Issue #1186 Business

Issue no: 1186/198

• SEPTEMBER 17 - 19, 2019

• PUBLISHED TWICE WEEKLY

PRICE: GEL 2.50

In this week’s issue...

Weekly Entrepreneurial News @entrepreneur.ge NEWS PAGE 2

Georgian Wine Agency to Spend GEL 9 mln on Marketing in 2020 BUSINESS PAGE 3

FOCUS

Tbilisoba Tops Arrival Guides’ Best Culinary Festivals of Autumn 2019

ON ADAPTING FASHION We meet the founders of Kombinzona who are changing the way Georgians think about fashion

BUSINESS PAGE 4

PAGE 6

Insurance Industry Requests Mandatory Insurance for Tourists Visiting Georgia

Huawei CEO Ren Zhengfei's Interview with The Economist, Part 1 BUSINESS PAGE 5

US & China Gear Up for Ideological Warfare

BY THEA MORRISON

G

eorgia plans to launch discussions on mandatory insurance for tourists visiting the country, Devi Khechinashvili, Head of Insurance Association of Georgia, announced.

Khechinashvili says that along with the increase in tourist numbers, the spending on tourists within the Georgian healthcare system is also increasing. He notes that too many tourists come to Georgia without insurance and as a result the healthcare system is struggling to cope.

“As we, Georgians, need travel insurance when we go abroad, I think we need to ask the same of foreign tourists visiting our country. It doesn’t matter where they buy this insurance, the main thing is having adequate limits for medical expenses,” he said.

The Head of the Insurance Association believes that regulations should be introduced which protect the interests of both the tourists and the state healthcare system.

“At the moment, there is a normative act about insurance, but no-one controls this at the border, so it is necessary to start discussions on this issue,” he noted.

Khechinashvili explained that the issue was raised by the insurance industry during a meeting with Health Minister Ekaterine Tikaradze.

POLITICS PAGE 11 Prepared for Georgia Today Business by

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COMMODITIES Crude Oil, Brent (US$/bbl) Gold Spot (US$/OZ)

Image source: www.travelmarketreport.com

“Discussions are sure to be launched because this is a very important problem that needs to be resolved,” he added.

This is not the first time the insurance industry has raised the issue of uninsured tourists.

Earlier this year, Khechinashvili said that tourists who are visiting Georgia visa or visa-free

are not asked for insurance upon entering the country, however, where visas are required it also states that insurance is necessary. According to him, in emergency cases, the state is obliged to serve uninsured tourists free of charge, which naturally affects the state budget.

Continued on page 4

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NEWS

@entrepreneur.ge Gamarjoba! I’m the Editor-in-Chief of the Georgian edition of Entrepreneur magazine and I’m here to share the top weekly Entrepreneurial news with you: The first crypto café is to be launched in Tbilisi. Founder Alex Sudadze says that high demand served as his main inspiration. Having worked in the field for many years, needing to find interesting locations to host foreign guests also operating in the same sector led him to open a thematic café which would solve his problems. The café has an innovative concept, boasting a techno-style interior suited for holding numerous events on different themes- as ideal for the public as professionals, investors, and entrepreneurs. The café serves Georgian and European dishes and offers thematic products, such as Bitcoin coffee, Blockchain Chakafuli, Monero Khachapuri and Satoshi Burgers.

GEORGIA TODAY

SEPTEMBER 17 - 19, 2019

European Commissioner Johannes Hahn Visits Georgia

In the village of Sadmeli, Ambrolauri, Racha, check out a family winery run by Mariam Margveladze, a young lady actively involved in ensuring its functioning and appropriate management, along with other members of her family. At the wine cellar, a 5-minute drive from Ambrolauri Airport, ancient traditions are continued and developed. The winery is close to the forest, overlooking the wonderful Rioni Gorge.

The Margveladze family winery is distinguished for its historic and ethno items, which almost give the venue a museum-like function. They started bottling wines this year, thus making a first step in their future wine business.

Meet Lia Megrelidze, whose love and interest in tea set her to revive the family tradition and launch Komli at her 150-year-old homestead. Komli integrates a guest house, organic vegetable garden and tea garden providing tea picking and agro-tourist services. The business, barely a year old, is already a success, seeing a constant increase in the number of visitors. Along with the accommodation, guests can try their hand at tea picking, help process the leaves, and then taste the result for quality. Thailand, China, Russia, England, Germany, the Netherlands and the USA are among the countries guests come there from. Construction of glamping facilities is now underway on the territory, adding to the appeal.

Follow the Entrepreneur Georgia Instagram page to get the latest updates from Georgian Entrepreneurs. For doing business with Georgian Entrepreneurs, write us on business@entrepreneur.ge

BY KETEVAN KVARATSKHELIYA

E

uropean Commissioner for Neighborhood Policy and Enlargement Negotiations, Johannes Hahn, is paying an official visit to Georgia.

Within the scope of the visit, Hahn is set to hold a meeting with Mikheil Batiashvili, Minister of Education, Science, Culture and Sport of Georgia, as well as students from the countries of the Eastern Partnership.

The European Commissioner, along with the Georgian government officials, including Minister Batiashvili, Prime Minister Giorgi Gakharia and the Mayor of Tbilisi Kakha Kalaldze, put a symbolic capsule on the site of the new European School of Eastern Partnership which is planned to be built at Lisi Lake by 2023. The ceremony was followed by the joint statement of Hahn and PM Gakharia.

"Today I am proud to announce that we are laying the foundation for an even larger and more ambitious construction,” Hahn said. “On this very site, at Lisi Lake,

the Government of Georgia, with the support of the European Union, will establish the very first fully-fledged European School in the European Union’s Neighborhood. In fact, the first ever, outside EU borders!”

The European School of Eastern Partnership is a large-scale project of the European Union, supported by the European Commission, which is to be the first school launched beyond the EU boundaries, targeting students from the Eastern Partnership states and offering internationally recognized European quality educational programs.

NEWS

GEORGIA TODAY SEPTEMBER 17 - 19, 2019

Wizz Air Now Offers Direct Flights to Switzerland

BY NINI DAKHUNDARIDZE

W

izz Air performed the company’s first direct flight from the Kutaisi David Agmashenebeli International Airport to the Swiss city of Basel on Sep-

tember 13.

From September 10 onward, the airline company began launching direct flights to its new destinations: Basel, Brussels, Copenhagen, Eindhoven, Bari, and Poznan, with A320 aircraft.

Having performed its first flight as an airline in 2004, Wizz Air has been operating in Georgia since 2012. The company chose Kutaisi International Airport as its base in 2016. The majority of the passengers traveling from Kutaisi Airport use the service of Wizz Air.

Finance Minister on Business Environment in Georgia

BY ANA DUMBADZE

T

here has been no such free business environment in the country in the last 25 years, - the Finance Minister of Georgia, Ivane Matchavariani, said after the first government meeting headed by the new Prime Minister Giorgi Gakharia.

He responded to a question about a statement made by TBC Bank founder Mamuka Khazaradze, in which Khazaradze recalled a meeting with Georgian Dream Ruling Party Bidzina Ivanishvili over a dispute with businessman Vano Chkhartishvili, attended by then-Chief Prosecutor Irakli Shotadze.

“I have no idea about that meeting, I didn't attend it personally, so, I can’t say anything about it. However, if there are specific facts of pressure against companies, they should come forward and show it. I've been living in this country for the last 45 years, I've been involved in business for about 22 years, in the public service for one year. I say with full responsibility, that there has been no such free business environment for the last 25 years in active business and politics. If there are facts of pressure on a particular company, a specific case, they should come forward, and if there is no response, then we can talk. I don’t say it because I am a member of the government. People lived here all these years and whoever was in touch with this field will confirm it,” Machavariani said.

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BUSINESS

GEORGIA TODAY

SEPTEMBER 17 - 19, 2019

Tbilisoba Tops Arrival Guides’ Best Culinary Festivals of Autumn 2019 capital as an “it” destination for 2019.

Arrival Guides informs its readers that October 5 and 6 will see the city streets flooded with openair concerts, folk dance performances, cultural happenings and, naturally, the true star of the show – spectacular culinary offerings from all across the country.

The author of the article recommends travelers throughout the world to taste distinguished dishes from Georgian cuisine while attending the Tbilisoba Festival: khinkali (“scrumptious soup dumplings sealed with a twist”), mtsvadi (“juicy pork barbecue”), khachapuri (“a cheese-filled, almondshaped local take on pizza, often with an egg on top”), and pkhali balls, a vegetarian dish.

“Wine and chacha (Georgian brandy) flow freely until the festivities culminate in a spectacular fire-

BY ANA DUMBADZE

T

bilisoba, the annual October festival which celebrates the diversity and history of Tbilisi, the capital of Georgia, leads the list of the best culinary festivals of autumn 2019, as recom-

work display, making Tbilisoba our top pick of the year’s autumn food festivals,” the article reads.

The article also advises the travelers to attend the Good Food Month Festival in Australia, Wine & Food Festival in the US and the White Truffle Fair in Italy.

Tbilisoba, one of the most popular and widely attended festivals in the country, was first held on October 28, 1979, and has since become an established tradition. The festival features open-air concerts of traditional music and dancing and various cultural events, centered in Old Tbilisi, the historical part of the city. Beyond celebrating the city's past and present, people from all over Georgia represent their region at the fair. Tbilisi City Hall also traditionally awards honorary citizenships within the frames of Tbilisoba.

mended by Arrival Guides, blog of the world’s largest travel guide publisher, Lonely Planet.

“Here’s a surefire way of dealing with the autumn blues: attending a food festival. We’ve surveyed the world to find out which autumn food festivals are on track to becoming fall season’s unmissables,” reads the article.

It goes on to note that there is hardly a reputed travel publication that hasn’t listed the Georgian

Insurance Industry Requests Mandatory Insurance for Tourists Visiting Georgia Continued from page 1 Khechinashvili also noted that some Georgian clinics face financial difficulties with foreign insurance companies who complicate the procedures of transferring compensation for injured tourists.

Earlier this year, the Head of insurance company GPI Holding, Paata Lomadze, said that uninsured tourists who enter the country must be asked to buy insurance in Georgia.

“Buying insurance in Georgia is such a simple procedure and it will help us avoid the disputes and financial risks that Georgian medical institutions currently face,” he said.

Georgia hosted 2,697,624 tourists (+8%) and 4,961,918 international travelers (+7.8%) in JanuaryJuly 2019.

In addition, 1,099,474 international travelers visited Georgia in July 2019. The increase compared with the same period of last year is +5.8%.

Most international travelers came from Azerbaijan (+13.1%), Russia (-6.4%), Turkey (+9.6%) and

Armenia (+3.2%).

The Ministry of Foreign Affairs of Georgia says that a citizen of a foreign country who seeks to enter Georgia generally must first obtain a Georgian visa. Certain international travelers may be eligible to travel to Georgia without a visa if they meet the requirements for visa-free travel. The visa policy of Georgia is comparatively liberal, allowing citizens of 98 countries to enter, reside, work and study in Georgia without the need to obtain either a visa or a residence permit. In addition, the Georgian government approved the list of 50 countries whose visa and/or residence permit holders may enter Georgia without a visa for an appropriate period and under appropriate conditions.

In all cases, the ministry says that foreign citizens must be able to present all the required documents at the Georgian state border: • Travel Document/Passport • Document proving purpose of travel • Proof of accommodation • Travel and health insurance • Document proving sufficient financial means

BUSINESS

GEORGIA TODAY SEPTEMBER 17 - 19, 2019

5

Huawei CEO Ren Zhengfei's Interview with The Economist, Part 1 beginning of the year, to 23% by the end of June, and now down to 19.7%. Our profits didn't increase largely due to a significant increase in our strategic investments. We have recruited a few thousand more employees worldwide, mostly high-end talent like young geniuses and fresh PhD graduates, to help patch our holes caused by the Entity List.

We have patched our holes from 5G to core networks. On September 18, we will announce an AI cluster that connects 1,024 Ascend chips. This will be the fastest AI platform in the world.

Currently, the Entity List still impacts our consumer business, and it will take some time to patch our holes in this area.

INTERVIEW BY DAVID RENNIE, BEIJING BUREAU CHIEF AND ‘CHAGUAN’ COLUMNIST, THE ECONOMIST & PATRICK FOULIS, BUSINESS AFFAIRS EDITOR, THE ECONOMIST

M

r. Ren, before we ask you questions about Huawei, we would like to ask you a question about globalization and about how technology is challenging globalization, because you're also a very important global business leader, and you now have big companies that are selling products and services that can only make sense in a world of a great degree of trust. You know, it's not selling tennis shoes or tennis rackets. It's selling an autonomous car or a medical device. So, this globalization is now seeing trade in products that requires a lifetime of trust, at the same time as countries like China and America find it very difficult to trust one another.

Can this problem be resolved? What is your view on how this problem can be solved?

“Economic globalization can bring substantial benefits to all of humanity.

This is because it will play a significant role in driving the optimal allocation of resources and reduction of service cost, thereby accelerating the pace of social progress,” Zhengfei says. “Economic globalization was a concept put forward by Western countries. Their guiding principle was to allow the West to trade their advanced technology and equipment for developing countries' raw materials and cost-efficient labor forces. This enabled global trade. But the West did not expect that developing countries would slowly begin to move up the value chain with production of low-end products.

“The West had a serious economic crisis in the 1960s and 1970s, brought about by conflicts between employers and employees. Some Western economists suggested higher pay, higher commodity prices, and higher consumption would solve this crisis. This theory worked well to address the West's problems for a while. For the next several decades until the end of the last century, their economy grew very quickly. Sustaining such an economic model requires very high yields though. Without high yields, it's going to be very difficult to ensure that you have enough wealth to distribute.

Although developing countries created a massive market space for Western countries to sell in, many products from these developing countries also entered developed markets. The clashes and contradictions that arose during the process are not an inherent problem with globalization, but occurred because of a lack of effective coordination between countries of these two different development stages.

“Let me use the Europe-China relationship as an example to explain how we could possibly address this problem.

China has made a commitment to the World Trade Organization (WTO) that it will significantly open up its service and manufacturing sectors. Over the last two years, this opening up has been accelerating, even though it is still a bit behind the promised schedule.

“The UK and Europe have accumulated hundreds of years of experience in the service sector. China has a huge demand for services. In this sense, if the export of large quantities of services is allowed from the West into China, it will facilitate the social advancement of China. In addition, the money earned

by China from Europe through the export of products will return to Europe through the export of products and services, creating a more balanced eco-

IS THE CONSUMER BUSINESS SHRINKING OUTSIDE OF CHINA? Our smartphone sales once declined in markets outside China, but the rate of that decline is now decreasing, now at around 10%.

LATER THIS MONTH, YOU'LL BE LAUNCHING THE MATE 30, THE NEW HANDSET. WILL IT HAVE ANDROID AND GOOGLE APPS AVAILABLE ON IT?

nomic situation.

“Let's look at another example. China will reduce automobile tariffs to a very low level over the next five years. The UK and Europe produce the world's highest quality automobiles, while Japan produces the most cost-effective quality automobiles. Today, we need to address the problems arising from globalization one at a time, through consultation. There is nothing wrong with globalization itself. These problems are arising because the development mechanism has failed to adapt to some of the changes in our new environment and the different players involved are not sitting down to have good discussions about how best to coordinate on these problems.

“Let's take Russia as another example.

If Russia had been accepted as a member of the European Union, I estimate that the trade between Russia and other Western countries would represent at least one trillion euros, because of Russia's energy exports and Western countries' machinery and equipment exports.

These transactions would bring a lot of money into Europe, which would help Europe address the issues they are seeing related to increasing economic disparity.

“I've had very good talks with George Osborne and David Cameron in the past. Back then, Osborne had already lowered the UK's tax rate to 21%, but these cuts didn't impact their national revenue. Why? Because the UK only allowed welfare to be distributed under certain conditions. To receive welfare, recipients would have to be actively seeking a job or make some form of contributions to community service, such as caring for the elderly or engaging in public health activities. The reduction in tax revenue equaled their reduced social welfare spending, and thus ensuring stability within the country.

“Afterwards, Theresa May's administration announced that it would further lower the tax rates to 17%. All of these policies adopted in the UK are serving as the DNA for it to become an investment center again. All in all, this proves that different players have to keep adapting to the new globalized environment.

A one-size-fits-all approach won't work.

This is my humble opinion.”

THE ONE COUNTRY YOU HAVE NOT MENTIONED IS

THE US. YOU TALKED ABOUT EUROPE AND JAPAN, WHICH CAN SEE THE ECONOMIC GLOBALIZATION. WHEN YOU LOOK AT THE USCHINA RELATIONSHIP, ARE YOU WORRIED ABOUT THE FUTURE OF GLOBALIZATION? Yes, I think China-US relations will affect the future of globalization. The US is the most powerful country in the world. It used to maintain order as the "policeman" of the world, and in return it was rewarded with the US dollar becoming the world's currency. The US collects seigniorage from the world by issuing US dollars. If the US continued to maintain world order, it would not stand to lose anything.

However, the US has destroyed this mechanism. People no longer believe that the US is trying to maintain order in the world, or that the US dollar is the most reliable reserve currency. When the world's confidence in the US and the US dollar starts to wane, the national debts and stock markets in the US will face crises, which will cause great economic and political turmoil in the US.

THIS YEAR, US DIPLOMATS HAVE MADE A BIG EFFORT TO PERSUADE ALLIES LIKE BRITAIN AND AUSTRALIA, AND TO PUT PRESSURE ON COUNTRIES LIKE VIETNAM, NOT TO USE HUAWEI PRODUCTS. HOW SUCCESSFUL HAS THE US BOYCOTT BEEN? First of all, it's perfectly normal for customers not to buy Huawei equipment.

In fact, many customers did not buy Huawei equipment in the past. Most customers make their decisions based on commercial considerations.

When it comes to 5G, I think the US may be wrong to politicize 5G or treat it as something dangerous. Countries should make their decisions about 5G to facilitate their development rather than fulfil political agendas.

Let me give you an example. About 1,000 years ago, China was the most powerful country in the world. The prosperity depicted in the famous painting "Along the River During the Qinming Festival" was not fictional; it was real.

Several hundred years ago, the philosophical thoughts and social systems in the UK led to the Industrial Revolution. The British invented the train and

The Mate 30 series won't have the Google Mobile Services (GMS) ecosystem pre-installed. steamship. However, China continued to rely mainly on horse-drawn carriages for transportation. Those carriages travelled at much slower speeds than trains, and they could carry far less cargo than steamboats. That's why China was left behind.

The UK became an industrial powerhouse, and managed to sell its products all over the world, hugely impacting social progress in many countries. Today, about two-thirds of the world's population speak English. With this example, I want to say that speed determines social progress.

5G is a connectivity technology that delivers high speeds, high bandwidth, and low latency. 5G represents speed in the information society. Countries that have speed will move forward rapidly.

On the contrary, countries that give up speed and excellent connectivity technology may see economic slowdown.

The British are very intelligent, and British universities are among the best in the world. If the UK wants to make a comeback in industry, it needs speed in the information society.

Optical fibre networks and 5G technology that is based on optical fibre networks will connect supercomputers and super storage systems to support AI. If AI is able to increase productivity by ten-fold, then the UK will become an industrial power with a workforce equivalent to hundreds of millions of people. When I say AI can increase productivity by ten-fold, this is just an estimation. The truth is that in some rare cases, with the aid of AI, efficiency can increase by 100 times or even 1,000 times.

Alan Turing, the father of AI, was British, as was the scientist who cloned Dolly the sheep. I simply cannot imagine what the world will be like when genetic and electronic technologies come together. I believe the UK has enormous potential for revitalization.

Speed will determine whether the UK can be successful again.

TELL US ABOUT THE FINANCIAL PERFORMANCE OF THE BUSINESS SINCE MAY, WHEN THE ENTITY LIST BEGAN? HAVE YOU SEEN A DROP IN REVENUES? Our revenue has grown by 19.7% by the end of August, while our profits were similar to last year's. Our growth rate has declined from about 30% in the

IF YOU LAUNCH A HANDSET THAT DOESN'T HAVE THE FULL SUITE OF GOOGLE APPS ON IT, IS IT CORRECT TO THINK THAT THE VOLUME YOU SELL OUTSIDE OF CHINA WILL BE MUCH LOWER THAN IN THE PAST? We would like to continue using Android, because we remain on good terms with Google. Even if the US government won't allow us to continue using Android, we have our alternatives. It will take us two to three years to replace Android with our own system, during which time our phone sales in markets outside China will see some decline. We think it is understandable. Our smartphones have their unique features in addition to ecosystem applications, so we believe there will be many more customers who will like and accept our products. We will launch the Mate 30 series in Munich on September 19, and you can find out what features they will have then.

OVER THIS PERIOD WHEN YOU MAY HAVE TO ROLL OUT YOUR OWN SYSTEM, DO YOU THINK IT'S POSSIBLE THAT A COMPANY CAN BE PUSHED INTO MAKING A LOSS? No, our growth will slow down, but we won't see losses.

IF I WAS RUNNING GOOGLE AND HUAWEI ENDS UP PUSHING ITS OPERATING SYSTEM OUT GLOBALLY, HOW WORRIED SHOULD I BE? Google is trying to persuade the US government to allow us to use their ecosystem. In this regard, we are willing to work with Google. Our operating system wasn't initially intended for smartphones.

Moreover, Google's operating system is open source, so we can continue to use it. The US limits our use of Google Mobile Services, GMS. That ecosystem includes thousands of partners, and Huawei wouldn't be able to build a comparable ecosystem in just a couple of days. If the US government allows us to continue to use Google's ecosystem, the US would maintain its dominant position in this field. If the US government refuses to grant the license, it will hurt them in the long run.

Don’t miss out on the continuation in Friday’s issue of GT.

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BUSINESS

GEORGIA TODAY

SEPTEMBER 17 - 19, 2019

Kombinzona, Lobbying Innovation & Happy Lifestyles your grandmother.”

Another sub-brand, “Alicap,” is also waiting to see daylight in a selection of adapted accessories. “For example, a beautiful head kerchief for those who suffer from Sinusitis so that they are protected and still look good.”

BY KHATIA GELOVANI, TRANSLATED

BY MARIAM MERABISHVILI

G

ano Melitauri is a marketer by profession with 14 years’ experience working in various companies. Innovative sewing factory “Kombinizona” is her dream come true, having entered the Georgian market 1.5 years ago and seeing its founder recovering all expenses in just one month. We met Gano Melitauri and her husband Kakha Gagnidze to find out more about Kombinzona and their long-term goals.

WORLD INNOVATION Another Kombinzona initiative is innovative not only for the Georgian market but for the whole world. The idea came Gano after watching her own children.

“My children have never loved getting dressed or undressed,” she says. “Then I thought about it and realized that adults tend to buy the kind of clothes they like.

So, I came up with the idea to make this process fun and interactive. Kids deserve to wear the clothes they want.”

The purpose of Gano’s interactive clothing line is to help children learn and develop; to learn the color gamma or calculations, for example. Each model will be integrated with a different type of game, and the basics of color therapy will be used throughout the production process.

“We put on comics and popular characters for children to collect. We will arrange competitions and even create a similar line for adults. With the help of clothing, they will be able to cope with stress, wake up in time ... However, individual investment will not be enough for this project and we will need investor support,” says Gano.

The factory is working well, orders are on the up and the innovative ideas are flowing. The couple’s 10-year business development plan is well on its way to success. Kombinizona is continuing to seek an international brand name and aiming to sell the brand’s franchise in various mega cities. Gano and Kakha are neither afraid of obstacles nor are they going to give up.

A DREAM COME TRUE “The brand ‘Kombinizona’ was highly appreciated upon its entry into the Georgian market. It was able to get to the break-even point in just one month,” Gano tells us.

It all started with Gano making a childhood dream a reality in adulthood with the support of her husband, Kakha, who was working with a friend on a new hotel brand when Gano walked into his life to interview for a job as a marketer.

“Gano was to do market research and take the position of Head of Public Relations for the company. She was so interesting that I started to see life anew,” Kakha recalls.

Gano has been creating sketches since childhood. Everything started with shoe models and later switched to clothing.

Four years ago, while working on a master’s degree at Warsaw University of Management, she chose the topic “Color Acceptance in Georgia,” studying color matching and its therapeutic effects.

Gano’s goal was to use her work as she pursued her dream - to open an innovative sewing factory which would produce clothing and accessories based on color philosophy. “I interviewed 1800 people for my survey,” she says. “I also worked with focus groups, learning how consumers perceive colors, how to plan color matching correctly, and its effects on mood and health. That’s when the outlines of the innovative sewing factory came to me. However, doing this job would have been completely unthinkable without Kakha,” Gano tells us.

Gano’s study of color matching will soon be published as a scientific work.

And Gano is already using the knowledge and results gained during her sketching process. “I created a dictionary that explains each color. For example, gray is a neutral color that translates to comfort.”

One day, Gano showed her sketches to Kakha. They talked about the color philosophy and decided that the creation of a factory should not be postponed any longer.

THE FIRST GEORGIAN ENTERPRISE OF ADAPTED CLOTHING While selecting the factory, buying textiles and turning Gano’s sketches into reality, the duo began to develop their concept. They studied the market and found that none of the Georgian brands was producing the adapted clothing that they had in mind.

The couple’s goal is not simply to create a boutique or a “Gano Melitauri” line and bring it to fashion weeks. Their target audience is diverse, ranging from children 0 to 18 months, to pregnant women and people with disabilities. This is where Kombinzona innovates, giving it the opportunity to “swim in the blue ocean.” Blue Ocean is a marketing strategy that aims to differentiate existing market players and gain significant competitive advantage with a completely different brand positioning.

“In every company I ever worked in, I

started by focusing on social responsibility right away. I wanted Kombinzona to be a powerful message carrier, taking great responsibility and changing many things for the better - people’s lives, moods and health,” says Gano.

Kombinzona became the first Georgian brand to launch a series of pregnancy outerwear. In addition, they created lines for people with disabilities and school children.

“We started manufacturing adapted clothing first. Very few understand the concept of adapted clothing. It is not a luxury but in many cases a necessity.

People with disabilities, for example, should not have trouble changing their clothes. My goal is that within 2-3 years, every person with disabilities in Georgia will have at least one Kombinzona work.”

BANK OF GEORGIA FUND ‘TREE OF LIFE’ GRANT COMPETITION As soon as it came to market, Kombinzona had a lot of fans. Orders increased by the day - both retail and corporate. It was a stressful time for the husband-wife team. “At the time, we had nothing but ideas, concepts and sketches,” Kakha recalls. The company had already won two tenders and had orders from Georgian designers flowing in, and the duo also had plans to travel to the Wolves Summit, where Kombinzona was on the list of innovative startups.

It was then that the heads of production hid a road-block and were unable to go to the Summit. “We had decided to take full responsibility for the development of Kombinzona, but then another great responsibility came along with the birth of Rene-Lazare,” Gano says with a smile.

Funding was needed to get Kombinzona its own factory, equip it and hire staff.

They applied to the Bank of Georgia Foundation ‘Tree of Life’ grant competition. They won, and were able to purchase

a space, equipment and assemble a team.

“I was convinced that the Georgian fashion sphere needed such projects. We needed to bring the concept of adapted clothing, unique color innovations, a Georgian maternity brand and to take real social responsibility,” says Gano.

A NEW BEGINNING Gano quit her high-paying job and decided to invest all her energy, time and knowledge into Kombinzona. The innovative clothing factory is working in several directions at this stage. First of all, of course, any product, be it an item of clothing or an accessory, is created based on Gano’s research on colors.

Another important direction aside from maternity and disability wear is women’s rights. Gano expressed a kind of protest against widespread abortion by printing #გოგოსდედა (Mummy’s Girl) on her outfits.

“We received very good feedback. However, this is not the last activity we tried to support women in. We’ve set up a Kombinzona Mothers’ / Women’s Club that will try to help pregnant women and future mothers stay physically active, spend nine months of pregnancy calmly, healthily and productively. We will have meetings, outings, competitions and various activities. In addition, we are going to create a kids club. Together with AlterSchool, based at Alterbridge International Training and Management University, we are planning to organize Kombinzona Art Factory children’s programs, the attendees of which will share alternative, fun and combined forms and will discover Georgian and world history, art, film, film history, filmmaking, photography and editing.

We are eager to give children a hands-on experience,” Gano says.

Along with Alterbridge, many other social projects are planned. Gano and Kakha always discuss the work of Kombinzona in a global context. The brand does

not just manufacture clothing: it is a lobbyist for innovation and happy lifestyles with strong social responsibility and design decisions.

FOR THE DEVELOPMENT OF THE GEORGIAN FASHION INDUSTRY “We are creating an international school for people who want to combine theoretical and practical knowledge with studying fashion marketing and management,” Gano says. “Each student will be able to work in our factory. A vocational school will also be opened shortly afterwards, with students studying high-level manufacturing. Nowadays, there is a serious problem of education in cutting and sewing. We will also teach our students the basics of management so that they can continue their business independently, or at least work in an existing enterprise.”

The plans of the Kombinzona brand are long-term. There will be exhibitions in Paris and Milan in the near future.

From September, the innovative sewing factory is presenting its work in European showrooms.

One of the main concerns of Gano and Kakha is choosing the right team. “My strength is developing and executing the brand concept, while Kakha is strong in terms of management.” The couple aims to create comfortable working conditions for their employees. The most important requirements for employees is that they have their own vision, the ability to make decisions independently and a love of the job.

Kombinizona is currently manufacturing a line of school and semi-sports bags in addition to clothing. In the near future, a relatively luxurious designer line of clothing called “My Grandma,” ethnocultural and 20th century elegant FrancoGeorgian clothes inspired by Georgian history, will enter the market “because love and a vision of fashion came from

ABOUT THE BANK OF GEORGIA GRANTS PROGRAM Bank of Georgia, within the frames of Corporate Social Responsibility (CSR), has been funding a grant competition since 2016 to address social issues, promote employment for people with disabilities and promote social entrepreneurship.

The grant competition aims to address social issues in Georgia through the establishment of successful social enterprises and the development of social entrepreneurship.

Bank of Georgia is one of the first companies to finance social enterprises. So far, a total of 10 social enterprises have been set up and the bank has granted GEL 400,000. The creation of each enterprise is funded with GEL 50,000.

Social enterprises have been created throughout Georgia. A bank-funded social enterprise was created and people with disabilities were employed in Lagodekhi, Nukriani, Tsnori, Kaspi, Batumi, Tbilisi and Zestafoni.

Those social enterprise projects serve a dual economic and social purpose. The economic goal must be a prerequisite for achieving the second, more important goal - social welfare.

By the end of 2019, five new social enterprises will have been created and the bank will allocate an additional GEL 250,000. The sixth grant competition will be announced in autumn 2019, where any NGO or initiative group interested in social issues will be able to submit a social enterprise project to receive up to GEL 50,000 in funding to build a social mission-oriented social enterprise.

Detailed information on the competition will be posted on the following website: www.tree.ge Originally printed in Entrepreneur Georgia magazine.

BUSINESS

GEORGIA TODAY SEPTEMBER 17 - 19, 2019

Geostat Report on Average Monthly Earnings in Q2 2019

BY KETEVAN KVARATSKHELIYA

T

he National Statistics Office of Georgia (Geostat) has presented a report on salaries observed in the second quarter of 2019, according to which, compared to the same timeframe of 2018, the average monthly earnings in Georgia increased by 76.3 GEL and amounted to 1,179.8 GEL. A growth in monthly remuneration was observed in almost all fields, with the highest figures in the spheres of: financial and insurance activities (2,393.6 GEL); professional, scientific and technical activi-

ties (1,900.4 GEL) and information technology and communications (1,806.4 GEL).

Geostat also introduced gender-based data, demonstrating the shifts observed in men and women’s earnings separately.

In the second quarter of this year, the average monthly salary of men amounted to 1,419.8 GEL, whereas the same data for women showed 913.5 GEL, with the growth of remuneration by 85.9 GEL and 69.1 GEL respectively.

The Geostat report shows that the representatives of the business sector enjoyed a growth in salaries of 90.7, with a total of 1,241 GEL, while employees of the non-business sector earned 1,073.9 GEL in average, an increase of 50.1 GEL.

PM Gakharia Responds to New Anaklia Port Accusations

BY ANA DUMBADZE

G

iorgi Gakharia, the new Prime Minister of Georgia, has responded to new allegations from Mamuka Khazaradze, Co-founder of JSC TBC Bank and the founder of the Public Movement Lelo, accusing him of making damaging moves against the construction of the Anaklia Deep Sea Port.

In particular, Khazaradze said that Gakharia, when minister, opposed the development plan of Anaklia Project and "repeatedly talked about it with foreign diplomats as well." He added that the current developments show that the Anaklia contract may be canceled.

The New PM denies the allegations, calling them "unserious," and notes that if Khazaradze has any proof against him, he should show it.

“It is not good when the country’s major strategic project becomes a subject of political gossip and speculation. Anaklia does not belong to any individual, the deep-sea port belongs to the development of the country and we should all show a bit more responsibility when it comes to projects important for the country,” PM said, adding that the Anaklia project needs serious investors, which the consortium does not have at this stage.

"The state has fulfilled all its obligations. No foreigners or important American partners are left in the consortium, and yet people are still talking about somebody’s interests. This is not serious,” he said.

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BUSINESS

GEORGIA TODAY

SEPTEMBER 17 - 19, 2019

British Embassy Launches 'UK Season in Georgia 2019' opened the ceremony, welcoming guests first in Georgian, then in English.

"Over the next three months, across Georgia, we will celebrate the special friendship that exists between Britain and Georgia and we will put in place the building blocks for future friendship," the Ambassador said. "From the 12th century amazing coin of King David the Builder to the very best of 21st century music and dance from Britain: we hope that the UK Season in Georgia will find a place in everyone's hearts.

Delivering a season of this kind is only possible with the help and assistance of the Government of Georgia, represented by the Ministry of Education, Culture and Science, and the help of our founding partners."

The British Council, Adjara Group Hospitality, Wissol Group, Alma, BP, Bank of Georgia and Georgia Capital are involved in the roll out of UK Season in Georgia 2019.

One of the 60 events we can already enjoy is a remarkable coin from the time of King David the Builder on loan to Georgia from the British Museum and now on display to the public for the first time at the Georgian National Museum.

The coin bears the following inscription: 'Lord, aid David, king of Abkhazians, Kartvelians, Rans, Kakhs, Armenians.’

Posters will be on display at bus stops and on buses throughout the capital

BY KATIE RUTH DAVIES

T

he British Embassy and British Council in Georgia were joined by Georgian government officials and numerous British, Geor-

gian and other nationals at the opening ceremony of the 'UK Season in Georgia 2019' in Stamba hotel, Tbilisi, on September 13.

The three-month UK Season is to see 60 different events celebrating the relations between the two countries.

Both the courtyard in Stamba and the area beside Rustaveli Metro were dec-

orated with giant Union Jack letters spelling the word 'GREAT' (and in small printed letters 'Britain & Northern Ireland). Stamba also played host to a delicious healthy buffet made by its team, and special "British" areas- fish'n'chips

wrapped in pages of our beloved Georgia Today, a tea shop serving cakes and fruit, an ice cream parlor and numerous visual and musical displays extolling the virtues of Britain.

Ambassador Justin McKenzie Smith

city showing off everything that makes Britain GREAT. For more news on the 59 other events you can look forward to in the next three months, follow the news with Georgia Today.

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GEORGIA TODAY SEPTEMBER 17 - 19, 2019

BUSINESS

9

Finance Ministry to Start Negotiations on Launching Tbilisi Urban Railway Project TRANSLATED BY KETEVAN KVARATSKHELIYA

T

he Ministry of Finance of Georgia will start negotiations with the European Bank Reconstruction and Development (EBRD) and European Investment Bank (EIB) on launching the Tbilisi urban railway project, - stated Ivane Matchavariani, Minister of Finance of Georgia, at the briefing held after the government sitting, noting that the project was discussed by the government earlier today.

The Minister stated that the project is the initiative of Tbilisi City Hall and represents an important infrastructural junction.

“This is a major project, envisaging development of the urban railway in the SamgoriLilo direction, which is to have nearly seven stations. What's more, within the scope of the initiative, it is planned to establish a connection with Rustavi through the urban railway,” said Matchavariani, noting that the approximate cost of the project is to amount to $174-218 million.

“We know that the EBRD and EIB are interested in this project. At this stage, Tbilisi City Hall has asked the Ministry of Finance to engage in the details of the project. Even though were are considering obtaining loans, this is the project, also enabling gaining grants,” noted the Minister.

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BUSINESS

GEORGIA TODAY

SEPTEMBER 17 - 19, 2019

GCAA Launches 2nd Global Investment in Aviation Summit, 27-29 Jan. 2020

T

he General Civil Aviation Authority (GCAA) has announced the launch of the second edition of its Global Investment in Aviation Summit (GIAS) under the theme ‘Enabling global aviation growth through fundraising and key partnership’. The upcoming summit at Madinat Jumeirah, Dubai, on 27- 29 January 2020, aims at exchanging expertise and knowledge between officials and aviation industry experts and forging partnerships that support the aviation investment sector globally.

The organizing committee of GIAS 2020 announced the details of the summit in the presence of His Excellency Saif Mohamed Al Suwaidi, DirectorGeneral of the GCAA, and Nadia Al Maazmi, GIAS Platform Director, at a heavily attended press conference in the Armani Hotel Dubai, Burj Khalifa, on Sunday.

Reiterating UAE’s commitment to strengthening the aviation industry around the globe, Al Suwaidi, the Director-General of the GCAA, said, “The Authority has achieved remarkable progress by adopting the latest initiatives and through the completion of many innovative projects, including the modernization of its Air Traffic Control Center, to serve the commendable growth of the aviation sector in the country."

Al Suwaidi added: “By organizing this summit, GCAA becomes a global platform for more than 1,200 international participants, including 200 aviation investors, to exchange their views and discuss market trends that can develop mechanisms to channel more investments into the aviation sector and support the global economy and support its growth and sustainability.”

Quoting a International Civil Aviation Organization report, he said that global

passenger traffic is expected to grow 4.3% annually from 2015 to 2035, 0.3 percentage points less than the previous forecast, which accounted for 4.6% annually from 2012 to 2032. The difference is mainly due to the economic growth predicted for China and the Middle East (overriding higher growth in Europe). All route groups involving Central Southwest Asia are among the Top 10 fastest growing , and Central South West Asia – North Asia is estimated to have the highest growth rate at 7.2% annually up to 2035.

Al Suwaidi highlighted the roles of strategic partners, among them the Ministry of Economy, Fujairah Aviation Academy as well as sponsors like Vimana, Indra and Egis, who play a crucial role in making GIAS a unique global aviation event.

Nadia Al Maazmi, GIAS Platform Director, said, “The agenda of the summit also includes a range of workshops, where participants can showcase their projects before potential investors and project managers. The aim is to provide participants with valuable insights they will need to establish their best investment decisions.”

Al Maazmi highlighted other features of GIAS 2020, such as the panel discussions at the upcoming summit, two at the ministerial level, and another involving heads of transport authorities. 'Aviation Optimization Vision and Strategies,' 'Best Government Achievements in Aviation Partnerships and Investments,' and 'Future Airport Investments: Challenges and Good Practices' are among the topics of discussion set for the summit.

GIAS 2020 will continue to showcase its business incubator Intelak that was launched in the previous edition to help startups to become part of the global aviation industry. The training programs and workshops at Intelak provide par-

ticipants with the opportunity to rub shoulders with experts and gain relevant knowledge in the aviation sector on the sidelines of the event, and build longterm relations with key stakeholders.

Al Maazmi gave an overview of the previous edition that saw presentation of investment projects exceeding $200 billion, $50 million estimated project funding, and allocation of more than $150 million in indirect investments. As many as 828 participants, including 80

speakers, eight ministers of state, 120 investors, 35 startups, and 387 international organizations were present at GIAS 2019.

Global Investment in Aviation Summit was launched in 2018 to establish a socioeconomic sustainable civil aviation system. Organised by Strategic Conferences and Exhibitions, GIAS has seen a participation of more than 850 international delegates and 120 investors from 60 countries, including Saudi Arabia,

US, UK, India, Germany, France. For more details visit https://www.gias.ae/ Strategic Exhibitions and Conference: Since its inception in 2000, Strategic Exhibitions & Conference is the trusted partner for many government entities in developing and managing high-profile conferences and events in the UAE. We are associated with Annual Investment Meeting, World Tolerance Summit, Global Investment in Aviation Summit, International Property Show, Dubai Investment Week and many more.

Georgian Wine Agency to Spend GEL 9 mln on Marketing in 2020

BY THEA MORRISON

T

he National Wine Agency (NWA) of Georgia will spend around GEL 9 ($3.04) million on marketing events in 2020, says Levan Mekhuzla, Chairman of the NWA. He noted that compared to the current year, the Agency's marketing budget will increase by almost 1.5 million GEL, though the number of wine exporter countries is limited.

“We are working with almost all partner countries, but more emphasis will likely be placed on the Nordic countries, where marketing activities have been very sporadic so far. We are also going to work strategically with Germany,” Mekhuzla said.

The head of the National Wine Agency says they will not be spending any of their budget on marketing activities in Russia.

"In Russia and the post-Soviet space, aside from the Baltic states, we have not had any marketing activities for the last four or five years and we have no plans to do so next year either,” he said.

Mekhuzla also noted that following the deterioration of Georgia-Russia relations after large-scale June 20-21 protest rallies, after which Russia suspended flights with Georgia and started talks about a new wine embargo, Georgian wines are struggling in Russia.

“These statements and events brought

Image source: itinary.com

the Georgian wine industry cautious expectations and we and our companies are trying to diversify markets in order to be less dependent on one particular market,” he said.

The Head of the Georgian Wine Agency added that the same caution can be

observed from the Russian importers of Georgian wine.

“The situation there is more or less stable but orders for Georgian wine have become less frequent,” he noted.

Last month, Mekhuzla announced that in the first seven months of 2019, Geor-

gian wine export to the United States increased by 60% and to Russia by just 2%. However, about 60% of Georgian wine is usually exported to Russia.

He said in the next 3-4 years, on average 4-5 million bottles of wine will be exported to the American market, which

will be an important step forward in replacing the traditional markets.

“We are committed to double-digit growth in the US, South East Asia and Europe. So far we have a 60% increase of wine export to the US and I hope we will finish with a 50% increase when the year is over,” he noted.

Mekhuzla says most Georgian companies find it easier to operate in a market where awareness of Georgian wine is high, but that many are starting to rethink their strategies.

"Risks are being reevaluated and there are some companies that are making a special effort to replace traditional markets or explore new ones,” he added.

During the last seven months of 2019, 47.2 million bottles of wine were exported to 47 countries worldwide, 4% more than the same period in 2018. Exported wine income amounted to $114.2 million, up 6% on last year.

In addition to this, Georgia exported about 86.2 million bottles of wine to 53 countries in 2018, which is a record high in the last 30 years. Last year, Georgia generated $203 million from the sale of wine abroad.

Revenue increased by 20% from 2017, while the volume of exports increased by 13%, says the Georgian National Wine Agency.

Georgia exported 20 million bottles of Georgian brandy (+9%) and 422,000 bottles of Chacha (+47%) abroad in 2018. In total, Georgia sold $306.5 million worth of alcoholic beverages in 2018, including wine, brandy, chacha and more.

POLITICS

GEORGIA TODAY SEPTEMBER 17 - 19, 2019

11

US & China Gear Up for Ideological Warfare

BY EMIL AVDALIANI

W

ithin light of growing US-China competition and problems surrounding Anaklia, Georgia's positioning as the US key strategic partner in the region might come under question. Any volatility on the future of Georgia's Black Sea ports will hinder prospects of greater collaboration between Tbilisi and Washington. This would in the long run open the doors to Chinese investments, limiting America’s strength in the Black Sea. Current developments in world politics have clearly shown that the 21st century will be more or less a geopolitical contest between the two giants, China and the US. Many still compare China-US competition to the Cold War of the 20th century between Americans and the Soviets. The scale of the China-US contest is far larger than the 20th century example by involving technological, commercial and military competition. The Soviets could not compete in trade and technologies, while the Chinese nowadays are almost as strong as the Americans.

Thus, these confrontations are of quite different scales. But there was one interesting aspect in the Soviet-American cold war which is rarely mentioned by scholars, analysts and politicians – the ideological dimension.

The Americans, following the end of World War II, started increasingly looking at the Soviet challenge as an ideological battle. It was not merely about democracy being against communism, but more as a free world against oppression. Behind this thinking was a methodical strategic planning, military strata-

gems as well as effective alliance building abroad. But it was nevertheless important to cushion all of that into the concept of an ideological crusade. It helped the US master its allies across the world and explain that any meandering would lead to their destruction by the Soviet state’s non democratic institutions.

Ideology is important and it has always

been so in history. Looking back at the post-WWII years, it is visible how gradually the American political leadership was moving from hopes of reaching possible understanding with Stalin to recognizing that a showdown was imminent.

Once this realization happened, an ideological cushion was prepared and it became difficult to stop the US. Back to the modern US-China compe-

tition, politicians and analysts in the West talk about possible consensuses between the two powers on trade and other issues. However, from time to time many even in the US itself fail to grasp how deep the differences between Washington and Beijing are, which limits exponentially the potential for a wide ranging agreement.

What is missed is the various hints

coming from the US officials and the documents from American state agencies that Washington is starting to regard China's rise and the challenge it poses the US-led world increasingly within the ideological boundaries.

There is a certain build-up in that sense, and it is likely that the competition with China will be framed as an ideological one in the coming years. As it was during the Cold War period, an ideological showdown will help the US better clarify its aims and ideas to its allies in the years that have seen a relative sluggishness in NATO and the west's stance on global threats in general.

The ideological setup will also help framing the American public's perception, master the country's resources and perhaps reinvigorate the political class' commitment to the transatlantic and Asia-Pacific allies.

At the same time, the ideological frame instituted by the US will likely be responded to by the Chinese side. As the Soviets did, Beijing will follow suit and frame its own worldview more openly and antagonistically (which it has so far explicitly avoided doing) towards the US. The ideological framing of the competition will also be the last straw which would lead the two countries into the kind of war the Americans and Soviets had. However, while the US in the 20th century sat and waited till the Soviet Union collapsed, simply because the Soviet system was destined to fail economically from the very beginning, a similar expectation would not work for China.

Thus, it is important to watch closely the various statements and reports coming from both Americans and Chinese and how their respective official language evolves into religious, nearly canonical pronouncements of Good against Evil.

CULTURE

Tbilisi Photography & Multimedia Museum Opens at Stamba Hotel

O

n September 16, Stamba welcomed the opening of the Tbilisi Photography & Multimedia Museum.

The museum is the first institution in Georgia and the South Caucasus to focus on contemporary imagery through photography, video and new media.

The museum was created as part of the ‘South Caucasus Photography Hub for Education and Innovation’ funded by the Swiss Cooperation Office in the South Caucasus. A space of 950 square meters has been provided by Adjara Group at Stamba

Hotel, the renowned historic publishing house converted into a design hotel.

The key purpose of the museum is to use visual art across the region, while encouraging further development of civil society and fundamental values.

The Tbilisi Photography & Multimedia Museum opened with a video installation by a duo of French artists, Vincent Moon & Priscilla Telmon, called ‘Unus Mundus: Rituals and Trances.’

The installation was accompanied with live music. Find out more in this Friday’s GT.

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