Caucasus Business Week #160 by Caucasian Business Week

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September 12, 2016 #160

September 12, 2016, Issue 160 - www.cbw.ge

Econo-mix GEL Exchange Rate not Expected to Show Extreme Volatility Pg. 4

Company Ajara Meets Mellow Season with Tourism Boom and Clean Seaside

PR Teona Baghdavadze: Staying Away from Political PR Pg. 11

Pg. 5

Inspiration, Innovation and Ideas at Tendence 2016

National Bank Cheapens Loans The monetary policy committee of the National Bank of Georgia (NBG) has taken a decision on reducing the refinancing rate by 25 base point to 6.5%. This decision is based on macroeconomic forecasts under which the tightened monetary policy should be gradually alleviated to move closer to the target inflation indicator. “According to the forecasts, in other equal conditions it is expected to lower the monetary policy rate to 6% in midterm period. In August annual inflation rate of the consumer prices declined to 0.9% and this corresponds to the existing forecasts. Disappearance of base eﬀect has important influence on reduction in inflation indicator. The weak joint demand stimulates also inflation slowdown tendency. According to the current forecasts, the inflation rate will be maintained at low level in the next quarters and will get closer to the target indicator at the end of 2017. Pg. 4

Turkish Opportunity Russian sanctions against Europe and Turkey provided a great opportunity for the Georgian agricultural sector which could have replaced, to the best of its ability, the needed supplies of fruit and vegetables to Russia and thus regain its positions on the vast neighboring market. It is unlikely that anyone would contest the idea how useful that would have been both for the stability of the country’s agricultural production and for testing its export and gradually raising the quality of its agricultural products to the level of the most demanding European and Asian markets. Today, however, as Russia and Turkey have, in practical terms, “made peace”, it can be stated that Georgia missed out on its chance. Which was not the case with its neighbors that realized their opportunities not necessarily within the legal framework. For example, Turkish export of tomatoes to Azerbaijan grew 50-fold—what Pg. 13 an appetite!

2 GOVERNMENT

NEWSROOM Part of the Basic Means’ Import Will Exempt From VAT Ministry of Cabinet will approve the list of industrial means, which import will exempt the importers from VAT, if these basic means are used during VAT taxable operation.

Government to Open Joint Business Service Space – Business House Business House, a joint business service space, will open in Tbilisi. On September 8 Prime Minister Giorgi Kvirikashvili attended a presentation of the Business House project.

ECONOMY

Georgia attracts $445m Foreign Direct Investments in Q2 2016 This was a 20 percent increase year-on-year (y/y), according to preliminary data published by the National Statistics Oﬃce of Georgia (Geostat).

Average Salary in Business Sector Is 978 Georgian Laris In the second quarter of 2016 the averaged monthly salary in the business sector made up 978.1 GEL,including women salaries rose to 727.5 GEL.

BANKING

TBC Bank seeks to purchase Bank Republic This week the Dow Jones News of the American stock exchange, the NASDAQ Stock Market, announced TBC Bank confirmed it was in talks to acquire JSC Bank Republic, a member of Societe Generale.

National Bank Forecasts Low Inﬂation Rate In August consumer price inflation rate declined to 0.9% and this tendency meets the existing prognosis. Base eﬀect completion makes important influence on inflation rate reduction.

BUSINESS

Wine Export is Increased by 42 Percent in Georgia Wine export keeps growing dynamic. According to National Wine Agency, as of August, 2016, 28 156 547 bottles of wine are exported from Georgia to 46 countries, which exceeds by 42% comparing to the same period of the previous year.

Indian and Turkish Textile Companies to Enter Kutaisi Free Industrial Zone Negotiations are underway with one of the Ukrainian companies too that plans to operate in the heavy industry direction.

COMPANY

Henkel to Open Adhesive Construction Materials Enterprise Henkel plans to open an enterprise of adhesive construction materials plant in the village of Martkopi, the Gardabani District, on September 15.

China impressed with Georgia’s bright investment climate

eorgia is embracing its growing ties with China by exploring new ways for mutual cooperation. Georgia’s Prime Minister Giorgi Kvirikashvili hosted China’s Minister of Human Resources and Social Security Yin Weimin in capital Tbilisi. Georgia’s bright investment climate and China’s role as an important trade partner for Georgia were discussed at the meeting, as were other topics related to deepening the bilateral partnership. Particular attention was paid to the importance of developing trade and economic relations and concluding the free trade agreement that’s currently being negotiated. The free trade deal will be extremely beneficial for Georgia as it will facilitate increased business and trade turnover between the nations. Through the deal Georgia will be able to export its products to China without additional customs fees. Georgia will be the first country in the region to sign this type of

agreement with China. Establishing a free trade regime with China was initiated by Georgia’s former Prime Minister Irakli Garibashvili when he met his Chinese counterpart Li Keqiang in September 2015. Both countries expected free trade talks to be completed before the end of this year. The two oﬃcials discussed a Memorandum of Understanding (MoU) recently signed between China’s Ministry of Human Resources and Social Security and Georgia’s Ministry of Labour, Health and Social Aﬀairs. The MoU outlined improving bilateral cooperation in the areas of labour and social security through exchanging experience. The document also had strategic significance in terms of sharing experience in the social policy area, and was part of the New Silk Road Project. Kvirikashvili also told his guest that China was one of the closest economic partners of Georgia. He welcomed the growing interest of

Chinese companies with Georgia’s business environment, and the increasing exports of Georgian wine to China. Kvirikashvili said friendly business relations between Georgia and China were more noticeable now than in the past, as more Chinese companies expressed interest in investing in Georgia. This was also evident in the tourist sector; figures showed Chinese tourists were more aware and interested in Georgia and this meant more Chinese guests were spending their holidays here. Figures released today by the Georgian National Wine Agency showed China was now the second largest importer of Georgian wine, after Russia. Last month alone China imported more than 3.3 million bottles of Georgian wine, or 12 percent of Georgia’s total wine exports. Last month Georgia exported more than 28.1 million bottles to 46 countries, including China.

Georgia-Switzerland explore free trade and economic opportunities

eorgia is exploring ways to deepen its existing ties and forge new bonds with Switzerland. Prime Minister Giorgi Kvirikashvili hosted National Council of the Swiss Confederation chairperson Christa Markwalder in Tbilisi and discussed the opportunities and prospects provided through mutual deals and cooperation. Discussion mainly focused on the trade and economic partnerships between the two nations. They also mentioned the Free Trade Agreement signed between Georgia and the European Free Trade Association (EFTA) this June. Through the deal with the EFTA, Georgia was now able to sell its goods in Switzerland, Norway, Iceland and Liechtenstein. The Swiss oﬃcial also met Georgia’s Foreign Minister Mikheil Janelidze earlier today. Georgia’s Foreign Ministry tweeted about the meeting:

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The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 12 Director: Levan Beglarishvili WWW.CBW.GE

September 12, 2016 #160

Mobile phone: +995 591 013936 Email: caucasianbusiness@gmail.com

The possibility of enhancing tourism ties and increasing Swiss investments into Georgia were also discussed by the two oﬃcials. Kvirikashvili stressed the significance of Swiss aid in developing Georgia’s highland regions. He specifically noted the support of the Swiss Agency for Development and Cooperation was instrumental in implementing projects that encouraged the development and advancement of Georgia’s alpine areas. On another note the PM briefed Markwalder about the Government of Georgia’s Four-Point Reform Plan that encompassed rapid development of the country, reforming the education system and improving open governance, as well modernizing and upgrading vital infrastructure such as roads. Kvirikashvili invited Markwalder to Georgia several months ago when he met her during his oﬃcial trip in Switzerland at the end of June 2016.

www.cbw.ge <<

Rehabilitation of Tbilisi by-Pass Road is Finished Before the end of the Fixed Term

Vintage is Actually Finished in Dedoplistskaro Municipality

Quantity of Visitors to Ajara Tourism Information Centers Grows by 110.8%

Silknet Provides Internet and TV Services at Lowest Tariﬀs in 9 Cities

Georgia is One of the Major Mineral Water Suppliers to Russian Market

Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Nino Kuparashvili, Lazare Gvimradze; Shiva Parizad. Designer illustrator: Ilia Chrelashvili. Technical Assistant: Giorgi Kheladze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

EVENT

September 12, 2016 #160

Black Sea International Folk Festival ended with a Gala Concert 4 countries, 24 groups and over 400 participants on the Black Sea Arena Scene

lack Sea International Folk Festival, hosted by Black Sea Arena in Shekvetili, ended with the gala concert. The concert consisted of two sections and did last for approximately three hours. Majority of its participants were represented by Georgian national ensembles: Sukhishvilebi, Rustavi, Basiani, Riho, Lagusheda, Pesvebi, Mareti, Bermukha (Elderly Ensemble). The Festival also hosted folk ensembles from Italy, Switzerland and Turkey. The London Community Gospel Choir, having the special guest status of the festival, presented its own program to the audience. According to Giorgi Donadze, Director of the Folklore National Center the International Black Sea Folk Festival will become a tradition. “It is a very good start. This festival will be more diverse in the coming years and guests from many countries will take part in it. This field will become more popular for Georgians. The festival will contribute to popularization of Georgia and tourism development. It started well and ended well. The Georgian traditional art has the great future if everything goes this way. Similar festivals directly aﬀect performance level of ensembles and they get incentivized. As regards the audience, you heard the ovations that followed each performance (ensembles,

solo performers, elderly dancers). “Can you imagine how important this stimulus is?! – said Giorgi Donadze after the gala concert ended. “I am delighted that the first festival raised such a big interest. 24 ensembles, over 400 participants -this is a great outcome. I am certain that Georgia has every opportunity to become a platform for grand international festivals,”said Mikheil Giorgadze, the Minister of Culture and Monument Protection of Georgia. Black Sea International Folk Festival was hosted by Guria. The events took place on the 1st, 2nd and 3rd September in Ozurgeti and Shekvetili. This year the festival was held within the Check in Georgia framework. Ozurgeti hosted Georgian and foreign ensembles on September 1 -2. Gala concert was held at Black Sea Arena. 24 ensembles and 400 participants from 4 countries presented unique folk pieces on the grand Georgian scene. The International Black Sea Folk Festival was organized by the Georgian National Folk Center with the support of the Ministry of Culture and Monument Protection, Ozurgeti Municipality and Black Sea Arena. “The initiating group had the idea to turn Ozurgeti into the folk city and started working on its realization. The 4-storey representative oﬃce of the

Georgian National Folk Center will be opened shortly and it will become the center of the western region. Any volunteer will have the opportunity to learn

Gurian chants. In addition, we created tourist routes in the region to facilitate folk tourism development. Our Gurian folk is unique and the international fes-

tival is the first step for realization of our idea,”- explained Avtandil Surguladze, Head of the Ozurgeti Regional Oﬃce of the Georgian National Folk Center.

ECONO-MIX

GEL Exchange Rate not Expected to Show Extreme Volatility

Merab Janiashvili Economic Analyst

National Bank Cheapens Loans

At this stage, GEL exchange rate is rising at moderate paces and this factor enables the business sector to meet this process ready

he Georgian national currency is not expected to extremely strengthen and this issue has been excluded from the agenda. Various macroeconomic indicators suggest that the national currency is incapable to extremely strengthen positions against USD. At the same time, external factors aﬀecting the Georgian economy have been minimized and no extreme depreciation is expected. After the last 18 months, on June 10 the lowest exchange rate of 2.12 GEL was fixed on the Georgian currency market. After major interventions by the NBG (250 USD extracted), the GEL depreciated again. On August 9, the GEL exchange rate fell to 2.35 point and new panic arose in the population. Besides the NBG interventions, this tendency was deepened because of payment of external state debts. Economic expert Mikheil Dundua says that the GEL exchange rate depreciated mainly because of payments of external debts. “This year both private and state sectors of Georgia had to pay total of 4.780 billion USD external debt. This is a peak indicator and equals 34% of GDP. Supposedly, a major part of the debts has been paid and the National currency exchange rate is being stabilized”, Mikheil Dundua said. On August 13 the GEL exchange rate started strengthening against USD and as of August 24 currency exchange booths were selling one USD for 2.26 GEL. This period has not recorded extreme fluctuations, the NBG, warned of extreme strengthening in spring, purchased 20 million USD to halt quick strengthening of GEL. The National currency started depreciating the next day. Seemingly, the NBG members thought they had taken exaggerated decisions and on August 25 they purchased 20 million USD at 2.2976 exchange rate, while they had sold the same amount at 2.2814 exchange rate on August 22. Before, deputy economy minister Nikoloz Gagua released forecast that by the end of 2016 the national currency would strengthen to around 2.2-2.25 exchange rate. In this time, a part of economists explained that reduction of current external liabilities and improved external factors had stabilized the GEL exchange rate. “Seemingly, the Government has paid a major part of the debts and the national currency exchange rate started slightly strengthening. This tendency is driven by increased investments, increased money transfers to Georgia and revenues from tourism sector. Since the major part of debts were paid, GEL exchange rate started strengthening irreversibly. According to my calculations, the national currency will continue strengthening to under 2.25 point. At this stage, GEL exchange rate is rising at moderate paces and this factor enables the business sector to meet this process ready. This tendency is important for our population too, because strengthened GEL will alleviate their loan burden too, especially for those who have taken loans in USD”, Mikheil Dundua said. Meanwhile, the National Bank categorically refused connection of external debts with the GEL exchange rate. They published a special schedule proving that the country has to pay similar amount of liabilities every year.

‘‘

he monetary policy committee of the National Bank of Georgia (NBG) has taken a decision on reducing the refinancing rate by 25 base point to 6.5%. This decision is based on macroeconomic forecasts under which the tightened monetary policy should be gradually alleviated to move closer to the target inflation indicator. “According to the forecasts, in other equal conditions it is expected to lower the monetary policy rate to 6% in midterm period. In August annual inflation rate of the consumer prices declined to 0.9% and this corresponds to the existing forecasts. Disappearance of base effect has important influence on reduction in inflation indicator. The weak joint demand stimulates also inflation slowdown tendency. According to the current forecasts, the inflation rate will be maintained at low level in the next quarters and will get closer to the target indicator at the end of 2017. Gradual alleviation of strict monetary policy and fiscal stimulus foster moving to the target inflation rate and improving the joint demand. The further change in monetary policy rate depends on economic developments, expected affect of risks coming from external sector and the volume of influence of external shocks coming from trade partner countries on the Georgian economy”, the NBG representatives said. The target inflation rate of 2016 is 5%, while the rate is expected to decline to 3%. However, taking into account the past months of 2016, the annual inflation rate is considerably lower compared to the target rate. Consequently, the NBG is able to gradually alleviate the monetary policy. For example, starting February 2016 the annual inflation rate shows (5.6%) slowdown tendency and the rate fell to 1.1% in June. In July the annual inflation rose to 1.5% and declined to 0.9% in August. On the one hand, monetary policy alleviation signifies an outflow of more money resources to the economy. Commercial banks take cheaper loans from the NBG. Consequently, commercial banks also issue credits at lower interest rates. On the other hand, bank clients’ credits are affixed to the refinancing loan interest rate and this change makes direct influence on their expenditures. As of July 1, 2016, a total of 17 392 loans affixed to floating interest rate have been issued. An absolute majority of them is affixed to the refinancing rate. Consequently, borrowers will pay lower interest rates, because the NBG has reduced the monetary policy rate by 25 base point to 6.5%. The value of all loans with floating interest rate makes up 786 million GEL. It should be noted that for several months experts urged the NBG to smooth the monetary policy rate.. Based on difference between the target inflation rate and actual indicators, the refinancing rate could be reduced more. However, this year the monetary policy rate may be reduced to 6% if common level of prices does not rise. It should be also noted that at the beginning of 2016 the interest rate on refinancing loan had increased to 8% because of high inflation rate and instable national currency exchange rate. As to the national currency exchange rate, in the last period GEL is demonstrating unusual stability and this is an achievement of the NBG efforts, most of all. In the past month the GEL exchange rate slightly strengthened against USD and stabilized around 2.30 GEL. To prevent extreme change in the national currency exchange rate, the NBG extracted 20 million USD from turnover on August 22, but on August 25 sold 20 million USD again. The time will show whether the GEL exchange rate is artificially stabilized in the pre-election period, according to some economic experts. The fact is that the low inflation and stable exchange rate make positive influence on economic growth.

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Stable Currency Exchange Rate and Low Inflation Rate will Stimulate Economic Growth

September 12, 2016 #160

The NBG representatives explained that the schedule of payment of external debts is prepared according to the joint international methodology and it reflects all debts, including those that will not become mandatory for the country to pay ever. Namely, the schedule comprises those obligations that must be paid within one year. At the same time, this category implies debts that must be paid “immediately”. These are obligations the payment time of which have already come, moreover, this time is even overdue. The NBG representatives explained that as of March 1 the country had to pay quite significant amount of debts (approximately 1.6 billion USD as of March 31, 2016). A major part of them is not paid in practice. “Moreover, the deposits that represent a bulk part of this amount are never made entirely, because a part of deposits is covered and new deposits are attracted instead of them. This signifies the volume of deposits grows on permanent basis”, the NBG representatives explained. In case of inter-company loans, debts are transformed into stock capital frequently. For example, in the first quarter of 2016 similar huge operation was carried out – approximately 700 million USD was moved to the stock capital. Information about the company is not divulged because of commercial confidentiality. This amount had been indicated in the schedule for many years as immediately payable sum, but the investor directed it to the stock capital instead of payment. According to the schedule published by the NBG, debts that must be paid within a year was 4.751 billion USD in 2012, 4.777 billion USD in 2013, 4.661 billion USD in 2014, 4.780 billion USD in 2015 and 4.223 billion USD as of March 31, 2016. “This is a very significant sum, but this is not the debt that the country must pay. Out of this 4.7-4.8 billion USD, deposits (1.5 billion USD) and overdue debts (0.8 billion USD) are not paid in practice. Trade credits (0.7 billion USD) are partly paid (about a half part) through supply of goods and services and the remaining part of 1.5-1.8 billion USD are long-term and short-term loans and loan securities”, the NBG representatives said. The year of 2012 will be the most critical one in terms of debts payments, when the country will have to pay Eurobonds, but in that period old debts may be covered through issuance of new securities, Archil Mestvirishvili, vice president of the National Bank of Georgia (NBG) said. At the same time, Mestvirishvili told the Georgian Public Broadcaster (GPB) that influence of external factors on the Georgian economy has been reduced. Therefore, the NBG forecasts 5% economic growth in 2017. This signifies the GEL exchange rate will not fall even if it does not strengthen. It should be also stressed that in July the demand for USD slightly declined. According to oﬃcial indicators, in that period total turnover of USD/GEL on interbank currency market (without the NBG interventions) made up 82 million USD, down 4.1 million USD (-5%) compared to the previous month’s turnover, but up 82% compared to the same month of 2015. At the same time, quantity of deals made by commercial banks have declined by 24% month on month (but grew by 71% year on year).

“USD denominated loans in total loans portfolio makes up about 2/3. Naturally, this is not the intention of either commercial banks or borrowers. Regretfully, a major part of our deposits are denominated in foreign currencies. We believe that the dollarization coeﬃcient will decline in several months and we will reach ideal balance in 5-7 years” Vakhtang Butskhrikidze TBC Bank director general

TOURISM

September 12, 2016 #160

Ajara Meets Mellow Season with Tourism Boom and Clean Seaside

ver the past years unsanitary problems were creating key challenges to the Ajara seasides. In previous years, the local Authorities were failing to meet tourism seasons with clean environment and save tourists from unsanitary eﬀects. Like the previous years, tourists declare this year that seasides are polluted by household wastes and cleaning works are conducted rarely. One of the tourists, who arrived in Batumi for holidays, noted that the territory was polluted most of all in the evening and cigarette remains had covered the whole territory. Tourists are also complaining about polluted sea water. There are evident cases when children were infected by enteroviruses and various infections because of the overwhelming unsanitary, vacationers noted. Meanwhile, state oﬃcials on both regional and central levels assert that resorts are free of unsanitary and virus problems. -What happens today when the mellow season has entered the active phase? -As we have clarified, Batumi is meeting the mellow season with clean seaside. Mamuka Berdzenishvili, head of the Ajara tourism department says that unsanitary problems genuinely existed in the summer peak period, but all problems have been

resolved. The summer challenges were caused by two reasons. In June-August a great number of tourists visited the Region and the Ajara Cleanup Service could not cope with the increased scales of the problem, Berdzenishvili said. “On autumn season we have resolved all technical problems. Therefore, we do not expect the Ajara Region to face this challenge. The current opportunities that the region owns in this direction fully meets the challenges and the quantity of tourists that we expect in September-October. If not summer challenges, the cleanup service would not have been developed”, Berdzenishvili noted. The Caucasus Business Week (CBW) has tried to clarify what situation dominates at Ajarabased hotels on this mellow season. Radisson BLU Batumi Hotel The hotel management assures that all suites are loaded by 100%. Foreign visitors prevail among customers. A major part of foreign guests come from Poland, Russia, Ukraine and Turkey. Currently, rental of a standard suite at Radisson BLU Batumi hotel is 315 USD (including breakfast).

Hilton Batumi Batumi, including Hilton Batumi hotel have tourists boom on the mellow season. The hotel is loaded by 100%. As a result, it is impossible to book a suite at the hotel. A major part of the hotel customers come from Israel, Saudi Arabia and Poland. «There are Georgians too among our clients, but very rarely», the hotel management said. The rental of a standard suite at Hilton Batumi hotel is 235-350 USD (including breakfast).

Georgia Palace Hotel The mellow season is very active, the Kobuleti-based hotel management says. About 80% of the hotel suites have been loaded. A major part of customers come from foreign countries. The price of a standard suite with one bed starts from 149 USD, the Georgia Palace Hotel management said. It should be also noted that despite sanitary problems, the Russian Forbes placed Batumi in top ten mellow season destinations. The Forbes has developed the rating jointly with RoomGuru.ru search system. The vaca-

tion budget has been created due to the averaged value of vacation for September. The price includes the air ticket prices for two passengers and a week-long vacation price at a 3- and higher star hotels. This signifies Batumi, as an image of tourism direction, is taking deeper roots among target customer groups. Russia, Ukraine and Belarus are our target markets, Mamuka Berdzenishvili, chairman of the Ajara Tourism Department, explained. “I think our popularity grows and not only because of AD campaigns. Improvement of Various tourism products have played crucial importance in this direction, including wine tourism and cuisine tourism development. We are also developing eco-tourism”, Berdzenishvili said.

In June-August a great number of tourists visited the Region and the Ajara Cleanup Service could not cope with the increased scales of the problem

TENDENCE

September 12, 2016 #160

new product groups. Numerous exhibitors said they were pleased with the results of Tendence 2016. Pure & Elegant – Jan Philippi, owner / CEO, Philippi: “I am really keen on Tendence. No other fair offers such a broad spectrum of first-class exhibitors in the field of high-grade home accessories. After the course of business so far this summer, we had no great expectations and have been very pleasantly surprised. The proportion of international customers, for example, from Russia, the Ukraine and even Australia, was super.” Steffi Goetze – Contemporary Jewelry Steffi Goetze was one of the exhibitors we met at Tendence. Her main material of work is silver and enamel, constantly searching for shapes, colors, lines, surfaces and textures to express the contrariety of concepts and their influence on each other by using various techniques of enamel. “My work is an experimental and personal dialogue with the contrariety of two concepts and their relation to each other. The conscious and the unconscious, the past and the future, the truth and the lie, the go and the stop, the remembrance and the forgetfulness, the inside and the outside, the maker and the observer, you and me”. TAPYLON- 3D Jewelry

Inspiration, Innovation, Ideas at Tendence

Jewelry System Tapylon – modular jewelry system by Anne Sievers is based on Y-shaped, flat elements. They are made of thermo-plastic synthetic and are only a few centimeters in size. They can be interconnected at diﬀerent points via a snap button system. Thanks to the material’s pliability, flat or three-dimensional shapes can be plugged together. Designed as jewelry and accessories, they also make delicate room sculptures. When the links are detached, the individual elements return to their flat shape. Thanks to the possibilities that the system oﬀers, polyethylene not only becomes a precious substance, but also turns from a purely functional,

NUTSA GALUMASHVILI

Innovation, top-quality design and ecologically clean products – these are the three key components that characterize the Tendence exhibition. Upon entrance, I felt like having entered the future, the place, where design, technology and innovation are omnipresent. It is diﬃcult to mark the best parts of the exhibition. However, visitors always find their own favorite highlights and spend a fair share of time examining everything.

endence is held at the end of summer season. Thus, the exhibition places key focus on Christmas-related topics as well as family products. However, you will find many other innovative products too: paper clocks, glass decorations, porcelain accessories, 3D ornaments and several more future products are accumulated at Tendence. Professor Hansjerg MaierAichen showed us various special exhibition desks, but apart from the visual aspects, the miraculous stories of the participants also left a great impression on me. For example, BORN Company manufactures products from processed waste; its owners succeeded the manufacturing technologies from their ancestors. Raumgestalt Company was launched in a small village and has already achieved much success. You

will hear similar stories frequently. Big and special stories accompany each object exhibited at Tendence and I believe that this is the exhibition’s success formula. More than 24,000 buyers took advantage of the event. 955 exhibitors from 45 countries placed orders, discovered new products, gained inspiration and cultivated contacts. “Despite challenging indices, the quality of the visitors and the volume of orders placed were excellent. Tendence is the platform for doing good business”, commented Stephan Kurzawski, Senior Vice President, Messe Frankfurt. “From 2017, all the indicators point to growth. To this end, we are supplementing the profile of Tendence with new product groups and expanding existing ones. Additionally, we will strengthen the new-product character of the fair and attract the bulk-buying

business back to Frankfurt. For this, there is only one solution: from next year, Tendence will take the pole position for the second half of the year”, adds the trade-fair manager. “We made an adoption in the team and organizational structure, we separated Ambiente from Tendence, we created two business units, we have a new structure, new management, new team and tools. For example, we created our own sales department that is only selling Tendence and acquiring new customers. We heavily invested in human resources. Why? Our target is very clear: we need more exhibitors and more visitors and both factors mutually influence each other. On the visitor side, we have to attract all relevant target groups and oﬀer each

target group an appropriate range of products. From the exhibitor´s point of view, we need to do this in an integrative way. So far it seems so simple but it’s not as easy, because in the past ten years, especially in Germany and also in Europe, we have seen a very strong shift of market shares. Figures for Germany indicate that the number of specialist trade retailers has decreased. Ten years ago, the market share of these companies was 26%, but now it’s only 18%.” Compared to the last edition, this year’s trade fair profited from the first conceptual adaptations and

indestructible material to an aesthetic statement. It all Started with a BIG Bag Born products were my favorite at Tendence 2016, because their philosophy was based on recycling and crafting. “Born Products are born with old knowledge passed on to us by our grandfathers, shoemaker and locksmith“, said the founder. One not only wears a unique handcrafted piece but also adapts an open state of mind and a new attitude towards reusing and recycling.

TENDENCE

September 12, 2016 #160

Consumer Goods Fair In Frankfurt

Georgia’s First Engagement in Tendence I was much impressed by the Georgian corner at the exhibition: beautiful blue carpets, various handmade crafts and miraculous colors that suddenly brought me back to Georgia. This year at the Tendence international exhibition in Frankfurt Georgia was represented for the first time. With the support of the Ministry of Culture and the Tbilisi Art Academy, Georgia introduced traditional blue tablecloths. Blue tablecloths and their preparation technology were recently restored. A workshop at Arts Academy focuses on manufacturing various of these tablecloths. I discussed all details with Mrs. Irina Saganelidze, representative of the Ministry of Culture.

«We have tried to introduce Georgian applied artworks in more diverse forms at this international exhibition and we have used the traditional blue tablecloth concept, and various samples of applied art created on the related themes – in the form of Georgian souvenirs: textile, various fabric accessories manufactured by batik technologies. Works based on decoupage technology that repeat blue tablecloth motives and Georgian enamel, ceramics, glass and ornament have been introduced here». Blue Tablecloth Triumph in Frankfurt The Georgian corner drew the attention of visitors thanks to its special and diﬀerent niche: eastern style carpets represented an entirely diﬀerent and special tradition.

“It is important to show those traditions of historical importance to European customers. Naturally, it is a huge experience for us to take part in similar exhibitions, because Georgian art products are exhibited among the world’s leading brands which are very important for popularizing Georgia. There is a great interest towards Georgia at the exhibition. The origins of these products are very new and unusual for them. As I have noted, similar exhibition events focus on such innovations”. The presentation of Georgian products will generate positive results. We, as the state oﬃce, are interested in developing Georgian traditional art on the one hand. This is one of the priority directions of our Ministry. On the other hand, we are focused on the employment of our authors and handcraft masters. We care about the growth in their salaries and the promotion of their talent. We believe that these business relations will be developed and that Georgia will be represented by wider delegations at the next exhibitions. We have taken part in this exhibition for the first time. We are examining what kind of products, packing and supplies are required and which factors may bring success. I believe this experience will assist us to introduce the Georgian corner in more interesting and impressive ways. The mood at the fair was given an additional boost by the plans of Messe Frankfurt to target the needs of the sector even more precisely with an integrated concept to be introduced next year. The concept calls for the reorientation of the long-established event with a threepronged concept with a stronger focus on product ranges for the spring and summer of the following year. Buyers will also be able to see new products for the winter much earlier than at present thanks to the new timing of the fair at the end of June / beginning of July. For those sections of the trade that buy in bulk, this change oﬀers particular strategic advantages. At the same time, exhibitors are well aware that it is up to all concerned to once again make the fair a genuine new products platform.

September 12, 2016 #160

BUSINESS

September 12, 2016 #160

Georgian Students Apple Chips Soon to Be Produced in Factory Georgian Students of Agricultural University launched Apple chips in this February and since then they were planning to have a small factory that could produce their chips, recently in the frames of StartUp Georgia they did receive money do construct the factory. Three students; Shalva Mdzinarashvili, Nona Noniashvili and Tamar Sheinishvili have gained 100 000 GEL fund. Mdzinarashvili told businesscontact that the mass production of apple chips will start from November. Newly created company will open its first factory in Gori, village Bitsi, which is a alpine settlement. Mdzinarashvili said the company will benefit from the facilities provided by the law of the mountain. At first 10 people will be employed in the factory. Enterprise plans to produce 30 000 packs of chips in a month.

STARTUP PRODACTION

Givi To Me: Small Khinkali Bar Opens in Ukraine pitality and love of delicious food. As a Georgian tradition deserves, here people think that guest is a person of god and they always try to serve with the best dishes. Khinkali is a main dish in the restaurant. “As we know, cooking this traditional and at the first glance simple dish requires special skills, to finally get juicy meat and ideal proportioned dough. That is why chef Gia Marianashvili is personally involved in making process. Kitchen is open for every guest, but one main rule here is to eat the dish with your hands. Besides Khinkali other Georgian dishes such as Khachapuri, Lobio, Satsivi, Mkhali, Kharcho and of course Wine are available. From Drinks, guest can

Givi To Me is a new restaurant of Aleks Cooper, which combines Georgian traditional cuisine and contemporary Georgian atmosphere. Givi To Me is located in Ukrainian seaside

city and is a fourth project of “Cooper People“. Marketer.ge writes in their article; “Small but proud Khinkali bar Givi To Me is created on behalf of Georgian characteristics: With the hos-

NEWS

INOVATION

Silknet Provides Internet and TV Services at Lowest Tariﬀs in 9 Cities

Smart Ring Could Save you Life: Startup of Georgian Students

Silknet company has launched a special campaign for 100 000 families in 9 cities – Internet and TV services at the lowest tariﬀs. Subscribers are able to receive 20mb/sc Internet and 125 TV channels for 23 GEL (reverse-pause functions).

Residents of Georgia to Check out Swiss Cimier Watches A watch is an accessory that beautifies our everyday lives and facilitates our perception of time and reality. Even more so, a person looks more self-confident when wearing a Swiss watch. Now residents of Georgia are able to buy Swiss watches of Cimier company. They are able to check out Cimier watches from the company’s oﬃcial website. Football fans will be mainly interested in Cimier watches, especially Manchester City FC fans.

Giorgi Mikatsadze Founder

Cnick is the first wooden smart ring, which acts as both: wallet and keeps your personal medical information. The idea belongs to four Free University students, the project has made to receive 100 ooo GEL funding from StartUp Georgia, Giorgi Mikatsadze talked with Marketer.ge about their product and future plans. Ring allows the consumer with the motion of the hand to make payments anywhere in the world and at the same time, it keeps the personal medical information (such as blood type, previous diseases, allergies). This is especially important, because this function could save lives. However Cnick completely replaces the wallet. How did you come up with the idea? The idea came to us at our University. Campus has a system of permits, which is attached to the identity card, or other noncontact card. We wanted something diﬀerent, which was not about taking a wallet card, instead one hand movement could allow us to enter the building. The first function of the ring was about entering the hall. How everything started and what obstacles did you face? When initiating a start-up we were examining the technology and the factors contributing to its development for a long time. We were generating diﬀerent ideas, and tried our best to create versatile and portable ring.

order GIVI lemonade or home made wine GIVINO VINO. For beer lovers white (Mountine milk) and black (Mountine tea) is also available. There are two halls in the restaurant: On the first floor there are tables for big group of people and on the second floor there are smaller tables and two rockers. The whole restaurant accommodates 100 guests. The interior of the restaurant is carefully selected with a taste: Furniture is handmade, vessel is collected from five countries, Ketsis are made by Ukrainian potters. In every corner of restaurant you will see unique design details: Teapots instead of flower pots. Every dish has its illustrated caption.

Hand4help: Georgia Startup Creates Upper Limb Prosthesis Hand4Help is a Georgian startup, which creates upper limb prosthesis, company is one of the winners of StartUp Georgia program, where it received 100 000 GEL funding. The aim of Hand4help– is to create multi functional, aﬀordable limb prosthesis, which will enable people to move things with the nerve endings. These models allow us to make two types of mechanical prosthesis, one that works on the wrist motion, and the second with the motion of the arm. Archil Sakevarishvili founder and Technical Director of the company, a student of Free University of Georgia talked about his experience and future plans with Marketer.ge After creating the first prototype, we realized that we could make such product that would help disabled people. Controlling the product is quite simple: A sensor perceives the crick, resulting movement of prosthesis. Our know-how is that, with one muscle people can control couple of functions, (Fist and OK- ‘s gesture), and they also can use RFID reader, through which taking things will be possible, by only attaching a small chip on concrete things.

September 12, 2016 #160

Staying Away from Political PR MARIAM KOPALIANI

Interview with Teona Baghdavadze, Founder of Key Communications PR-Consulting Company

- What is your profession? - I hold a MA degree in social studies. Previously, this direction was united into the journalism faculty, but a year later it was transformed into the faculty of social sciences. In Italy I graduated from Media Management School. Later I was interested in PR issues. I have passed many trainings in this direction, including in London. I have also passed George Washington University courses in projects management. This profession assists me in my activities very much. - What about your first job? - I got my first job at Mze TV company. I started as an intern. Then I left for Italy for my studies. Having returned to Georgia, I started working for Aldagi insurance company. - The current job and position. - 1.5 years ago I left stable job and now I manage my own PR-consulting company of Key Communications that serves about 20 medium companies in terms of selection and implementation of communication strategy. I am the company founder and executive director. - You first success. - In general, PR is perceived as a magic stick resolving all problems with company reputation. However, the reality is diﬀerent. PR management cannot be confined by only one person and one team. Therefore, I think all projects that I have implemented in collaboration with the company management turned out very successful. I can name Beeline company that reached much success when I was working there in stable regime. PR was one of the decisive instruments in this success. In that period this mechanism promoted the company reputation and even today Beeline maintains the image of one of the most growing companies in Georgia. I have cooperated with many major companies in terms of consulting. A major part of them are my stable partners and I am proud of this. - Project that you have implemented and are proud of.

PR is perceived as a magic stick resolving all problems with company reputation. However, the reality is diﬀerent. PR management cannot be confined by only one person and one team

- I am proud of almost all projects. Georgian Glass Company is the recent one and I have been cooperating with this company for several months. I think this is one of the interesting companies. Moreover, inauguration of Biltmore hotel was also very good experience. We have also conducted energy efficient campaigns jointly with USAID. I would also name Castel projects, for example, appearance of Kaltenberg beer on the Georgian market. McDonald’s project is also worth mentioning. As part of social responsibility campaigns, we have cooperated with enterprises, where persons with disabilities make handmade products. We have assisted them in sales of these products in McDonald’s network. This was a good case for other countries too. I believe we can be proud of the achievements we have made in a short period. - The field where you would never work. - My activities are diversified and they frequently comprise such aspects as the company’s social responsibility, management of reputation and risks direction. I believe there are many interesting fields for me in this direction. At this stage, I prefer to stay away from political PR. I have received interesting offers, but I decided that I was not ready to take decisions for specific realities and to ignore those initiatives that I want to implement. -What factors make a person successful in your field? Besides knowledge, what special personal characteristics are required? - First of all, this is a desire to listen to different people with different visions, but today it is very difficult for us to act in this

way. It is diﬃcult to consider the relevant issues and problems from their positions. Tolerance is one of the key values for me and this value is necessary that a person get established in this field. Ability of making creative and smart decisions is of crucial importance. PR is considered (fairly) one of the stressful professions because it depends on external factors. It is very diﬃcult to determine human behavior in advance. Therefore, ability of keeping good relations with various types of people assists me very much to attain success in this field. - Is it possible today in Georgia to study PR technologies very well, or international education and experience is necessary? - This field is being developed very dynamically. I believe our task is to create academic expectations (who act in this field). Some persons manage to do this better, because they work in this direction more, some have less capabilities. However, I do believe that PR as a standard of communications art, should be

still developed in Georgia. It is necessary to make mixies in our country. - Is PR perceived and understood in Georgia in its classic essence? - Media has lost the influence that it had a certain period ago. In Georgia, commerce organizations that were restricted to demonstrate AD materials in television space have to resort to creative PR decisions. In this situation it is frequently diﬃcult to draw line between PR and marketing and they are perceived as a joint discipline and communication. - Interesting episode from your business life that have changed your life. - It is not easy to name such an episode, because I have been working in this field for a long period and everyday life enables me to perceive this profession better and in more diﬀerent ways than the day before. During this period I have better got acquainted with people, their psychology and I think everything is ahead and this is only commencement.

-Without this profession, who would you be and where would you take efforts? -I have thought about this frequently, but I find it diﬃcult to answer this question. I think I would work in fields related to media and communications. I am interested in social psychology very much. I frequently perform as a lecturer in various directions, but this is not my true purpose at this stage. Currently, I plan to engage in more international projects to make sure that my knowledge will promote me on international markets too. - Where do you see yourself after 20 years? - I will be still young after 20 years and I see myself in this field again. However, my favorite expression is: «Life has better fantasy than you”. I belong to that category of people who do not miss chances somehow. I think the main charm of the life is that you receive chances of which you have never dreamt. Therefore, I never set long-term plans for my life.

STARTUP

September 12, 2016 #160

Rotem Peled

10 Things you should know when you are building a new social network Let me start with that in general setting up a start-up is no easy y k, peas. And if you, like me, are setting up a new social network, buckle up and get ready for a rollercoaster.

t’s no secret that, although half of the world has signed up for one or another social media site, we are all a bit done with “social networks”. With topishare, a place where you can create and design your own social network, I give an answer to the social media fatigue. But it’s a “long processing” as my mother likes to say. In other words, it’s a long road with lots of ups and downs. You need to be extremely resilient, extremely optimistic, and extremely passionate about your goals. Between starting two years ago developing topishare from scratch, and having the advanced beta version launched a few months ago, I’ve learned a lot. And I want to share these lessons with you. 1. Market research In every country, we experience products differently. You might think that your product is a fit for all, such as topishare, but that’s not how you should approach your marketing. Define and specify your regions, understand how they work, what people think about similar products. And not only that, research specific age groups, understand what their issues are in your field, and figure out how your product could benefit each specific group. 2. Target Smart From the start I knew topishare was going to be a product that basically targets everyone. In general, social networks do, but topishare does it in particular, as it provides the answer to whatever it is you are looking for, may it be to have topic-based discussions, to build and engage a community around your stories, create and publish music, have a live comment section on your website, crowdfund for your cause, connect with likeminded people, have free targeted advertising, the list goes on and one. And if you market is “everyone” (and/or global), your product needs to be “modular”. What this means is, ok your product answers various needs, but make sure you understand this when you choose the audience you are targeting. Be flexible, and decide which part you are marketing depending on the target audience’s needs, benefits, and experiences. 3. When to start marketing? A common mistake is to wait with marketing until your product is ready. Don’t. With topishare, I started marketing right after we launched our advanced Beta. We are not putting a lot of money into our marketing efforts, and mostly market organically. But we are still slowly getting a buzz going about topishare, even though we are still continuously developing, uploading changes, and working towards our final goals. Now, I hear you say “but what if others will steal my idea?”. That’s a risk you will have to take, and you are probably not the only person in the world working on a similar idea anyway. The customer will choose the product they like most, and if your heart is in it, it will be yours. In the end, the customer will choose the better working product. Be patient. 4. Never say Never One of our partners (we are setting up partners with media, businesses, and organizations) was a bit hesitant initially. He had a lot of questions and a lot of concerns. So I sat down with him. In person. And we talked. And I listened. I took in all what he said. You should never think you know everything, and you should never say no to anything. You can never know how one conversation can change your idea or product. Listen with a blank slate to anyone. And if you really call yourself an entrepreneur, when someone gives you advise not necessarily perfect or related to what you plan to do, still envision how it could work for your product. 5. Know your product inside out I’ve set down with my team on many occasions, trying to figure how we could phrase what topishare offers in not too many words. And it’s hard. And you can’t do it you do not know what your product offers precisely.

If someone asks you stuﬀ about your product and you don’t have a good answer, take a step back. You MUST know your business, market and product before you’re even thinking of talking to people in the industry. But if you have the answers, you’re in. It will start a passion within others, and will spread around fast. 6. Babies fall a lot, so will you Our VP marketing has a one-year-old son who loves to run around (he just started walking). And he falls. He falls a lot. But no matter what happens, he gets back on his feet and continues his journey, learning from his last fall. And that’s what happens in the life of an entrepreneur. You will fall, and you will fall hard, but if you don’t get up on your feet and continue your journey, you know you will never succeed. So yes, be like a baby ;) 7. Put your ego in the freezer, for a bit I like to think of everyone on our team as one single beast, which works in full harmony with each other. This also means that it doesn’t matter if it wasn’t you who came up with a certain idea. What matters is that it works, that it’s successful. In other words: put your ego in the freezer. Let people think, let them be creative, and put it towards the common goal you all have: a successful product. 8. Money, Schmoney I was with my family on Costa Rica, living a very low-key life, when I came up with the idea for topishare. And I wasn’t planning on it. I was actually planning to take a break from the tech start-up world for a while after having ran an e-commerce start-up before I turned 22. But you can’t say no to a great idea, so I went full force in. And that’s why you should become an entrepreneur: because you really believe in your idea. Right now, we are only taking a very small salary from our start-up. And once we will start making profit, I will still continue taking a small salary. What matters to me is that everyone benefits from topishare, not the other way around. And I’ve seen this around me, if you decide founding a start-up because you believe there is big money to earn in it: don’t. Just don’t. There are much easier ways to make money, and I can promise you your life won’t be easy the first few years. You won’t be able to solve all the problems you will encounter if you are not passionate about your product. 9. Team work, Teamwork, Teamwork (and some more team work) With one business mind with 30 years of experience in start-ups and marketing, a dev guy with 30 years of experience - who could code before he could speak-, and the fresh young eye of yours truly, I am certain we’ve got the perfect founders. But it doesn’t stop there. Every single person in your team is an important key to success. You need complete trust both ways, and you need to be able to complement each other’s weaknesses. 10. Laugh And don’t forget to laugh! Laugh a lot! It’s the perfect remedy for all the stress you will encounter on your journey. And it doesn’t stop there. Through ups and downs you grow as a person and as an entrepreneur. We continue working to make topishare the newest thing out there, and so far, I couldn’t be more proud of the work my team has accomplished. Eager to find out more? Check topishare.com now!

OPINION

September 12, 2016 #160

t is unlikely that anyone would contest education plus my younger son will go to the idea how useful that would have school this year”, etc. That was the logic been both for the stability of the coun- based on expenses which is hopeless at the try’s agricultural production and for market where the prices are determined by testing its export and gradually raising the the buyer. Georgian suppliers would not lisquality of its agricultural products to the ten to my arguments when I was trying to level of the most demanding European and explain that there existed other suppliers at the export markets whose sale conditions Asian markets. Today, however, as Russia and Turkey were such that Georgians could not comhave, in practical terms, “made peace”, it pete with them in price. can be stated that Georgia missed out on Over the last four years our company its chance. Which was not the case with its worked with tangerines, bay leaves and neighbors that realized their opportunities culinary herbs, with potatoes, tomatoes, not necessarily within the legal framework. peaches and nectarines. We experienced For example, Turkish export of tomatoes the same scenario in any case. We proto Azerbaijan grew 50-fold—what an ap- vide guarantees for buying their product petite! Kazakhstan could increase tenfold and ask about their bulk price some three its supplies of meat and meat products to months before the harvest. The answer is Russia—and that without increasing its in- always: “We will tell you at the day when you shall be buying”. ternal production. Not to As an exporter I have mention Belarus that could contracts with strict libecome a prominent exabilities that I signed porter of sea food… I am not with retail chains, in in any way suggesting that which penalty fees are Georgia should have folspecified and, beyond lowed their example, and I that, I must show my am proud that this country wholesale price there. where I live has a legal sysGeorgia was in If I were to state “I will tem which does not allow tell it at the day of shipits businesses to give in to on a very good ment”, I will see noththe temptation of “easy thing: Russian ing more than a conmoney”. descending smile. As a Speaking of the missed opmarket that was hit result, this is what happortunity I have in mind a pens, on and on: everygenuine local production by the economic waits for the price for export and not those blockade became one to be specified, and it “black” or “shady” schemes is in the beginning too that involve changing the well-disposed to high for export, then it certificates of origin for the and interested in goes down, then even products (made in Turkey). down, “below the Georgia was in on a very any propositions way ground level”, but by good thing: Russian market from its neighbors that moment “the train that was hit by the economhas left the station” as ic blockade became wellthey say: other supplidisposed to and interested in any propositions from its neighbors. ers have fully satisfied the demands of the Unfortunately, the suddenly available gro- export markets, so it is practically imposcery niche, with products characteristic for sible to get in any more. Georgia, was filled by many countries, some This is difficult issue, but not the main one. of which are quite far away from Russia: It is more or less possible to come to terms South Africa, Kenya, China, Morocco, Israel, with those who work on the land themEgypt, Uzbekistan, Iran, Serbia, Syria. This selves: after several unsuccessful years, our drawback is not related to politics. It is the partners in Western Georgia who produce result of existing business models that are bay leaf and green herbs could understand ineffective with regard to export and that our logic and eventually they increased are prevalent in the traditional Georgian ag- their export manifold becoming leaders ricultural sector. To clarify please allow me in their commodity items. The problem is much more difficult when dealing with sharing our experience as an exporter. The first issue is related to the logic of peas- brokers who mediate between the exporter ants, small farmers and agricultural coop- and many peasants, small farmers and small eratives with regard to price determination. cooperatives. This is one more repeating In our many negotiations with the produc- scenario. Three months before the harvest ers, when our representatives wanted to we visit our potential partners in Bolnisi, know how did they determine their stated Kutaisi or Gurjaani telling them “We shall asking price, the answers was, for example, buy everything if…” No one is able, howas follows: “I spent money for building the ever, to hear the word “if”, and the famous glasshouse, so I must pay back my bank Georgian feast will convince the buyer that loans and for my daughter’s university everything will be just fine if not better…

When harvesting starts, however, you will find out, for no explainable reason, that the broker fee you, a novice, had negotiated three months ago was two and a half times larger than a seasoned buyer (let’s say, from Azerbaijan) pays—someone who simply knows the prices. Well, that all is not the main issue, yet again. The buyer may agree to the producer’s price or budge from the broker’s inadequate service price. The broker, however, will not guarantee the good quality of the delivered goods—well, just the opposite… Whether tangerines, peaches or nectarines, in Georgia, unfortunately, it is the exporter who must control the process with his own effort. Otherwise, you will find small and unseemly tangerines in the boxes lying below the upper row of large and great-looking fruits. My reliable customers in Gurjaani, whom I believe on their say-so, will not take this responsibility upon themselves. They tell me: “We will give you good workers, and they will do the grading”. But I do not want any workers! I want good, evenly sized peaches in accordance with agreed upon specifications and pricing. This is what happened in Gurjaani last harvest: a family from St. Petersburg saw what went into the boxes and they oﬀered: “We want to sort and grade the fruit ourselves”. The answer was: “No, never!” One more comment: the topic permanently under discussion is whether it is expedient to subsidize agricultural producers. In my view, subsidizing is always a bad decision. There may be exceptions, but that is a diﬀerent topic. If, however, there can be funds allocated in the state budget, it is worth considering what would be the goal of their spending: do we want to produce or to export? Since the answer is obvious, the subsidies should be directed to the support

of the exporters who can take the produce out of the country. Otherwise, the harvest can either stay in the garden where it was grown or, in the best case scenario, become a non-standard product. Subsidizing the producer will play a purely social function, and it does not have anything to do with the market economy. Here is, at last, the truly most important issue in our work. Georgian exporters lose out to their competitors in terms of their payment conditions. Just imagine this: my representatives may explain away in Moscow, St. Petersburg, Novorossiysk or anywhere else in Russia just how tasty and advantageous are potatoes from Bolnisi or nectarines from Gurjaani. What they hear back is: “We have offers in Moscow for the delivered potatoes from Syria, Egypt and Israel with payment postponement for up to 60 days, and you are asking for the onsite payment during loading plus your price is higher… Isn’t it ridiculous?” The support of the state is certainly needed, and in other countries the state supports our competitors in the most active way. Financial arrangements can be manifold. For example, providing state guarantees for the revolving (renewable) bank credit for the period of 30 to 60 days upon presentation to the bank of the goods export declaration. No one takes any risks in this case, and Georgian agricultural products would become competitive along this criteria. There are other options as well. The main issue is to become competitive in today’s markets where conditions are dictated by the buyer. However, please be advised that this short article did not even touch upon the issues of standardization, certification, packaging and marketing of Georgian agricultural products.

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PUBLICITY

September 12, 2016 #160

WORLD NEWS

September 12, 2016 #160

Quotes

“ We can never Facebook’s new oﬀerings include a feature called Lookalike Audiences, which helps advertisers target customers in new countries that are similar to their existing customer base

Facebook launches new tool allowing small businesses to target global customers

acebook (FB.O) is banking on Canadian small businesses in an effort to continue fueling the growth of its own business. The company unveiled on Thursday a range of new tools for advertisers seeking to expand their customer base beyond Canada. “We’re in the business of ensuring small businesses become large businesses... and local businesses become global businesses,” said Jordan Banks, managing director of Facebook and Instagram Canada, in an interview with BNN. “And it’s happening at a scale and predictability right now that is amazing.” Facebook’s new offerings include a feature called Lookalike Audiences, which helps advertisers target customers in new countries that are similar to their existing customer base. Banks noted there are 445 million people outside of Canada connecting to a Canadian business on Facebook. Facebook ended its most recent quarter with more than 1.7 billion monthly active users. And businesses are a growing part of that story. On a July 27 conference call, Chief Operating Officer Sheryl Sandberg noted Facebook now has 60 million

monthly active business pages. As for sales, Facebook generated more than US$6.4 billion in revenue in its second quarter, with 97 per cent coming from advertising. By comparison, the company generated less than US$2 billion for all of 2010 -- the year Banks joined Facebook. “The future growth in jobs and the economy of our country rests solely on the shoulders of small business,” Banks told BNN. According to the Canadian government, 98 per cent of all businesses in Canada are small businesses. As of 2015, they employed 8.2 million Canadians, which represents more than 70 per cent of the private labour force. Facebook’s new features are also meant to highlight the company’s Canadian user base to businesses based outside of Canada. In his BNN interview, Banks highlighted that 70 per cent of Canadians on Facebook are connected to a business based outside the country. Of course, social media users can be highly sensitive to how data is shared with advertisers. “User data is sacrosanct,” said Banks. “It is not shared in any personally identifiable way. And, in fact, what we do with the data is provide a better and more customized user experience.”

U.S. trade mission to eye business opportunities in Azerbaijan

he next U.S. Trade Mission to Azerbaijan, organized in partnership with ExportDC will be realized on September 15-16. The mission will feature small and medium-size American companies specializing in sustainable energy development, green finance, strategic and advisory services, health services management and health education consulting, sales and marketing automation services, user experience research, strategy and design, landscape architecture, planning and urban design services, IT, software design and development, infrastructure projects consulting, instructional content design and workforce training consulting, defense products and services, civil engineering, surveying and landscape architecture, business advisory and import-export management and advanced operator training simulators, USACC reported. The participating companies are Browne and Associates, Cube84,

Symbiosis DC, Synergetic Information Systems, C.L. Russell Group, Zura Consulting, West Coast Connections. The mission will feature country economic and sector-specific briefings, networking reception, exclusive meetings with relevant oﬃcials, one-on-one individual business appointments with prospective agents, distributors, partners and end-users. Companies interested in individual meetings with mission participants should send a brief e-mail to chamber@usacc.org specifying the purpose of the meeting. Azerbaijan enjoys being America’s largest trade partner in the South Caucasus and has successfully pursued major mutually beneficial trade deals. The State Oil Fund of Azerbaijan has invested approximately $3 billion in the United States, including in the US Treasury, Federal Home Loan Bank, Fannie Mae and Freddie Mac bonds, as well as in US corporate debt and equities.

obtain peace in the outer world until we make peace with ourselves

”

Even with more exports, Russia is still expected to be a small part of the feed-wheat market, and in the past has typically consumed all of its feed grain

Dalai Lama

Turkey’s TAV in talks with Saudi Oger to buy half of Medina airport stake Turkey’s TAV has opened talks with Saudi Oger to buy half of the latter’s shares in a company that runs Medina’s international airport, it said in a written statement late on Sept. 6. “We have started talks to buy half of some 33.3 percent of Saudi Oger’s shares in Tibah Development, some 33.3 percent of which is already owned by us. If a deal is clinched, TAV Airports’ 33.3 percent of share in Tibah Development will increase to 50 percent after the required permissions are taken,” said the statement to the Public Disclosure Platform (KAP). Medina Airport has been run by the consortium including TAV since 2012 as part of a 25-year deal until 2037. The airport gave services to a total of 5.8 million passengers in 2015, according to statement.

Armenia national debt totals over $5bn at end of first half of 2016 At the end of the first half of 2016, the national debt of Armenia has amounted to 5 billion and 343.8 million US dollars. Atom Janjughazyan, Deputy Minister of Finance and Chief Treasurer of Armenia, on Tuesday stated the aforementioned at the National Assembly, as he presented the 2016 State Budget performance report for the first half of the year. Accordingly, this national debt totals 2 trillion and 545.4 billion drams, whose government debt is 2 trillion and 308.6 billion drams, and that of the Central Bank of Armenia totals 236.8 billion drams. At the end of the first half of 2016, the national debt of Armenia has amounted to 46.7 percent of the projected GDP.

Russia Boosts Feed-Wheat Exports as Bad Weather Hurts Some Crops

ussia looks set to boost exports and supply more countries with wheat fed to livestock after a record crop and weather damage left a bigger amount of grain unfit for human consumption. The nation shipped out about 272,000 metric tons of feed wheat in 2015-16 and the amount may be several times that this season, with some grain going to new markets such as South Korea, according to grain inspection firm SGS SA. Russia is expanding wheat sales and supplanted the U.S. as the top exporter last season after the weak ruble and good growing conditions led to more supplies. In recent months, the quality of grain suﬀered in some areas as rains and hot spells lowered protein content and caused fungal disease, meaning there’s more wheat that’s only suitable for livestock. Even with more exports, Russia is still expected to be a small part of the feed-wheat market, and in the past has typically consumed all of its feed grain. Ukraine is a major supplier of the wheat variety and globally, countries will export about 20 million tons this year, according to the International Grains Council. Wheat Varieties “Russia has been considered as a provider of exclusively milling grain,” Irina Sarycheva, a manager at the Russian unit of Geneva-based SGS, said in an interview in Moscow. “It wasn’t big in feed wheat. Now, Russia is diversifying its oﬀer.” Russia is expected to boost total wheat shipments by 18 percent to 30 million this season, U.S. Department of Agriculture data show. That may help compensate for a plunge in supplies from France, the European Union’s top grower, where flooding

earlier this year devastated crops. There were deluges in much of central and southern Russia in May and early June, while rains soaked fields in central areas in July and August amid high temperatures. To the west of the Urals region, feed wheat will account for 31 percent of the crop this year, up from 26 percent a year earlier, SGS estimates. The increased supply has prompted some traders to ask SGS to test cargoes to see if they’re fit for export to South Korea, Sarycheva said. Russia may also expand sales of the grain type to Bangladesh and other destinations, she said. Rising Supply “We have seen an unusual exportable surplus of feed wheat from Russia,’’ said Evgeniya Dudinova, a trader at Al Ghurair Resources, a Dubai-based commodities company. Some sellers are prepared to oﬀer at a discount of at least a couple of dollars a ton to wheat from Ukraine, she said. Because of abundant supply, it may be cheaper for Russian livestock farmers to replace some of the corn fed to animals with feed wheat, Sarycheva said. If that were to happen, then more Russian corn could be exported, she said. Some of the lower-grade wheat can still be exported as the milling variety by blending it with high-quality grain so that shipments meet a 12.5 percent protein content, the benchmark level Russia uses for human consumption, Sarycheva said. Russia is expected to produce about the same amount of milling wheat as last year and exports will be steady, Sarycheva said. However, because of the quality issues and bigger harvest, milling wheat will account for a smaller share of the total crop, she said.

PUBLICITY

September 12, 2016 #160