viktor Reppo, CEO at Excedea

Growing Northern European Investor Interest in Georgia

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The FINANCIAL — Being as local as possible is a core principal for succeeding on foreign markets. Delivering values to the market you enter is considered another important factor. These are the main guides for Georgian entrepreneurs targeting foreign markets. On the other hand, Georgia maintains competitive advantages for foreigners. Being more Western would make the country be more targeted by European investors as they would feel safer here and could easier understand the market.

“For many of our partners Georgia is part of their strategy. However, it is not their top potential country for development. We see for many of our clients it is going to be the next step. So we want to be a little bit ahead of our clients. We want to build our competence, our relationship in Georgia and later serve our clients better. Our trip is an introductory type,” Viktor Reppo, CEO at Excedea, an advisor company on international growth and financing, told The FINANCIAL.

The FINANCIAL met Reppo during his visit to Georgia. After his introductory meeting with Georgian officials Reppo travelled to other cities of Georgia, including the Black Sea coastal city Batumi. One of the key interests of Reppo has been the real estate sector of Batumi. “We have investment funds, focused on real estate, residential and vacation real estate. From this point of view we decided to visit Batumi. I hope that our visits will become more frequent in the future,” he said.

The core service of Excedea is helping companies going international, helping them to make business in new territories. “We have not had a lot of work coming from Georgia yet. Currently, there are a lot of companies from Russia that are trying to enter the European market and the Nordics, China, India.” The FINANCIAL asked Reppo for his suggestions for Georgian exporters on how to succeed on foreign markets. He also provided his viewpoint as an outsider regarding Georgian investment potential.

“The Georgian market is relatively small. This is one of the reasons why it is not of the highest interest to Northern European investors. It is nice to see that the country is more European than anything around it. The perception for many investors in Northern Europe that Georgia would be close to a Middle Eastern or Asian-like country, which means difficulty doing business or risk, is not true.”

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Reppo expressed his regret that he does not see a lot of focus on innovations here in Georgia. “Most of the countries that I visit have more innovation incubators. There are more discussions of IT and innovations. In the modern world it is a big part of economic development to move from steel production or coal mining to higher value added.”

Q. How does your approach to assisting your clients to succeed on foreign countries vary from country to country?

A. We have different groups. We have companies who want to either sell their products or bring their services and competence to new markets. Then we have very elaborate methodology. The core is learning the best practice. You need to understand where you are going, you need to understand the risks and have local feet on the ground. Investors looking from Germany, France or Brussels and thinking that they understand Georgia because they have read a report from the IMF is just ridiculous. The core principle is being as local as possible. A lot of Western businessmen take special pride in having travelled to a country a lot, speaking a little bit of the language and feeling like insiders. It is still very difficult to get to the level and read all nonverbal communications on the same level as locals. So, it is very important to be local, which means having lots of local people on the ground. In the end there should of course be opportunities for the investor. Meanwhile, investors should be delivering values to the market they are entering.

Q. Can you share with us your first impressions regarding Georgia?

A. Once you leave the airport you are surprised by how Western the country is. The whole of Europe had lots of excitement while looking at Georgian reforms some years back. Some of them, like the tax system, are still continuing. It is becoming very light, flexible and easy to understand, which is a big advantage. From the eyes of an outsider it is important to see how the country handled corruption. Developing export entrepreneurship in the country would give a good outcome.

Q. As we know the small size of the market is one of the obstacles for Georgia to attract large-scale investors. Do you think that if our neighbouring Caucasus countries were sitting in the same boat as Georgia, in terms of reforms, it would contribute to a boost of foreign investors?

A. There is no single investor who would be going solely to the Estonian market. They are either going to the EU or, at least, to the Baltics as a whole. It is the same logic regarding Georgia. Going to the whole region rather than a specific country always helps. Meanwhile, if an investor would try to choose one specific country as a gateway in any region, they would not get an obvious answer.

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Meanwhile, Georgia really has competitive advantages compared to its neighbouring countries. Being a Western-type country is a big advantage for a person coming from the EU. It makes them feel safe and that things are easier to understand.

Q. Russia is one of the target countries of your client companies. How has their attitude towards RF changed since the economic crisis in our northern neighbour?

A. It impacted a lot, also the general volume of business towards Russia. A lot of projects were put on hold or called back ever since the turmoil in Ukraine evolved. There are some companies, more like brave pioneers, who believe that in ten years Russia will return to its previous growth rate and are therefore trying to invest now as it is cheap.

Q. Have Russians moved to post-crisis conditions?

A. Russians have accepted the new reality. From this point of view there is no crisis management going on anymore. We can say it is post-crisis. However, the country has not moved to normal business yet. For lots of Russian companies it is a very difficult time now. Before they had some reserves built up, so they felt like a fat cat who can live without milk for a few days. Now the reserves are disappearing. The Russians are not able anymore to invest in the development that is becoming an obstacle. We are also seeing another direction of movement, when Russian companies who used to specialize in Russia are now interested in Germany, the UK, France and other markets.


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