The FINANCIAL — Twenty-six new businesses have been registered in Georgia with the cooperation of German businessmen during January-July 2015. The number is three more than the same period of the prior-year. In total, fifty-four Germans decided to try their hand at business in Georgia. The taxation, as well as simplicity of starting a business – are the main motivators that have encouraged Germans to establish businesses in Georgia.
German Wolfram Groh and Birgit Gruber-Groh are currently operating the bar-restaurant Café Adjara located in Old Batumi. Cafe Adjara was opened in early 2015. It is frequented mainly by tourists in summer and locals in the quiet season.
Grohs invested about EUR 300,000. “Our restaurant was opened in early 2015 and is already one of the best-known places in Batumi. The business is not yet profitable over the whole year as the tourist season is rather short,” Wolfram Groh, owner at Cafe Adjara, told The FINANCIAL.
“The environment for our current business is good, and we hope for better political stability,” he added.
As Groh said, the couple has little experience in this business, however they are working with Georgian employees who have professional experience.
“We believe that Georgia has an interesting history and a relatively undeveloped natural environment and can therefore offer a new experience to visitors from overdeveloped countries. It also has a rich cuisine of natural food. Our current and future business will be geared towards promoting Georgia in European countries and attracting tourists with a preference for natural living, and to trade in traditional Georgian food items,” said Groh.
Groh listed the finding, training and maintaining of stable personnel to provide good customer service – as the main challenge while doing business in Georgia. As for Georgian officials, he suggested that government units should show more interest in foreign investment.
In future, Grohs plan to establish Georgian brands which can be marketed in European countries.
Torsten Koehler from Sindelfingen, Germany, and Tea Totogashvili, his Georgian business partner, founded the joint travel agency GeorgienReisen (Travel Georgia) in Tbilisi in April 2014.
Torsten Koehler has longstanding experience in the field of tourism, and one of his many travels led him to Georgia. He was immediately impressed by its culture, the stunning landscapes and of course Georgian wine. In Tbilisi he got to know Tea Totogashvili who had worked for many years as a German-speaking tour guide and freelance journalist working in Georgia.
The agency is specialised in culture and wine-tours. “Our main focus is on wine-travel with winemakers from Germany. On 3 November we will bring more than 20 winemakers from Germany to Khareba, Schuchman and Chateau Mukhrani,” said Torsten Koehler, Founder of GeorgienReisen.
“We decided to establish our company in Georgia because of tax reasons and the easy way one can establish a company in Georgia,” Koehler said. In his words, he is very satisfied with the success of his business in its first year since April 2014.
According to Koehler, the biggest issue in Georgia when running a business will be the service in hotels and restaurants and also the situation of toilets and cleanness in the countryside.
Koehler positively rates the Georgian investment climate, describing it as easy and successful.
The future plan of GeorgienReisen’s team is to achieve the highest quality of travel in Georgia. “There is a big market in Germany for top level trips to 4 and 5 star hotels,” Koehler added.
For now GeorgienReisen has invested around USD 5,000, mostly in flyers, websites etc. “We would like to invest more in fairs and marketing campaigns etc. in the upcoming months. The next steps will be opening offices in Georgia and Germany,” Koehler told The FINANCIAL.
The volume of German FDI to Georgia amounted to a record USD 139 million in 2012. However, since then the inflow started declining. In 2014 it reached USD 4 million, and over USD 6 million in the first half of 2015.
“The Georgian market is strategically located. Being at the crossroads of Europe and Asia is a very good and strong argument. It is also the possibility that Georgia is used by many countries as a main location for both Armenia and Azerbaijan, because of the conflict between these two countries. Georgia is also a very good entry gate to the landlocked areas of Central Asia; most of them use Georgia as a transit corridor. In addition, if we look at the fundamentals of the Georgian economy, there are not so many countries worldwide that have had such a robust and stable development of their economy. During the past 20 years Georgia has only once had a relatively small contraction of GDP. It was in 2009. Since that period the country has always had growth. The country’s potential is also greatly supported by the very welcoming population and competitive labour and energy costs. There are plenty of business opportunities in many sectors. Democratic, efficient, business-friendly and corruption-free public institutions are a good basis for doing business easily,” said Dr. h.c. Sascha Ternes, Board Member and Interim Managing Director of the German Business Association in Georgia and Armenia.
“Due to the ongoing situation in Russia and Ukraine, investors targeting emerging markets will consider Georgia a good alternative,” Ternes said.
The German Business Association has been working in Georgia since 2007. It incorporates approximately 140 member companies, and hosted several delegations from Germany in 2015.
“Whenever investors arrive in the country, they provide cash investments and also lots of know-how and technology transfers. We can see it in any kind of business, regardless of the sector in which they are operating. When they are bringing in their experience and knowledge, they are doing something for the local market. They are improving the standards, procedures and capabilities of staff which contributes to extending the market. Companies also invest a lot in the training of staff. So, education is important. We have a couple of members that are very actively engaged in trainings. With all of these activities the overall market conditions will improve a great deal,” Ternes told The FINANCIAL.