Doing business in Belarus
31 of January 2012
2
99,57 %
AS A. Le Coq
Estonia
AS A. Le Coq
EstoniaVolfas Engelman
Lithuania
Volfas Engelman
LithuaniaA/S Cesu Alus
Latvia
A/S Cesu AlusLatvia
100 %
The structure of the Olvi groupThe structure of the Olvi group
98,2 %
OLVI PLC
Finland
OLVI PLC
Finland
JSC ”Lida beer”
Belarus
JSC ”Lida beer”
Belarus
91,6 %
Why Belarus?• Geographic location and opportunity grow for Olvi group.
• Access to Russian market and other markets of common custom zone
• Ready-to-do production
• Formed management team
Risks• Political influence on economic processes
• Control of only 51% at the beginning of investment
Something controllableSomething controllable
Actions to make things happen• Increase Authorized Capital Stock and issue additional shares
• Make great offer to minor shareholders
Result of investment. Expectations and reality
• Met all profit indicators through 2009-2011 years.
Olvi Challenges• Difference in mentalities influences on the attitude for
changes. Resistance is higher.• Great investments in to education of personnel in order to
motivate them to work differently.• Slowing down all process (construction took 1,5 more years).
Points you have to consider• Politic defines economic:
– Belarus have to produce import substitute. Main direction is to copy instead of to invent.
– Protection of local producers by administrative measures.– Local currency devaluation process and covering this by complicated
accounting system.
Plans and reality • According to presidential decree in 2012
– GDP has to grow on 5 – 5,5%, – inflation rate 19-22%– Export growth 11,6-12,3%
• In comparison with 2011 forecast was:– For inflation rate – 7,5-8,5% (fact 110%)– For local currency devaluation – 8% (fact 180%)
Could be equal, but through tough measures
• Consider economic model of Belarus:– Power of government officials– Social economy orientation exceeds business reasonability
• Consider negative scenario:– Must have anti-crisis plan: strategy, resources, flexibility in business
procedures and processes
Recommendation for doing business
Recommendation for doing business • Top management:
– Think in advance about who you will work with (knowledge of language, proper education (MBA), western style of working experience)
– Think about whole team (recruiting one by one will slow down all the processes)
Recommendation for doing business • Your business “hardware”
– Consider real price of company where you are going to invest. (difference in reality and accounting documentation could be significant)
Something you can get use to • Business trip it is a complicated process:
Set a meeting
Go to meeting
Send internal memo
Set a meeting
Send memo to accounting
Write assignment for business trip
Prepare an order for trip
Go to meeting
Take a stamp on authority docs
Get back and write a report
Get travel expenses
Come back
Thank you