BUILDING COMPETITIVE industries IN Moldova CEED Final Report

U.S. Agency for International Development 1300 Pennsylvania Avenue, NW Washington, DC 20523 Tel: (202) 712-0000 Fax: (202) 216-3524 www.usaid.gov

Month Date, Year This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics International Inc. 4 BUILDING COMPETITIVE industries IN MOLDOVA Moldova CEED Final Report

USAID Contract No. 121-C-00-05-007111

The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CEED CONTENTS

OVERVIEW...... 1

THE PEOPLE: BUILDING A SKILLED WORKFORCE...... 3

THE PRODUCT: IMPROVING THE QUALITY, MANUFACTURING, AND MARKETING OF GOODS...... 13

THE CONNECTIONS: BUILDING STRONG ASSOCIATIONS AND NETWORKING REGIONALLY AND ABROAD...... 31

THE MONEY: ACCESSING FINANCE TO GROW COMPANIES. . . 59

Lessons learned ...... 65

FRONT COVER: An Intercentre Lux seamstress uses methods she learned from a CEED consultant. In just three months, after participating in CEED’s productivity enhancement program, the company saved 24,800 person-hours (the equivalent of 13 full-time employees), greatly improving efficiency. CEED

INSIDE FRONT COVER: In May, even before appear on the vines, there is much to be done at Et Cetera winery. Et Cetera is one of a handful of wineries that joined to form the CEED-supported Moldovan Small Producers Association. The association aims to improve the business environment for small-scale winemakers. CEED / ANGELA POTTER

BACK COVER: CEED’s support enabled Lion Gri winery to increase CEED’s assistance enabled Asconi vineyards to improve its production of premium and differentiate its markets. As a techniques in the 2008 and 2009 harvest seasons. result of improved quality, exports of dry wines increased from 15 Asconi sold wines from these vintages to a major Czech retail chain to 20 percent of total production. The winery won several medals at and a distributor in . the 2008 ExpoVin Moldova competition. CEED / ANGELA POTTER

CEED Contents iii Overview

Nearly 20 years after the Soviet shows and association-building Union, Moldova’s wine, textile and proved essential to growth; and apparel, and information commu- how it helped free up working nication and technology (ICT) sec- capital for businesses.While no tors had gained stability and market single formula exists to make an share that readied them for growth. economy more competitive, these The United States Agency for In- sometimes small but important ternational Development (USAID) infusions of technical assistance sought to foster further growth lifted businesses over an eco- by launching the Competitive- nomic hurdle that, in aggregate, ness Enhancement and Enterprise comprised an impressive gain. In Development (CEED) project in numerous cases, CEED’s assistance 2005. CEED’s goal was to prompt enabled people working in these new investment and generate em- industries to experience, or at least ployment by forming competitive forecast, growth they never had clusters With a budget of nearly $8 imagined. In total, CEED assisted million and a five-year life span, 115 companies that recorded CEED aimed to build capacities growth of 3,500 full-time equiva- within these priority industries at lent jobs and $84 million in sales. the firm level while assisting policy Managed by Chemonics and its and regulatory reforms to promote partners, Crimson Capital Cor- investment and bolster Moldova’s poration and Dexis Consulting burgeoning economy. Group, CEED’s design followed the private sector competitiveness To tell the story of how CEED program area and the private sector enhanced the overall competitive- productivity program element of ness of the country’s three target the Foreign Assistance Framework. sectors, this final report details The project’s complementary busi- results through the lens of four ness development and business themes that emerged from project environment components ensured activities: the people, the products, that industry competitiveness the connections, and the money. would be advanced at the policy The report illustrates how CEED and firm levels. Each component helped developed a strong and carried several key result areas capable information technology around which the project grouped (IT) workforce; how it enhanced activities. The results are summa- efficiency and branding to pro- rized in this report and detailed Moldova is at a crossroads geographically, politically, and duce better products and increase around this framework in the economically. Positioned between Western Europe and the CIS, sales and jobs; how its support for quarterly and annual reports. Moldova has the advantage of geographical proximity to both stable but demanding western markets and growing but risky making connections through trade eastern markets.

iv Contents CEED / ANGELA POTTER Overview 1 CHAPTER ONE The People: Building a Skilled Workforce

Developing a skilled workforce, Turning to successful models in particularly in the ICT and textile neighboring countries, includ- sectors, proved an important ing , CEED helped fill driver for economic growth dur- the education gap in Moldova by ing CEED’s assistance. Acquiring introducing three major, vendor- new skills allowed workers in based curricula in colleges and these industries to take advantage high schools: Cisco Certified of technologies that make busi- Networking Associate (CCNA) nesses faster, more efficient, and, training for universities, the ultimately, more competitive. Microsoft IT Academy, and the Cisco IT Essentials (ITE) cur- ICT riculum for high schools. More As one of the fastest-growing than 500 students have enrolled sectors in Moldova, the ICT in these programs, which offer a industry demands more skilled way to gain practical ICT skills labor than the country can sup- before entering the work force. ply. From 2003 to 2008, ICT exports jumped from $24 million Cisco CertifiedN etworking to $114 million. IT services alone Associate Program Readies increased from $1.2 million to University Grads for IT $26.3 million. High salaries and Jobs the relatively short time (three A study commissioned by CEED to five years) needed to enter the found IT networking skills in workforce makes ICT an at- short supply in Moldova. Nearly tractive sector for young people. 70 percent of managers inter- However, educational programs viewed for the study indicated are not up to the needs of the that networking skills were essen- market, limiting job opportuni- tial for ICT companies, and 50 A student at the high school in the village of Taraclia in Causeni ties and sector growth. percent believed that educational rayon disassembles and reassembles a computer as part of the Cisco IT Essentials program. CEED helped launch the program in 20 rural high schools throughout Moldova.

CEED / ANGELA POTTER The People: Building a Skilled Workforce 3 institutions needed to improve threats, and understand wireless their curricula in this area. networking concepts and termi- nology. Students who complete In response, CEED helped Cisco the course may take an exam in expand its Cisco Networking English to obtain the internation- Academy (NetAcad) so students ally recognized CCNA certificate. could obtain CCNA certification They may also enroll in advanced from three Chisinau universi- Cisco training through DNT ties and gain a competitive edge Association. in the labor market. The project started by sponsoring a training- To date, 51 instructors have been of-trainers program in partnership trained to lead Cisco CCNA and with Cisco’s Regional Academy ITE classes and 360 students in Moldova, DNT Association. (including 107 women) from The association trained nine new 14 academic institutions sup- CCNA instructors from the three ported by CEED have enrolled. partner universities. The College These Moldovan students have of Finance and Banking opened joined 100,000 students in more its academy in 2008; the Free In- than 130 countries taking Cisco ternational University of Moldova courses through 8,000 academies.

and the Technical University Cisco Systems reported double- CEED / ANGELA POTTER of Moldova opened academies and triple-digit growth in Mol- Andrei Ghergelas, who earned his Cisco CCNA certificate, studies dova’s NetAcad program between with a classmate at the Cisco Academy in Chisinau. He applied the in 2009. To date, eight instruc- skills and knowledge he gained from the certificate program to his job tors have been trained and 119 2008 and 2009, which it credits as an engineer with a local telecommunications firm. The academy students have enrolled in CCNA to CEED support. is fully equipped with materials, hardware, and software, providing certification programs. students the hands-on experience needed to make them marketable. Microsoft IT Academies To raise public awareness of Cisco Take Off with CEED’s networking courses, motivate Assistance academy at ASEM. Taking the determined an appropriate tuition students, and ensure continuation Microsoft technologies serve as lead on planning and handling lo- that would allow the academy to of the course offerings beyond the the platform for doing business gistics, Mr. Tutunaru determined operate sustainably. To prepare project’s life span, CEED built a worldwide, but there were few that the university had everything for a fall launch, CEED acceler- sustainable framework, includ- certified Microsoft profession- it needed to launch an academy ated the process of applying to ing organizing periodic NetAcad als in Moldova until recently. In except one major requirement: Microsoft for academy status by meetings, developing a NetAcad January 2008, to respond to this Microsoft-certified instructors. agreeing to cover the first annual Web site, and participating in need, CEED began working with Certification is an expensive fee of $1,000. CEED also helped Cisco’s annual networking skills Academy of Economic Studies and lengthy process. Although the university begin building a competition, NetRiders. CEED of Moldova (ASEM), a bustling Mr. Tutunaru identified several library of course materials and also purchased basic laboratory Chisinau university of more professors interested in pursu- create promotional materials to equipment for partner institutions than 15,000 students, to lay the ing certification, a faster solution help attract students. as they began teaching Cisco foundation for the country’s first was required so he could open an courses. Microsoft IT Academy. academy during the 2008-2009 On August 26, 2008, the univer- school year. With CEED’s as- sity launched the program with The curriculum, which is the first After participating in a CEED- sistance, he turned to the private three certification tracks: systems level of Cisco networking tech- sponsored trip to a successful sector for instructors who would engineer, web developer, and nologies training, teaches students Microsoft IT Academy in Roma- serve for a few years while faculty Windows developer. To date, over to install, configure, operate, nia in July 2008, ASEM Associ- studied to obtain certifications. 90 students enrolled in Microsoft- and troubleshoot medium-sized ate Professor Sergiu Tutunaru courses and two in-house instruc- networks, mitigate security championed the effort to open an Mr. Tutunaru and CEED staff tors were trained. Participating prepared a draft curriculum and students may now choose courses

4 The People: Building a Skilled Workforce The People: Building a Skilled Workforce 5 at the College of Finance and that CEED helped introduce Banking, which houses the pro- at the university level, the ITE pro- gram, by developing a sustainable gram also required certified teach- support model and a financial ers. Over the course of two years, mechanism for the ITE program. CEED enlisted 25 teachers from The program, which started at six 14 high schools (10 located outside pilot schools in September 2008, of Chisinau) and two colleges, introduces essential computer Microelectronics and Informatics. hardware and software skills that The teachers participated in a two- entry-level ICT professionals month distance and classroom need. The curriculum covers the training led by the DNT Associa- fundamentals of PC technology, tion. All 25 graduated. networking, and security. During the course, students identify and The College of Finance and describe computer components, Banking’s Grigore Vasilache, who assemble a computer system, serves as the initiative’s master install an operating system, and instructor and coordinator, said use system tools and diagnostic he’s noticed much progress since software to troubleshoot issues. the program launched in 2008. “Students can already help their

CEED / ANGELA POTTER IT Essentials teacher and tech- friends and neighbors with com- More than 100 students at Moldova’s first Microsoft IT Academy nology champion Pelaghia Traci puter skills.” As of July 2010, 43 used new textbooks provided with CEED support. The IT Academy ITE instructors had been trained is hosted by the Academy of Economic Studies of Moldova (ASEM) understands the demand for such in Chisinau. skills in rural areas. Until recent- and 241 students had participated ly, she was a one-woman resource in newly implemented optional for all computer issues for the ITE courses at the institutions village of Taraclia in Causeni that joined the Cisco NetAcad. rayon, where she teaches the IT ranging from business essentials percent) demonstrates the effec- Essentials program at the local APPAREL AND TEXTILES (Excel, Word, and PowerPoint) tiveness of training provided by high school. Ms. Traci also helped Training Builds Skills and to advanced systems engineering the local academies. set up Taraclia’s first Internet café, Business Savvy of Own- (planning, implementing, and funded by the Soros Foundation, label Manufacturers and maintaining a Microsoft Win- Cisco IT Essentials a few years ago. Through her Retailers dows server). All of these skills are Program Introduces work, she has brought much- CEED recognized that it would in high demand in Moldova and Technology Skills to Rural needed ICT skills to her village not be able to reach everyone in worldwide. Communities and inspired the community to the textile and apparel industry Moldova’s rural communities embrace new technologies and and that merchandising and busi- In addition, CEED introduced a have historically lacked access learn valuable skills. “It’s hard ness development can be chal- voucher to cover the cost of cer- to technological training and sometimes when people ask me to lenging throughout the industry. tification exams for students who advancements. In fact, many connect two computers between As a result, it sponsored seminars successfully completed Cisco and still lack access to the Internet or houses. I don’t have time. Now including a four-day training Microsoft courses. The exams, basic computing. To bridge the I can ask my students to do this. focused on moving companies given in English by the vendors, urban-rural divide, CEED helped It’s very beneficial for the whole toward selling products with high cost between $70 and $250, and launch Cisco’s ITE program in community because now the added value, a three-day seminar students’ confidence in taking 20 rural high schools throughout students can help people solve on fashion merchandising, a one- them is typically low. To date, 11 Moldova. computer problems.” day seminar on color forecasting students have taken advantage for winter 2010 and another for of the voucher program. Their CEED assisted participating Much like the Cisco Certified summer 2011, and a three-day comparatively high pass rate (64 schools and the Cisco Academy Networking Associate program seminar on industrial merchan-

6 The People: Building a Skilled Workforce The People: Building a Skilled Workforce 7 dising and retail management vita, and Saltoianca applied the and Vistline) purchased CAD sive analysis of each company’s during the economic downturn. design principles they learned software and invested $30,400 in current financial situation and Participants applied what they to prepare collections for the implementing it. Each received recommended further improve- had learned in a number of October 2009 Interselection assistance in installing the soft- ments. The on-site consultancies ways. A total of 145 participants exhibition in Paris. CEED sup- ware, which is expected to reduce also helped these companies select attended and reported strong ported their participation. by two-thirds the time required several key indicators of financial results, including: to create patterns. performance in addition to those Intensive Training Prepares that are common for all compa- • After the June 2008 fashion Sewing Operators to Work Training Boosts Financial nies, such as sales, investments, merchandising course, the with Computer-assisted Management Skills of and third-party financing. Olga Ceban retail store in the Design Software Apparel Personnel Jumbo Commercial Center in During the September 2009 Information gathered from WINE Chisinau was reorganized to Textillegprom apparel exhibition CEED client firms reveals that, Breaking into new markets improve traffic flow. The store in Moscow, Russian design soft- when financial needs arise, ap- requires knowledge of the market also rearranged products and ware firm CADRUS noticed that parel companies tend to reinvest and marketing skills. CEED used color blocking to improve Moldovan own-label companies profits rather than obtaining bank organized a series of trainings the look of the store. These were still executing pattern design loans or other third-party financ- to help Moldovan winemakers techniques and investments in manually. Because these com- ing. Historically, this practice has acquire this knowledge. To assist promotion helped to increase panies must create large product limited company growth. winemakers in entering the Ger- sales more than 50 percent over lines, manual pattern design slows man market, CEED sponsored a the summer of 2007. the process significantly. CEED decided to help four ap- seminar conducted by Herman parel companies — Codru, Olga Recknagel of BEVCON consult- • Following the fashion mer- CADRUS, a partner to the Ger- Ceban, Portavita, and Tricon — ing in January 2008. The seminar chandising course, Vistline man computer-assisted design improve their financial manage- focused on the market, products, employees reorganized prod- (CAD)-based software GRAFIS, ment skills by teaching employees prices, distribution, and market- uct layout, organization, and organized a one-day promotional how to make debt (third-party ing and included a visit to Moldo- lighting in the company’s retail training in Chisinau for Moldo- financing) work in their favor. va Wine Guild member wineries outlets. Along with improved van apparel companies a month to help employees prepare for the product and pricing policy, after Textillegprom to demon- CEED selected a short-term ProWein trade fair in Düsseldorf. these changes resulted in sum- strate the benefits of GRAFIS. consultant with practical experi- Mr. Recknagel also evaluated the mer sales nearly tripling from The well-received workshop ence in financial management to wineries’ marketing materials and 2007 to 2008. pointed out the value of using this lead the training. An initial group price lists. As a follow-up, guild software to increase speed and training included lessons on cash member wineries presented their • Infinity, Intercentre Lux, Mo- efficiency. flow management, financial lever- wines at an exclusive press event, bile SRL, Noustil, Olympus, aging, and financial ratios. CEED Meet the Press – Wines of the Rumfelsia, Saltoianca, Steaua Following up on this show of then provided on-site support to World & German Cuisine. Reds, Tricon, Vestra, and interest, CEED worked with each company to establish and Vistline employees attended CADRUS to organize more implement financial management Using the same format, CEED the seminar on selling products intensive, specialized training on practices, with special focus on invited U.S. wine expert Lou with high added value. Their the use of CAD software for pat- debt management. As part of this Capitao and a British Master of new collections were showcased tern design. The training for 12 program, basic financial manage- Wine, Caroline Gilby, to conduct at the February and Septem- interested companies and higher ment software was installed in a two-day seminar on U.S. and ber 2009 and February 2010 education instructors took place each company. UK markets for guild members Federal Trade Fair for Apparel in May 2010. CEED and the the following month. The semi- and Textile (Textillegprom) participating companies split the Participating companies now nar focused on sales and market- exhibitions in . CEED cost of the 15-day course, which have the proper systems in ing. About 25 people from seven supported their participation. focused on developing practi- place, and their trained person- wineries attended. According to cal skills for using the software. nel have the skills to conduct the participants, the topic and the • Artizana, Iuvas, Mobile SRL, After the training, three ap- financial analyses. In addition, materials presented were highly Odema, Olga Ceban, Porta- parel companies (Iristil, Vestra, CEED conducted a comprehen- relevant.

8 The People: Building a Skilled Workforce The People: Building a Skilled Workforce 9 CHAPTER TWO The Product: Improving the Quality, Manufacturing, and Marketing of Goods

In 1991, independence from the WINE spurred Moldova’s CEED Helps Lift Wine transition toward a free market Industry Over Economic economy. For industries long Hurdle One Bottle at a shaped by the Soviet era’s model Time of mass production and a com- With its moderate climate and mand economy, the transition fertile soil, Moldova is one of a signaled a shift toward innova- handful of European wine-pro- tion, flexibility, and competitive- ducing countries able to produce ness. However, during the first a wide range of wine styles, espe- decade of independence, many cially popular white varietals such industries still produced products as . In the growing geared toward the Soviet market. areas, rolling hills and winds from Moreover, the government lacked the Black Sea basin protect vines promotion plans for its industries from deep frost in the winter. and maintained policies and regulations that hampered the Despite the ideal climate, the business environment. As a result, country’s wine industry has not Moldova’s industries — and always flourished since the Da- therefore its products — were cian people discovered how to slow to enter the competitive turn grapes into wine 4,000 years global market. CEED’s approach ago. The Greeks and Romans to increasing sales and expanding loved wines from this region and markets focused first on enhanc- championed the tradition for ing product quality and then on centuries. The Muslim Ottoman creating brands that would gain Empire, forbade wine, however, the attention of new markets. and the region’s industry suffered for centuries more. The mid- Lion Gri’s winemaker, Tatiana Climco, demonstrates how oak planks fit together inside steel barrels, eliminating the need for expensive oak barrels. She learned the technique from CEED-supported winemaker Luca Zavarize.

CEED / ANGELA POTTER The Product: Improving the Quality, Manufacturing, and Marketing of Goods 11 Geographic Distribution of CEED Activities throughout Moldova The industry also suffered from of the Moldovan Wine Sector the 2008 global economic crisis noted, “while there may be many and strengthening of the Moldo- sales and marketing challenges van lei, which made Moldovan ahead for Moldovan wineries to wines less competitive in export overcome, there is none greater markets and reduced profit than to adapt its thinking to a Soroca margins. Production dropped market that views success as the significantly from 2005 levels ability to offer the best qual- Rascani during the 2006-2009 period, ity product for the money in a Soldanesti when interest rates on loans rose, consumer-driven wine style.” U K RAIN E further eroding the wine indus- Balti Rezina try’s profit margins. International wine experts noted that the quality of Moldovan Recognizing the challenges in wine severely hampered the Orhei the industry, CEED targeted industry’s ability to compete glob- Dubasari its assistance in three areas to ally. Impediments included lack Ungheni improve the quality and branding of knowledge about and access to Calarasi Straseni of Moldovan wines, with the ulti- modern winemaking tools and mate goal of helping the industry practices; improper wine pro- Chisinau diversify to broader markets: duction, storage, handling, and quality control procedures and; Ialoveni Tiraspol R O MANI A Hincesti • Training and building capacity deficiencies in canopy manage- Tighina in effective winemaking skills, ment and harvesting. Causeni practices, and technology Stafan Voda CEED’s hands-on work with • Technical assistance in market- winemakers to improve quality ing and building the image of spanned all five years and had a Basarabeasca high-quality wineries significant impact on the assisted wineries as seen through increased • Development of a new, com- sales, higher quality wines, and Apparel and Textile petitive vision and strategy for expanded export markets (see the Moldovan wine sector table, page 14).

ICT Cahul Technical Support for The project launched its quality Improving Winemaking enhancement efforts in 2006 at Skills Salcuta and Lion Gri wineries, Basarabeasca When the CEED project began which had recently updated their Wine in 2005, many Moldovan wines equipment and were eager to differed from the styles in de- improve the quality and styles of mand in Western markets. Wine their wines in line with Western producers were unaware of how to consumers’ preferences. CEED control -growing to deliver tapped Italian winemakers Luca 1980s brought Mikhail Gorbach- wines — ostensibly because of the best product for the money Zavarize and Pier Giorgio Berta ev’s anti-alcohol campaign, which quality issues. The ban served as and effort. When Russia’s 2006 to help the wineries set up equip- devastated the industry again. a wake-up call for the industry as wine ban prompted producers to ment for collecting and crushing winemakers realized they could look for commercial opportunities grapes properly and to select high- The most recent blow came in no longer rely on Russia as their elsewhere, it was clear that they quality yeast and other inputs for 2006, when Moldova’s top mar- main client and that they must must re-evaluate product quality. the 2006 harvest. Mr. Zavarize ket, Russia, banned Moldovan start selling to new markets. USAID’s Pre-Strategy Assessment and Mr. Berta also oversaw the

12 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 13 CEED Technical Support to Wineries fermentation process, introducing glass, uncluttered design, simple Winery Technical Assistance Provided a number of important changes to language, and brand names that Asconi • Monitoring grape maturation winemaking practice to yield the are easy to read and understand. CEED assistance provided: 2008–2009 (two harvest seasons) • Monitoring quantity and quality of yields new wine styles. • Planning for harvest The advanced winemaking technology implemented by CEED consultant Acorex Wine Holding undertook • Guidance on crushing and fermentation Luca Zavarize created new opportunities for Asconi. Sales to the Czech • Storage and bottling procedures In 2007 and 2008, the project an intensive effort to understand Republic increased to almost two million bottles by the end of September • Selection and use of equipment 2008 — a 30 percent increase over the previous year. Wines produced un- began providing technical as- these preferences and rebrand its • Winery layout der Mr. Zavarize’s guidance were selected by a major Czech retail chain, and sistance to six additional wineries: wine accordingly. A large company the winery began a relationship with a distributor in Poland with an initial Asconi, Basarabia Lwin-Invest, consisting of several wineries, shipment of 45,000 bottles in November 2008. Doina Vin, Bostavan and Purcari Acorex was one of two Moldovan Basavin • Guidance on crushing and fermentation (owned by Bostavan Holding, wine companies that had success- CEED assistance provided: 2007–2009 (three harvest seasons) • Storage and bottling procedures • Selection and use of equipment which bottles the production of fully penetrated the UK market. On the recommendation of CEED consultant Pier Giorgio Berta, Basavin • Winery layout invested €80,000 in four tanks for producing red wine, two for grape process- both wineries), and Vitis Hincesti. Through a direct mail catalog, ing, and 12 for storage. It also relocated existing refrigeration units to make As with Lion Gri and Salcuta, the Acorex garnered a modest but them more accessible. Basavin increased its portfolio and expanded sales to international winemakers worked stable $600,000 each year from its new markets in the United States and Western Europe, selling about 30 per- cent of its production (150,000 liters) of high-quality wines produced under with local counterparts on every UK sales, which supplemented its the supervision of CEED’s winemaking consultants. About 20 percent of the step from monitoring the ripen- largely Russian export portfolio. production is aging in oak barrels. ing grapes through planning for Bostavan Holding (Bostavan and Purcari) • Monitoring grape maturation harvest and overseeing the grape The company, which employed CEED assistance provided: 2007 (one harvest season) • Irrigation of vineyards crushing and fermentation to 420 people, tapped UK wine dis- • Monitoring quantity and quality of yields Following the recommendations of Mathias Pellissard, a French winemaker • Planning for harvest storage, treatment, and bottling. tributor PLB to assist in launch- hired by CEED, Bostavan Holding invested €1 million in updated equipment • Guidance on crushing and fermentation ing additional sales in the UK. (refrigeration units, vacuum presses, crushers, and laboratory equipment). • Use of additives With the use of the new equipment, processing capacity increased to 1,000 As a result of the technical as- However, PLB said a marketing • Use of racking equipment tons for Purcari (up from 700 tons) and 15,000 tons for Bostavan (up from • Equipment inspection and maintenance sistance provided by the CEED effort would require a new um- 12,000 tons). Bostavan launched a new premium brand, DAOS. • Winery and staff management consultants, most participating brella brand for the wines. With

Lion Gri • Pest management wineries improved their manage- assistance from CEED, Acorex CEED assistance provided: 2006–2007 (two harvest seasons) • Recommendations for new varietals ment of winemaking and storage secured the services of a specialty • Guidance on crushing and fermentation CEED support, including technical advice from Pier Giorgio Berta, enabled processes; learned about new wine brand design firm, Amphora • Use of oak for aging Lion Gri to increase production of premium wines and differentiate its mar- • Cleaning, sanitation, processing, and storage winemaking technologies and Designs. Amphora, with Acorex kets. As a result of improved quality, exports of dry wines increased from techniques (such as setting correct management and PLB, developed 15 to 20 percent of total production. The winery won several medals at the 2008 ExpoVin Moldova competition. fermentation temperature param- several options for a brand iden- eters and using adequate yeast tity, from which the final choice, Salcuta • Pest management CEED assistance provided: 2006–2007 (two harvest seasons) • Recommendations for new varietals and enzymes); improved their use “Taking Root,” was selected. • Guidance on crushing and fermentation Salcuta emulated internationally recognized styles to produce younger, fruitier of storage and bottling equip- • Cleaning, sanitation, processing, and storage wines similar to those made in Australia, California, and Chile. Immediate ment; and enhanced techniques To ensure the new brand was results led to new investments, better wines, and higher sales. The winery for blending and producing new backed by strong operations, invested €130,000 in a new refrigeration unit, which will enable processing of 2,000 metric tons of grapes — up from 370 tons. Salcuta launched a high- wines. Even more important, they CEED hired a wine specialist to quality brand NOI, in Poland and the Czech Republic, where sales totaled acquired a new, integrated and in- evaluate Acorex’s winery and rec- €100,000. The winery’s 2007 2007 took a gold medal at the ternational vision of winemaking. ommend facilities improvements 2008 ExpoVin Moldova competition. based on practices that wine Vitis Hincesti • Monitoring grape maturation CEED Raises Profiles buyers from the UK would expect CEED assistance provided: 2008 (one harvest season) • Monitoring quantity and quality of yields • Planning for harvest Through Brand-building from a supplier. Following the winemaking assistance provided by Luca Zavarize, Vitis • Guidance on crushing and fermentation and Management Hincesti won a tender organized by the Real supermarket chain in Romania • Storage and bottling procedures for 60,000 1.5-liter bottles per year. Bottled under Real’s private label, the The Moldovan wine industry’s The brand was nominated for • Winery layout wines began shipping in February 2009. The winery anticipates that the • Equipment inspection, maintenance, and cleaning narrow focus on Russia as its the prestigious Drinks Business contract will be extended to Germany, Poland, and other countries where Real operates. main customer limited funda- Design and Packaging Award in mental knowledge about Western 2007 and was launched at the preferences and trade practices, ProWein exhibition in Germany including an emphasis on heavy in March 2007 and the London

14 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 15 Wine Fair in May 2007. While • To help a core group of soft- a change in account manager ware companies increase their resulted in PLB losing interest global competitiveness and in expanding UK sales, Acorex enhance their software devel- continued to promote Taking opment practices by introduc- Root in several countries, in- ing them Capability Maturity cluding Sweden, where it now Model Integration (CMMI), sells 100,000 bottles per year, an internationally recognized the United States (10,000 bottles software process improvement per year), and Belgium (5,000 to model, and IT Mark, which 6,000 bottles per year). aims to certify the quality and maturity of the processes of ICT small and medium technology ICT Companies Get companies Efficient with Software Process Improvement • To put Moldova on the world- Program wide software process improve- The IT industry is one of the ment map highest-paying and fastest-grow- ing in Moldova. Over the last 10 • To stimulate the development

years, scores of technology and of a software enterprise “clus- CEED software development compa- ter” in Moldova Andrey Aidov, director of Q-Systems, reviews new software with nies have emerged and now offer a colleague. Q-Systems is one of three companies that earned IT Mark certification with CEED support. The certification strengthens innovative products and services Industry experts worldwide planning and development capabilities and improves communication domestically and regionally. Bus- consider CMMI, developed by and interaction with clients. tling with ideas and innovation Carnegie Mellon University’s but lacking knowledge of inter- Software Engineering Institute, national best practices, many of a leading certification. However, business processes, and informa- throughout the European and these companies work hard, think many IT businesses view CMMI tion security. Within those areas, Eurasian region, and with sub- competitively, and stand ready for as difficult to obtain and expen- IT Mark strengthens planning contractor ESI Center Bulgaria, growth. sive to implement. and development capabilities, which delivers IT Mark and improves communication and in- CMMI courses in the region. Recognizing their potential, The European Software Institute teraction with clients, and reduces CEED set out to help these busi- (ESI) developed the more accessi- development errors and delivery CEED launched the program for nesses expand internationally ble IT Mark certification targeted times. It also allows interested local businesses with a workshop through the adoption and certi- to IT companies. The certifica- small and medium-sized enter- in February 2007, bringing in fication of best practices. To that tion covers three main categories: prises to continue on the path ESI Center Bulgaria to introduce end, the project had three goals: software process improvement, toward CMMI once a culture of CMMI and IT Mark to more software process improvement has than 20 software engineers from taken root. 14 companies. ESI Center Bul- garia senior staff introduced the To bring IT Mark and CMMI concept of process improvement, Vendor-based IT Education Programs Supported by CEED certification to Moldovan soft- highlighting the effective use of Course Inception Schools offering Students Students graduated Instructors ware development companies, CMMI and IT Mark by soft- program enrolled to date to date trained to date CEED teamed with the USAID ware companies in southeastern Microsoft IT Academy 2008 1 93 93 2 Regional Competitiveness Initia- Europe — particularly Bulgaria, Cisco CCNA training 2007 3 119 53 8 tive (RCI), a funding partner that Romania, and Serbia — whose encourages cooperation among experiences are relevant to Moldo- Cisco ITE 2009 11 241 167 43 USAID missions and projects van software developers.

16 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 17 After the workshop, CEED and and increase efficiency. QSystems what clients. It allows us trans- APPAREL AND TEXTILES ESI Center Bulgaria offered improved its predictability indica- parency. We can now close the Apparel Industry Gains program and financial support; tor (which measures the reliability project faster.” Ground with CEED’s RCI provided additional finan- of its projections of the time and Productivity Enhancement cial assistance. Three companies resources a given job will require) As a result of improved efficiency, Program — QSystems, Alfa Soft, and from 25 to 70 percent. The com- F-Line Technologies’ business While the process of stitching has Deeplace — committed to the IT pany hired a quality manager to increased quickly. “We expanded remained unchanged for decades, Mark certification program and increase staff skills and said it has our company almost two times,” new technologies and methodolo- its three-part process: greater confidence in its ability to Macari said. “The volume of our gies have advanced the global ap- compete in new markets. contracts grew.” parel industry considerably. New 1. IT Mark awareness and train- procedures differentiate successful ing. Companies participated Building on this success, CEED F-Line Technologies and Alfa apparel industries by lowering in an introductory IT Mark and ESI Center Bulgaria con- Soft found the program so suc- costs, raising quality, and speed- workshop conducted by ESI ducted another round of CMMI cessful that they pursued IT ing production. Center Bulgaria. Following and IT Mark seminars in 2008. Mark Premium, the next level of the workshop, the center made Of the 10 Moldovan software certification. F-Line Technolo- To become and remain competi- one-day visits to each com- companies that participated, three gies received IT Mark Premium tive in the global marketplace, pany to evaluate the status of — NetInfo, F-Line Technolo- certification in June 2010. USAID determined that Moldo- existing processes and draft an gies, and Endava — joined the IT van apparel companies needed action plan for improvement. Mark program. To spread the word to other ICT workflow improvements and companies and their customers new technologies to increase 2. IT Mark consultancy. As Oleg Macari, director at F-Line about the benefits of IT Mark, productivity. In response, CEED follow-ups to the initial visits, Technologies, was skeptical at CEED collaborated with the six launched a productivity enhance- the companies received assess- first: “CEED invited us to hear certified companies to design and ment program to improve firm- ment reports and assistance in about IT Mark Certification and conduct an awareness campaign level productivity with the goal designing individual improve- … I thought, ‘Oh, we are so busy. and publish an article, “Methodol- of lowering unit costs by imple- ment plans to prepare for final How can we find energy to do ogy of Success”, in Profit magazine menting more efficient workflow appraisals. If needed, the center this’? But pride kept me from re- to educate local of IT service cus- methods and stimulating technol- provided remote consulting on fusing. We found time to partici- tomers on the benefits of CMMI ogy investments. processes and documentation. pate,” Macari said. “We felt it was and IT Mark certification. that breath of air that we needed Most of the cut-and-make en- 3. IT Mark appraisal and certifica- so much. Our employees began to Finally, CEED worked with the terprises that the project assisted tion. ESI appraised the compa- realize they were not doing things ICT Association, the Ministry of directly over five years showed nies’ readiness for certification. in a proper way.” Information and Communication remarkable results, increasing Technology, and ESI Bulgaria productivity by an average of 12 The project supported the three F-Line Technologies, NetInfo, on the July 2010 launch of an to 15 percent. Many dramatically companies throughout the IT and Endava all earned IT Mark excellence center in Moldova — improved workflow methods Mark certification process. RCI certification. Like their predeces- called the European Software and management and quality and CEED covered about two- sors, all reported increased trans- Institute Eastern Europe Quality control processes. These improve- thirds of the costs; the companies parency and efficiency, which Lab — to support individuals and ments, coupled with investments contributed the rest, signing reduced work hours, brought in companies working in ICT to the companies made in new contracts directly with IT Mark more contracts, and improved achieve global standards for qual- technologies and, in some cases, certifier ESI Center Bulgaria. morale. “Now we have a clear ity and productivity. Although at further assistance from CEED vision of the project at every stage an early stage, the center is seen as on the marketing side, resulted All three companies earned IT of development,” said Victoria a self-sustaining legacy institution in new contracts in international Mark certification, which they Scodorova, a senior analyst and that will accelerate innovation markets, larger profits, higher pay, reported has helped improve project manager. “Every employee and position Moldova as a leading and improved employee morale. business processes and workflows can see what he or she did with center for ICT training, certifica- tion, and knowledge transfer.

18 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 19 Each year, CEED selected three or proper planning, organization of SUCCESS STORY four companies that displayed the production, and communication. willingness and ability to pursue New Product Line Fills productivity increases. While each The work, led by Mr. Haycock, firm’s needs — and the subsequent focused on advising company Production Gap intensive assistance it received — management organizing produc- proved unique, the program gener- tion more effectively through Apparel Industry ally followed these three stages: improved workflow planning Definitions and line balancing techniques; Tricon, an apparel company in Cahul, southern Moldova, used the cut, • Company audit and assessment. collecting, analyzing, and using Cut-and-make. The manufac- make, and trim production method for European clients, who provided This stage included a brief production data to make man- turer sells cutting and manu- the patterns, fabric, and other raw materials necessary to produce audit of the firm’s productiv- agement decisions; evaluating facturing services to foreign finished garments. Tricon’s clients are high-end companies such as ity, including current status, sewing operators’ performance clients. The customer owns all Max Mara and Basler. The orders are large, but the margins are small. key bottlenecks, and needed and offering on-the-job training materials imported for pro- According to commercial director, Irina Rodenco, Tricon had a successful improvements. The project as needed; and reducing garment cessing and the ready-made cut, make, and trim operation , the company had unused production developed a work program for defects through improved quality goods to be exported. capacity which it felt could be used to produce clothing with higher each firm, defining activities control methods. Taken together added value for the Moldovan market. Cut, make, and trim. The and time frames for improving over time, these tactics increased process is the same as cut- productivity through workflow productivity; reduced order In 2008, Tricon decided the time was right to launch a new women’s and-make, but the manufac- streamlining methods or tech- fulfillment times; and enhanced clothing line for the local market, but it needed help to develop the turer provides some necessi- nology improvements. client satisfaction, overall factory brand concept. With support from USAID’s Competitiveness Enhance- ties such as thread or buttons. production capacity, and profit- ment and Enterprise Development (CEED) project, Tricon developed • Workflow optimization pro- ability. a brand image and a marketing and promotion plan for its target cus- Full package. The manufacturer gram. This stage targeted short- tomers. Tricon launched its My Revival line in spring 2008 by opening purchases all materials needed term productivity enhance- Given the labor force deficit its first store in Chisinau. to meet the customer’s ments by optimizing workflows caused by migration, increased specifications and invoices the — for example, using existing productivity is critically impor- However, Tricon still lacked important skills required to support the full value of the product on facilities and not requiring any tant in Moldovan apparel com- new brand and drive sales. Fortunately, CEED organized a three-day delivery. additional investments. The panies. The 21 companies that seminar focused on marketing and merchandizing for apparel retail- Private label. The manu- project worked with each firm CEED assisted with productiv- ers. Tricon and 20 other apparel companies learned the importance facturer designs collections at its site to improve workflow ity enhancement employ about of sales and marketing techniques, such as visual merchandising, store independently or jointly with distribution methods. 30 percent of the apparel sector planning, and color matching. Tricon embraced these new concepts the customer. The full-value workforce. In just three months and also began routinely updating its promotion plan and advertising products are delivered under • Stimulating investments in tech- in 2010, the productivity increase to increase the brand’s visibility. Tricon hopes to sell the My Revival line CEED the customer’s label. nology. CEED’s international generated a saving of thousands of in neighboring countries as well as Moldova. CEED supported Tricon consultant, John Haycock, person-days. For example: Tricon’s high-fashion My Revival line and participated at Textillegprom apparel exhibition in Moscow in 2008 Own label. The manufacturer worked with firms to link two new shops launched in 2008 more and 2009. designs collections and sells equipment improvements to • Brio Impex saved 13,800 than tripled sales that year. them under its own brand. increased productivity, sales, person-hours, the equivalent of Following the opening of the first shop, Tricon opened My Revival and profitability. seven full-time employees shops in Balti and Cahul in 2008. Sales rose steadily throughout the year; the new line’s share of total domestic sales rose from 7 percent CEED’s approach optimized • Intercentre Lux Ltd. saved in the first quarter of the year to roughly 65 percent by year end. As work at the sewing operator 24,800 person-hours, the a result, 10 percent of Tricon’s production capacity is now devoted to level, introducing proper sewing equivalent of 13 full-time em- the My Revival line. The company plans to expand its store network in methods; at the line supervisor ployees Moldova in the next two years, and hopes to begin exporting. Con- level, introducing control, mea- tacts made at Textillegprom resulted in trial orders for Russia. surement, and product launch • Listex Ltd. saved 20,866 techniques; and at the upper person-hours, the equivalent of management level, introducing 11 full-time employees

20 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 21 duction capacity, making it more their own labels. Those that did attractive to clients and decreasing so sold the goods locally through costs due to lower salaries and pric- their own sales networks. Foreign- es of other inputs. Mr. Haycock made items and well-known continued to provide assistance, labels stiffened competition in the ensuring adoption of modern and local market, making it difficult internationally recognized produc- to increase market share. Quality Control tion management practices that System Catches would permit Mobile SRL to oper- CEED’s goals were twofold: To Defects Earlier ate successfully while managing its assist current own-label compa- rapid growth. nies to gain greater market share For most apparel companies through branding and marketing in Moldova, quality control is Supported by further assistance efforts and to help existing cut- viewed as an end-of-the-line from Mr. Haycock, the enterprise and-make companies expand into process, even though catch- doubled its sales volume. After private- or own-label production. ing errors and defects early the initial on-time delivery, the improves efficiency. Italian customer placed a second Most Moldovan apparel compa- As a result, John Haycock in- order for approximately 6,500 nies have been providing cut-and- troduced the 7 – Zero system pieces. Since then, Ms. Yeahia make services for customers from of operator quality monitoring Mir has secured two new clients Germany, Belgium, , and

CEED / ANGELA POTTER in Mobile SRL’s Chisinau and and produced nearly 2,000 arti- Italy; therefore, they have the nec- Artizana applied design principles it learned through CEED- Rezina factories. The statisti- cles for them — about 22 percent essary skills to launch their own sponsored training to prepare collections for the October 2009 labels and clothing lines. Some Interselection exhibition in Paris, which CEED also supported. cally based system is designed of her finished production. to bring quality checks as close also have well-trained, talented to the needle as possible. It Branding and Marketing designers who could create high- helps to identify the most Efforts Give Apparel fashion clothing for local and effective use of time by staff Companies New Life foreign markets. involved in quality assurance Historically, Moldova’s apparel • Vestra JSC saved 126,000 tion systems properly, she turned and provides data that helps to industry has been dominated by Over the life of the project, CEED person-hours, the equivalent of to USAID for assistance. CEED determine actions to be taken. cut-and-make companies. The helped 15 own-label companies 66 full-time employees had already hired John Haycock cut-and-make, or stitching, part boost sales by developing coher- to provide technical assistance in Mobile maintained the orga- of the process constitutes only 20 ent marketing approaches that Mobile SRL Turns Needed apparel production to Gabiny, nizational and quality control percent of the value of a product included identifying target clients, Intervention into Big Artizana, and Eurotextile. He methods it implemented with but requires the majority of the redesigning products to corre- Business agreed to add Mobile SRL to CEED’s assistance, reduc- labor. Increasing competitive- spond to fashion trends, and devel- After CEED supported her at- his scope of work and provided ing person-days from 45 to ness — and profitability — relies oping modern brands to compete tendance at the Ready to Show several days of training in produc- 10. Defects decreased from on diversifying the industry against imported garments. exhibition in Milan in 2006, tion planning and organization, 30 to 7 percent , and output toward development of local ap- Georgeta Yeahia Mir, a gradu- methods to evaluate operator increased by 5 percent in sum- parel companies making products CEED’s four-phase program ate of the London College of performance, and performance mer 2008. under their own labels. The work forced companies to take owner- Fashion, launched Mobile SRL, monitoring using key indicators. of own-label companies runs ship of the branding and mar- a Chisinau-based cut-and-make As a result, Mobile SRL com- the gamut from developing the keting process. The first phase company. But the former designer pleted and delivered its first order concept and design of clothing to included trademark development, of one-off formal wear had a big for 5,000 pieces on time. manufacturing and marketing, the second included brand and challenge: limited experience adding value at all levels. brand book development, the with cut-and-make production. Following this initial success, third included trademark registra- The Milan show had brought in Ms. Yeahia Mir opened a second When CEED began assisting tion, and the fourth launched the a large order, and she needed to production site in Rezina. The new apparel companies, few enter- trademark. CEED financed the execute it fast. To set up produc- factory enlarged Mobile SRL’s pro- prises produced garments under first two phases and the compa-

22 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 23 nies covered the costs of the third February and September 2009, and fourth. CEED also assisted Olympus increased its clients all companies in developing pro- tenfold — from two to 22 motion strategies tailored to their investment capacity and market- Strengthening Carpet ing budgets. Value Chain Saves Jobs and Money CEED support for develop- For years, Filatura Ungheni ing new brands or revamping supplied yarn to a single client, existing brands led to systemic carpet manufacturer Moldabela. improvements in marketing in Recently, however, Moldabela’s all apparel companies, including clients complained about uneven brands designed to appeal to the color, staining, and unraveling. chosen target market segment, Moldabela put Filatura Ungheni corporate styles that reflect the on notice: Fix the problems or new trademark image, and simple risk losing its business. but effective marketing strategies. Moreover, each company’s mana- With 300 employees, mostly gerial team learned that business women, Filatura Ungheni success depends significantly on couldn’t risk losing Moldabela’s

developing and implementing a business and potentially hundreds CEED marketing mix including product, of jobs, so it turned to USAID for Kevin Lordan, a CEED yarn spinning consultant, calibrates price, placement policy, and a help. The CEED project tapped a equipment at the Filatura Ungheni factory. CEED’s support helped the company to dramatically improve the quality of its yarns and promotional plan to help create spinning consultant, Kevin Lor- maintain market share. demand. dan, to work with Filatura Ungh- eni technical staff to make minor CEED’s work with own-label changes to spinning machinery companies led to significant and make modest investments in results. For example: critical ancillary equipment. The consultant calibrated the spinning to minimize the risk of selling price from a Romanian company • After Intercentre Lux began equipment and trained Filatura to a single customer. However, it looking to liquidate, and, with selling its products in the Ungheni staff to perform these needed to find a way to educate the help of Mr. Lordan, success- Transnistria market under a adjustments themselves in the new customers about its higher- fully installed and learned how new brand, sales for the first future. quality yarn. According to Mr. to maintain it. Chapter Three quarter of 2010 increased by Lordan, the company also needed provides further information 79.8 percent, from $68,000 As a result, Filatura Ungheni’s a laboratory that could perform about the increased sales that to $122,000, over the same yarn quality improved signifi- quality tests to guarantee that Filatura Ungheni and Moldabela quarter in the previous year cantly, helping to eliminate the products would meet customers’ experienced as a result of CEED defects Moldabela in its rugs exact specifications. It purchased technical assistance and trade • Tricon’s My Revival brand and securing hundreds of at-risk the right equipment at a good show participation. competes well against foreign jobs. Moreover, through process brands in the local market, changes in the spinning line, Fila- selling $114,000 per quarter — tura Ungheni’s general director 150 percent more than when estimates that CEED helped save the brand was first launched the company another €1 million.

• After introducing its new By solving these problems, Nikkas brand at the Textilleg- Filatura Ungheni gained the prom exhibitions in Russia in confidence to look for new clients

24 The Product: Improving the Quality, Manufacturing, and Marketing of Goods The Product: Improving the Quality, Manufacturing, and Marketing of Goods 25 CEED / ANGELA POTTER cultivate his vineyards. With C With vineyards. his cultivate to tractor amodern uses Association, Producers Wine Small E raised the quality of their wines. their of quality the raised that techniques winemaking and management vineyard learned t Cetera winery owner Alex Luchianov a member of the Moldovan Moldovan the of amember Luchianov Alex owner winery t Cetera EE D support, association members members association D support, CHAPTER Three The Connections: Building Strong Associations and Networking Regionally and Abroad

Throughout the life of the project, unsuccessfully with the govern- CEED focused on building ment to relax these restrictions. strong alliances, internationally and domestically, to contribute to Change came with the 2004 a new vision, resource and knowl- passage of the Guillotine II law, edge sharing, and the ability to which set up a regulatory reform present a united image and mes- framework to remove ineffective sage to buyers and stakeholders in business regulations. For Moldo- targeted industries. The approach van businesses, that created an modernized isolated, outdated opportunity to engage govern- marketing efforts that defined the ment in reform policies. However, past into an industry-wide push the government and businesses for greater visibility. communities had limited capacity to initiate discussions. Public-Private Dialogue Opens the Door for Better As a result, CEED organized Business three roundtables in November In the past, frustrations ran high 2006 that brought public and pri- as Moldovans were forced to vate stakeholders together to dis- navigate excessive government cuss the key business environment restrictions to do business. For ex- issues in its target sectors. More ample, the government demanded than 150 people participated in that IT companies obtain licenses the three days of discussions. before providing software devel- Participants, including representa- opment services and that wineries tives from the Ministries of Econ- own all their equipment before omy and Trade, Informational they could be licensed to start op- Development, and Industry and erations. Business owners pleaded Infrastructure; Moldova Vin, a

Romanian sommelier Lucia Pirvu leads a tasting of Chateau Vartely wines for buyers from the Romanian hotel, restaurant, and café industry.

CEED The Connections: Building Strong Associations and Networking Regionally and Abroad 29 government agency that promotes markets joined forces in 2006 For the next two years, CEED Assistance to the and regulates Moldovan wines; to create a unified message and worked with design agency Casa Small Wine Producers USAID; and private enterprises brand. Imago and guild members to Assocation discussed the legal, regulatory, develop a 32-page catalog and a For decades, large, state-owned and administrative impediments The seven participating winer- brand concept, including a logo; wineries dominated the Moldo- facing IT, textile and apparel, and ies — Acorex Wine Holding, slogan, Celebrating the Grape; van wine industry. More re- winemaking businesses. Bostavan, Chateau Vartely, and Web site (www.moldo- cently, several small wineries have Dionysos-Mereni, DK Intertrade, vawineguild.md). In addition, emerged, changing the economic As an outcome of the roundtables, Lion Gri, and Purcari — held a CEED helped develop a slide landscape of the industry and in- Moldova’s parliament approved series of meetings to discuss rais- show with facts, figures, and vivid troducing more innovative wines. 37 legislative initiatives and modi- ing their visibility by establishing images of the Moldovan wine However, the laws that regulate fied 11 laws and normative acts a unified brand for high-quality industry. wineries have not changed to ac- governing entrepreneurship. As a wines from Moldova. The winery commodate these newer, smaller result of these changes, software owners agreed to form the Mol- The catalog discusses the history wineries, which are held to the development no longer requires dova Wine Guild, which would of winemaking in Moldova, wine same fees and standards as for licensing, saving companies time be responsible for raising Mol- regions, , and large wineries. As a result, several and money, and winemakers can dova’s profile as a wine-producing profiles of member companies. small winemakers joined to create obtain licenses even if they lease country through public relations It was completed in March 2009 the Moldovan Small Wine Pro- rather than purchase equipment, and marketing efforts, including just in time for the ProWein ex- ducers Association in 2009. reducing capital barriers to enter- joint presence at trade shows and hibition in Düsseldorf, Germany, ing this industry. The govern- tasting events in target markets. where the guild distributed 300 “The first goal of the association ment also created public-private copies. The slide show was also is to make us heard,” said Alex task forces to serve as the driv- During CEED’s first year, the shown during the exhibition. The Luchianov, association mem- ing force behind improvements project focused on building an two marketing pieces will con- ber and co-owner of Et Cetera in the business environment in organizational structure and tinue to be used at international winery. Another is to ensure that CEED’s three target industries. promoting wine through joint wine press and trade events. regulations and fees are fair for By creating a forum for construc- marketing. CEED identified mar- producers of all sizes. “We have tive dialogue, CEED enabled the keting strategists Neil Gooch and The Moldova Wine Guild partici- to pay 20,000 lei ($1,567) for the private sector to have a stronger, Patrick Gooch of the RGS Group pated in wine trade events such license per year, the same amount more effective voice in improving to speak to guild leadership about as Prodexpo in Moscow, ProWein as big producers,” said Ion Luca, Moldova’s business environment. building and managing a com- in Düsseldorf, the London Wine chairman of the association. “A mon brand for the organization. Trade Fair, and Expovin in Hong single winery can’t change this, WINE They also helped establish criteria Kong. As a result of CEED’s as- but together we can say to the Creation of and Assistance for selecting members, discussed sistance, the guild became more ministry, ‘Look guys, we are de- to the Moldova Wine Guild pros and cons of group marketing experienced in planning and veloping and we need new rules.’ Historically, Moldovan wineries and wine branding, and detailed implementing its exhibits at these ” With the help of CEED, he and branded and marketed themselves resources and timing for critical events. eight other association members with little attention to the indus- start-up activities. aim to change the regulations, try at large. Russia’s ban on Mol- The Moldova Wine Guild con- which they believe are inefficient, dovan wines and the worldwide In 2007, CEED invited a U.S. tinues to work on behalf of its unfair, and outdated. “Today we economic downturn highlighted marketing advisor, Lou Capitao, members locally and internation- have over 40 laws for winemak- the need to promote Moldovan to discuss strategic and operation- ally. With CEED’s assistance, ing, and no one knows what they wines jointly to a broader audi- al planning with guild members. the organization chose the right should do,” Mr. Luca said. ence. Looking to countries with Mr. Capitao commented on the operational model from the successful national wine market- guild’s mission and strategic goals beginning and avoided common CEED hired legal consultant Di- ing efforts, including Australia, and objectives, reviewed the tac- start-up pitfalls. ana Lazar to review the regulatory France, and Chile, a small group tics and timing for implementing obstacles and make recommenda- of progressive Moldovan wine the strategy, assisted with opera- tions for review by the Ministry producers representing 35 percent tional planning, and presented of Agriculture. In May 2010, the of Moldovan wine exports to EU recommendations.

30 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 31 CEED Assistance to Winemakers’ Associations

Association Year Type of Assistance

Small Wine Producers 2009 • Hired legal consultant Diana Lazar to review regulatory obstacles and make Association recommendations for review by the Ministry of Agriculture • Supported design and production of a catalog introducing association member wineries and their wines to potential buyers and the media

Moldova Wine Guild 2007 • Provided resources for start-up activities • Advised on forming the guild and building membership • Supported group marketing and wine branding • Supported development of catalog and brand concept, including logo, slogan, and Web site • Co-funded participation in wine trade events, including Prodexpo (Russia), ProWein (Germany) London Wine Trade Fair (UK), and Expovin (Hong Kong)

Syndicate of Winemakers 2010 Diana Lazar reviewed Moldovan wine legislation and suggested modifications that would and Grape Growers benefit the industry. Union of Winemakers

association presented her report their wines to potential buy- and recommendations, which in- ers and the media. “Wine is not cluded reforming licensing rules, just a product. Wine is a story.

abolishing minimum production Wine is emotion,” Mr. Luca said. CEED requirements, eliminating trade “Through these catalogs, we Acorex Wine Holding uses a high-tech bottling process as part of its can say more about our wines.” quality assurance system. CEED helped Acorex brand and promote its barriers that restrict small produc- wines for the Western markets. ers, and proactively supporting Within six months of publica- these producers. The report tion, the number of Chisinau concluded, “Moldova’s wine sec- restaurants carrying wines from tor will not grow a quality wine member wineries skyrocketed production chain, with its own from three to 30. identity, without consideration of increased dramatically in recent about 70 members of the wine small wine producers. The current Expanding Wine Markets years. Discussions with wine community in cooperation with regulatory framework needs to be Westward exporters revealed that the main Moldova Vin. The research was changed to allow the possibility of Recognizing the need for Mol- challenge to selling more was a made available on CDs during the a small manufacturer to produce dovan wineries to diversify away lack of awareness about the wines. presentation and later distributed its wine on equal terms with other from Russia, USAID focused by mail. Mr. Capitao also present- actors in the sector.” much of its assistance on mak- To provide the industry with in- ed a case study of the successful ing connections, educating, and formation on how to expand into launch of Australia’s Yellow Tail The ministry reviewed the recom- building relationships with buyers the Romanian market, CEED brand in the United States. The mendations and agreed to create in Romania, Germany, Poland, tapped the TNS-CSOP market local press publicized the event. a working group, including as- the Czech Republic, the United research agency in 2006 to ana- sociation representatives and Ms. States, and the United Kingdom. lyze the Romanian market. Led by In addition, CEED helped Cha- Lazar. The working group will Lou Capitao, agency representa- teau Vartely, a young, progres- review and draft modifications Romania. Romania’s interest tives traveled to Romania; con- sive company that had exported to current wine laws to present to in wine and the language and ducted interviews; and produced wines to Romania for two years, the government. culture it shares with Moldova a report detailing Romanian to raise its profile and boost sales make it an ideal export destina- consumer tastes and preferences, there. The project hired a brand- In addition, CEED supported the tion. Due to underproduction distribution networks, potential ing expert with knowledge of the design and production of a 12- in Romania’s wine industry and promotional opportunities, and Romanian hotel and restaurant page color catalog that introduces the generally positive perception effective advertising channels. Mr. market to help design a promo- association member wineries and of Moldovan wines, sales have Capitao presented the results to tional campaign. As a result of

32 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 33 SUCCESS STORY WORLD MARKET FOR MOLDOVAN BOTTLED WINE EXPORTS TO MAIN MARKETS, Group Marketing BOTTLED WINE IN 2008 2006-2008 (€ MILLION) 7 Belarus 6.5 22.7% Maximizes Visibility 24.2% 6 5.82 5 2006

4.2 2007

4 3.78 2008 Moldova is a small country, little known in the West, but with a long 3.2 3 2.68

Other € million

winemaking history. Most wine exports went to Russia until early 2.05 Countries* 2 1.57

Russia 14.6% 1.35 2006, when difficult trading relations forced Moldovan producers 1.20 1.15 1.03 1.05 1 0.96

30.5% 0.85 0.71 0.77 1 0.7 0.67

Other CIS 0.57 0.58 0.41 0.50 0.4 0.44 0.43 0.39 to search aggressively for new markets. However, low awareness of 0.35

14.6% 0.13 0 Moldova and its winemaking potential hampered efforts and frustrated . y via t ep UK onia oland La man USA China wineries, especially those producing modern wines in styles that are omania P er Est *Other countries are shown in the bar chart at right. R zech R G Lithuania attractive in Western markets. Moreover, Moldova had never had an C effective wine promotion program.

Source: Moldovan Investment and Export Promotion Organisation Responding to this challenge, USAID’s Competitiveness Enhancement and Enterprise Development (CEED) project gathered representa- tives from several of Moldova’s leading wineries to discuss ways to raise the visibility of local wine producers by creating a category of this effort, recognition of Chateau this, sales of Moldovan wine high-quality Moldovan wines. CEED recruited international experts,

CEED Vartely among upscale Romanian have been low in the past because who recommended that the wineries unite to approach new markets; consumers increased, and sales to small distributors sold only to Members of the Moldova Wine Guild only as a group would they attract the attention of buyers, journalists, Romania more than quadrupled. regional markets. The wineries’ show their wines at the London and others in the international wine community. Encouraged by CEED main challenge in Germany was International Wine and Spirits Fair and confident in its desire to be a partner in their future development, The project also helped Dionysos- establishing relationships with in 2007. seven Moldovan wine producers formed the Moldova Wine Guild to Mereni with a marketing and large distributors that could cover maximize members’ marketing efforts for greater impact in interna- sales strategy tailored to help it larger portions of the country tional markets. The guild is the first of its kind in Moldova. enter Romania. The initiative and educating consumers about resulted almost immediately in Moldovan wines. The Moldova Wine Guild moved quickly. With support from CEED, clearer and more effective po- the guild exhibited at the ProWein trade show in Germany and the sitioning of the brand on the In response to this challenge, International Wine and Spirits Fair in London in 2007. As expected, Romanian market, improved per- CEED selected four wineries — the guild’s unified approach attracted attention; several prominent ception of competition, and more Acorex Wine Holding, Bosta- journalists took notice and wrote stories that helped the industry to effective use of its advertising van, Chateau Vartely, and DK “discover” Moldova. The formation of the guild has also encouraged its budget. Dionysos-Mereni quickly Intertrade — for a joint activity members; one marketing manager commented after ProWein, “This met its sales goal of 160,000 to improve distribution channels was the first time that Moldova presented its wines on an equal level bottles in the last three quarters and increase exports by network- with our regional competitors. We felt proud of our participation.” of 2006. ing with buyers and garnering The success of the Moldova Wine Guild not only benefits its members positive media coverage. but creates opportunities for all Moldovan producers. Germany. Germany ranks fourth worldwide in wine consump- CEED hired German consult- tion. It is one of Moldova’s most ing and design firm BEVCON important Western commercial to organize two trips to Moldova partners, with more than $100 for German buyers and to intro- million in trade between the duce the wineries to the leading countries each year. Germany’s trade journal, proximity makes it an ideal ex- Weinwirtschaft. The first trip, port destination for wine. Despite in November 2008, included

34 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 35 representatives from three German Poland. The biggest problem that wine distributors; the second, in Moldovan wine producers face July 2009, included representatives in Poland is lack of awareness of from five German distributors. Moldovan wines. To address this, The representatives toured wineries Bostavan Holding, which led and vineyards and tasted the wines 2008 exports to Poland at $2.4 — and liked most of them. While million, organized a presentation the trip did not result immediate to critics and buyers in Warsaw in sales, it succeeded in educating an May 2009, shortly after launch- important wine-drinking sector ing Purcari and its new premium about Moldovan wines, which brand, DAOS, which plays on could lead to future deals. the theme of Moldovan historic traditions. The wines, made under In addition, with CEED’s as- the guidance of Mathias Pellissard, sistance, the four wineries teamed included an affordable Chardon- to support German wine journal- nay, , , ist Jörg Sievers’ trip to Moldova and Kahor, which were acclaimed to write a supplement for Wein- in Moldova and abroad. wirtschaft. CEED and the winer- ies cost-shared international travel CEED selected Caroline Gilby, a

and lodging and the publishing British Master of Wine, to work CEED fees. The supplement was in- with Bostavan Holding staff to Workers at Purcari winery sort grapes during the 2006 harvest. cluded in the February 27, 2009 lead tastings, create a slide show, edition of Weinwirtschaft. and develop tasting notes for each wine. Bostavan Holding’s importer A few weeks later, with financial and distributor, Domain Menada, support from the Committee on one of the largest in Poland, Eastern European Economic Re- helped to organize and finance the sales of DAOS wines to Poland Chateau Vartely covered the lations, the Moldova Wine Guild event. CEED assistance included rose from 3,000 to 5,000 bottles remaining expenses associated exhibited wines as a group at the covering the cost of the room and per month. with the event and co-branding ProWein exhibition in Düsseldorf. catering. Bostavan Holding paid all publicity materials with the As part of the activity, BEVCON for the creation of the co-branded Czech Republic. Moldovan wines USAID logo. The 120 attendees tapped into its network of Ger- publicity materials. were not well known in the included representatives of the man wine distributors, importers, Czech Republic until recently. media; retailers; and the restau- and food retail chains, contact- The 130 attendees included To expand sales in this market, rant, hotel, and cafe sector. The ing more than 140 potential representatives of the media; wine Chateau Vartely selected a highly presentation of premium wines, buyers by mail and phone. The import and distribution compa- visible event, Vinarsky Pul Mara- including ice wines, helped Cha- mail campaign included informa- nies; major supermarket chains; ton, held every April in Pardubice, teau Vartely sell 50,000 bottles to tion about the four wineries and specialized wine boutiques; and a small city near Prague. Czech Republic buyers in 2009. described Moldova as an emerg- the hotel, restaurant, and café ing, innovative wine-producing sector. The presentation gener- Chateau Vartely obtained a com- CEED also helped to organize a country offering excellent wines ated media coverage, acquainted mitment from its Czech distribu- March 2010 tasting in the Czech and good business opportunities. buyers with DAOS and Purcari tor, Vartely CZ SRO, to design Republic for Lion Gri that was Through this activity, the winer- wines, and provided information a marketing campaign aimed at co-hosted by a hotel sommelier ies established new relationships about Moldovan wines, produc- increasing awareness of the wines and the winery’s Czech distribu- with experienced German buyers tion, and adoption of internation- before the 2009 event. CEED tor. The sommelier presented 11 and raised awareness of Moldovan al and wine production hired a local wine critic to present still wines and a classical spar- wines. They also learned how to standards. Winery representatives the wines to the public, paid for kling wine to 70 members of better organize future visits for established direct contacts with a room, and hired a sommelier. the wine press, buyers, and wine foreign buyers. buyers and the press. As a result,

36 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 37 Participation of CEED-supported Wineries at International Wine Exhibitions lovers. Sales of 200 bottles to and export capacities. As part of attendees and 250 bottles to the that initiative, five of the wineries Wine Exhibition Location Year(s) Wineries hotel totalled $1,900. The event’s shipped samples to Beverage Bis- ProWein Düsseldorf, 2007, Acorex Wine Holding, Bostavan, Chateau Vartely, DK Intertrade, Lion Gri, and success prompted two additional tro, a U.S. importer/distributor. Germany 2008, 2010 Purcari in 2007, 2008, and 2010; Doina Vin and Folicain in 2010 tastings featuring Lion Gri wines. Beverage Bistro signed six-month London Wine Fair London, UK 2007, 2008 Acorex Wine Holding, Bostavan, Chateau Vartely, DK Intertrade, Lion Gri, and letters of exclusivity with Acorex, Purcari United States. The U.S. wine mar- Chateau Vartely, and Lion Gri, Enoexpo Krakow, 2009 Acorex Wine Holding, Basavin, Bostavan, Chateau Vartely, DK Intertrade, ket is one of world’s largest. How- but was unable to find buyers for Poland Esmalda, Lion Gri, and Purcari ever, sales of Moldovan wines are the wines. Wine and Spirits Singapore 2010 Acorex Wine Holding, Bostavan, Chateau Vartely, DK Intertrade, Lion Gri, and limited because the winemakers Asia Purcari have little experience working in In 2007, Lou Capitao coached the United States, lack knowledge representatives of several Mol- of the distribution system, and dovan wineries on strategies for have few connections with wine entering the U.S. market. The ships with U.S. wine importers communicated a shared message importers and distributors. The brainstorming session gave wine- and distributors. The meetings and brand. CEED booked the connections that exist are primar- makers an opportunity to express helped the wineries understand ProWein booth and designed and ily in ethnic markets where sales their ideas about how to enter the what was involved to break into printed 1,000 copies of a market- are limited and standard com- market, debate pros and cons, and the market (including first-year ing brochure in English and Ger- mercial practices are not strictly plan for the future as anticipated costs of about $30,000) and man that featured guild wineries. observed. higher profits result in additional develop strategies for building CEED also supported the guild’s marketing budgets. Mr. Capitao successful sales. participation at ProWein in 2008 The two primary ways to enter also spoke about how to enter the and 2010 by covering part of the the U.S. wine market — through U.S. wine market at the 2007 Increasing Sales Through cost of the space and specialized direct retail or a national im- International Wine Conference, Tastings and Networking tastings to increase awareness of porter — pose challenges. Direct held during the ExpoVin Mol- Educating, tasting, and network- Moldovan wines. retail limits volume and brand dova wine fair. ing are essential to expanding exposure, and a national importer markets and increasing sales. Rec- London Wine Trade Fair. Draw- could require significant capi- To help Moldovan wineries bet- ognizing this, USAID supported ing thousands of buyers from the tal from the winery — around ter understand the U.S. market, the guild’s attendance at four UK, Europe, and the rest of the $2,500 per month — for account CEED invited John Beaudette, major wine trade shows as well as world, the London Wine Trade management and marketing. president of MHW, Ltd., to numerous other activities that in- Fair can put wineries on the map. However, the benefits of such a Moldova in December 2008. troduced Moldovan wines to new CEED assisted guild wineries in large market are clear, especially MHW is a leading U.S. importer markets. Presence at the shows organizing a seminar and tasting as the millennial generation, 70 and distributor of alcoholic bever- and a unified brand and messag- at the May 2007 fair. The project million strong and considered un- ages that also provides consult- ing raised the profile of Moldovan hired London PR expert Barbara pretentious, begins to dominate ing, market research, regulatory wines with international buyers. Scalera to make the presentation the wine-drinking market. compliance, and administrative and covered some organizational services to foreign suppliers, other ProWein fair, Düsseldorf, Ger- costs. UK wine experts, includ- In July 2006, CEED assisted six U.S. importers and wholesalers, many. More than 3,300 exhibitors ing journalist Robert Joseph and domestic companies — Acorex and domestic wineries. and 36,000 trade visitors from Master of Wine Angela Muir, Wine Holding, Bostavan, Cha- around the world attend this lead- spoke about Moldovan wines teau Vartely, DK Intertrade Lion Mr. Beaudette made a presenta- ing platform for the international to about 100 attendees. For the Gri, and Purcari — by providing tion to representatives of Moldova wine and spirits sector. In an 2008 fair, CEED hired wine writ- information on the U.S. market Wine Guild member wineries and effort to penetrate new markets, ers Caroline Gilby and Darrel Jo- and helping to make potential met with Acorex Wine Holding, Moldova Wine Guild member seph to conduct a tutored tasting connections with buyers. CEED Bostavan, Chateau Vartely, DK wineries attended the fair in of indigenous and international supported a visit by an American Intertrade, Lion Gri, and Purcari March 2007 when they showed wines produced in Moldova for business linkage expert, who to discuss opportunities for their wines for the first time at about 30 people, mostly from the assessed the wineries’ products establishing long-term relation- a common guild pavilion that wine press.

38 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 39 Enoexpo, Krakow, Poland. Eno- Holding, Bostavan, Chateau expo, attended by nearly 10,000 Vartely, Dionysos Mereni, DK wine distributors and merchants, Intertrade, and Lion Gri. import agents, restaurant repre- sentatives, and members of the Visit of Polish and media, is the only professional journalists to Moldova. Sales to wine-focused event of its kind Poland and the Czech Republic in Poland. Events include train- have increased over the years, and ing, industry seminars, and wine they are among the top buyers of tastings. Since the Polish market Moldovan wines. Still, the per- has shown significant growth ception of Moldovan wines in the potential for Moldovan wine countries could be improved. To sales, CEED supported guild address this issue, CEED spon- participation in the November sored and organized a press trip to 2009 fair. The project paid for Moldova for three wine journal- space rental, helped develop a ists from each country. booth, and supported tastings at the booth and a nearby hotel. The The September 2009 trip gave tastings educated and the journalists an opportunity to food journalists and buyers about become familiar with Moldovan Moldovan wines and the coun- wine styles, wine consumption, try’s wine history. culture, and folk heritage. The trip included visits to the Purcari, Cri- Wine and Spirits Asia, Singapore. cova, and Chateau Vartely wineries Moldovan winemakers increas- and an event hosted by the Mol- ingly look to Asia as a promising dova Wine Guild at the Moldovan new market for their wines. In Village tourist site. As a result of 2010, CEED supported partici- the trip, articles on Moldova and pation at the Wine and Spirits its wines were published in the Asia exhibition. Attended by Polish magazine Rynki Alkohol- more than 25,000 wine distribu- owe, Gastro & Hotel magazine, tors and merchants, importing The Prague Post, and on the www. agents, restaurant representatives, vinisfera.pl Web site. The articles and members of the press, Wine informed the Czech and Polish and Spirits Asia is a networking public and publicized Moldova as hub for the food and wine in- a winemaking country. dustry in Asia. CEED supported the attendance of Moldova Wine Press visit to Moldova’s National Guild wineries and shared exhi- Wine Festival. Many foreign bition costs. wine experts and journalists, especially from Western and Networking with Swedish import- Central Europe, lack knowledge ers. In July 2007, CEED invited a of Moldovan wines. The National group of Swedish importers and a Wine Festival, which takes place wine critic, led by Pekka Lind- each October, offers an oppor- berg, the owner of Lindberg AG tunity to introduce enthusiasts wine importing company, to tour to Moldovan wines. The festival and taste at Moldova Wine Guild combines local cuisine with wine member wineries Acorex Wine

Tests at the Lion Gri winery laboratory ensure high quality.

40 The Connections: Building Strong Associations and Networking Regionally and Abroad CEED / ANGELA POTTER The Connections: Building Strong Associations and Networking Regionally and Abroad 41 Düsseldorf and helped create a Supporting the Syndicate country brand for the industry. of Winemakers and Grape Growers Creating a Wine Culture in The Syndicate of Winemakers Moldova and Grape Growers is a newly Despite the large quantity of bot- created group that works with tled wine it produces, Moldova the government on behalf of ranks relatively low in consump- producers. It is funded by 40 tion of wine by the bottle. Many Moldovan wineries representing Moldovans prefer beer, brandy, a significant part of the industry. and cocktails. Some winemakers Given CEED’s extensive experi- speculate that these preferences ence in this area, the president of are changing as young, foreign- the syndicate’s board of direc- educated Moldovans return home tors, Feodosie Bors, requested seeking better wines. CEED’s help in early 2010 to review Moldovan wine legislation Still, Moldovan wineries lack and suggest modifications that information about consumer would benefit the industry. In the preferences, market segmentation, context of CEED’s ongoing sup- and market capacity, which has port for private wine producers

CEED / ANGELA POTTER made it difficult to target local and with the goal of strengthen- Nicolae Gherganov, chief winemaker at Asconi winery, used the marketing efforts. As a result, ing the syndicate, CEED agreed advanced winemaking technology recommended by CEED consultant to support the request and hired Luca Zavarize to improve the quality of Asconi’s wines. As a result, CEED commissioned Magenta sales to the Czech Republic increased to almost two million bottles by Consulting to conduct a domes- legal consultant Diana Lazar, the end of September 2008 — a 30 percent increase over the previous tic wine market study in August who supported the Small Wine year. 2007. The research was intended Producers Association on a simi- to serve as a guide for wineries lar project (see pages 31-32). Ms. tastings and folk music in a scenic International Press Gives seeking to penetrate the domes- Lazar worked with the syndicate countryside setting. Face Lift to Moldovan tic market and gain insight into and Union of Winemakers to Wine Industry Moldovan wine consumers and review legislation pertaining to With support from CEED Collective marketing often yields markets. To ensure their research syndicate members and propose and the EU-funded Support more results than individual needs were met, local wineries improvements that would ensure to Moldova Export Promotion efforts, especially for promoting helped select topics for the study. a favorable regulatory environ- Organization (MEPO) and its wine abroad. The project focused ment for the wine producers. inward investment attraction its group marketing efforts on win- Magenta presented its findings and department (MIDA) project, eries that planned to participate recommendations in December As part of the effort, Ms. Lazar the Moldova Wine Guild and jointly in promotion and market 2007. Its detailed report is online wrote a white book, Rethink the Moldova Vin hosted a visit to the development activities abroad. at http://www.vinifera.md/files/ Wine Industry, which she present- 2007 festival by wine critics and Studii/bottledWinemarkeEN. ed in July 2010 to the Ministry of writers from the UK, Poland, the One of those efforts was co- pdf. The 55 attendees included Agriculture and Food Processing Czech Republic, and Romania. financing the publication of winery marketing representa- and the Ministry of Economy The festival offered a chance to articles in the UK’s Harper’s and tives, Moldova Vin officials, trade and 50 industry representatives. become familiar with Moldovan Weinwirtschaft magazines to representatives, members of the The document recommends wines, culture, and folk heritage raise awareness of Moldova as a business press, and representatives reforming the regulatory and and to tour and taste at Lion Gri, wine-producing country and of of professional wine associations. legal environment by eliminating Dionysos Mereni, Purcari, and Moldovan wine producers among The findings were discussed in an required licenses and creating a Acorex Wine Holding. British and German readers. The article about the local wine market joint public-private Chamber of publications were used widely published in the Logos Press. Wine and Viticulture to ensure during exhibitions in London and participatory, transparent, and

42 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 43 fair administration of the indus- financing of $6,500. In addition, Technologies, which provides the Moldova Association of Pri- try. Ms. Lazar also recommended CEED worked closely with the software solutions for banks and vate ICT Companies organized promoting “controlled origin” as companies on logistics, marketing financial institutions; Global and co-financed an outward a differentiating quality factor materials, negotiations, schedules, Phoning Group, a multilingual trade mission in May 2010. The on domestic and international and other details. contact center offering telemar- Netherlands Council for Trade markets. The recommendations keting and software development Promotion and the Netherlands sparked dialogue between govern- RIT Labs exhibited a new, mobile services; NetInfo, which delivers Chamber of Commerce hosted ment and the private sector, result- version of its popular e-mail client high-quality Web-based solu- the two-day event, which was ing in the formation of a working solution, the Bat Voyager Pro, tions and financial software; and attended by five Moldovan com- group to determine how to make which it developed for travelers Pentalog, a leading outsourcing panies: Allied Testing, NetInfo, the recommendations a reality. with high security requirements. provider. Endava, F-Line Technologies, and Dekart presented a new version Starnet. ICT of its Private Disk, a hard disk CEED covered a significant share International Trade Shows encryption software developed of the participation fee. SEPIA Led by Deputy Minister of ICT, and Regional Missions Put to secure personal data, and a contributed additional resources, Dona Scola, with contributions Moldovan IT Companies on new SIM card reader that allows including travel and accommoda- by CEED and SEPIA repre- the Map users to manage the content of tions for the association’s execu- sentatives, the mission created Growth for Moldovan software their cards. Deeplace presented its tive director. In addition, SEPIA matchmaking opportunities for development companies depends secured e-banking solution and and CEED jointly supported companies to develop business largely on finding new export showcased its system integration publication of a promotional linkages. Over the course of 19 markets. Therefore, CEED fo- services and experience. Partici- leaflet that was distributed to the meetings, Moldovan IT com- cused much of its assistance to the pation allowed these companies 700 Gartner delegates. CEED panies promoted themselves as ITC sector on making connec- to benchmark their products also worked with company par- reliable outsourcing partners for tions with international buyers. and services against others in a ticipants to design a companion Dutch IT firms and established To determine the most appropri- competitive environment and Web site, www.ict.md, and the numerous relationships. ate shows or trade events, CEED raise awareness of Moldovan IT exhibition booth. analyzed options, consulted with products among European users. ICT participants talked with industry leaders, and decided to Participants networked with representatives of the Netherlands support the attendance of eight For Gartner’s 2009 Outsourc- representatives of Russian and Ministry of Economic Affairs IT companies at two major exhi- ing and IT Services Summit in Canadian ICT associations and about the possibility of establish- bitions: Systems 2006 in Munich, London, CEED teamed with the met with representatives of some ing a matchmaking program Germany, and the Gartner Out- EC-funded SEPIA project and of the world’s largest IT firms. financed by the Ministry and sourcing and IT Services show newly formed Moldovan Associa- Although such firms are unlikely aimed at helping Moldovan ICT in London in 2009. Gartner is a tion of Private ICT Companies to deal directly with enterprises companies find Dutch partners. leading independent IT author- to support the attendance of of only 50 to 500 people, Moldo- They discussed the possibility ity whose more than 650 analysts five companies and co-sponsor van ICT firms received valuable of creating a grant program to operate worldwide. their participation in several exposure by participating in the cover 50 percent of joint venture events. More than 45,000 senior summit and networking with investment project costs for the For the Munich show, CEED IT and business strategists and foreign counterparts. This was the development of companies and provided support to three lead- industry actors from around the first time the Moldovan ICT sec- projects through a Moldovan- ing Moldovan software develop- world converge at the summit tor was represented at a high-level Dutch partnership. ers — RIT Labs, Dekart, and to explore, debate, evaluate, and international event of this kind. Deeplace — to attend and display justify IT. Inward Trade Missions their innovative security soft- Outward Trade Mission to from Romania and Bulgaria ware solutions to business users The companies chosen to attend The Netherlands Despite the language and culture from Germany and other EU were Allied Testing, a quality After identifying the Netherlands that Moldova shares with Ro- countries. CEED teamed with assurance and testing firm that as a potential and lucrative mar- mania and the history it shares the Moldovan-German Business serves the capital markets, trad- ket for IT products and outsourc- with nearby Bulgaria, few trade Partnership Project to provide co- ing, and finance industry; F-Line ing services, CEED, SEPIA, and relationships with these countries

44 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 45 have existed until recently. To Moreover, Moldovan businesses SUCCESS STORY establish Moldovan IT companies seeking IT solutions lack knowl- as potential vendors for Romania edge of Moldovan IT firms and ICT Firms Earn and Bulgaria, CEED teamed often purchase solutions from with the MEPO/MIDA project foreign companies instead. Policymakers’ Respect to organize inward investment missions in November 2007.

One mission involved seven After members of Romanian Information communications technology (ICT) is one of the highest- Romanian companies; the other, and Bulgarian IT associations paying and fastest-growing sectors in Moldova; yet it is still small five Bulgarian companies. Both discussed their successes with and under performing. Contributing factors include limited dialogue delegations included ICT business Moldovan IT companies during between the government and the private sector; the lack of a well- association representatives, who a CEED-sponsored trip in 2008, defined state policy to stimulate the sector’s growth and competitive- gave talks about their association 20 loosely organized Moldovan ness; and an inadequate ICT education system. Further, many ICT management experience and the firms joined to form the Moldo- firms underestimate the sector’s potential, and local enterprises choose impact of their associations on van Association of Private ICT foreign vendors because theyoften think that Moldovan ICT firms are the business climate and sector Companies. The new association unable to deliver cutting-edge IT solutions. The absence of an industry development. Representatives aimed to raise regional awareness CEED association compounded these challenges because addressing them from 10 Moldovan companies of the industry’s offerings and requires broad-based support from all industry stakeholders. The association board presents the participated in plenary sessions work with Moldova’s Ministry and face-to-face meetings during of Informational Development members’ vision and action plan for To address these problems, 25 firms formed the Moldovan Associa- the ICT sector. each mission. to reduce regulatory barriers to tion of Private ICT Companies, the first sector-wide association of its growth. Since its inception, the kind, in 2009. USAID’s Competitiveness Enhancement and Enterprise CEED received positive feedback association has formalized its Development (CEED) program assisted by providing information about from all participants, and many structure, increased its member- the experiences of successful associations in neighboring countries and reported increased awareness and ship from 20 to 26, levied an hosting and participating in meetings. To focus members’ attention on understanding of the need for a annual membership fee of $1,400, common challenges and help conceptualize and prioritize solutions, strong sector association. Fol- and hired an executive director. CEED aided the association in formulating an ICT policy white book lowing the presentations by the that describes the private sector’s vision for the industry and lays out Bulgarian and Romanian ICT The CEED project hosted regular strategic recommendations and concrete actions. Using the white book associations, an informal working working group meetings and helped the association. It engaged the Ministry of Informational Devel- group of business leaders from the organized the association’s first opment in fruitful dialogue concerning the country’s draft national ICT Moldovan ICT sector was orga- general assembly. In addition, strategy. nized. After working together for the project helped the association nearly a year, the group registered develop a brand and polished, “We are very grateful that USAID introduced us to the white book Moldova’s first sector association professional organizational concept, which was new to us. We were not aware that such an effec- in October 2008 (see below for a style. The association’s brand, tive mechanism existed to engage in dialogue with the government,” detailed description). Its members brand book, and Web site raise said the association’s president, Veaceslav Cunev. The association found included enterprises from the its profile domestically and help that the white book increased its credibility with the government. hardware, software, and telecom- promote the sector abroad. Officials who attended a presentation on the white book responded munications subsectors. by inviting the association to cooperate in developing the national ICT Perhaps most importantly, the strategy. IT Association Raises project helped the association Awareness of Industry develop an ICT policy white Needs book, which enumerated key Although ICT is one of the high- challenges and opportunities, est-paying and fastest-growing listed actions needed to grow the industries in Moldova, the coun- sector, and laid out strategic rec- try lacks a ministry-level strategy ommendations for public policies to stimulate the sector’s growth. and legal and regulatory reforms

46 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 47 format. It was a win-win situa- A communications campaign was tion. Both the presenters and the an integral part of the initiative. audience were very satisfied. The CEED developed a brochure, summit itself became a catalyzer.” IT Career: Try and Succeed, that emphasized the rapid profes- ICT Career Fairs Raise sional growth possible in ICT, Awareness with Youth compared to other sectors. The Although the information, com- brochure included several first- munication, and technology in- person success stories to promote dustry is one of the best-paying in ICT careers. The brochure was Moldova, it still lags behind law distributed in print and online and economics as popular college (http://career.ict.md). majors. To attract young people to the profession and bridge the Building on the success of the gap between employers and job 2008 fair, the 2009 and 2010 seekers, CEED supported three events made improvements to annual ICT Career Fairs, starting maximize efficiency, includ- in 2008. ing more active participation by students and young professionals; CEED and PoliProject Exhibi- a more comprehensive commu-

CEED tions, an event planning company, nications campaign; and more Moldovan Association of Private ICT Companies board members organized the fairs as part of the involvement by the private sector, — Chairman Gherman Suprunov (Starnet), Veaceslav Kunev including Cisco and Microsoft. (Deeplace), Executive Director Ana Chirita, and Iuri Coroban ComInfo ICT industry exposition. (Alfa Soft) — discuss the annual work plan. With CEED support, The goal was to enhance universi- 20 Moldovan firms formed the association in 2008. The association ties’ capacity to develop and deliver APPAREL AND TEXTILES raises regional awareness of the industry’s offerings and works with Apparel and Textile Shows Moldova’s Ministry of Information and Communication Technology market-driven ICT courses, raise to reduce regulatory barriers to growth. awareness among students and Raise Profiles and Boost other young job-seekers about how Sales that would improve the business lay the groundwork for productive and where to gain critical ICT In the apparel and textile in- environment. By using the white business relationships. knowledge and skills, and provide dustries, showing off styles and book as a guide to frame its mes- an overview of effective manage- fabrics and meeting buyers in sages, the association engaged the The association served as a main ment in the ICT context. person are essential to expanding Ministry of Informational Devel- partner and organizer for the into new markets and increasing opment in fruitful dialogue and is ICT Summit, helping to outline The career fairs brought together sales. Recognizing this, CEED now working with the ministry to the offer and gauge the interest colleges and universities with ICT supported the attendance of 21 develop a national ICT strategy. and participation of Moldova’s faculties; private ICT training textile and apparel companies ICT community. “The summit providers; businesses hiring ICT at seven major trade shows over With the Moldovan Associa- was exceptionally successful,” professionals; university graduates the life of the project. Presence at tion of Private ICT Companies said the association’s chairman, looking for new or better jobs in the shows, coupled with brand- officially formed, CEED sup- Veaceslav Cunev. Commenting on ICT; and high school graduates ing and technical assistance ported several important initia- attendance, he noted, “there was exploring careers in the field. (Chapter Two), raised the profile tives critical to growth, including unprecedented participation from Through a mix of presentations of Moldovan textile and apparel participation in the Gartner the government.” Oleg Macari, a by companies and educational/ companies with international Outsourcing Summit in London director at F-Line Technologies training providers, themed work- buyers considerably. All shows (page 44) and the first Moldova and member of the association, shops, and career counseling, generated numerous contacts ICT Summit, which brought said the summit provided an op- the fair helped bridge the gap and positive results. Russia’s large together ICT organizations and portunity for producers and clients between the demand for and sup- annual Textillegprom exhibition potential clients to share knowl- to communicate. “We worked in ply of ICT professionals. yielded exceptional results; two edge, establish connections, and this B2B [business-to-business]

48 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 49 participating apparel companies, struggled to survive. It slowly Noustil and Olympus, generated grew to its current size of 650 so many new contacts that they employees, but Ms. Raisa was opened offices in Moscow. The still unsure about how to grow table on page 50 details the trade the business and garner new shows, locations, and apparel clients.In preparation for the and textile companies that the exhibitions, CEED hired a program supported. consultant who provided as- sistance to Odema in design, CEED-supported companies also color management, creation experienced notable successes of apparel lines, and increas- from those shows. For example: ing the efficiency and quality as part of CEED’s productiv- • Odema. Hailova Raisa, director ity enhancement program of the Odema apparel company (Chapter Two). CEED sup- in Transnistria, said her 2009 ported Odema’s attendance at participation in Textillegprom Textillegprom and Interselec- in Moscow and Interselection tion to show its apparel lines in Paris had a significant effect to international buyers. As a on her business. “Without the result, Odema gained a major

help of the project, we would contract for school uniforms in CEED hardly be able to penetrate the Russia and another for a line Anatolii Dzernovich, president of Intercentre Lux, checks production launch documentation with a seamstress. Factory employees market,” she said. During its of men’s and women’s cloth- received training through the CEED-supported productivity most productive period, before ing for the Frank Eden label in enhancement program. Moldovan independence, the Belgium. former uniform maker for the Soviet Union boasted 7,000 • Filatura Ungheni. In 2008, employees and eight kindergar- after CEED helped Filatura tens. After the fall of the Soviet Ungheni improve the quality Baldine helped the company percent of Filatura’s total an- Union, however, the com- of its yarn (Chapter II), CEED prepare for the world’s largest nual revenue) to new clients, pany laid off thousands and design specialist AnnMaria textile fair, Germany’s Domo- including 15 tons to Poland, 40 tex exhibition, in January tons to Russia, and 70 tons to 2008. Ms. Baldine helped Romania. Since October 2007, develop a concept to showcase Filatura Ungheni has invested Participation of CEED-supported Apparel and Textile Companies in Trade Shows Filatura Ungheni yarns at a $1.3 million in new equip-

Event Location Year Companies Attending booth it shared with Molda- ment; won three new clients in bela. Coupled with improved Romania, Poland, and Russia; Week of Republic of Bucharest, 2006 Dana, Flautex, Gabiny, Rada, Vasconi Textil Moldova Romania quality of its products, and and gained more than $2 mil- as a result of its participation lion in additional sales. Ready to Show Milan, Italy 2006 Mobile SRL at Domotex, Filatura Ungh- Domotex Exhibition Hannover, 2008 Filatura Ungheni, Moldabela eni signed contracts with rug • Moldabela. In preparation for Germany manufacturers Dywilan in the Surfaces Expo in Las Vegas, Surfaces Expo Las Vegas, 2008 Moldabela Nevada, and the Domotex Nevada Poland and Sintelon Company in Serbia and continued to exhibition in Germany, both Textillegprom Moscow, Russia 2008, Artizana, Infinity, Intercentre Lux, Ionel, Iuvas, Mobile SRL, Noustil, Odema, 2009 Olympus, Portavita, Rumfelsia, Saltoianca, Steaua Reds, Tricon, Vestra, Vistline gain new clients. From Octo- in 2008, CEED called on ber 2007 to September 2008, AnnMaria Baldine to advise Interselection Paris, France 2009 Artizana, Iuvas, Mobile SRL, Odema, Olga Ceban, Portavita, Saltoianca Filatura Ungheni exported Moldabela on rug styles and CPM — Collection Moscow, Russia 2010 Artizana, Mobile SRL, Saltoianca 125 tons of wool yarn valued colors that would appeal to Premiere at $900,000 (more than 12 American and European buy-

50 The Connections: Building Strong Associations and Networking Regionally and Abroad The Connections: Building Strong Associations and Networking Regionally and Abroad 51 MOLDOVACEED / ANGELA CEED POTTER business. PDA’s of 12 and percent Artizana for sales in $260,000 representing Artizana, from month per jackets 3,200 nearly ordering PDA began 2010, January In work. Artizana’s of quality the seeing after Barbour with deal the brokered PDA Manufacturing Barbour. company, clothing UK prestigious the for clothing makes company the where factory the off shows Aldatova Angela Director Assistant Artizana ers. Ms. Baldine accompanied Barbour, a prestigious UK the firm’s team to Domotex to clothing company, and works advise them on current design with 40 factories in Bulgaria and color trends that could be and one in Macedonia. PDA incorporated into future prod- representatives visited Moldova ucts. She returned to Moldova twice to determine whether in May 2008 to help the com- companies there could produce pany develop collections and clothing to Barbour’s high design a new catalog for use in standards. CEED organized Europe and the United States. and took part in visits to four As a result of its participation apparel companies: Saltoianca, in the Domotex exhibition, Artizana, Codru, and Intercen- Moldabela signed new contracts tre Lux (Dubasari). In January with existing clients valued at 2010, PDA began ordering approximately $7.3 million. nearly 3,200 jackets per month Customers commented posi- from Artizana, representing tively on its new designs, and €200,000 in sales for Artizana prospective clients from Europe and 12 percent of PDA’s busi- and the United States inquired ness. PDA plans to transfer half about its products. of its clothing manufacturing business to Moldova by 2011. Building Market Linkages with New Buyers Benefits • Standa (Finland). CEED Apparel Companies introduced Standa, which sells Due to the global economic crisis, uniforms, to five local apparel production in the Moldovan companies with experience in apparel sector dropped nearly 30 uniform production — Brio percent in 2008 from the previ- Impex Fantezia, Listex, Prevent ous year. To help cut-and-make Moldova, and Saltoianca. companies recover from the loss, Because Standa’s volumes are CEED actively made connections limited, however, the company with new buyers in 2009. The is still trying to determine an project recommended Moldovan affordable way to ship from manufacturers to prospective Moldova. clients, provided manufacturers’ profiles, accompanied buyers dur- • Finlayson (Finland). CEED’s ing company visits, and provided assistance in facilitating a logistical information on doing dialog between Finlayson business in Moldova. CEED and Tirotex in Tiraspol about facilitated three successful link- producing bed linens led to a ages between foreign companies successful trial order. CEED and Moldovan suppliers: PDA helped Finlayson resolve Manufacturing and Finlayson problems transporting finished and Standa companies. goods to Finland by making introductions to several local • PDA Manufacturing (UK). transportation companies and PDA Manufacturing bro- selecting one that could trans- kers garment production for port affordably. A worker irons a garment at Intercentre Lux, whose collection was showcased at the February and September 2009 and February 2010 Federal Trade Fair for Apparel and Textile (Textillegprom) exhibitions in Russia. CEED supported Intercentre Lux’s participation.

54 The Connections: Building Strong Associations and Networking Regionally and Abroad CEED The Connections: Building Strong Associations and Networking Regionally and Abroad 55 CHAPTER FOUR The Money: Accessing Finance to Grow Companies

All businesses need short-term quickly. It enables enterprises to financing of working capital to increase the size and frequency of maintain and grow. Regular orders — thereby increasing sales access to this capital through ap- and profits — without tying up propriate and adequate financial collateral. Banks get the benefit of mechanisms can unlock export gaining new and better credit- and trade development, enhanc- qualified clients and earning ing competitiveness across all higher profits from POF transac- levels of the economy. tions.

In the past, Moldovan banks ARF offers secured loans in mainly offered traditional loans, which accounts receivable are which required fixed assets as pledged as collateral in exchange collateral and rigid payback for cash. This method is most schedules. This kept manufactur- often used by businesses facing ing businesses from purchasing short-term cash flow problems. additional inventory to produce goods even when they had lined Businesses most in need of these up guaranteed buyers. instruments tend to experience growth that outpaces available Recognizing this constraint, working capital or seasonal sales CEED introduced two new spikes that can strain cash flow. financial products, purchase order These circumstances are common finance (POF) and accounts in the wine and apparel indus- receivable finance (ARF). POF tries. is a form of short-term financing that allows a company to pur- USAID tapped Crimson Capital chase inventory or finished goods consultant Rick Currie to intro-

The short-term financial products that CEED introduced to banks made it possible for companies to increase the size and number of orders without tying up collateral. ngela potter

CEED / A The Money: Accessing Finance to Grow Companies 57 POF SCHEME duce POF to three commercial their own banks, CEED began banks — Fincombank, Mobias- providing POF implementation Delivers raw material banca, Moldindconbank — in assistance to three additional Submits purchase order or nished goods “ POF is a flexible tool 1 5 2006 and 2007. His approach commercial banks — Moldova 6 for reliable businesses, included: Agroindbank, Banca Sociala, and Produces and Buyer delivers products Seller Supplier a key for development, Eximbank. Mr. Currie used the • Providing the banks with draft same methodology to introduce Buyer pays Submits Money to supplier Submits purchase Loan Submits for raw material and an impetus for POF procedures and related the concept and train bank staff. bank/balance 9 8 invoice 2 3 to seller 7 invoice 4 to seller order for or nished goods POF loan new accomplishments. documentation to seller Fincombank became the most ac- The uniqueness of • Helping banks integrate POF tive in promoting and using POF, this product is that it into their existing documenta- providing POF loans mainly tion by reviewing and adjusting to businesses in the CEED- Bank enables the borrowing credit policies and procedures, supported wool sector. The bank company to generate loan and collateral agreements, also provided POF loans to and related processes and rules Moldabela rug factory, Filatura sales that exceed Ungheni yarn factory, and several its current financial • Training loan officers from wool collectors in the pilot branches and assisting region, which CEED referred to Accounts receivable financing. bank’s management expressed possibilities, thus them in reviewing and process- the bank. The successes of the The success of Fincombank’s lingering concerns about collec- providing a basis for ing initial POF loans other banks varied depending on POF program prompted CEED tion procedures in the event of their structures and commitments to propose to help it launch an- default. Therefore, no more ARF business growth. After introducing the program, from bank management. other trade finance tool, ARF — loans will be issued until the legal Together, we can it became clear that the banks considered the next logical step concerns surrounding this type of were offering POF only to exist- By the end of September 2009, for businesses after POF. transaction are fully addressed. achieve more! ” ing customers with good credit client banks had issued 44 loans histories. The enterprises from valued at an estimated $5.9 mil- In March 2008, CEED and Fin- Commercial Leasing Svetlana Polisciuc Proves Valuable Finance Chief of Credit CEED’s target sectors were not lion. These loans have enabled combank’s management began Division, Fincombank clients of the three banks and so more than $12.1 million in sales, examining the issues involved Tool for CEED Sectors did not benefit from the prod- as demonstrated in the chart, with ARF, including legal issues Until recently, most people in uct. To make POF accessible to below. related to accepting accounts Moldova saw leasing as a way to target sector companies through receivable as collateral. These buy a car, not as a financial tool discussions involved the Ministry to expand a business. Similar to of Justice and USAID’s Access to automobile leasing, commercial Credit Initiative Project. Because leasing requires only the leased Bank/Year Number of Loans Loan Value (USD) Sales Value (USD) the review revealed complications item as collateral to secure the Fincombank 13 $1,158,417 $2,670,012 that could not be immediately loan. Obtaining approval for Mobiasbanca 1 $201,261 $670,870 resolved, CEED and Fincombank commercial leasing takes less Year 2 Total 14 $1,359,678 $3,340,882 decided to move forward with a time than for standard loans. For Fincombank 13 $2,464,474 $3,655,984 preliminary version of ARF that the apparel and wine industries, Moldindconbank 6 $1,433,154 $2,106,815 did not rely fully on accounts which require specialized equip- Moldova Agroindbank 2 $50,060 $792,173 receivable security but on liquid ment to expand, commercial Banca Sociala 3 $232,049 $410,586 assets such as those used to secure leasing is an attractive alternative Year 3 Total 24 $4,179,737 $6,965,558 POF loans. to standard loans. Moldova Agroindbank 3 $266,887 $1,649,397 Banca Sociala 1 $44,321 $79,778 By the end of September 2008, CEED’s goal of increasing access Eximbank 2 $60,157 $73,708 the bank had made three ARF to trade finance mechanisms Year 4 Total 6 $371,365 $1,802,883 loans valued at more than aligned with the results of joint Grand Total 44 $5,910,780 $12,109,322 $200,000. Despite this, the market research it conducted with

58 The Money: Accessing Finance to Grow Companies The Money: Accessing Finance to Grow Companies 59 the Agribusiness Development In parallel, CEED helped SUCCESS STORY Project in April 2007. The study, improve back-office operations, based on nationwide research on reducing delinquencies greater Innovative Financing commercial leasing opportunities than thirty days from 21 to 7 and business preferences, found percent in the span of a year. Funds Growth that the potential for commercial Because of this change and in- leasing within the following two tensified business-level sales and years could reach $100 million marketing efforts led by CEED, in winemaking, $17 million in IMC’s commercial leasing opera- Constantin Manole, general director of the Maviprim-Com agribusiness light industry, and $24 mil- tions grew quickly and substan- trading company in Balti, northern Moldova, needed additional financ- lion in agro-processing. It also tially. By the end of September ing to expand his business. His suppliers had plenty of wheat, sunflower revealed high interest in access 2008, IMC had issued 68 leases seeds, and other items to meet the flood of orders that Maviprim- leasing within the private sector. with a total value of nearly $2.3 Com received from cereal and sunflower processing companies. million — $1.9 million of which However, without sufficient short-term capital, there was no way for As a result, CEED met with IMC financed itself. the company to increase purchases and sales. three of the five active leasing companies on the market. IMC Finally, due to CEED assistance A few years ago, Moldovan banks offered mainly traditional loans that Leasing, backed by the U.S. in developing its business strat- required fixed assets as collateral and were not adjusted to the length investment fund NCH Capital, egy, IMC (which was renamed of time a company might need the funds. This structure kept Mr. showed promise and requested Express Leasing at the end of Manole from purchasing additional agricultural crops from Moldovan support to build staff expertise 2009) received a $2.7 million farmers even though he had lined up guaranteed buyers. As a client and institutional capacity to credit line from the European of Fincombank’s Balti branch, he was interested in a new product, introduce a commercial leasing Bank for Reconstruction and purchase order financing (POF), that the bank was launching with the program into its portfolio. Development (EBRD). Nego- assistance of USAID’s Competitiveness Enhancement and Enterprise tiations with EBRD had begun Development (CEED) project. POF is a trade finance product through USAID tapped leasing expert prior to the assistance CEED which banks provide loans based on purchase orders and use liquid Stewart Pirnie to tackle the issue. provided; however, according CEED instruments as collateral. Mr. Manole believed that POF could solve his Mr. Pirnie worked with IMC to IMC management, CEED’s short-term financing needs. Leasing to establish relation- involvement accelerated and Maviprim-Com Director Constantin ships with equipment vendors enabled EBRD’s positive decision Manole and Iulia Baxan, director of In eight months, he took out seven POF loans totaling $1.35 million. so they could provide leasing on the credit line. Fincombank’s Balti branch, discuss POF Obtaining the first loan took just two days — and no fixed assets to their clients in the same way loan terms and conditions. were required as collateral. The POF loans enabled Maviprim-Com to they cooperated with automobile CEED representatives visited buy small quantities of grains from nearly 1,800 Moldovan farmers and dealers. numerous target companies fill orders for larger quantities from more than 300 local and foreign to discuss these new financing buyers, resulting in sales of $1.5 million. With Mr. Pirnie’s help, IMC opportunities. In the textile and Leasing restructured the or- apparel sector, CEED presented Mr. Manole is now looking for new ways to expand his business, but he ganization within six months POF and leasing options for stresses that it is virtually impossible to do so without outside financ- to reflect new procedures and companies participating in an ing. “I am looking forward to seeing Moldovan banks provide more workflow to handle commercial apparel upgrading workshop in innovative loan products to meet companies’ specific needs,” he says. leasing. The company signed 2008. That same year, CEED Manole. With CEED’s support, Fincombank has approved 26 POF cooperation agreements with organized a seminar within loans totaling $3.6 million. four vendors: Agrotehcomert for ComInfo for IT firms and com- combines; Autoprezent for con- mercial banks to address how struction equipment and trucks; to finance the sector for faster Inducat for apparel; and Micro- growth. cel for forklifts.

60 The Money: Accessing Finance to Grow Companies The Money: Accessing Finance to Grow Companies 61 CHAPTER FIVE Best Practices and Lessons LearnED

CEED achieved significant competitiveness that included success in enhancing the com- enhancing product quality petitiveness of private Moldovan through improved production enterprises from three industries processes and technologies, — information and commu- establishing market linkages, nications technology, apparel building workforce capac- and textiles, and wine — and ity, and improving the busi- strengthening industry clusters ness environment. Although and improving the business envi- CEED did not initially focus ronment for these industries. on workforce development, it quickly became apparent that During the five-year project, project support was required in CEED’s activities and interven- this area to stimulate industry tions revealed several important growth, particularly in the ICT best practices and lessons learned. sector.

1. Take an inclusive approach 2. Maintain flexibility in program to industry competitiveness. design. The ability to adapt and Enhancing competitiveness is respond to change — both a complex task that requires opportunities and constraints interventions at several lev- — in the global, country, and els. Focusing on one without business environment is criti- considering the others can cal. To respond to the global undermine the impact of any crisis that affected Moldovan development project. Recog- enterprises at the end of 2008, nizing major gaps in the indus- CEED tailored its intervention tries it assisted, CEED devel- strategy by providing addi- oped an inclusive approach to tional support in searching for

Igor Luchianov, co-owner of Et Cetera winery, walks in the vineyard with his daughter, who he calls “the next generation of Moldovan winemakers.”

CEED / ANGELA POTTER Best Practices and Lessons LearnED 63 new markets and establishing panies aroused widespread business linkages. interest and adoption of this activity. Pioneering IT com- Flexibility in project design panies’ positive response to IT can also allow for coordination Mark led other firms to opt in of activities and interventions to the program in later years, with other projects and donors and the success of the Moldova to leverage resources and scale Wine Guild became a model up activities to assist beneficia- that accelerated the efforts of ries. Through cooperation with the Moldovan ICT industry projects funded by USAID and to establish an association of other donors, CEED leveraged its own. The development of more than $200,000 for proj- strong, competitive enterprises ect activities and beneficiaries. motivated Moldovan industries For example, in cooperation to become more competitive. with two EU-funded export promotion and investment 4. Build buy-in through benefi- attraction projects, CEED ciary cost-sharing. CEED not increased the participation at only required cost-sharing from international trade shows for beneficiaries but also allowed all three target sectors. In ad- them to take part in planning. dition, by partnering with the For instance, the top-focus USAID Regional Competitive- wine markets in were deter- ness Initiative, CEED piloted mined after thorough consul- software process improve- tation with leading wineries. ment technologies such as IT Likewise, sector associations Mark and CMMI. Finally, by were an important counterpart cooperating with the EBRD, and contributor to project’s an- several CEED-assisted apparel nual work plans. Beneficiaries companies received additional that help to plan activities are support to complete their cor- more apt to share costs; and porate rebranding efforts. the combination of planning and cost-sharing leads to strong 3. Innovate, share and replicate. commitments. CEED began by selecting as beneficiaries progressive enter- One key objective of CEED prises with the commitment was providing support to help and capacity to absorb innova- industries enhance com- tions in business processes, petitiveness in domestic and product quality and develop- international markets through ment, and marketing. Sharing increased sales. Project experi- implementation results with ence revealed several important industry stakeholders allowed lessons about trade promotion: the project to build industry readiness gradually and expand • Narrow the market focus. initiatives to other enterprises When resources and capac- in the following years. Early ity are limited, it is most successes in brand-building effective to target a smaller initiatives with apparel com- number of the most promis- Following CEED recommendations, Bostavan Holding invested €1 million in new equipment for its Purcari winery (shown in photo) and its sister winery, Bostavan. With the new equipment, processing capacity at Pucari increased from 700 tons to 1,000 tons.

64 Best Practices and Lessons LearnED CEED Best Practices and Lessons LearnED 65 ing markets. It is important early. Deals can take time to ing and sales efforts. This to lead the process. How- to use trade data and engage develop, so market link- is particularly true for the ever, the project must be an stakeholders to help define age activities should begin wine and ICT industries, active facilitator, champion, specific markets for export quickly. Successful medium- where local companies com- and coach. promotion. In the wine and long-term deals for such pete more with companies industry, a major goal for branded products as bottled from other countries than • The primary considerations CEED was supporting mar- wine or clothes are complex, with Moldovan firms. How- for assisting an industry ket diversification away from involving many factors. It ever, promoting a country association are promoting Russia, which accounted for takes time for buyers and requires a focused strategy sustainability and ensuring nearly 80 percent of exports. sellers to understand each and commitment from both that the support does not Although the European other and build trust. A the private and public sec- distort the group’s economic Union was defined as a thorough understanding tors. CEED provided best viability. focus, CEED went further of the market and how value when it focused on a and identified the five most business is conducted in a particular region or specific • Demanding leadership, attractive EU markets — given sector is important, markets and applied a broad ownership, and signifi- Germany, the Czech Repub- as is evaluating companies’ approach to country promo- cant cost-sharing from an lic, Poland, Romania, and readiness to invest their own tion rather than a scattered association helps keep its the United Kingdom. This money in long-term promo- and fragmented approach to priorities in line with those allowed the project to take a tional market development a large number of markets. of its members. more focused and inclusive activities. This enabled stakeholders approach to providing sup- to learn and apply effective • Larger associations are more port that enabled wineries to • Be persistent in promotion. promotion methods and viable because they better pursue these markets. Although they are excel- to replicate them in other represent the industry as a lent avenue for promotion, markets. whole and are economically • Promote the right product exhibitions require continu- efficient; therefore associa- for the right market. Paying ous and repeated participa- 5. Foster — don’t lead — industry tions should be encouraged attention to product quality tion to be effective. CEED associations. Strong industry as- to accept new members. — and, most importantly, selected Textillegprom in sociations are essential facilita- appropriateness for the Russia as a key exhibition tors of competitive and mature 6. Fortify public-private partner- intended market — is a pre- for the apparel industry. industry as agents of trust, ships. CEED worked with wine requisite for successful trade After 11 Moldovan apparel cooperation, knowledge, and and ICT industry associations promotion. CEED worked companies participated at innovation. CEED fostered the to develop policy white books with beneficiary enterprises Textillegprom a second launch of two important and defining the private sector’s to adapt their products’ and third time, six of them self-sustaining associations — agenda for industry develop- quality, style, and packag- started doing business with the Moldova Wine Guild and ment and government support. ing. Fifteen new apparel Russian clients. the Moldova Association of Helping the private sector brands were launched in the Private ICT Companies. When achieve a shared vision of Moldovan and Russian mar- • Pay attention to country as supporting the development of industry development strategy kets with CEED support. well as individual promo- associations, CEED learned: and a clear agenda for public Likewise, the preferences of tion. Country promotion policy and legal and regulatory selected EU wine markets and awareness is impor- • Associations are best built reform is a critical milestone were matched with a pro- tant, particularly for small from the bottom up by al- for effective public-private gram to improve the quality countries like Moldova that lowing industry stakeholders dialogue. and style of beneficiary win- are not well-known in the eries’ products, maximizing regional and international their chances for success. arenas. Effective country promotion is an essential • Start export promotion complement to enterprise- and marketing activities and industry-level market-

66 Best Practices and Lessons LearnED Best Practices and Lessons LearnED 67 3