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Doing business in Belarus 31 of January 2012 The structure of the Olvi group OLVI PLC Finland 100 % AS A. Le Coq Estonia 98,2 % A/S Cesu Alus Latvia 99,57 % 91,6 % Volfas Engelman JSC ”Lida beer” Lithuania Belarus 2 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 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. Totally new sales team New system of distribution New logistic system Personnel replacement Investments to capacity and quality Restructuring investment flow Reducing personnel cost Decreasing of profitability 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%) Plan Actions Could be equal, but through tough measures Fact Recommendation for doing business • 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 • 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 Set a meeting Go to meeting Send internal memo Send memo to accounting Take a stamp on authority docs Go to meeting Write assignment for business trip Get back and write a report Come back Prepare an order for trip Get travel expenses Thank you