The FINANCIAL — The number of businesses registered by Russian citizens in Georgia has reached 232 units for January-August 2015, up from 215 from the same period of the prior year. Only 21 of the registered companies are currently active. Trade, travel and construction are some of the most attractive fields for Russians that have decided to try their hand at business in Georgia. The simplicity of registering a business has been named undoubtedly as one of the main competitive advantages of Georgia. However, later operations appear far from attractive for Russian businessmen.
Out of the total 44,585 businesses registered in 2014, companies established with the cooperation of Russian citizens amounted to just 330, or 1%. According to the National Statistics Office of Georgia, out of 251 businesses registered during January-August 2014, the number of active companies amounted to 92.
GazTrans was registered in Georgia in January of the current year by Kazbek Urumov. The company is importing gas from Russia to Georgia. It had planned to re-export gas from Georgia to its neighbouring countries. However, plans have been cancelled due to the high cost of the Batumi terminal. GazTrans is supplying to almost the whole of Georgia’s territory: Zugdidi; Tbilisi; Poti; Marneuli; Gori and other cities. “We want to expand our market share if Gazprom doesn’t sink us,” Revaz Memisisi, GazTrans, told The FINANCIAL.
Kazbek Urumov is Director General of Forpost Rusneft. The company was registered in November 2011 in Alania, North Ossetia. According to Oxycom.biz, the Russian guide website to Russian companies and their managers, Forpost Rusneft is registered in the fields of animal husbandry, retail sales of automotive fuel, and the activity of specialized transport of cargo cars.
The reforms that were implemented in Georgia under the previous government encouraged Dmitriy Tulchinsky, CEO at Sedmax, to expand his business in Georgia. The tolerance of citizens towards foreigners and different religions has been another attractive advantage for Tulchinsky.
That being said however, Tulchinsky found the current economic situation of Georgia to be worsening. “Activity has decreased compared to the previous years. The desire to continue with previously-planned global projects, where we see potential clients, is also declining. Previously there was more activity in the country. More was being constructed, more was invested and the whole pace of development was faster. Currently no one hurries, no one takes decisions. We did not face any bureaucratic problems while establishing our company here. However, after that, when we started active work, we found the market to be very stagnated,” Tulchinsky said.
Sedmax incorporates several companies focused on engineering solutions. “We have tested our competence in Russia over twelve years. Then we decided to expand our business overseas. The Georgian market is quite open and enables one to reach other markets as well. We offer industrial automation, projection of an industrial control system mostly for electrical parameters. We also offer services for non-electrical parameters. Our potential clients are huge industrial companies: metallurgic, nitrogen, chemical factories, electric stations, network companies that distribute electricity. Our service provides the opportunity to avoid the wasting of resources,” said Tulchinsky.
Currently Sedmax is mostly focused on developing our business in Georgia. However, the company is keeping up negotiations with its potential partners in Azerbaijan, Kazakhstan, Uzbekistan and Turkey.
According to Tulchinsky, the economic situation in Russia has definitely worsened during the last two years. “Every company has faced this impact. We have long term contracts with our clients, all our deals are denominated in the Ruble which has been devaluated by 100%. In addition, the demand for our service and the number of new clients has declined”.
“To move from words to deed” – is Tulchinsky’s main suggestion for improving the investment climate in Georgia. “Georgia really needs global projects, so the government needs to work hard on attracting global investors,” he added.
Sedmax has already invested over USD 100,000 in Georgia. The further investment portfolio is up to deals with its clients.
Russian Philip Potemkin has purchased 200 hectares of land in Zugdidi, Georgia. He registered a Nut and Agriculture Company in Georgia. Currently there are more than 10 people employed by the company. The first harvest is expected to happen in 3-4 years.
“When we make our first harvest and start operations more actively the number of employees will reach at least 50. The additional volume of investments, together with exact plans for entering export markets will be determined later, after the company moves to the second stage of its development,” Mamuka Mgaloblishvili, Director of Nut and Agriculture Company, told The FINANCIAL.
Instar Projects Logistic Georgia offers a complete package of logistics, transportation and freight forwarding services worldwide. These include: air transportation; rail transportation; sea transportation; road transportation; project cargo (OOG) transportation; chartering services; and customs formalities. The owners of the company are Instar Logistics Ltd and Georgian Global Forwarding Ltd. Both companies are transport companies and have experience in freight forwarding and a wide of range transportation and logistics services, especially in oversized and project shipments.
“Instar is an international company network with professionals and experts in project cargo transportation in Europe and Russia. With the support of our engineering department in Germany we have a very good chance to get projects in the Georgian energy sector,” said Revaz Uchaneishvili, Director of Business Development at Instar Projects Logistic Georgia.
Paritet Georgia was founded by Timur Esmurziev. The company is importing natural juice ‘ABC’ from Belarus. “We are distributing products to all around the country. At first we imported three containers. At the end of November we will import the second consignment of goods,” said Gia Papishvili.
It is the first time that Esmurziev has tried his hand at business in Georgia. “The import of juice has been quite successful, so we will soon start importing ketchup, mayonnaise and all of the products which ABC produces,” Uchaneishvili said.
Frescura, which means cleanness in Spanish, was registered in February 2015. The company is importing self-care products from the Spanish Laiseven and MPL companies.
The company is distributing products in Tbilisi, Samtredia, Kutaisi and Batumi. Frescura has invested over EUR 25-30,000. “We plan to expand our import share in Georgia. However, it requires more investments, so currently it is difficult to talk about our future plans,” Nodar Sidamonidze, one of the founders at Frescura, told The FINANCIAL.
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