Caucasus Business Week #274

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March 11, 2019 - www.cbw.ge

#274

WEEK

p.7 Where and How Many – Taxes in Georgia, CIS Space and Worldwide

p.4 Business Sector Turnover Grows by 22%

p.3

p.5

10.1-inch HUAWEI MediaPad T5: The Best Choice for Your Children's Safety

Why Georgian Companies Lose Road Infrastructure Deals

p.10 Fernando Cortinas: "Georgia is in a Perfect Position to build a Story around the Wine Industry "

p.6 The Value of Credits in Georgia – International Experience

2 March 11, 2019 #274

Fiji and Georgia sign Visa Free Agreement Georgians will soon be able to travel to Fiji without a visa.This is the highlight of Georgia’s Deputy Foreign Minister’s two-day visit to Fiji.

Mogherini reviews EU and Georgia Relationships and Compliments County’s Progress According to Mogherini, Georgia has made great steps in the implementation of the Association Agreement, which provides the basis for Georgia’s political association and economic integration with the EU.

TAV Georgia participated in International Tourism Exchange Fair in Berlin The operator company of Tbilisi and Batumi International Airports TAV Georgia for its eight time participates in ITB Berlin – International Tourism Exchange Fair, one of the most prestigious events of the tourism and travel industry.

Sir Suma Chakrabarti: Georgia remains to be One of the Role Models for EBRD “Georgia remains to be one of the role models for the European Bank for Reconstruction and Development” stated Sir Suma Chakrabarti, President of EBRD at a meeting with Mamuka Bakhtadze, Prime Minister of Georgia today.

Georgian Railway participated in European Railway Awards Ceremony Director General of Georgian Railway Davit Peradze and Head of Corporate Management Department Nino Jorbenadze participated in the European Railway Awards ceremony held in Brussels and took part in the 63rd General Assembly of the European Railway Group.

Gas Supply from Azerbaijan to Georgia may increase by 11% in 2019 Gas supply from Azerbaijan to Georgia may increase by 11 percent in 2019, Azerbaijan’s state oil company SOCAR told Trend.

February registered 2.3% Inflation Rate –Major rise in Prices due to Product Items Geostat, the national statistics service of Georgia, published its report on the 2019 February inflation rates.

Oil Shipments from Georgia’s Batumi Port drop 38 pct in Jan-Feb Oil and related shipments from Georgia’s Black Sea port of Batumi dropped 38 percent in the first two months of 2019 from a year earlier, an official at a KazMunaiGas-operated terminal at the port said on Friday.

Mamuka Khazaradze: I express Full Distrust to Koba Gvenetadze and NBG Vice President TBC Bank founder Mamuka Khazaradze demands that Koba Gvenetadze, president of the National Bank of Georgia (NBG) resign and urges to call him to account.

Prime Minister: Roadmap will help resolve Current Economic Challenges Georgia is a leading country in Eastern Partnership, Georgian Prime Minister Mamuka Bakhtadze noted at the news conference, which was held after the EU-Georgia Association Board meeting.

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili WWW.CBW.GE Address: Aleksidze Street 1 Sales: Mob: +995 591 01 39 36 Email: caucasianbusiness@gmail.com Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Copy Editor: Ellie Rambo Reporters: Nina Gomarteli; Mariam Kopaliani; Merab Janiashvili, Economic columnist: Andria Gvidiani; Technical Assistant: Giorgi Kheladze;

10.1-inch HUAWEI MediaPad T5: The Best Choice for Your Children's Safety When delivering each new product of HUAWEI, the customer aims to take advantage of the more advanced technological capabilities compared to predecessors, and the company is exactly oriented towards these expectations. By launching each new model, HUAWEI once again shows that it is an advanced and innovative oriented brand.

HUAWEI has introduced an updated 10.1-inch HUAWEI MediaPad T5 to Georgian customers. This is the latest and most innovative MediaPad, with an 8-core, powerful processor and 10.1inch and 1080P full HD screen. At first glance, it has a simple and plain design, but thanks to the updated technological capabilities, you can use multiple apps simultaneously, and with the microSD card, and increase your mediaPad memory up to 256 GB and watch your favorite movies anytime and anywhere.

In addition, MediaPad is equipped with a smart management system that regulates the operating time and speed of applications.

HUAWEI MediaPad T5 can connect HUAWEI's smartphones and computer platforms.

The strength of the device is provided by an 8-core processor and the wide and sharp depiction through a high-resolution screen. If you want to get professional stereo sound, this is not a problem for this model as you’ll find a double speaker in the lower part of the tablet.

The 460gram MediaPad also has rounded edges for maximum comfort in your hands.

With the special functionality embedded into the HUAWEI MediaPad T5, you can set limits to your child’s usage and customize the content available.. Besides the parental control feature, HUAWEI MediaPad T5 offers enhanced eyecomfort modes for your kids’ eyesight health: Posture Guidance (provides reminder for your child don’t read the tablet when lying down), Blue Ray Filter and Usage Time Control.

HUAWEI products and services are available in more than 170 countries

3 March 11, 2019 #274

and are used by a third of the world's population. There are 16 research and development centers operating worldwide in the USA, Germany, Sweden, Russia, India and China.

HUAWEI Consumer BG is one of HUAWEI's three business units, mainly focusing on Smartphones, personal computers, tablets and cloud services. HUAWEI Global Network is based on 20 years’ experience in the telecommunications business and serves to provide innovative technologies to customers around the world.

4 March 11, 2019 #274

Business Sector Turnover Grows by 22% 4Q18 Records Major Growth in Business Sector Turnover and Output The business sector turnover in the 4th quarter of 2018 rose by 21.9% year on year and constituted 25.8 billion GEL. The reporting period has also registered an upturn in output. output. Namely, the output volume constituted 11.5 billion GEL, up 9.6% year on year.

At the same time, according to Geostat, the National Statistics Service of Georgia, the major business’ ratio in the 4Q18 turnover accounts for 51.6%, medium business – 19.7% and small business – 28.7%. “Slightly different indicators are reported in terms of total

output: major business – 40.3%, medium business – 25.8% and small business – 33.9%.

In the reporting period, total value of the goods and services bought by companies constituted 16.5 billion GEL, up 5.7% year on year, while the goods and services sold by companies amounted to 10.2 billion GEL, up 4.8%, the Geostat information reports.

In the reporting period, the highest ratio in the turnover structure was recorded in the trading field (maintenance of vehicles and bikes) – 40.9%; art, entertainment and recreation ranks second with 20%; processing industry is third with 9.8%; development sector comes fourth with 8.7%, transport and warehouse services – 5.9%; supply of electricity, gas, steam and conditioned air – 3.6%; all other sectors – 11.1%. As to employment, growing turnover and output have preconditioned the unemployment reduction. For example, in 4Q18 the business sector registered 684.5 thousand employees on average, up 3.7% year on year.

According to Geostat, the national statistics service of Georgia, the ratio of women in total number of employees makes up 40.6%, men – 59.4%. According to Geostat, the ratio of major business in total number of employees accounts for 36.2%, medium business – 21.6% and small business – 42.2%.

At the same time, total number of hired workers in the business sector made up 647.6 thousand persons. Total expenditures on the staff made up 2 582.4 million GEL. In the reporting period, the average monthly salary in the business sector amounted to 1 318.7 GEL (the indicator has risen by 77.2 GEL year on year), including women salaries made up 977.2 GEL, up 67.9 GEL year on year.

Due to the size of companies, the average monthly salary is as follows: Major business – 1 288.8 GEL Medium business – 1 513.9 GEL Small business – 1 234.5 GEL. In the 4th quarter of 2018, trading sector (wholesale and retail sales; maintenance of vehicles and bikes), processing industry and development sectors are leaders in number of employees with 25.7%, 13.1% and 10.6% ratios, respectively. However, significant ratio in the structure is occupied by health and social service sector – 10.2%, transport and warehouse sector – 8.1% and accommodation and food supply fields – 5.5%.

By Merab Janiashvili

5 March 11, 2019 #274

Why Georgian Companies lose Road Infrastructure Deals

The tendency over the past few years prove that Georgian road construction companies have been losing road infrastructure deals, and key motorways are entrusted to foreign companies, while several years ago Georgian companies were participating in, winning and implementing major and important projects. However, starting in 2013, an intensified inflow of foreign companies to the Georgian market lead Georgian companies to bankruptcy, and made them withdraw from the market.

Maia Tskitishvili, Minister of Regional Development and Infrastructure recognized the relevance and acuity of the problem when she noted at a parliament meeting that Georgian companies could not satisfy tender requirements for major projects.

For the purpose of implementing major projects, the Ministry follows the regulations of international institutions.

“Why do foreign companies win tenders?

In similar projects, we receive financial support from international institutions, and we follow their regulations and requirements. Based on the risk assessment component, project scales and technical complications, we determine specific volumes, turnover, the history of company performance. Companies must also have the experience of managing similar projects. Therefore, we must avoid experiments and project failures, where Georgian companies may win tenders, but fail the projects implementation process. Regretfully, Georgian companies frequently cannot satisfy the requirements ”, Maia Tskitishvili noted.

The Caucasus Business Week (CBW) has inquired why Georgian companies fail to win infrastructural projects and whether they genuinely have low qualifications.

“Placing focus on quality improvement and rejecting price as the only criterion

can ensure a company’s growth and quality improvement”, Ana Sabakhtarashvili, director of Association of Infrastructure Developers, told Maia Tskitishvili, Minister of Regional Development and Infrastructure.

Negotiations should be conducted with donor institutions with the aim to involve Georgian companies in major infrastructure projects. These resources genuinely exist, and it is possible to diminish or fragment project scales in certain cases. Small sections may be entrusted to domestic companies. Similar approach could be the only solution, Sabakhtarashvili said.

Secondly – all contracts must name a domestic subcontractor. Today, a similar strategy is carried out in certain deals, however, this practice should be established in all negotiations, Sabakhtarashvili noted.

‘We seek to achieve this objective with our donors. They cooperate with local subcontractors anyway, because otherwise it is impossible, physically. Moreover, this amount should increase for nominated subcontractors”, Sabakhtarashvili noted.

Frequently, tenders are held, and the final price radically differs from the initial price, and this is not good.

Somebody may appraise this as efficient spending of state finances, but the law price signifies that either a company fulfills the project with low-quality work, or it does not invest money in development and labor safety, she added.

The existing state procurement system is oriented only towards price, and enables companies to offer the lowest price, she noted.

“The only mechanism for growing companies and improving their quality, besides a focus on quality and rejecting the price as the only criterion, consists of the obligation to care for a project.

One company should be responsible for design, fulfillment and care. In this situation, companies will be able to perform works with higher quality, and lower expenditures will be required”, Sabakhtarashvili said.

The Ministry of Infrastructure is conducting negotiations on the aforementioned issue with the Association of Infrastructure Developers and the private sector, she added.

Gia Tsikarishvili, head of the LagodekhAvtoGas company, explains that Georgian companies are not able

to receive experience in state tenders. The current situation does not enable us to act even as a subcontractor as a part of major projects, he said.

Irakli Khergiani was Deputy Chairman of Road Department, from October 2015 to December 2017. According to him, major projects in Georgia are implemented by international donor organizations. As a result, the purchasing schemes are almost identical, and they have not changed.

Khergiani explains that international financial institutions apply almost identical procedures, and the Ministry of Infrastructure is obliged to implement this process under donor-determined regulations.

“I mean a project worth several tens of millions of dollars, where companies were requested to have the required working experience. That’s why Georgian companies cannot satisfy the aforementioned requirement”, Khergiani said.

In response to the question of how Georgian companies could satisfy the requirements from donor organizations before 2012, Khergiani pointed out that Georgian companies have never participated in major infrastructure projects, because they could not satisfy even the financial requirements.

“I remember in 2004 or 2005, Georgian companies, including the ZIMO company, fulfilled construction works for the first section of the highway, but the project was funded from the state budget. After that, only foreign companies have participated in major projects, and Georgian companies were represented only as subcontractors”, Khergiani said.

The Ministry of Infrastructure should help Georgian companies get involved in major projects as subcontractors, he noted.

“It was the strategy of that period: to promote the growth of Georgian companies, and help them penetrate foreign markets, both construction and engineering companies. This is a necessary component. It is necessary that our country should export engineering services”, Khergiani noted.

In response to the question of whether the Ministry of Infrastructure follows the same strategy even today, Khergiani explains that Georgian companies provide active work even today, including the Black Sea Group, Caucasus Road Project.

“Only two companies have taken part in major tenders, and according to my information, they keep working very well, even today. Consequently, this strategy has been maintained”, Khergiani said.

6 March 11, 2019 #274

Where can we find or borrow money which would be easy to return at the lowest interest rates? Are there, anywhere, similar creditors? It turns out that similar creditors do genuinely exist. It is a widespread practice in many countries, where central banks issue loans to commercial banks with the lowest possible interest rate, frequently with a so-called negative interest rate. International experience proves that similar practices make financial resources more attainable. For example, when a central bank issues a loan with a 0.75%. interest rate, this signifies that the authorities of the mentioned country is ready to fund commercial banks to enable them to issue cheap credits to the business sector. Like Switzerland, the negative interest rate is practiced in Denmark, too (-0.65%). The top four countries with negative interest rate include Japan (-0.1%) and Sweden (-0.5%). Interest rates range from 0% to 1% in such countries as Bulgaria (0%), Israel (0.1%), Samoa (0.14%), Great Britain (0.5%), Norway (0.5%), Fiji (0.5%),the Czech Republic (0.75%), Hungary (0.9%). Interest rates range from 1% to 2% in the following countries: Taiwan (1.75%), USA (1.5%), South Korea (1.5%), Australia (1.5%), Poland (1.5%), Bahrain (1.75%), Hong Kong (1.75%), and New Zealand (1.75%).

According to specialists, in these countries where cheap credit with low interest rates are issued thanks to strong economies, sharp competition between commercial banks and a high volume of issued capital.

What is the situation in Georgia? According to the National Bank of Georgia (NBG), in January 2019 the averaged interest rate on GEL-denominated loans made up 16.2% and 7.7% on foreign currency (USD) denominated loans.

If we compare the current average interest rates in Georgia and EU countries, the difference is essential. For example, in Germany the average interest rate of a loan is 1.7%, Austria and Finland – 1.9%, Netherlands – 2%. The same interest rates run at Sweden. 2.1%, 2.5%, 2.9%, 3 % and 3.2% interest rates run in France, Belgium, Denmark, Hungary and Lithuania, respectively.

However, there are countries with higher interest rate loans too: Spain – 9.1%, Croatia – 7.8%, Bulgaria – 7.5%, Iceland – 7.4%, Romania – 6.2%, Greece – 6%, Slovenia – 5.5%, Poland 5.5%, Estonia – 5.1% and Latvia – 5.1%.

Financial experts name several factors that make credit expensive in Georgia. The first reason is that a comparatively lower volume of stock capital at Georgia-based commercial banks (16 banks), which makes up about 1.8 billion USD. For example, in Denmark, which is a smaller territory than Georgia and has 5.5 million citizens, there are five commercial banks, and their assets exceed 10 billion USD. Another reason: borrowers in Georgia have low and unstable incomes, and they may fail to fulfill their obligations. An unstable national currency is another, additional reason.

Because of extreme volatility in the exchange rate, borrowers may fail to return loans, and commercial banks may face problems in this respect. Low competition among commercial banks is an additional factor making loans expensive, as well as an undeveloped capital market. We should also mention political and macroeconomic risks in the country, market diversification, the inflation rate and so on.

According to specialists, the high or low interest rates depend on refinancing the loan rate set by the National Bank of Georgia (NBG). The refinancing loan is a short-term loan that the

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Intern ationa l Exper ience

NBG issues to commercial banks. Today, the refinancing loan rate is 6.75%, and this signifies that the interest rate on GEL-denominated loans cannot be less than 6.75%.

Specialists assert that clients prefer to take mortgage loans for buying apartments, cottages, land or other expensive things. According to the indicators of the Numbeo statistics portal, the top three countries with the lowest interest rate on mortgage loans is as follows: Japan – 1.21% (the maturity ranging from 1 to 35 years), Switzerland – 1.42% (the maturity ranging from 2 to 100 years) and Sweden with 1.35% and about a 35% maturity.

In Georgia, the interest rate of GEL-denominated mortgage loans is about 7.5%, and USD-denominated mortgage loan yields 4.55% interest.

7 March 11, 2019 #274

Customs

Monitoring between the Bad and the Worst

Several days ago, a new meeting held as part of the Abashidze-Karasin format. This meeting could pass without noise, if not several factors.

The first and most important media campaign in Russia was a series of articles, where authors assert that Government of Georgia has agreed to arrange customs monitoring points on the de-facto borders – Enguri and Gori.

In practice, this signifies a recognition of the current border of Abkhazia and the so-called South Ossetia and their independence. This is the manifest treason against the State and any citizen of Georgia signing similar document will be sentenced to life imprisonment.

Officials in Tbilisi have categorically denied this information, but a lot of questions remain, because the Georgian party has released many statement about the agreement with Russia on key issues - but, in this situation the border is the most important aspect and all other factors are of secondary importance.

So, what agreement have Abashidze and Karasin achieved? what key principles have they agreed?

Open intimidations from Karasin made the meeting – “unpleasant surprises ahead if you conduct wrongly”… Nor the Deputy Foreign Minister of Russia has specified what sort of surprises he had meant.

As expected, the meeting finished without essential and noisy decisions – customs points were not opened at Enguri, nor Russia has announced economic embargo.

Abashidze’s visit to the Parliament has not cast light on the situation. He only repeated old statements he had made in other interviews and public discussions.

However, fundamentally incorrect attitudes dominate in Georgian society regarding this issue – seemingly, there are two variants for implementing the mentioned agreement – good one and bad one.

The good variant implies that a private Swiss company will set a control over Georgia-Russia internationally recognized border. The bad scenario signifies that the mentioned customs points will open at the de-factor borders and I reaffirm this variant signifies open and evident treason against the State.

In reality, it is a crime and high treason to talk about this issue – even the good variant is almost the same treason as the bad variant, because both of them imply the situation, where the country loses its dignity and reputation - transmission of the state border control, one of the holiest duties and obligations, to an unclear foreign company.

In general, it is unclear from where and why this issue came to the surface; the almost forgotten issue, who has remembered it and why?

Government argument is ridiculous and it cannot withstand criticism - Saakashvili has signed it and we have to fulfill it.

Let me remember – This is the government which deliberately acts contrary to its predecessor, is not it? -And how, from where do they have similar devotion to decisions of the previous Authorities? And why specifically in this issue smelling like the treason against the State?

As to the previous Authorities – shifting responsibility on them is not a right way.

We should take into account why this agreement was signed. This agreement was concluded because our western partners wanted Russian Federation to enter World Trade Organization (WTO). And Georgia was the last barrier, which demanded for impossible thing – arranging Georgian customs points at- the Georgia-Russia border in Abkhazia and the so-called South Ossetia.

In the end, someone put forward a model, that, at a glance, allowed Georgia to maintain its reputation – a Swiss company will stay at the border to control cargo turnover in the name of Georgian Authorities. Georgia is content, Russia enters WTO, the west is happy. In a word, everybody is happy.

This agreement was signed, but none of the parties intended to fulfil it – they just signed it and forgot it the next day.

Objective of this document was to not control the borders, but accepting Russia in WTO. The goal was achieved and the customs monitoring was forgotten by all parties.

Why and who has recalled this useless paper after 6 years? The answer is unclear.

In the end, it does not matter which variant will win – open treason or hidden. State border control is a state obligation and it is inadmissible to replace it with a foreign company – be it on the river Enguri or the river Psou. If the state does not control the borders, then it must not sign official documents recognizing this reality, because this is the treason in itself.

Let’s imagine – clean-shaven, honest Swiss observers stay at the river Psou and Roki tunnel - And beside them – savage Ossetian-Abkhaz border guards and Russians, who are world champions in bribery and various cheating schemes.

I can openly say – this will be a miserable picture. They will just bribe Swiss or laugh at them – make them ridiculous.

Bring them when they find it acceptable and expel them from the border, when they decide so.

Does anybody think that Swiss can work with these masters of cheating on their territory and under their rules?

An only right solution in this situation is that any negotiations on this issue should be suspended. I bring my apologies to neighboring Armenia, which has vital need of transportation routes.

We are said: If you go to the left, you will be killed, if you go to the right, you will get your legs fractured. And in this situation the only right decision is to step forward.

By Tengiz Ablotia

8 March 11, 2019 #274

Marika Lomtadze: "Due to Rapidly Evolving Technology, the Marketing Landscape is growing at a Accelerating Pace" Interview with , Head of Marketing Department at Alliance Group Holding, Marika Lomtadze.

Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession?

It was like love at first sight. At that moment, I was studying at the Caucasus School of Business BBA program, when on the 2nd course I started to study Basic Marketing. During the first lecture, I already knew that I wanted to continue my career in the field. Since then, I have been in the marketing field, and had the opportunity to work in the Pharmaceutical, Information Technologies, Retail, Manufacturing and now Financial and Consulting sectors.

Work experience in such diversified sectors, combined with BBA studies at the Caucasus School of Business and later on MBA studies at the Maastricht School of Management in the Netherlands, helped me to become a professional and developed as a manager.

Furthermore, I continually concentrate on building professional relationships both inside and outside the workplace, and demonstrate sound business ethics, show commitment, and am ready to step up to give advice in the field I am qualified to give.

In regards to technological changes, what challenges do you face as the head of a marketing service?

It is an opportunity rather than a challenge.

We, the marketers, ought to have a strong focus on applying technology based platforms and marketing analytical tools in everyday marketing operations. Hence, it is vital for Marketing Department to use technologies for growing opportunities, customer leads, opportunities and communications.

Marketing is a multifaceted business process that involves creativity and innovation, alongside with analytics and strategy structuring, and therefore the contemporary marketing strategy, program and campaign is hard to imagine without digital technology, digital business models, and other applications of technology.

What has changed in the field in the last 5 years, and what changes are expected now?

The marketing field has undergone a metamorphosis over the recent years, and it still continues to change. Digitalization and globalization have affected the field to a great extent, created challenges, and brought enormous business opportunities. There is a great shift from traditional to digital marketing strategies. New technologies were introduced that transformed the way of implementing various marketing programs and communication strategies.

Due to rapidly evolving technology, the marketing landscape is growing at a accelerating pace, and I think more changes are to be expected in the future that will dramatically affect the behaviors of the customers and the approaches that companies take in marketing.

What important features should a marketing manager focus on, and what are their roles in an organization?

Especially in the era of globalization, the role of marketing is pivotal for every organization to

succeed on the market. A contemporary marketer needs to have a diverse set of skills in order to drive the organization towards growth and success. Among the key traits necessary for a successful marketer is to be a visionary, flexible and creative thinker, with expressed customer centric and relationship building skills. Besides, the recent rise of the use of marketing technology for engaging customers, the increased need for marketers to acquire more technology skills and qualifications.

What steps did you take, as an organization, to catch up with new trends, and use innovative approaches in the field of marketing?

Alliance Group Holding is an innovative, diversified, leading company in the field of investment and advisory services, that aims to invest in the projects that are innovative and strategically important for the development of the local economy. The company manages subsidiary companies with a diversified core businesses in financial, consulting, leasing, energy, property valuation, business information and its new business in education (the recently established first Finnish School in Georgia) sectors.

As a marketer, I constantly distill recent marketing trends, research and transform business data into customized service offerings, and these communications and activities drive demand by connecting with customers. Besides, cross-departmental communication and collaboration is vital in order to brainstorm, link every unit together, ensure their involvement to accomplish projects and achieve business goals.

What’s your organisation’s business model, in terms of marketing?

Alliance Group Holding aligns its business goals with those of the customers. Developing trusted, long-standing relationships with customers is a cornerstone of our company philosophy. The distinctive culture and values act as a moral compass, and are reasons why customers choose to partner with AGH and its subsidiary companies. The company acts according to its five core values, which are professionalism, good governance, diversity, stability and integrity.

One word that describes your work.

Continuous growth The most useful advice you’ve ever received in life?

Always see the big picture if you want to succeed.

Think of a person who inspires you professionally.

Nothing is more inspiring than accomplishing successful projects, and seeing its value and development in the long-run.

9 March 11, 2019 #274

Business News

Giorgi Bochorishvili wins Best Actor at Aswan International Women Film Festival

Georgia in 2015-2018, Ministry of Education, Science and Sport of Georgia reports.

Georgian, Giorgi Bochorishvili wins best actor at Aswan International Women Film Festival in Egypt for his performance in the movie Horizon.

Evenings spent with Pat Metheny within Tbilisi Jazz Festival Tbilisi 22nd Jazz Festival was a huge surprise for jazz fans. The festival’s headliner was Pat Metheny, 20 Grammy Award-winning musician.

Gudauri to host Snowboard Cross Europa Cup The first stages will be held along ladies and men on the slopes of “Kudebi”, where the winners of various tournaments will take part from Austria, Switzerland, Germany and other European countries.

Black Sea Arena transmitted to Ministry of Education for Management

Starting September Labor Inspectors will Check Companies without Warning

The Black Sea Arena concert hall located at the Black Sea coastline has been transmitted to Ministry of Education, Science, Culture and Sport for management.

Starting September 2019 the Labor Inspection Office will check all categories of companies.

Parliament of Georgia has already adopted the due amendments.

Fitch upgrades Georgia’s JSC Partnership Fund to ‘BB’ Fitch Ratings has upgraded Georgia-based JSC Partnership Fund’s (PF) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘. The Outlook is Stable. The agency has also affirmed PF’s Short-Term Local-Currency IDR at ‘B’.

29 000 Foreigner Students came to Georgia for Studying in 2015-2018 GPI Holding announces Share Capital Increase to GEL 27 mln According to GPI Holding’s Supervisory Board decision the share capital of the company has been increased by GEL 6 mln and now equals to GEL 27 mln.

Silk Insurance – Silknet and TBC Insurance joint Project Home insurance without leaving home. Under the partnership of Silknet and TBC Insurance, from now on home insurance can be available straight from the Silk TV.

28 940 foreign students had been studying in

US Cities to host Wine Tasting for Georgian Winemaker Women Wine tasting for Georgian winemaker women will be held in New York, Los Angeles and San Francisco. Keto Ninidze, one of the participants of the wine tasting told BM.Ge that the exhibition-tasting will be held from march 9 to March 15 and five Georgian winemakers will participate in it.

10 March 11, 2019 #274

Fernando Cortinas: "Georgia is in a Perfect Position to build a Story around the Wine Industry" Professor Fernando Cortinas held a master class on Wineconomics at IE Insider Day in Tbilisi. Fernando has extensive, international experience, and holds an MBA from Harvard Business School. He has been teaching continuously at IE since 1992. During the last 18 years, he has taught different courses in the field of marketing.

The lecture was about major changes and trends taking place in the global wine industry, and discussed both macro and micro perspectives, and explored the current competitive environment in this business. During the interview with CBW, Mr. Cortinas also reviewed Georgia’s position on the wine market, and what steps should the country take: How do you combine your corporate and academic career?

One of the factors that made IE special was having two types of professors: there are conventional academic professors, those who bring lots of theoretical knowledge based on what they studied and researched, while I was part of what IE calls practitioners.

We learn by doing at IE. We base our studies on a case method. It’s important for the university to have people with managerial experience. I learned this in Spain 27 years ago: I was moved to a metal mechanical company, and then I joined Telefonica, which is one of the top 10 largest telecommunications companies in the world. I was busy with digital marketing at that time. It was really hard at the beginning, being a professor of International Marketing and traveling a lot, it’s quite difficult to combine, and that’s why I began to teach a limited number of sessions with my expertise. So, I would concentrate my classes in the times of year when I wouldn’t travel due to seasonal reasons.

It was very refreshing, and I feel that it’s very important for students to not only have the views of academics, who develop good theoretical frameworks, but it’s important to bring experience from what’s going on on the ground. This is why IE has several hundred professors together with me, which brings practical expertise.I developed this part-time professorship over more than 20 years, but 6 years ago I took a retirement plan and now I’m devoted to full-time to teaching.

That’s why I feel that I’m still young, and that my international experience is relevant, and that’s why I teach international marketing.

IE seems like an extraordinary University.

What are the most innovative approaches to learning taught there?

IE has some distinguished characteristics that makes it

unique. One of the main distinguishing characteristics that everyone claims is internalization. When I studied in the US, internalization 24 % would be foreigners, while 95% are foreigners at the IE--only 5% are Spanish-so when you have such a strong international environment, it’s like a micro-cosmos, a small slice of the entire world.

On top of that, IE puts the focus on entrepreneurship. Let’s say you have structured periods, you have chore courses, but then after the first term you begin to have elective courses, and on top of them you can develop your own entrepreneurial project. So part of the credits you can get are not only based on conventional learning, in which you study and take credits, but also you develop projects under the mentorship and sponsorship of companies, professors; that’s what we call learn by doing.

So when you combine internalization with entrepreneurship, then you have learn by doing its best.

Every year there is a contest for these new projectseven many professors are investors, who also teach entrepreneurship, and they are judges at this contest, so you make a project, run a contest and, if you win, you get money. But sometimes, there are so many interesting projects that you might get funding even if you don’t win.

It’s not mandatory. I would say one more important factor is that we are very pragmatic. IE is very diverse, we don’t have any type of religious or political affiliation. That’s why I'm so happy and comfortable to work there. The IE is a place where being different is a plus and not a minus.

Given that, when you’re different, you normally bring different perspectives, the bigger the number of different people with idiosyncratic ideas and putting them on the table and discuss them, that’s where innovative ideas are born. I think this diversity is the key to success for IE, and over the last three decades, that’s reflected in the numbers, the story of our success. We are open to everything.

What suggestions do you have for students?

If you’re in Spain and planning to invest a significant amount of Euros studying in a programme, on top of the one or two years, it is worth it to buy a plane ticket, visit all the schools. It seems like a good idea to me to spend a week or two, just as a job, not as a tourist, to visit this course, feel the place. This research will pay out, and make you more confident. Make sure that your school you want to go is good for you. It’s like a picking a partner, it must fit your personality, lifestyle and expectations.

What are the major marketing trends in the global wine industry?

Now we are passing from volume to value.

We favore smaller editions, smaller quantities of higher quality, and thus higher prices. This is why big wineries are still powerful, but there is room for small wineries who are producing limited editions, a limited number of bottles with peculiar characteristics.

A person who pretends to be an expert in wine wants to taste something different. The more of an expert you pretend to be, the more willing you are to pay more money for unique things. The

number of liters being traded internationally is growing, meaning more people are willing to buy wines from foreign countries. Besides, the average price per liter is higher. We saw that the average price for water 15-16 years ago was 2 Euros per liter, and now it’s 3, and the trend is going in that direction. A higher proportion of wine consumed internationally is from a non-local origin, and the average price per liter is growing steadily.

You’ve mentioned how Georgia’s positions on the wine market during the master class. Can you tell us more about your advice and forecasts?

Georgia has a uniqueness, as far back as the recent archaeological discovery that Georgia is the birthplace of wine. When you have 15-16 different types of grapes, lots of micro climates, micro locations, you are in the perfect position to build a story. The facts around peculiar denominations of origins. You are a small country, the number of bottles is small, and because of that it doesn’t make sense for you to compete in volume.You have scarce resources, and a limited amount of land, and you should focus on, in the medium and long run, try to produce highquality, high-price wines, and build a story around this fact that Georgia is a cradle of wine. It’s an opportunity, but also a challenge, because marketing is a war. But this is not a war of products, my product is not competing with yours, it’s a war of perceptions. We compete based on the percentage of market.

If we were to invest in wine now, what should we be looking at?

The French are the market leaders, in terms that nobody beats Italians. They produce excellent wines, but meanwhile, they’re great marketers, building stories based on facts, and they’re not lying. They’ve produced wine only for 2000 years in the best case scenario, you have been producing for 8000. Who’s in the better positions in terms of stories? You need to recover the stories. It’s easier to continue apace where you are, and you’re selling wines to your traditional markets, making money, but you sell to Russia, Kazakhstan, Ukraine, China. But what if you have a problem with one of your markets, as happened with Russia? You were selling almost 100% of your wine to Russia, after the issues you learned the importance of diversifying. You’re still largely concentrated on the Russian market. You need to diversify markets, geographically speaking and in terms of positioning you to have to add value, and be perceived as producing higherquality, high-price wine. Of course you have to invest money to educate consumers, Western Europe has to learn about you. More than 85% is concentrated on these same markets. China is a promising market, but in terms of competition it’s easier for you to educate consumers, in the US, UK, Eu. You need to invest in promoting yourselves. First, invent a storyline, and then implement that. You can’t do that as a company, but at a high-volume level, as a country. The market is big, and Georgia is a small fish in a huge pond full of sharks. Still, you have this fact: you are the birthplace of wine.

By Nina Gomarteli

11 March 11, 2019 #274

Georgian Media marks a 200th Anniversary “And a newspaper will be issued twice a month.

Incomes will be collected from this source, and our people will be also accustomed to it”, Ioane Bagrationi wrote in his 1799 draft document called the the Sjudleba. The document called for improving governance issues in the Kingdom of Kartli and Kakheti, and mobilizing various sources for replenishing the treasury. The idea of establishing the first Georgian newspaper was put forward in this way, and this idea was enforced after 20 years.

On March 8, 1819, the first Georgian-language newspaper was published. The 4-page newspaper was the first newspaper edition in the South Caucasus. Initially, the paper was used to spread Russian propaganda, and protected its interests in the Russo-Persian and Russo-Ottoman wars. At the same time, the edition was paving the way for Georgian journalism.

The history of the Georgian press started in this way. Shortly after the issuance of the Sakartvelos Gazeti (the Newspaper of Georgia), new editions also appeared in Georgia – the Tfilisi Utskebani (Tbilisi Messenger) and in addition the “Literary Circle of the Tfilisi Utskebani”. The editor of the aforementioned editions was Solomon Dodashvili. This newspaper was the first

Georgian media space where national-liberation ideas appeared; the third edition was Tsiskari, under the editorship of Giorgi Eristavi and Ivane Kereselidze.

National-Liberation ideas were becoming popular in a Georgia suffering from Russian imperialism. In the 1860s, the Georgian press acquired its genuine stars: Sakartvelos Moambe (the Herald of Georgia), as well as the Droeba and Iveria under the editorship of Ilia Chavchavadze. Public figures of that period openly used these media editions to struggle against the Russian Empire, defended the Georgian language and discussed problematic issues in Georgia.

At the beginning of the 20th century, the Georgian press outlined new directions: advertisements and editorial cartoons – works by Oscar Shmerling are considered to be the best ones in this regard. These works were published in the Photo Edition of the Tsnobis Purtseli. In the same period, satiric media also developed - "the Devil’s Whip”, "Ekali (Thorn)", "Matrakhi (Whip)”, “Tartarozi (Tartar)" and other editions used to openly criticize many state institutions on the pages of newspapers.

Following the development of media at the end of the 19th century, photography also spread in Georgia.

This business started with expensive daguerreotypes, attainable for only rich families, and it became popular and attainable for the wider society, along with the development of the corresponding technologies.

A lot of photo studios operated in Tbilisi, Kutaisi, Batumi and other cities of Georgia in the 20th century, with their own trademarks. Photos by Ermakov and Roinishvili represent the most valuable visual materials depicting and illustrating Georgia inf the early period of the 20th century.

On May 21, 1925, radio stations started broadcasting in Georgia for the first time, along with South Caucasian countries in the Georgian, Russian, Armenian and Azerbaijani languages.

On May 26, 1951, the Georgian edition of the Voice of

America launched operations. Two years later, the Georgian version of Freedom Radio also started broadcasting from Munich. Anti-Soviet radio broadcasts were, naturally, suppressed in the Soviet Union, but people manage to listen to Freedom Radio programs despite the risks. In the 1980s, so-called Perestroika reached Soviet propaganda, too. The Peak Hour was a spark of similar liberty, which could broadcast western popular music.

During the Soviet occupation, Georgian political emigre established a lot of papers to maintain national spirit and the struggle against the Soviet regime.

Georgian-language editions spread to the national communities in Paris, Geneva, Berlin under the editorship of Niko Nikoladze, Archil Jorjadze, Leo and Giorgi Kereselidzes and so on.

Today, the Television Tower is an inseparable part of Tbilisi, which was designed and erected on Mtatsminda mountain in 1953. On December 30, 1956, the Tbilisi TV Center started broadcasting its first TV program. The first TV presenters of the Georgian television space were Aleksandra Machavariani and Lia Mikadze.

By the end of the 1960s, colored TV programs appeared in the Georgian television space. Shortly after this, the Iluzioni TV program was launched, which was broadcast on Saturdays was the only window the west for the audience.

The collapse of the Soviet Union was reflected in the quality and quantity of Georgian media editions: in the 1990s, the following newspapers were established: 7 Days, Droni, Alia, Asaval-Dasavali, Kviris Palitra, the Sarke magazine; in the second half of the 1990s, Georgian media was replenished by radio stations operating on FM frequency: Pirveli Radio, Radio 105, Evrika, Green Wave, Fortuna, Audience (later Imedi radio), Sakartvelos Khma (Voice of Georgia) and so on.

And naturally, TV companies: Ibervisia – the first Georgian independent TV company, which was very popular; Channel 2; in 1994 Kavkasia TV company and the Rustavi 2 TV companies launched operation.

In 2003, Imedi TV company started broadcasting; in 2014, the Georgian Public Broadcasting Company was formed on basis of the State Teleradio Corporation.

Today, there are about 100 authorized broadcasters in the country.

In 1998 the first Georgian internet edition, Gza, appeared in on the global internet space. Today, all Georgian media editions have their own websites and social network accounts.

Today, the Georgian media celebrates its 200th anniversary. During these 200 years, Georgian journalism and journalists, photographs and operators have created and shaped priceless history. Therefore, ClipArt congratulates various forms of media on this date, through the medium of newspaper (an attachment in the CBW), video, film and other memorable gifts.

12 March 11, 2019 #274