No Bees, No Honey; No Work, No Money

STRATEGIES FOR BUSINESS IN MOSCOW

No bees, no honey; no work, no money

A PROPOS

The number of Muscovites registered as individual en- private entrepreneurs who got rich quickly and started trepreneurs has increased by 32 percent over the past to live well. five years. There are currently over 233,000 individual The road toward small and medium-size entrepreneur- entrepreneurs working in the capital, which is 60,000 ship in Russia has never been easy: business people more than in 2010. This fact was recently reported by have been given a green light here and there, many red Natalya Sergunina, Deputy Mayor for Economic Policy lights, weighed down by so many laws that growth and Property and Land Relations of Moscow. was impossible...And although there are still a lot of This is an excellent trend, especially considering the problems in this sector of the economy today, it is fact that just a short while ago those who wanted difficult to find people who are fundamentally opposed to start a private business could be put in jail for 3-5 to its existence. At least there aren’t any people like years. The Criminal Code of the USSR was extremely this in the Moscow Government. The Mayor himself strict in this regard! sets the tone. Just recently, Sergey Sobyanin made the following statement: “Small business is part of the The situation started to change with the beginning of foundation of any economy. During challenging times, perestroika. In 1987, a law legalizing self-employment small business becomes a source of economic growth. was passed. It was back then – on May 13th, 1987 – We know this, and are paying a lot of attention to this that the first Co-op restaurant, Kropotkinskaya 36, sector. The city is providing financial and material sup- opened in Moscow. Those who had a chance to visit it port to small business, along with tax benefits.” Suffice remember how delicious the food was – the burgers, it to say that it is now possible to open a business in borscht, baked veal with mushrooms and meat on a Moscow in just a few days. skewer with tomatoes. No other cafes in Russia ever had anything resembling this before. Unsurprisingly, By the way, there are a lot of foreigners working as small business started to blossom. There were not individual entrepreneurs in Moscow. Some of them only private restaurants, but also private stores, taxis, are featured on the pages of Capital Ideas. One of studios, repair shops and construction companies, them, Maurizio Pizzuti – a restaurateur from Rome farms – the list goes on. Just two months after the law who has been in Moscow for 20 years. He has lived was passed, there were about 600 different private through the toughest times here and never wanted enterprises in Moscow. to go back to Rome. Why? “Unlike in Italy,” Maurizio says, “there are plenty of opportunities in Moscow.” But not everything was going smoothly. The corporate world immediately encountered opposition from both party members and the general public. The former were guided by communist principles, while the latter Sergo Kukhianidze were motivated by irritation and jealousy toward the Editor in Chief

[email protected] CAPITAL IDEAS Moscow Official Founder: Department for External Economic and International Relations of the Government of Moscow Cooperation between Address: Tverskaya, 13, Moscow, 125032. two regions expands Ph: +7 (495) 633-68-66, Fax: +7 (495) 633-68-65 E-mail: [email protected] Mayor of the Russian capital Sergey Sobyanin and the www.dvms.mos.ru Minister President of Bavaria Horst Seehofer signed a joint Editorial staff: announcement on cooperation. Editor-in-chief – Sergo Kukhianidze Production crew of the edition: Elena Egorova (deputy editor-in-chief), Austrian business is ready to Tatyana Akimova, Gennady Charodeev, Vladimir Dolmatov, Marina Ershova, participate in large scale projects Evgeny Khokhlov, Sergei Levin, Pavel Lukyanov, Marina Ogorodnikova, New opportunities are opening up for Moscow and Vienna Anastassia Paloni, Vladimir Smelov, Dmitry Sokolov, Anna Tomkins, Marina Urshina 6 – 7 CAPITAL IDEAS STRATEGIES FOR BUSINESS IN MOSCOW

Publisher: Moscow Center for International Cooperation 8 – 13 CEO: Igor Tkach Address: 105005, 68/8, build.1, Baumanskaya str., Moscow, Russia Moscow Official Phone: +7 (499) 267-46-56 E-mail: [email protected] Showcase our work, General Partner: National Review Ltd appreciate the work CEO – Sergei Oposhnyanskiy Phone.: +7 (495) 784-69-71 of others E-mail: [email protected] Moscow became a focal point at the Consulting – Sergei Anikanov, Evgeny Khokhlov international exhibition of investment Design – Robert Saifulin and real estate MIPIM-2016, which Photo editor – Victoriya Oposhnyanskaya took place in the middle of March in Page layout – Alexander Saifulin Cannes Assistant – Nadezhda Ratanova Distribution – "Trans-Media" Ltd Acknowledgements to: PHOTO – www.mos.ru, www.dvms.mos.ru, ITAR TASS Agency, RIA-Novosti, Getty Images Russia, companies and organizations, represented in the issue. If you wish to get new issues of Capital Ideas, please, apply to: [email protected] The magazine is registered with at the Federal Authority of Legislative Control in Mass Media and Cultural Heritage Protection. Media registration certificate ФС77-53716, issued April 26, 2013. All reproduction permitted only with the Editor’s permission and reference to ‘Capital Ideas’. Distributed free of charge Published with support from the Department for External Economic and International Relations of the Government of Moscow Circulation : 7000 Signed into print 06. 04. 2016 Nothing Ventured Nothing Ventured Cover Story Russian wine with Luca Tavasci: The most Sergey Sobyanin: a Swiss personality important thing is that Small business Winemakers are particularly responsible professionals who approach their work, the suit fits! becomes a source of along with everything else in life, with We judge people by their clothes. This applies to strict perfectionism. A meeting with Swiss men as much as it does to women. Luca Tavasci, economic growth winemaker Renaud Burnier and his wife a 27-year-old style consultant at De Luca Sartoria, It’s a well-known fact that small size does Marina is the quickest way to confirm this has no doubts that this is the case. “Somebody like not preclude great content. This is true fact. Relying on techniques developed by Adriano Celentano can certainly afford to wear in both art and business. The Moscow experienced Swiss winemakers, they have whatever he wants, but this doesn’t apply to the Government completely agrees with this been making real Russian wine in Southern rest of us. Regular men must watch what they’re point of view. Russia for several years. wearing,” he said in an interview with Capital Ideas. 14 – 19 32 – 36 38 – 40

20 – 24 Face To face Horst Seehofer: The best way to create trust is through dialogue Bavarian Governor answers questions of Capital Ideas in an exclusive interview

26 – 29 What’s New

30 – 31 Moscow in words

April-June 2016 CAPITAL IDEAS 3 Nothing Ventured Nothing Ventured Nothing Ventured The place where Time to convert freshness is baked Anke Pötzsch: When In the beginning of Ostozhenka Street, one door closes, two feelings into action there is Austrian bakery that was The World Trade Center hosted a Russia- opened in October of last year by Martin new doors open India business day. The main topic for the Erichovich and Engelbert Edlinger. Walk The German holding company INTERPONT, new format for communication between through the glass doors of Engelpekar, which provides consulting and outsourcing businessmen from the two countries was and you immediately end up in a services and has been operating in Russia for the issue of mutually beneficial cooperation different dimension – a warm, cozy, over two decades, is a unique enterprise. It in the small and medium-size business almost homely atmosphere filled with wasn’t “imported” from abroad, but rather sectors. the smell of coffee and Austrian bread. founded from scratch right here in Moscow. 41 46 – 49 54 – 57

42 – 44 50 – 52 58 – 61 Nothing Ventured Nothing Ventured Expert tips Arnaud Jacquart: Russia is Jussi Tuisku: It's worth investing a fantastic school of life We are planning in Moscow French-born Arnaud Jacquart came to Moscow as a to strengthen our Swedish national Fredrik Svensson has student right before the coup of 1991 and immediately been living and working in Moscow fell in love with Russia. He considers himself to be presence here since 2007. He is a partner in law more Russian than French, manufactures electric No doubt, the most significant firm Mannheimer Swartling which bicycles in partnership with Russian defense plants decision was to localize our is the largest law firm in the Nordic and dreams that Tverskaya Street will one day be a manufacturing in the centre of countries. In this interview, Fredrik pedestrian area free of motorists. Russia, so that we can offer the Svensson talks about the continuing most competitive products for investment attraction of Russia and 45 reasonable prices i.e. value for its capital for small and medium businesses. Nothing Ventured money to our clients, said Head of Ruukki Russia answered questions New agency for investors from Capital Ideas In late March, Analytical Credit Rating Agency (ACRA), which was established in Russia at the end of last year, held a business breakfast dedicated to issues of its development.

4 CAPITAL IDEAS April-June 2016 Our interview Life&Leisure Nikolay Kovalyov: Unusual museums: valenki, The law should Bookshelf retro cars and Olympic bear work like an There are a lot of world-famous museums here Making Perfect in Moscow: the Tretyakov Gallery, the Pushkin electrical outlet.... Teri Lindeberg, founder and CEO of Museum, the Kremlin Armoury and so on. A lot of “Corruption is one of the biggest dangers Staffwell, is a remarkable woman. She Muscovites and visitors know about these museums for Russia,” NikolayKovalyov said in an know all ins and outs of doing business in and visit them on a regular basis. But our city also exclusive interview with Capital Ideas. Russia. At least she wrote a great book has other interesting, but less famous places to NikolayKovalyov is a member of the State titled Making Perfect, that is about what explore. Capital Ideas has compiled a list of unusual Duma, General of the Army and former employees want from their employers. museums that feature the most unexpected exhibits Director of the FSB. Here’s the extract from Teri’s book. in the city. 62 – 64 74 – 77 86 – 89

66 – 71 78 – 79 90 Face to Face This and That Life&Leisure Vladislav Tretiak: Savoir vivre a la Russe White collar fest: The cold war period People may think that the Russian soul it’s magic time! is mysterious, but there is very little in hockey has been mystery to it! They say that those who work hard play hard. Employees of The Boston Consulting Group over for a long time 80 – 85 don’t doubt this for a second! On May 6th, Moscow and St. Petersburg Life&Culture 92 – 96 will be hosting the 80th Ice Hockey World Championship. Before the event, Vladislav Food&Drink TRETIAK, the President of the Ice Hockey Entertainment for Federation of Russia, sat down for an everybody: From Roberto: exclusive interview with Capital Ideas. Queen Elizabeth to food like art 72 – 73 Julio Iglesias Federico Fellini famously said that life is a Moscow Vocabulary combination of magic and pasta. The Italian The cultural events of the spring and summer restaurant Roberto, which is located on will help the Moscow’s guests and residents Rozhdestvensky Boulevard, serves pasta and liven up any day of the week. And everybody many other dishes so magical that the life of will be able to find something they like. every visitor turns into a true dolce vita.

April-June 2016 CAPITAL IDEAS 5 MOSCOW OFFICIAL

Cooperation between two regions expands Mayor of the Russian capital Sergey Sobyanin and the Minister President of Bavaria Horst Seehofer signed a joint announcement on cooperation

Sergey Sobyanin pointed out that the last visit the Ba- cow’s technoparks; five more new enterprises are varian delegation paid to the capital was extremely pro- expected to launch operations in the near future. In ductive: a number of events followed, including Days of spite of the sanctions, the Moscow government re- Moscow in Bavaria. The cities also started to actively co- mains optimistic about cooperating with Bavaria, operate in the spheres of health care, culture, transport maintaining that there is plenty of opportunity for and more. In spite of the political and economic chal- collaboration. lenges, the regions continue their cooperation. In turn, Horst Seehofer thanked the Mayor of Moscow Over the 10 months of the past year, trade turnover and the delegation of the capital’s government for the between Moscow and Germany amounted to $20 bil- productive meeting. lion. “I hope that the Agreement we are singing today, an announcement of our plans to enhance our cooper- “I think that if we are signing another Agreement to- ation, will give new impetus to the development of our day, it should serve as the start to a new chapter in economic and cultural ties,” the Mayor of Moscow said. the history of our cooperation. That is, it should give us new impetus, as you have already said. Usually, this is According to him, Moscow has new opportunities and achieved most quickly and efficiently with the econo- platforms for investment. Among other initiatives, a de- my. Of course, we are targeting the economy with this cision was made to provide investors with special ben- Agreement. But I think that by the next time I visit Mos- efits. A network of technological parks has been created. cow, we can expand this cooperation to include spheres such as science and culture,” Horst Seehofer declared. ■ Sergey Sobyanin stated that there are already 850 Ba- varian companies operating in the capital. This year, Mr. Seehofer answers questions of Capital Ideas in an ex- another three companies were established in Mos- clusive interview on page 20 Austrian business is ready to participate in large scale projects New opportunities are opening up for Moscow and Vienna

The current state and prospects for cooperation project cost has been estimated to amount to about between the capitals of Russia and Austria were $4 billion. The Chinese company is taking care of the discussed on February 3 by Minister of the Mos- construction, the investments and the operations. cow City Government, Head of the Department There are lot of examples like this one in the capital for External Economic and International Relations these days,” the Head of the DVMS stated. (DVMS) Sergey Cheryomin and Austrian Deputy Minister of Science, Research and Economy, Depu- “It is true that we have a lot of competition in Mos- ty Chairman of the Austrian-Russian Intergovern- cow, including competitors from Asian countries,” mental Commission on Trade and Economic Coop- Ms. Gierlinger agreed, “but we have our advantages: eration Bernadette Gierlinger. our goods and services are all top-quality and we have our own unique know-how.” Sergey Cheryomin informed the Austrian side about existing opportunities to create new advanced tech- According to the Austrian Deputy Minister, there are nology plants in Moscow, went over the measures still over 400 Austrian companies and enterprises op- the city government has taken to improve the invest- erating in Moscow. Of course, these companies are ment climate, and talked about the Russian capital’s going through a rough patch right now. Nonetheless, development in light of the Western sanctions. Austrian business is interested in the Russian market and Vienna would like to participate in major projects. “Companies from China, Japan and South Korea are actively operating on the Russian market. Over the “Moscow is getting ready to host major athletic past few years, they have changed their approach to events, including the 2018 FIFA World Cup. We are foreign economic activity and are offering us package prepared to assist Moscow with the construction deals,” the Minister said, “They no longer simply want of economy-class hotels. Moscow and Vienna have to sell their goods and services. Business from these great opportunities for cooperation,” Bernadette Asian countries is accompanied by long-term financ- Gierlinger noted. ing. This is good for Moscow and for our partners.” After the talks were over, the plenary meeting for As an example, Mr. Cheryomin brought up an agree- the Austrian-Russian Intergovernmental Com- ment with a major Chinese company on the con- mission on Trade and Economic Cooperation took struction of a branch of the Moscow metro. The place in Moscow. ■

April-June 2016 CAPITAL IDEAS 7 MOSCOW OFFICIAL Showcase our work, appreciate the work of others

MIPIM is one of the largest and most prestigious international exhibition in Cannes. The delegation international annual forums in the sphere of invest- included Minister and Head of the Department for ment and real estate, which has been held regularly External Economic and International Relations of since 1990. A Moscow delegation headed by Marat Moscow Sergey Cheryomin, Minister and Head of Khusnullin, the Moscow Deputy Mayor for Urban the Moscow Department of City Property Vladi- Development and Construction, took part in the mir Efimov, Minister and Head of the Department

8 CAPITAL IDEAS April-June 2016 Moscow became a focal point at the international exhibition of investment and real estate MIPIM-2016, which took place in the middle of March in Cannes of Economic Policy and Development Maksim Reshetnikov, Head of the Department of Sci- ence, Industrial Policy and Entrepreneurship Oleg Bogachev, Chairman of the Moscow Committee for Support of Investment Projects in Construc- tion and Participatory Construction Monitoring Konstantin Timofeev, Chief Architect of Moscow and First Deputy Chairman of Committee for Ar- chitecture and Urban Planning of Moscow Sergey Kuznetsov and other officials.

The City of Moscow undoubtedly became one of the key focal points at MIPIM, and not just because the entire European business community is actively discussing the need to lift the sanctions against Russia. The exhibition featured daily events that were connected to Russian cities.

Moscow won awards across 7 different prestigious nomination categories, which were established by the London-based Foreign Direct Investment Magazine, published by The Financial Times. Sergey Cheryomin, Head of the Department for External Economic and International Relations of Moscow (DVMS) received special diplomas.

This year, 223 European cities participated in the contest. Experts took into account a total of 96 independent variables, including economic potential, human resources, costs associated with doing business, standard of living, quality of infra- structure, barriers to doing business, and strategies for attracting direct foreign investment. The best cities were selected by a special independent jury after all of the scores were tallied up. Each of the candidates competed against cities of the same size: large, medium-size, small and micro. Moscow won in a tough competition with West- ern European cities in the “Stable Development” nomination category. The capital of Russia also made the list of top 25 most “progressively devel- www.reedmidemphotos.com oping cities in Europe,” as well as the list of top 10 The capital of Russia made the list of top 25 "Most Progressively Developing Cities “Most Attractive” megacities in the world and the in Europe,” as well as the list of top 10 “Most Attractive” megacities in the world.

April-June 2016 CAPITAL IDEAS 9 MOSCOW OFFICIAL www.reedmidemphotos.com

www.reedmidemphotos.com

list of top 10 megacities in terms of “Efficiency of Ex- penses for Municipal Services.” Moscow also made the list of laureates competing in the “Most Attrac- tive City for Doing Business” and “Positive Approach to Entrepreneurship” nomination categories. It was included the list of top 10 cities in the “Economic Potential” nomination category, as well as the list of top 10 cities in terms of “Development of Human A Moscow delegation headed by Marat Khusnullin, the Moscow Deputy Mayor for Ur- Potential and Attractive Lifestyle.” ban Development and Construction, took part in the international exhibition in Cannes. Megacities such as London, Lisbon, Kiev, Vilnius, Co- logne, Dusseldorf, Zagreb, Ljubljana, Minsk and others won awards at the exhibition as well.

The exhibition’s foreign participants were especially interested in the investment conference called “Russia as an Innovative Vector in City De- velopment,” which took place on March 15 at the Cannes Palais des Festivals and was organized by Reed Midem, the Moscow Government and Kom- mersant Publishing House. Russians also excelled in this sphere. After all, any event like this one gives experts the opportunity to talk with the investment community. The fact that the Ruby Room, which was where the discussion was held, was completely filled shows that Europe is extremely interested in investing into various projects in Moscow and in Russia as a whole. www.reedmidemphotos.com

10 CAPITAL IDEAS April-June 2016 The speech made by Marat Khusnullin, the Moscow Deputy Mayor for Urban Development and Con- struction and the Head of the Moscow Delegation at MIPIM-2016, was particularly popular with the audience. Mr. Khusnullin talked about specific example of major projects that foreign investors can participate in.

“Over 80 km of railway lines and over 40 transpor- tat stops are going to be commissioned in 2016. By the end of the year, Moscow will be a global leader in terms of rail transport. Moreover, we are planning to complete the reconstruction of the Moscow Ring Railway, which means another 54 km of railway lines and 31 transportati stops. In terms of our transportation network, Moscow is 2-3 times behind major global megacities. Our goal is to ensure that the Russian capital makes the list of the top five cities in terms of rail transport. We are inviting investors to participate in these promising projects,” Marat Khusnullin said.

Minister of the Moscow Government, Head of the Department for External Economic and Internation- al Relations of Moscow Sergey Cheryomin pointed Moscow won awards across 7 different prestigious nomina- out that Moscow is relatively optimistic about the tion categories. Sergey Cheryomin, Head of the Department future in spite of a decrease in investment amounts for External Economic and International Relations of Moscow coming into Russia and Moscow. According to (DVMS) received special diplomas.

April-June 2016 CAPITAL IDEAS 11 MOSCOW OFFICIAL www.reedmidemphotos.com

him, Russia remains on the list of top 10 countries time, the devaluation of the ruble has played a posi- in terms of attracting direct investment (a total of tive role and, in spite of visible stagnation on the $70 billion). market, transactions on the Russian market are still taking place. However, the potential of the Russian market is still undervalued, including in terms of development. “There is a lot of work to be done,” the head of the Of course, this has a negative impact. At the same DVMS pointed out, “The efforts to create and infra-

Within the scope of the Moscow delegation’s business program from MIPIM-2016, the Head of DVMS Sergey Cheryomin met with the Mayor of Riga Nil Ushakov.

12 CAPITAL IDEAS April-June 2016 structure inside the Russian capital is an excellent reason to invest capital. Moscow is successfully trying to create a favorable investment climate. The city can already afford this, given that we have a balanced budget and considerable reserves in the banks. We ae counting on private investors, including foreign investors, to invest 40-50 percent into various projects.”

During a meeting with Mr. Cheryomin and Mr. Bo- charov, the Mayor of Dusseldorf Thomas Geisel expressed his appreciation for the participation of the Moscow delegation in the exhibition. “In September 2016, Moscow is hosting Days of North Rhine-West- phalia. We would like to set up a similar economic conference and discuss the establishment of a digital environment in the Russian capital. Dusseldorf has a lot of experience in implementing innovative technology across many different sphere of city life.” www.reedmidemphotos.com Within the scope of the Moscow delegation’s business program from MIPIM-2016, the Head of DVMS Sergey Cheryomin also met with the Mayor of Riga Nil Ushakov, as well as with the Mayor of Toulouse Jean-Luc Moudenc. The friendly discussions focused on the development of partner relations and business ties between cities.

The Minister of the Construction Industry, Hous- ing and Utilities Sector of the Russian Federation Mikhail Men, who visited MIPIM-2016, was very specific in his interview with our magazine: “Partici- pants of the Russian delegation and our businessmen have finally understood how the MIPIM works. Now, the regional authorities and business people come to Cannes less to showcase their accomplishments and more to try to attract investors. This is a completely normal process. One can only hope that this approach will become more common at other international exhibitions.” During a meeting with Mr. Cheryomin, Mayor of Dusseldorf Thomas Geisel expressed MIPIM is one of the most influential and prestigious his appreciation for the participation of the Moscow delegation in the exhibition. events in the sphere of real estate. Last year, the exhibition was attended by 21,000 people from 93 countries. This year, the numbers increased to over 25,000 people from 100 countries. This is a record for MIPIM! Aside from the few thousand European companies, the US, Canada, China, Turkey and Thai- land opened their stands at the exhibition for the first time this year.

Dues to the economic crisis, there were fewer companies from Russia at the French exhibition this year – there were 250 in 2015 and just over 200 in 2016. In 2014, 500 Russian companies and organizations visited the MIPIM. During a conversation with Capital Ideas, one of the organizers of MIPIM and directors of the “Real Estate” Filippo Rian said that every exhibition has the same outcome: “You showcase your work, appreciate the work of others and make valuable deals.” ■ www.reedmidemphotos.com

April-June 2016 CAPITAL IDEAS 13 COVER STORY Sergey Sobyanin: Small business becomes a source of economic growth It’s a well-known fact that small size does not preclude great content. This is true in both art and business. The Moscow Government completely agrees with this point of view.

14 CAPITAL IDEAS April-June 2016 Paying attention

Sergey Sobyanin is famous for his positive approach lenging times, small business becomes a source of to small business. The capital’s mayor has recently economic growth. We know this, and are paying a made the following statement: “Small business is lot of attention to this sector. The city is providing fi- part of the foundation of any economy. During chal- nancial and material support to small business, along with tax benefits.”

At this point, small and medium-size business in Moscow accounts for 59 percent of the city’s rental stock. The total turnover for these enterprises amounts to 16 percent of total turnover for all enterprises in Moscow. According to the Russian Fed- eral State Statistics Service, there are over 360,000 small and medium-size enterprises registered in Moscow. Moreover, the capital holds the leading position in Russia in terms of growth of registered entrepreneurs. For example, SME growth for 2010- 2014 amounted to almost 40 percent. According to the Federal Tax Service, there were 39,500 individual entrepreneurs registered in Moscow in 2015, which is 9.6% higher than in 2014. Moscow is home to about 8 percent of all SMEs registered in Russia. A combined 1.9 million people (over 25 percent of all employed people in Moscow) work for small and medium-size enterprises. Of course, the city is primarily interested in high tech, innovative business that pays high

April-June 2016 CAPITAL IDEAS 15 COVER STORY

salaries, since this translates into high tax revenues. SOS – call for help! 422 innovative enterprises have been established in Moscow over the past 5 years. The city is currently If some part of the process is taking too long – the home to 20 technoparks – a number that is project- permits are taking a while to issue, for example – ed to double by the end of this year. the applicant has the option to contact the Busi- ness Protection Headquarters ([email protected]). From trade to advanced There are plenty of cases in which the center can help the entrepreneur overcome administrative manufacturing barriers, including cases where an official is not doing their job. A lot of SMEs have already received For small and medium-size businesses in Mos- assistance. cow, trade remains the best source of income – it has been in the lead for the past few years. It so The main objective of the Business Protection happens that the capital is home to a lot of trade Headquarters was to create favorable conditions routes, major logistics centers and so on. Opera- for entrepreneurial activity and increase the capi- tions with real estate and provision of services are tal’s investment appeal. There is a hotline that op- in second place, while construction comes in third. erates every day of the week. Those who contact Then there is manufacturing, transport and com- the Headquarters can receive consultations from munications, provision of communal, social and experts and lawyers. The Headquarters work with other personal services. In Moscow, the main play- the executive authorities in order to more effec- ers of the industrial sector are still large-scale en- tively protect the rights of entrepreneurs and in- terprises – the auto industry, aerospace industry, vestors. Road maps for improving the investment electronics manufacturing, new materials, phar- climate in the region have been developed. maceuticals and so on. The center is actively growing and developing. In Nevertheless, there has been a shift to increasing vol- 2012, for example, the Business Protection Head- umes of innovative resources based on intellectual quarters established cooperation with the Agency property in the capital. Our technoparks and tech- for Strategic Initiatives (ASI). Collaborative proj- nopolises provide about a million square meters of ects include the development of business service space for high-tech manufacturing. center chains located in technoparks. These are

16 CAPITAL IDEAS April-June 2016 powerful service centers that are located within walking distance and can provide the entrepreneur with the full spectrum of government services, as well as help find partners, investors and qualified employees. Great city for doing business

In general, there are a lot of different types of support the city has made available – tax services, property services, as well as information and consultation services. In Moscow, entrepreneurs have simplified access to financial resources, the share of public procurement from SMEs is increasing, and individual entrepreneurs get tax breaks if they re- new their registration. Those who have switched to the simplified tax system (STS) or a patent tax system (PTS) also get tax breaks: a 0 percent rate for a period of 2 years.

Property support for entrepreneurs in 2015 amounted to 7.2 billion rubles. This includes preferential purchase of the leased premises (installment payments for up to 5 years), and preferential rental rates for non-residential premises owned by the city – 3,500 rubles / sq. m.per year (the period of validity of the rental rate has been extended until July 1, 2016). Right now, over 6,000 entrepreneurs are taking advantage of these preferential terms. 3,367 contracts totaling 68 billion rubles have been concluded by SMEs in 2012-2015 as part of the program. It is projected that over 4,000 more contracts will be concluded over the next three years.

April-June 2016 CAPITAL IDEAS 17 COVER STORY

Another important measure developed to support SMEs is increasing the public procurement share. In 2015, the capital’s small and medium-size business representatives received 108.3 billion rubles worth of public procurement orders (19.7% of total public procurement volumes). For the sake of con- venience, electronic platforms called “Supplier Plat- form” and “Trade Exchange,” where companies and individual entrepreneurs interact with government customers, were laucnhed. As of today, there are 40,500 entrepreneurs registered on the “Supplier Platform,” 66.2% of which are small and medium- size business representatives.

Just recently, the Moscow Department of Science, Industrial Policy and Entrepreneurship has been approved as a government body fully authorized to

www.meclean.ru evaluate and oversee the compliance of public procurement plans with the legal requirements that ensure the participation of small and medium-size enterprises.

So far as access to financial resources, The Fund of Small Business Credit Assistance (FSBCA) and the Foundation for the Promotion of Microfinance Ac- tivities have been established in Moscow for this purpose.

In 2015, the FSBCA provided 550 guarantees that totaled 3 billion rubles, which allowed enterprises to attract credit resources in the amount of over 6 billion rubles. The Foundation for the Promotion of Microfinance Activities has provided 418 micro- loans in the amount of 185 million rubles. Overall, with support from the FSBCA, small and medium- size enterprises has attracted over 55.3 billion rubles in bank financing over the past 5 years, almost doubling the indicator posted for 2005-2010.

An entire network of business support centers based on the SBI Small Business of Moscow has been created to assist entrepreneurs. The centers provide legal and consulting support for entrepreneurs across all business-related issues, from registration of the enterprise to employee training. Over 25,000 entrepreneurs have taken advantage of the services these centers provide. For example, last year alone the centers provided over 60,000 consultations.

Objectively speaking, it is obvious that Moscow is a great place to do business. It is no surprise that so many foreigners and people from other cities in Russia come to Moscow, just like it is not surprising that the number of new enterprises in the city keeps growing every year. These are the laws of the market – entrepreneurs flock to places where doing business is profitable, and helping business develop is the job of the government. ■

18 CAPITAL IDEAS April-June 2016 The SME sector in the beginning As of January 1, 2015, according to the Russian Federal State of 2015 Statistics Service:

There are a total of 4,5mln small and medium size enterprises operating in Russia

These enterprises employ over 18mln people, which accounts for 25% of all employed people In terms of the number of market participants, individual entrepreneurs make up the base of the small and medium-size enterprise sector – 2,4mln or 53,3% of all SMEs

Microenterprises account for – 1,9mln or 41% of all SMEs

Small enterprises make up 5,2% and medium size enterprises account of 0,3% of all SMEs

Enterprises classified as small and medium-sized businesses

SME category Number of employees Turnover

Microenterprise < 15 people < 60 mln rub Small enterprise 16 – 100 people < 400 mln rub Medium-size enterprise 101 – 250 people < 1 bln rub

April-June 2016 CAPITAL IDEAS 19 FACE TO FACE Andrei Sharonov Moscow never sleeps

Andrei Sharonov, Yes, it is a challenge as well. But it is a real opportunity and what is important – it is a reality. Deputy Moscow Mayor for Economic Policy, shared with CAPITAL IDEAS his Isn’t it a challenge?

vision of Moscow as an international Yes, it is a challenge as well. But it is a real opportunity and what is important – it is a reality. financial center

20 CAPITAL IDEAS January-March 2016 Horst Seehofer: The best way to create trust is through dialogue

The Bavarian Governor answers questions form Capital Ideas in an exclusive interview

Mr Minister-President, you were the first influ- What were the main topics you discussed with the ential German politician to visit Moscow in the President of Russia, Vladimir Putin, the Mayor of year 2016, at a time when relations between Moscow, Sergei Sobyanin, and the other Russian Russia and Germany leave a great deal to be representatives? Were these a kind of exploratory desired. Can one presume that your trip to the meetings or did you discuss specific projects? Russian capital will contribute to normalisation of bilateral contacts and a return to the main- President Putin and I agreed on collaboration between stream of constructive cooperation between the the Russian Federation and the State of Bavaria in the two countries? fields of business, science, education and culture. Ba- varia and Moscow have had a close partnership since Relations and contacts between Bavaria and Russia the end of the 1980s, with mutual delegation visits enjoy a long tradition and have been highly diverse – and exchange on all levels – from administration to in business as well as among communities, universi- business and culture. Not least, Bavaria was the first ties, museums and libraries. The path I take is always German state to open a representation in Moscow that of dialogue. I am of the conviction that dialogue in January 1995. We established a new foundation for is the means for diffusing conflicts. Exchange is im- cooperation between the City of Moscow and the portant for mutual understanding and, ultimately, State of Bavaria via a mutual Memorandum of Under- coming closer together. standing regarding bilateral collaboration.

April-June 2016 CAPITAL IDEAS 21 FACE TO FACE www.bayern.de

Among the German states, Bavaria is a particularly deal of social ties and traditions serving as common important and active business partner for Moscow. ground, which were not fully extinguished by the his- How can one characterise the current status of this torical catastrophes marking the 20th Century. For partnership? Are you happy with that status? example, German continued to be the most important foreign language in Russian institutions of education Approximately one in four German companies active still today, while Russian has always been offered in in Russia comes from Bavaria. This demonstrates how Bavarian secondary schools. Literature, theatre, mu- Russia is still viewed as an important future market, sic and visual arts have also always represented social especially in Bavaria. The billions in investments made ties among the people of our two regions, even under by Bavarian companies underscore that fact. At the the most adverse historical and political conditions. same time, economic relations have not remainedun- scathed by the current difficulties, of course. That is By pursuing cooperation projects with the City of why I would like to create an even more stable foun- Moscow and the Russian Federation, we are being dation for the close partnership between Bavaria and consistent in following our path in business, science, Russia through an increase in cooperation. education and culture. An institutionalised partnership has connected Bavaria with the City of Moscow One important factor in these relations is contact since 1999, which we have now renewed. This coop- in the cultural, humanitarian and public sector as eration encompasses in particular the fields of busi- well as civil society relations. How is interaction ness, culture, police, construction, environment and developing in these fields? healthcare.

There is one thing these highly varied activities have Mr Minister-President, let's come back to business. in common: they developed extremely swiftly and in- According to the German-Russian Chamber of tensively, especially from 1990 on. There were a great Commerce, around 400 of the nearly 6000 German

22 CAPITAL IDEAS April-June 2016 Das Zukunftsmodell "BMW Vision Next 100". © BMW Group www.bayern.de www.bayern.de April-June 2016 CAPITAL IDEAS 23 FACE TO FACE www.bayern.de www.bayern.de

companies active in Russia left the Russian marke- tions particularly affect the sectors of agriculture and tin 2015. How can this be explained? Is German en- food. The European Union's sanctions are the reac- terprise losing confidence in Russia? Is this a trend, tion to Russia's actions in Ukraine. Europe is looking or a temporary phenomenon? to leverage them to achieve implementation of the Minsk accords. And despite a great deal of progress, For some of the companies, the withdrawal can be there is still much to do. In the interest of everyone explained by the current situation. After all, the low involved, I hope that a solution to this conflict can be Russian rouble makes imports from Germany very ex- found soon. pensive for the companies engaged in Russia. Sanc- tions and counter-sanctions are also straining busi- How do you view the perspective of advancing the ness relations. The best way to create trust is through relations between Bavaria and Russia, between dialogue. There are positive cases, too. For example, Bavaria and Moscow? What should the two sides trade fair organisers like Messe München and Nürn- primarily do to achieve success in those relations? bergMesse are expanding to the Russian trade show market. Several Bavarian companies are now in the I firmly believe that personal contact and exchange in process of deciding to set up new production sites personal dialogue are what is important. That is why I in Russia or to expand them. That is why we should will be travelling to Russia again in autumn this year – work together to re-intensify the bilateral economic accompanied by a large delegation from business and relations over the medium-term. science. My wish is for Bavaria and Russia, Bavaria and Moscow to maintain and intensify their relations in More than once, you haven spoken out against personal contact. Western sanctions on Russia, which not only cause economic damage, but also a certain de- Mr Seehofer, you visited Moscow for the first time gree of nervousness in business community in April 2011. Have you noticed any kinds of changes circles. How do these sanctions and Moscow's in the Russian capital? What particularly drew your counter-sanctions affect German-Russian rela- attention? tions? When, in your opinion, will the Western sanctions be lifted? Unfortunately, the tight scheduling during international visits does not leave room forbecoming ac- The sanctions against Russia do, of course, also have quainted with and exploring a city. My impression impact on trade partners in the European Union, has been that of a thriving metropolis. Moscow is a Germany and Bavaria. The Russian counter-sanc- global city of tremendous dynamics! ■

24 CAPITAL IDEAS April-June 2016 useful info

Department for external economic and international relations of the Government of Moscow Address: 13 Tverskaya Street, Moscow, 125032 Ph: +7 (495) 633 68 66 Fax: +7 (495) 633 68 65 E-mail: [email protected] www.dvms.mos.ru Department of Science, Industrial Policy and Entrepreneurship of the Goverment of Moscow Address: 22 Voznesensky Pereylok, Moscow, 125009 Ph: +7 (495) 777 77 77 Fax: +7 (495) 957 05 92 E-mail: [email protected] www.dnpp.mos.ru Department of Economic Policy and Development of the Government of Moscow Address: 21 Voznesensky Pereylok, Moscow, 125032 Ph: +7 (495) 777 77 77, +7 (495) 957 72 17 Fax: +7 (495) 629 33 42 E-mail: [email protected] www.depir.ru Department of City Property of the Government of Moscow Address: 20 Bakhrushina Street, Moscow, 115054 Ph:+7(495) 777 77 77 E-mail: [email protected] www.dgi.mos.ru Moscow Exchange Address: Office 1: 125009 Moscow, Bolshoy Kislovsky per, 13 Office 2: 125009 Moscow, Vozdvizhenka Str, 4/7, Bldg. 1 Phone: +7 (495) 363 32 32, +7 (495) 232 33 63 Fax: +7 (495) 705 96 22 www.moex.com

April-June 2016 CAPITAL IDEAS 25 Garden Ring sidewalks to be widened

idewalks on the Garden Ring in Moscow will be widened within the scope of the “My Street” program. The project entails the reconstruction of one of the capital’s central ring highways. Project architects have Sproposed a return to the Ring’s historical appearance: they plan to plant about 1,500 new trees along the highway. The project will result in the emergence of 100 new squares and green areas in the city center, which will resurrect the Gar- den Ring’s historical appearance and make the street more comfortable. The project also entails the establishment of a uniform width for the roadway in order to avoid traffic bottlenecks and widen the pedestrian areas in specific sections. These areas will be equipped with energy-efficient lights and street furniture. There will also be benefits for motorists, as the optimization of the space will result in the creation of new parking areas.

This year, improvement works on the Garden Ring will en- the crosswalks near the entrances to residential areas will compass the section of the highway that stretches from Old be lifted to match the height of the sidewalks. Trees will be Arbat to Dolgorukovskaya Street (Smolenskaya Square, No- planted along the pedestrian zone. The color of the sidewalk vinsky Boulevard, Kudrinskaya Square, Sadovaya-Kudrinska- will serve as a navigation tool. The light granite part will be ya Street, Bolshaya Sadovaya Street, Sadovaya-Triumphalna- used for pedestrians, while the darker section will demarcate ya Street and Oruzheiny Pereulok). “The improvement works parking areas. Different shades will be used on the Garden will be completed in accordance with uniform standards, Ring to highlight promenades and transit areas. Thanks to which will enable us to combine all of these streets into a special paving in front of building facades, the sidewalks will single space,” the design documentation reads. Public trans- stay dry. This paving method will minimize the likelihood of portation stops will be equipped with electronic displays for deformations and distortions at the junction with the main transport schedules, ticket booths and free Wi-Fi. sidewalk paving. Moreover, around 800 new energy-efficient lights will be installed along the sidewalk and roadway. Work Special curbs about 50cm in height will be used to protect on the project is to begin in May, and will be completed in the the trees. Creating a uniform pedestrian area means that fall of this year. ■

First budget cruise

ext season, Mosturflot will launch a budget cruise proj- The ship will have a self-service restaurant that operates ac- ect on the 4-deck ship Knyazhna Anastasia. Tourists will cording to a free flow system. The restaurant will be able be able to select between a full or partial ticket, as well to service up to 160 tourists at a time, including tourists as opt to purchase a ticket without a meal plan, order who purchase meal plans and those paying out of pocket. individualN tours or plan their own route for exploring tourist at- The ship deck will be equipped with a cafe-bar that will of- tractions after receiving a free consultation and map of the city fer a wide range of drinks, as well as cold and hot snacks. on board of the ship. This summer, taking a cruise along the rivers of Russia’s central region will be available to cruise lovers with different budgets. Cost reduction is possible with the help of a flexible system that allows guests to hand-pick which services will be included, including meal plans.

Prices start at 2,300 rub/day per person. The ticket includes: accommodation in a cabin, travel information, lectures, music, entertainment and children's programs on board. There are a total of 16 cruises, ranging in length from 3 to 13 days, planned for 2016 (all will depart from and arrive in Moscow). In 2016, Knyazhna Anastasia will be able to accommodate a total of 4,800 tourists. ■

26 CAPITAL IDEAS April-June 2016 CSKA will have its own metro station and park

eonid Pechatnikov, the Deputy Mayor of Social Devel- opment, has announced that the Moscow Interdepart- mental Committee decided to name the metro station in Khodynskoe Pole after the athletic club CSKA. The Lchange will be carried out at the initiative of the Ministry of Defense employees, as well as Central Army Sports Club fans who have pointed out that Moscow already has stations named after the athletic teams Dynamo and Spartak. The station, which is currently under construction, will be a part of the new metro ring line. The new line is to be commissioned in 2020. In just three years, 60 kilometers of metro rails and 34 new stations will be constructed.

The Third Interchange Contour will have five new stations: Petrovsky Park, Khoroshevskaya, Khodynskoe Pole, Shelepikha and Delovoy Tsentr.

A big park will also be erected next to the CSKA stadium. Ac- this summer. Specialists have already completed the con- cording to Deputy Mayor for Urban Development and Con- struction of all stands and the canopies over them, mounted struction Marat Khusnullin, the stadium and the surround- the facades of commercial lodges and installed elevators. On ing area will be open to the public. Mr. Khusnullin also noted the football field, the base unit, drainage, aeration and heat- that the main parts of the CSKA stadium construction project ing systems, as well as turf and field firmware have all been have been completed, and the arena is scheduled to open completed. ■

A pedestrian area will appear next to the Polytechnic Museum

street gallery will appear in place of the lower tier about 4 meters in width. Tour buses and other transport of the Polytechnic Museum. The gallery will bring will be able to drive up to the museum from Lubyansky together existing pedestrian routes in the center Proezd. of Moscow. The gallery will be established next to Ahouse 3/4, on Novaya Ploshchad. The street gallery will The new pedestrian area will join together existing be four meters below the sidewalk, and pedestrians will routes in the center of Moscow: Nikolskaya Street, be able to descend into the gallery via the stairs next to Myasnitskaya, Maroseika – Pokrovka, as well as Zarya- Solovetsky Stone. Pedestrians will be able to get to Ilyin- dye Park. sky Square via an underground passage. The establishment of this area is part of the Polytechnic The Museum Park will be separated from the sidewalk Museum reconstruction project, which is being carried and roadway with a green, multi-tiered retainer wall out by the Government of the Russian Federation. ■

April-June 2016 CAPITAL IDEAS 27 Avenue South West Shopping Center is now open

he area around Yugo-Zapadnaya metro station did not have any modern shopping centers for a long time. Con- sequently, the big empty space became home to a large number of small kiosks. Now that a modern shopping Tcenter has been erected, local residents, as well as students and professors who spend a lot of time in the area, have the opportunity to relax and shop comfortably.

“Over the past few years, construction of shopping centers and big stores has been developing in Moscow. Over the course of five years, the total area of shopping centers has increased by almost twenty-five percent, which means that Moscow is one of the global leaders in terms of this indicator. What does this mean for Moscow and Moscow’s residents? First, shopping is inching closer to our places of residence, since stores, both medium-sized and large-scale shopping centers, are being erected within walking distance,” said Mayor of Moscow Sergey Sobya- nin while doing a walk-through of a multi-purpose shopping tion. The parking and turn-around area for Mosgortrans buses, center. which used to be located on the site of the shopping center, has been moved. It is now located at the intersection of Lenin- Avenue South West was constructed at the intersection of sky Prospekt and Ulitsya Akademika Anokhina, near Toparevo Pokryshkina Street and Prospekt Vernadskogo. The total area metro station, which has been re-routed as the end point for of the shopping center is 85,000 square meters. The building a lot of public transport that used to run to Yugo-Zapadnaya has nine floors, four of which are located under ground. The metro station. glass exterior has a futuristic design, dominated by clear and symmetrical shapes. There are multimedia screens installed on Moreover, the investor has built a trolleybus contact network the building facades. All of the above-ground floors, as well as for transferring the trolleybus waiting platform to Ozernaya one below-ground floor, will be used to house stores. The rest Street, which entails the reconstruction of the traction substa- of the space will be used as a parking space with total capacity tion and an increase of its capacity. of 1,000 cars. There will also be another parking lot for 770 cars. Thus, it was possible to significantly reduce the intensity of bus The construction of Avenue South West included measures to and trolleybus traffic, improving the road conditions near the change public transport traffic flows around the metro sta- Yugo-Zapadnaya metro station. ■

Renovation of Aragvi has been completed

he historical restaurant Aragvi, located at Tverskaya 6, trons included Alexander Pushkin, Ivan Turgenev and Leo Tol- has been renovated. While renovation work was in prog- stoy. The hotel building gradually expanded, eventually growing ress, elements of 17th century structures that date back to incorporate 3 floors. to the times of Tsar Alexei Mikhailovich were discovered Tat the site. The building is constructed in the place of four his- In 1904-1909, the building grew to 4, and then 5 floors. The toric houses and has a long history that reflects different time cellar was used to store Prince Golitsyn’s wine collection. The period of Moscow architecture. The first stone buildings were first floor housed hotel spaces, along with stores and kiosks. constructed here no later than 1670. In 1730, house No.28 be- For several years in the beginning of the 20th century, artists longed to Prince Gagarin VI. A new stone building, which has Surikov lived in the hotel (he died in 1916). In 1918, the building been preserved as part of building 2, was erected during this was home to the newspaper Pravda. Then, in the 1920s, it was period. New buildings were erected here again in 1777, when the Palace of the Soviets. In the beginning of the Soviet era, the the land belonged to pharmacist Jacob Kalkan. In 1770-1790, the State Publishing House bookstore was located here. During the area contained two buildings, separated by a fenced-in court- reconstruction of Tverskaya Street in the 1930s, Dresden Ho- yard. In the beginning of the 19th century, the property was tel and the house of V.I. Gagarin were partially included within passed on to General-Mayor D.V. Chertkov. A hotel called “Sev- the scope of house No.6. “False facades” were completed for er” was opened here, which was later renamed “Dresden.” The buildings along the square, and new residential buildings were hotel was popular among musicians and writers: famous pa- erected along Tverskaya Street. The main facade of the hotel

28 CAPITAL IDEAS April-June 2016 was completed in style of Socialist Classicism. After reconstruction, Dresden hotel was renamed Moscow City Council Hotel.

In 1938-1939, a Georgian restaurant named Aragvi opened in the basement and on the first floor of the building. While work to draft a new plan for the closed restaurant was underway in 2004, a new discovery was made: buildings that were erected before Peter the great. After conservation efforts and a change in ownership, scientific restoration supervised by the Depart- ment of Cultural Heritage of Moscow started in 2013. Two years later, restoration work was completed. According to the Mayor of Moscow Sergey Sobyanin, Aragvi restaurant will reopen this spring. ■ New gastronomic places

new place called Mark i Lev on Rublevo-Uspenskoe so on. One of the walls features two gym bars for pull-ups Highway in the suburban Gorky-2 proves, once again, and push-ups, the tables are painted like chess boards, and that the concepts “Russian cuisine” and “healthy life- the entrance features the old-school gymnastics apparatus style” can be synonymous. The restaurant’s suppliers are “Kozel.” farmersA who care about the environment and abstain from using harmful technology and pesticides. The menu includes well- LavkaLavka Farmer’s Market has opened at Mega Khimki. balanced seasonal and healthy products. The wine list stresses The market will have about 70 points of sale, where farmers from different regions in Russia are going to sell honey, pine nuts, chocolate, cocoa beans, cottage cheese, yogurt, sour cream, vegetables and meat products. The farmer’s market will operate in accordance with Mega Khimki’s schedule: from 10:00 am to 11:00 pm on weekdays, and from 10:00 am to mid- night on weekends. There will be a special zone with workshops and games for children. The market will also have an incubator, where visitors will be able to watch the birth of baby chicks.

Katusha Gastronomic House has officially opened its doors. Katusha is a combination of a restaurant, gourmet boutique and confectionary. It is located at Bolshaya Dmitrovka 23. Dmi- try Zhelyazkov, the best student of the well-known Italian chef Carlo Grecu, is in charge of the kitchen. Dmitry has worked with Carlo Grecu on projects such as Beef Bar, Dom Carlo and Sixty. Katusha is a great place to go for your morning cup of coffee Russian wine brands such as Vedernikov, Gai-Kod- or a quick business lunch. The confectionary has a wide selec- zor, Uppa Winery, Alma Valley, Raevsky, Lefkadia, tion of treats on offer, from macaroons to unforgettable cakes. as well as the Crimean brand Yayla, which will be Katusha only uses high-quality, natural ingredients. The reci- offered on the Moscow market for the first time. pes have been used for many years, to the delight of Katusha’s The European section of the wine list includes or- guests. ganic and biodynamic wines. Famous restaurateur Alexander Rapoport has opened a res- The sixth cafe of the home cooking chain Var- taurant called Erwin. RekaMoreOkean with a seafood menu enichnaya No.1 has opened close to Tretyakovs- that is unique for Moscow. 90% of seafood products used by kaya metro station at Klimentovsky Pereulok 10, the restaurant come from Russian seas and rivers, and prices building 2. This is currently the largest cafe in for different dishes vary. With a selection of over 30 dishes, Moscow: it contains three halls and has a total the “CrabsCrawfishShrimp” section is the menu’s trump card. capacity of 158 people. The interior of the cafe is Crabs: Kamchatka crabs, snow crabs, frog crabs. Crawfish: Lou- dedicated to athletic accomplishments from the isiana-style, Rostov-style, or Sevan-style. Shrimp: Argentinian Soviet era: the walls are decorated with posters from the warm waters of the Atlantic, from the cold waters of featuring Olympic skiers and quotes such as “If northern seas, the sweetest shrimp that the Japanese refer to you want it, you must train,” “Sun, air and wa- as Botan-Ebi, and tiger shrimp, which resemble creatures from ter are our best friends,” “Soviet football” and the Cretaceous Period. ■

April-June 2016 CAPITAL IDEAS 29 MOSCOW IN WORDS

“All religions will pass but this will remain: simply sitting in a chair and looking into the distance.” Vasily Rozanov, Russian writer and philosopher

“Bread for myself is a material question. Bread for my neighbor is a spiritual one.” Nikolai Berdyaev, Russian religious and political philosopher

“Life has taught me to think, but thinking has not taught me to live.” Alexander Herzen, Russian writer and thinker

30 CAPITAL IDEAS April-June 2016 “To listen is an effort, and just to hear is no merit. A duck hears also.” Igor Stravinsky, Russian composer, pianist and conductor

“In every physical action, unless it is purely mechanical, there is concealed some inner action, some feelings. This is how the two levels of life in a part are created, the inner and the outer. They are intertwined. A common purpose brings them together and reinforces the unbreakable bond.” Constantin Stanislavski, Russian actor and theatre director

“You could wonder for hours what flowers mean, but for me, they're life itself, in all its happy brilliance. We couldn't do without flowers. Flowers help you forget life's tragedies.” Marc Chagall, Russian artist NOTHING VENTURED Russian wine with a Swiss personality

Winemakers are exceptionally responsible professionals who approach their work, along with everything else in life, with strict perfectionism. A meeting with Swiss winemaker Renaud Burnier and his wife Marina confirms this fact. Relying on techniques developed by experienced Swiss winemakers, they have been making real Russian wine in Southern Russia for several years. The story of their winery, which is located in Natukhaevskaya Stanitsa near Novorossiysk, starts in 1999.

e started working in Russia many since we all want to try new things and get to know years ago, when the Swiss franc the countries we visit through their traditions, cui- was worth 19 rubles,” Renaud sine and culture. This is especially so in Europe where jokes as he recalls how long he there’s an established culture of locally made food has been working in Russia. “I & wine. But Renaud couldn’t find any Russian wine. had“W known for a while that the country has unique People kept telling us it simply does not exist.” This places, in terms of climate and location, for planting came as a surprise to Renaud and he suggested we vineyards,” he says. “Winemakers know, for exam- go to Southern Russia, where he knew people have ple, that people in the Caucasus have been growing vineyards. grapes for a long time. When I reflect on my childhood, it is clear to me that Russia has been on my Renaud and Marina came to Southern Russia to do mind since then. When I met Marina, we decided to their own research and understand what happened move here and research Russian winemaking.” to Russian wine. “Our friends gave us contact information for experts from the Krasnodar Institute of “When Renaud came to Moscow for the first time,” Viticulture and Winemaking,” Marina continues, “and Marina recalls, “he, like many of my other foreign they invited us to their experimental facility, which friends, wanted to try Russian wine. This makes sense; was located in Buzhor, near Anapa, to look at the grape

32 CAPITAL IDEAS April-June 2016 harvest and wine production process.” When Renaud tried the local grapes, he no longer had any doubts: he had to find land here, plant vineyards and make wine. He understood immediately that high-quality wine that falls in line with international standards could be made here. Renaud was particularly encouraged by the fact that here in Russia there is a mass of empty land that can be used for vineyards, while back in Switzerland there’s a lot of competition for it. The grapes that were grown here impressed Renaud but he was considerably less impressed with the wine that was made from them. Experts explained that winegrowers and winemakers have different goals. For winegrowers, the main goal is to have as big a harvest as possible. Winemakers understand that this goal does not cultivate the kind of grape they need to make wine. According to Mr. Burnier, considering the

April-June 2016 CAPITAL IDEAS 33 NOTHING VENTURED

working conditions for wine growers and wine mak- business that would be environmentally friendly and ers, both deserve much credit for the effort they put in would not disrupt the surrounding ecosystem. to make a high-quality product. However, finally he found an ideal spot. As is often the For three years after they took a decision to make case, Renaud discovered it just as he was losing hope wine in Southern Russia, Renaud and Marina for his project in Russia. “It was as I came home. I had searched for a suitable plot of land. “Why so long? a special feeling for this place”. Renaud says, “It’s a lot Because we can’t afford to make any mistakes,” Re- like our vineyard in Switzerland and is located at the naud explains, “When you plant a vineyard, it’s going optimal spot for cultivation in terms of latitude – at to be for a long term. We came to Russia seven times Natukhaevskaya Stanitsa between Novorossiysk and and researched the whole of the Black Sea coast. We Anapa, in the Caucasus Mountains.” did a lot of work, studying and analyzing factors that directly or indirectly influence the quality of grapes The plot was once a vineyard years ago but had been and wine – the soil, climate, the slopes and their re- abandoned. Owned by a local farmer, now none lationship to the sun, annual rainfall volumes, prox- of the barriers, bureaucratic ones included would imity to the sea and so on.” prevent Renaud from realizing his dream. By 2001, the couple had bought the land from the farmer. Renaud decided that he would make top-quality “In 2003, we planted the first seedlings, which we wine in Russia. This is why he was so specific about brought from Italy and France from small family selecting the right plot of land. He finally chose a farms that grew grapes for European winemakers,” beautiful spot on a hill and surrounded by a forest. Renaud says, “It was very symbolic for me to have It fit all of Mr Burnier’s criteria but he couldn’t set our daughter plant the first seedling. That year, we up his vineyard there due to construction of a major planted seedlings over 17 hectares of land.” industrial facility nearby. Renaud and Marina had to overcome a lot of challeng- “Of course, this put a damper on everything,” Marina es in order to produce the first batch of Burnier wine says. Her husband was adamant about setting up a in Russia by 2005. “It was difficult to explain to people

34 CAPITAL IDEAS April-June 2016 what exactly we wanted the end result to be,” says Krasnostop that inspired him to set up his winemak- Renaud, “Many of the people we hired had worked in ing business near Anapa. vineyards before but none had worked in accordance with the standards I had established. In 2001, there Ironically, for the next 10 years after their first har- were no modern vineyard technologies in Russia. There vest, Renaud and Marina struggled with Russian weren’t even any of the materials we needed – wires, entrepreneurs, officials and other people they came binding equipment and so on. We had to bring all these into contact with. Back when Russian businessmen things from Switzerland, the process was quite a feat, sought to get rich as quickly as possible while keep- especially in terms customs clearance.” ing investment to a minimum, the Swiss man’s me- ticulous approach to developing his business was For environmental reasons, it was decided that the confusing. Many simply did not believe that good winemaking facility would be built out of wood quality wine could be made in Russia. Renaud and but the idea was dumped due to Russian fire haz- Marina tried hard to break this stereotype through ard standards. Renaud brought all of the equipment their actions and persistence. from Switzerland in the hope of quickly installing and starting the winemaking process. However, Now, Mr Burnier grows his own grapes on a territory when the first harvest was collected in 2005, he still of 49 hectares. The manufacturing facility is located didn’t have a facility to produce. “We had to make at the vineyard and is a full-cycle plant, from sorting do,” Marina adds, “We installed our equipment at a the grapes harvested to supplying wine directly to neigbouring facility where our people worked on it consumers. with the grapes we had harvested. The first wines we produced were Krasnotop, Cabernet Sauvignon, Renaud developed the concept of the winery him- Merlot and the white Assemblage.” self and Swiss architects helped to elaborate building plans. Burnier’s line of wines includes one made from the local grape – Krasnostop Zolotovsky, which Renaud The project turned out to be extremely complicated tried when he first visited Russian vineyards. It was to execute on Russian soil! Russian construction stan-

April-June 2016 CAPITAL IDEAS 35 NOTHING VENTURED

dards, which have been the same since the 70s, aren’t “There is wine that is made on an industrial scale compatible with the technologies Mr. Burnier wanted and then there is terroir wine. We make the latter,” to use. He would argue with construction workers and Marina explains, “It’s impossible to make this kind of local officials. This led to a delay in construction of five wine in large quantities. It’s a labor-intensive pro- years after the first seedlings were planted in 2008. cess, that requires a lot of time, energy and resourc- Building to took four years to complete, including time es. The quality of the grapes plays an important role. to obtain necessary permits. The result: a winery in Which is why so much work needs to be done on an ideal location with a unique design, (for example, the vineyard. Terroir wine is high-quality wine that the production facility is below ground level) which is made naturally without the use of industrial tech- adheres to environmental and resource conservation nology. Taste is created through a natural process. A standards. Burnier’s cellars contain about 500 barrels master of the trade knows how to create a particu- with a capacity of up to 225 liters each. The barrels are lar style, which remains mostly unchanged from one made out of French oak and were brought from Eu- year to the next, from one harvest to the next. It is rope. A total of 30 people work at the enterprise. De- this style, associated with the specifics of a particu- pending on the year, Burnier produces anywhere be- lar geographical location that is so highly valued by tween 180,000 and 200,000 bottles of wine. customers.”

Renaud comments proudly that theirs is the only Note from Capital Ideas: family winery in the area. The success of the en- deavor depends on many factors, each one equally Renaud Burnier comes from a family of winemakers with important. Of course it includes quality control at every production stage, raw materials, love for the historical ties to Russia. Prior to the revolution, governesses work you do, as well as the ability to never give up from Switzerland frequently worked in wealthy households. and come up with solutions in when facing difficulty. The labels on the wine feature Burnier’s family name. Renaud’s great grandfather’s sister taught the children of This isn’t just a marketing strategy but a sign that Nicholas II’s sister. After the October Revolution, she returned the winemakers personally take responsibility for the product quality – their family name and their honor home. Renaud learned a lot about Russia from her memories is on the line. when he was a child, imagining it to be a magical and wonderful country. He started learning the art of winemaking Today, Burnier wine can be found in stores and restaurants all over the world. In Russia, for example, you can aged 20. From his teacher, professor Maurice Mishler, the find it at Metropol, Buddha Bar, Ginza Project, MOS winemaker learned that there are unique places for growing and Valenok in Moscow, at Rodina, San Remo and Bai- kal in Sochi, as well as in Lublu in St. Petersburg. ■ wine in Russia. Photos from Renaud and Marina Burnier's personal archives

36 CAPITAL IDEAS April-June 2016 Number of enterprises by type of economic activity in 2014 /year-end, %/

38,7 % – wholesale and retail trade, repair of motor vehicles, household goods and personal items

20,3 % – operations with real estate, renting and provision of services

11,9 % – construction

9,6 % – manufacturing

8,7 % – other types of activity

6,8 % – transport and communications

Agriculture, hunting and forestry, fishing and mining account for a minor share of small and medium size business activity.

April-June 2016 CAPITAL IDEAS 37 NOTHING VENTURED Luca Tavasci: The most important thing is that the suit fits!

We judge people by their clothes. This applies to men as much as it does to women. Luca Tavasci, a 27-year-old style consultant at De Luca Sartoria, has no doubts that this is the case. “Somebody like Adriano Celentano can certainly afford to wear whatever he wants, but this doesn’t apply to the rest of us. Regular men must watch what they’re wearing,” he said in an exclusive interview with Capital Ideas.

Today, there are a lot of places to shop for stylish clothes in Moscow: almost every brand in the world can be found in the capital. However, a famous brand does not always equal great quality. “When we buy famous brands, we can’t always be sure about where the items we have purchased were made. Unfortu- nately, there are a lot of fakes on the market,” Luca Tavasci explains.

Luca knows that he’s talking about. He graduated from the Milan Institute of Design. Mr. Tavasci came to Moscow six years ago. “I was around a lot of Rus- sian friends in Italy and they pushed me to come to the Russian capital,” Luca Tavasci says about his decision to move. At the time, Luca Girimondo, the owner of De Luca Sartori, offered him a position as a style consultant at his Moscow office.

Girimondo’s grandfather established the shop in Ve- rona, back in 1923. De Luca Sartori specializes exclusively in sewing classical men’s clothing. This includes,

38 CAPITAL IDEAS April-June 2016 April-June 2016 CAPITAL IDEAS 39 NOTHING VENTURED

suits, shirts, ties, jackets, trousers and shoes, as well as accessories like belts and wallets. We use exclusively top-tier English and Italian fabrics but the price of a suit made at our shop, for example, will be half of what you would pay for a brand-name suit at a boutique.

The fact that Mr. Girimondo decided to open a shop in the Russian capital in 2008 was no accident. According to Luca Tavasci, Russian men started to take an interest in fashion in the beginning of the 2000s. They care more about what they wear. Of course, this primarily applies to businessmen and politicians. Why have the majority of men in Russia always been so indifferent to clothes? The De Luca Sartoria style consultant has his own opinion about this. “There is only one reason women in Russia took more of an interest in fashion than men for several decades,” he said, “there were more of them in the country than men. This means The first is men who have problems finding a size that, since there was so much competition, women that works for them in stores. The second category is wanted to draw attention to themselves. They always people who are so busy that they don’t have the time had to look good. For Russian men, the gender gap or the desire to go shopping and spend time picking had the opposite effect: he would be fine no matter out clothes. The third category is men who just like to what he wore.” Regardless of how things used to be, dress in an elegant, classical style.” those times are gone now. Although there are still more women than men in Russia, men have started All of the clothes that our Moscow clients order are to pay attention to fashion. The men who come to the sewn in a shop that is located in Verona. There are shop where Luca Tavasci works are among them. about 50 highly qualified specialists working there. They also take care of orders that come from Mexico, So who are they? “I want to point out that our clients Ukraine and Switzerland. “This is how it works,” Luca include expats who are working in Moscow as well as explains, “As soon as a client contacts us, we set up a Russians,” Tavasci explains. “Right now we have about meeting at a time that works best for him. I come to his 300 clients. These are members of the elite class that office or home and take the order, taking all of the nec- includes both businessmen and politicians who are essary measurements on the spot. This usually takes 28-70 years old. We have been affected by the crisis, about an hour and a half. The order is then sent to Italy, but we are in Russia for the long haul. We are sure where it takes about a month and a half to complete.” that things will fall back in their proper place. So far as our clients go, they fall into three main categories. But why not make the suits in Moscow. “We won’t be able to,” Luca says, “You can’t simply transfer the process of making a high-quality suit from Verona to Moscow. A suit isn’t like cheese, which, in light of the sanctions, is being replaced through an import substitution program. Cheese that is somewhat similar to the cheese made in Italy or France can be made in Russia, although I’m not so sure about the quality. But still, there is still milk here, along with all of the equipment you need. Things are a lot more complicated with a suit. Having the right fabric and equipment is not enough. To tell you the truth, fabric is really a secondary concern. You need the eyes and hands of experienced professionals. This isn’t an unfounded statement: out shop in Verona is headed by a tailor who has been in the business for forty years!”

Yes, “the most important thing is that the suit fits” – that’s what we learn in the song from the film Magi- cians, which is so popular in Russia. “Absolutely,” Luca exclaims suddenly, “I know this expression from a movie that’s very popular in Russia and I completely agree.” ■

40 CAPITAL IDEAS April-June 2016 NOTHING VENTURED

Time to convert feelings into action

The World Trade Center hosted a Russia-India business day. The main topic for the new format for communication between businessmen from the two countries was the issue of mutually beneficial cooperation in the small and medium-size business sectors.

ll of the speakers agreed on one point: cooperation Vice President of the Moscow Chamber of Commerce Suren between Moscow and Delhi in the nuclear, military Vardanyan also wonders why, in spite of our shared history and and diamond spheres will undoubtedly be developing strong friendship, trade volumes between Russia and India re- further. After all, these spheres of cooperation receive main low. Our business relations with Turkey, for example, are government support. But what about small and me- much better, in spite of the fact that Russia has had a lot of is- Adium-size business representatives? They have to figure things sues with Turkey in the past. There is plenty of different kinds of out for themselves. textiles from Turkey in Moscow, but almost none from India, in spite of the fact that Indian textiles are famous all over the world. What needs to be done? However, quality textiles are not India’s only source of pride. Ac- “First of all, we have to eliminate the information gap be- cording to Sammy Kotwani, head of the Indian Business Alliance, tween our countries,” says Amit Telang, a senior official at “we don’t have oil or gas in our country, so we cannot rely on natu- the Indian Embassy in Moscow, “Although Russians and ral resources and must develop all sectors of the economy – agri- Indians generally have positive feelings toward each oth- culture, the pharmaceutical industry, the light industry…”. Every one er and this has been the case for many years, in practice of these sectors in India has small and medium-size business rep- we know very little about each other. Feelings need to be resentatives who are ready to work with their Russian colleagues. translated into concrete action.” According to the official, we have a lot of issues when it comes to financial and cus- Incidentally, Kotwani himself is an excellent example of how a toms problems, not to mention stumbling blocks such as person can put their fears aside and start a small business. He the visa regime, without the liberalization of which nothing has a shop in Moscow that became popular a long time ago. will be possible. It is no surprise that Sammy Kotawani, as one of the initiators of the Russia-India business day at the WTC, signed an agree- The visa situation really is a challenge. For example, some- ment with Maksim Chereshnev, Chairman of the Russian Trade times Indian businessmen who come to Moscow have to and Economic Development Council. The document was signed wait several hours at the airport while they wait for permis- with the goal of strengthening informal contacts between Rus- sion to enter the country. sian and Indian businessmen. ■

April-June 2016 CAPITAL IDEAS 41 NOTHING VENTURED Arnaud Jacquart: Russia is a fantastic school of life

French-born Arnaud Jacquart came to Moscow as a student right before the coup of 1991 and immediately fell in love with Russia. He considers himself to be more Russian than French, manufactures electric bicycles in partnership with Russian plants and dreams that Tverskaya Street will one day be a pedestrian area free of cars.

Arnaud, do you remember your first impressions here, I decided to start my own business selling French of Russia? wine. I prepared and researched the market, I talked to people. Less than a month later there was a knock I came to Russia over 20 years ago, in 1991. I came in July, on my door. There was some huge guy standing in and there was a coup in August. I was walking down the front of me – so huge that he didn’t even fit in the street and taking in everything that was happening. This doorway. He asked me, “are you the French guy who was a historic moment, and I was right in the middle of is trying to start a wine business?” I looked at him for a the action. I felt the power and true heart of Russia and few seconds and said, “I had the idea, but it’s definite- understood that this is the country I want to live in. ly gone now.” He told me I made the right decision, turned around and left. Then, at my first job, back when I was a salaried employee, I ended up in a small town called Kharyaga (an After this, I gave up on the idea of selling wine and de- oil field town in the Nenets Autonomous District, lo- cided to go into doing set meals. At the time, I was close cated in the Arctic Circle, 165 kilometers from Usinsk). to running out of savings and the business started with It was negative 35-40 outside. I was in shock. 15 days a small bluff. I agreed to supply meals for a relatively later, the person who was in charge of heating for the large organization. They took my word for it – at the city turned off the heating for the whole town because time, people believed a Frenchman in a tie and didn’t of some personal problem. This happened at night, and ask for letters of recommendation. I said that I would all of the pipes burst overnight within just a few hours. be able to start delivering the meals in 15 days, but they We turned on all of the electric heaters we had, but still insisted on the following Monday. I didn’t want to lose had to sleep in outdoor clothes. And then we had to my first big client and said that I would do it. In three work for another day and a half in this weather while days, I set up an operation in my kitchen to cook meals they were fixing the heating. Welcome to Russia! These for 80 people, without any special equipment. We were my first impressions. worked like this for another two weeks, until we could afford to get a real kitchen space. In five years, we were What about your first experience of running your making 30,000 lunches. Then I opened a cafe and bak- own business? ery chain called Le Khleb. I sold the business, ACS Cater- ing, before the next crisis in 1997 because I understood It was funny and short-lived. Three years after I got that I had stopped growing.

42 CAPITAL IDEAS April-June 2016

NOTHING VENTURED

to put it back on. I had to spend several hours in 40 degree weather behind a row of trucks, surrounded by black smoke and soot. It was then that I realized that something in this world must change. Since I was into sports, I decided that I am going to make environmentally friendly modes of transportation. Electric motorcycles don’t sell well, so I decided to create an electronic bicycle.

This was six years ago. I opened the companies Emotions’and Re-volt in Moscow and now we make and sell electric scooters, skateboards and bicycles. We have our own manufacturing plants in China and in Germany, as well as over a dozen plants in Russia that manufacture parts for us. We sell our products in Europe as well as in Russia. It’s interesting work. I wake up in the morning thrilled to be alive and doing what I do. There is endless potential for innovation here. The moment when you’re showing people your new product during a test drive is always exciting and uplifting.

This was a tough time in Russia – the 90s. Did What do you dream about? these years affect you? I don’t dream about creating some kind of superpower: You have to understand where you’re going and who running a huge company is not something that I’m af- you are, and be able to learn from what happens to ter. My dream is that, in the next ten years, every other you. I didn’t get in anybody’s way, I didn’t steal. Every- person on the planet will have their own electric ve- thing I made, I made honestly. So there weren’t any hicle. Cars that run on gasoline are outdated and dam- threats. And a crisis can quickly remind you who you age our environment. Using a quiet and clean elec- are and where you belong. tronic vehicle is great fun. My dream is that Tverskaya Street in Moscow will be closed off for cars so that we Russia is a fantastic school of life and I’m thankful for can walk there with our children. The Garden Ring is every day that I’ve spent in this country. The only thing already shutting down once a year for a bicycle parade, I’m afraid of is that Russia might turn into a boring Eu- so everything is possible! I hope that I have enough en- ropean country. But I believe that the constant stress ergy to be productive for a long time and do what oth- and difficult climate will ensure that Russia retains its ers are not able to do. I dream that people remember character. I hope that this country will continue to be me as a person who invented something truly genius, my inspiration for the rest of my life. or at least as a person who made a change in favor of healthy lifestyles. Then I will consider my mission to However, I have learned to avoid putting my all of my have been accomplished. eggs in one basket, and don’t exclude the possibility of my children building their lives in Europe. I also plan on What advice would you give to foreigners who developing my business on the European market. The come to Russia to do business? crisis has just speed up my plans. At the same time, I consider myself to be more Russian than French but I The first important thing to understand is that nobody am a patriot of both countries. The economic climate in Russia is waiting for you. Always have a backup plan might not be the best here right now, but there is a lot and be ready to lose everything. The second thing: if more potential than in Europe. you have already started something, finish it. Doing something half way in Russia is absolutely useless; it’s How did you come up with the idea to make elec- better not to start at all. Third, be careful with Rus- tric bicycles? sian women. I’m just kidding. But don’t lose your cool. Moreover, a person doing business in Russia must be In addition to being a businessman, I have always willing to take risks. Here, doing marketing research been into sports – motorcycle racing at a fairly pro- and having a clear development plan is not a guarantee fessional level. In 2009, I decided to take a shot at that you will succeed. You have to stay alert, be able to the World Cup, and received the title of International quickly adapt to changes and take risks. Especially now, Master of Sports, becoming a silver medalist in the when everything is changing so quickly. ■ rally. During one of the races, I lost the seat of my bike in the middle of a desert and lost too much time trying Photos from Arnaud Jacquart's personal archives

44 CAPITAL IDEAS April-June 2016 New agency for investors In late March, Analytical Credit Rating Agency (ACRA), which was established in Russia at the end of last year, held a business breakfast dedicated to issues of its development.

t one meeting with famous economists, By the way, several countries, such as Canada (DBRS) where the issue being discussed was a fi- and Japan (JCRA), have had their own rating agencies nancial crisis that started in 2008, Queen for a long time. Elizabeth II asked the following question: “Why did nobody see it coming?”. This ques- 40-year old Ekaterina Trofimova became the CEO tionA is not as naive as it first appears. What were all of of ACRA. She graduated from the St. Petersburg the leading rating agencies – Moody’s, Fitch Ratings, State University of Economics and Finance in 1998 Standard & Poor’s – thinking? They were supposed to with a degree in International Economics. In 2000, look out for these kinds of problems. Essentially, the she graduated from Sorbonne University in Paris Queen asked them the same thing that millions of with a degree in Finance and Tax Management. She people all over the planet who were affected by the worked as a financial analyst, Director and Head of crisis were thinking. Really, it seems that there are Standard & Poor’s Russia and CIS Financial Institu- more questions than answers. It’s unclear what the tions Rating Group (Paris, France). From 2011 un- people working for these rating agencies are doing, til November 2015, she was a VP at Gazprombank how qualified they are, and whether or not their work (Russia), where she was the head of the Centre for is affected by politics. Economic Forecasting.

Reforms of the rating sphere started to go into ef- To the question, “Suppose you publish your first re- fect some time ago. The objective of these reforms port and the Ministry of Finance or government of- is stricter regulation of the activities of rating agen- ficials don’t like it. What will you do?”, Ekaterina Tro- cies that is aimed at improving the quality of ana- fimova answered: “Credit ratings aren’t there to be lytical work, avoiding conflicts of interest and the liked by anybody. A credit rating is an instrument that advancement of business processes. Moreover, a lot helps make investment decisions. My job is to make of experts have been calling to finally put an end sure that the process in the agency is set up in ac- to the monopoly what has existed on the ratings cordance with the best practices and that there are market for a long time (it is currently dominated by no conflicts of interest. The best indicator of attitudes Moody’s, Fitch and S&P). toward credit ratings is how much they are used by the investment community.” To the question, “Do you In July of last year, Russia passed Law F3-222, which feel like you are free from external pressure?”, the CEO defines the legal framework of rating activities and of ACRA said: “I feel a strong sense of responsibility the basic provisions of its regulation by the Bank of to the investment community. My task is to meet the Russia. A few months after the law was passed, Ana- expectations of investors who are interested in a top- lytical Credit Rating Agency (ACRA) was established. quality analytical product.” ■

April-June 2016 CAPITAL IDEAS 45 NOTHING VENTURED

In Moscow, in the beginning of Ostozhenka Street, there is an Austrian bakery that was opened in October of last year by Martin Erichovich and Engelbert Edlinger. Walk through the glass doors of Engelpekar, and you immediately end up in a different dimension – a warm, cozy, almost homely atmosphere filled with the smell of coffee and Austrian bread.

The place where freshness is baked

artin Erichovich and Engelbert Edlinger belong to ers stayed to chat with the owners after paying. The bakery’s that lucky category of people who make money do- logo features a skier, old skis decorate the walls and a figurine ing something they truly love. After all, baking and of a skier on a downhill slope sits atop of the cabinet. “One of selling bread is not only a profitable business, but our regular customers gave us the figurine,” Martin says, “In my has been considered a noble profession for centu- opinion, this is very symbolic. First of all, our logo features a Mries. This is why people from many countries, including Russia, skier. Second, downhill skiing is a traditional Austrian sport that treat bread as something sacred. is associated with movement, drive and mastery. In a sense, this also applies to the way we do business.” Engelpekar is not a large bakery, but a lot of customers came in during our hour-long conversation with Martin and Engelbert. Martin has long-term ties with Russia. Before opening the bak- Some people simply bought bread and pastries and left, while ery, he had already worked in the Russian food industry. He met others ordered coffee and drank it in the shop. Some custom- Engelbert by accident during a flight eight years ago. Back then,

46 CAPITAL IDEAS April-June 2016 The place where freshness is baked

he was selling raw materials for bakery factories. A friendship Engelbert dreamed of opening his own business for a long time, was born, and two years ago Martin and Engelbert became and he came to Russia frequently. When it was time to finally business partners. make his dream come true, he had no doubts about where to open his bakery. “Moscow is a city with tremendous potential,” Engelbert, who was managing eight bakery companies in Aus- he said, “It cannot be compared, for example, with Vienna, the tria at the time, had the idea to open a bakery in Moscow. “My capital of Austria.” “Of course, running a business in Moscow is a whole life revolves around bread,” he says, “I studied for a long challenge, but there are a lot of opportunities for growth,” Mar- time and then worked for a long time in order to understand tin says, “Which is what we were counting on when we opened the science of making bread. Then I started developing recipes our first bakery. We plan to open a bakery chain.” and selling them. Then, I started working in big companies. I had to manage the entire production cycle, as well as be responsible Engelbert has discovered that Russian people love to experi- for the staff. Last summer, I left to work in our Moscow bakery.” ment. Austria has a well-developed, rich history of bread-

April-June 2016 CAPITAL IDEAS 47 NOTHING VENTURED

making. The country has a lot of interesting bakeries, but in- range, but there is always fresh-baked bread here. More im- troducing something new is difficult due to rigid traditions. portantly, everything is done right here on the spot (according Muscovites, on the other hand, are interested in at least trying to Engelbert, bread doesn’t travel well). “We plan on opening something new – Austrian bread, for example. Moreover, there our second Engelpekar bakery this summer, and the third one is another factor at play. Russians have come to perceive Aus- in the winter,” Martin clarifies, “Each bakery will operate in ac- tria as a country that makes natural, environmentally-friendly cordance with uniform standards.” products. “We are trying to meet these expectations that are associated with Austria’s image,” Martin says. It is not secret that employees are the key to the success of any enterprise, including a bakery. A small team that was carefully Getting back to the experiments that Engelpekar has success- selected by Martin and Engelbert work at Engelpekar on Os- fully implemented in Russia, the unique apple strudel, which tozhenka.. “We have very young professionals working here,” was literally born inside a muffin, is an excellent example. “This Martin points out, “We specifically selected this team because combination would be very confusing to an Austrian person, we do a lot of experimentation, and young people are more Engelbert says, “but Russians are excited about this unusual hy- willing to try new things. We are surrounded by people who are brid between a muffin and a strudel.” interesting to work and grow with. These are people who are willing to pour their hearts and souls into our work.” Engelpekar’s trademark is Engelbrot bread, the recipe for which was created by Engelbert. “Russian rye bread is different from It is worth noting that Martin and Engelbert started their busi- Austrian bread,” he explains, “Engelbrot is based on typical Aus- ness in Moscow while the Russian economy was at a low point. trian leaven. It’s an air-light bread with an intense taste that However, the bakery isn’t experiencing any difficulties. This incorporates cumin, coriander and other spices." makes total sense, since they are working in a sphere where will most likely never be a decline in consumer demand. Simply “Engelbert’s most radical suggestion, which he made back when put, people will always buy bread. we first started the business, was limiting the bakery’s range of breads to 5-6 kinds,” Martin says, “This way, the employees Engelpekar bakes about 400-450 loaves of bread every day would be able to focus on thoroughly studying the techniques and sells them almost immediately. Only rye bread (and some for just these types of bread. Moreover, this narrow range en- sweet bread) can be kept for sale the next day. “We don’t throw sures that bread sells quickly, which means that there is always away the bread we don’t sell,” Martin says, “I want to clarify fresh bread in the bakery. It’s a very radical approach, but we that we really don’t have much left at the end of the day, since ended up agreeing on a compromise, and now we bake 15-20 the baker knows how much bread needs to be made on a given product items at site. We sell bread as well as pastries, along day. We recently decided to make extra bread and take it to the with Austrian chocolate and tea. The coffee is Italian.” orphanage. We’ve only done it once so far, but hope to make it a regular undertaking in the future.” The bakers at Engelpekar work the same way their colleagues worked 50 years ago. The only difference is that they use mod- What is the main ingredient of the delicious bread Engelpekar ern equipment now – Engelpekar at Ostozhenka uses Ger- makes? “Flour,” Engelbert says, “We get our flour in Austria, from man equipment. The bakery does not have a very wide product our partner whose family has been in the flour business for 23

48 CAPITAL IDEAS April-June 2016 generations. For me, as a baker, it is extremely important to have the mills in Austria is often blended. Different types of grains are high quality flour. After all, this is the foundation of bread. If the combined in order to create the best flour.” foundation isn’t good, the quality of the product goes down. Generally speaking, flour is a whole separate science. There are Engelpekar is a unique place with a homely, cozy atmosphere many factors that can help determine the quality of the flour. infused with the unforgettable aroma of freshly-baked bread. The flour’s ability to hold water, for example, affects the flexibility It combines Austrian traditions, experience and knowledge of of the dough. A lot of other enzymes that are added to the flour the intricacies of baking. All of this is done for the customers – also influence this quality. I especially want to point out that we people who come here every day to bring home a tiny piece of don't add any enzymes to the flour. And, of course, the quality of the bakery’s warmth. ■ the flour is also impacted by the climate in the location where the wheat or rye used to make it is grown. This is why flour at Photos provided by Engelpekar's press service

April-June 2016 CAPITAL IDEAS 49 NOTHING VENTURED Jussi Tuisku: We are planning to strengthen our presence here "The most significant decision was, without a doubt, to localize our manufacturing in the center of Russia, so that we can offer the most competitive products for reasonable prices," said the Head of Ruukki Russia in an interview with Capital Ideas.

Speaking about annual economic results of Moscow in 2015 Moscow Mayor Sergei Sobyanin admitted that the volume of construction works in Moscow is not declining. It sounds very optimistic to the construction business. As you launched a new production line of sandwich panels in February 2016, you also see sales growth perspectives. You call your new product as innovative, could you describe its unique selling points and its target audience?

Ruukki's new sandwich panel LIFE has an exceptionally high re- cycled material content and its air leakage rate is extremely low. The panel minimizes raw material and energy consumption and reduces CO2 emissions up to 45% both during construction and throughout the building's life. Without false modesty I can reassure you that so far there is no alternative to this product on the Russian construction market. Ruukki and its partner ISOVER are pioneers in energy efficient building in Russia. We offered the product with up to 50 years of guaranteed exploitation period what extremely long period and makes new sandwich panels almost eternal. Our decision to launch a production line in Balabanovo, not far from Moscow, was well-argued and balanced; we were the first to re- alize some perspective market trends and to come up with the right offer at the right time. Our customers are the companies, not relying on short-term profits, but the ones who see the future of construction business in environment-friendly technologies and state-of-the-art materials. Using Ruukki’s LIFE sandwich panels will also earn more LEED and BREEAM credits for your building.

There is a well-known proverb “Rome wasn’t built in a day” (and we say the same about Moscow), which means you cannot expect to do important things in a short period of time. Let’s talk about how long it took to set up Ruukki business in Russia, particularly in Moscow region? What

April-June 2016 CAPITAL IDEAS 51 NOTHING VENTURED

changes did you face with? Could you list the most impor- supplied with Ruukki’s facade cassettes. However it is really hard tant events, solutions and results? to mention just a few projects as during years we executed a great number of other buildings in Moscow and Moscow Region Ruukki has a really long history of relationship with Russia. It start- including warehouses, sport and recreation centers. ed in 1962, when our company signed our first agreement with USSR. The Soviet engineers participated in building our manufac- Experts, who work in Russia for a long period, admit that turing plant in Raahe (Finland), while the Finnish specialists con- the main barrier is commitment to traditional technologies. sulted USSR in building the Karelskiy Okatysh mine, a large iron Centuries ago people used to build mostly from wood, not mine located in the northwest of Russia in the Republic of Karelia. stone (fortunately Moscow was surrounded by forests), today people get used to building with cement, not contem- Then Ruukki came back in early 2000-s, when the company porary construction technologies. Is it more difficult to pro- decided to localise its production in Russia. Since then we have mote your steel products in Russia than in the North Europe? executed thousands of projects, more than 600 objects every year. No doubt, the most significant decision was to localize our I wouldn’t say difficult but there are definitely some local -par manufacturing in the centre of Russia, so that we can offer the ticularities and traditions that we always take into account. most competitive products for reasonable prices i.e. value for For example, Russian construction business same as in many money to our clients. other countries though is more conservative when it comes to changes, introducing new technologies and various upgrades. Ruukki has a Finnish origin, but since 2014 it has been However, today we notice a boost of interest to new materials merged by a Sweden SSAB corporate group. Do you have and technologies in construction industry, it’s a global trend and any changes in your marketing policy? What is a role of Russia is not an exception. Maybe the process is not as swift as the Russian Ruukki division in SSAB? What targets do you in Europe, but there is for sure a positive dynamic with bright have from the Sweden headquarters? Are you sponsored perspectives. Another proof of this trend is increasing demand by the headquarters or have to earn money for company for the Ruukki’s system hall solutions such as Spider, Condor, development by yourself? Trasskon or our sandwich panels.

SSAB is the Ruukki’s long-standing partner. For many years we Possibly the Ruukki’s own production lines near Moscow have used their metal-rolled products due to the outstanding high give you certain competitive advantage, especially in the quality, so we continue doing this to manufacture steelworks, terms of significant decline of imported goods. Are you go- sandwich panels, system hall constructions and metal tile roofing. ing to continue localizing your manufacturing processes After merging our tasks changed: SSAB continue producing steel or you have other solutions how to strength your posi- products, while Ruukki has focused on creating, developing and tions in Russia? providing ready solutions and materials for construction. As I mentioned above our decision to start local manufacturing Could you tell Capital Ideas about your Moscow projects? in Russia was an important step for Ruukki. Localization allows What objects were built with your products? us to keep and introduce our European highest quality standards and at the same time provide our local clients with a flex- The most remarkable is of course participation in reconstruction ible offer of a diverse portfolio at a reasonable price. Our global of the Bolshoy Theatre in 2011. Ruukki created special metal stage policy as well as the corporate long term strategy is still based structures – secondary trusses and 8 primary trusses, the weight on expanding local presence in key markets including Russia. of these structures was 412.5 tones, which was quite light for We are planning to strengthen our presence here by further de- such type of constructions. Among other examples I would men- velopment of relations with Russian metal producers as well as tion Crocus Expo and Mega Teply Stan shopping-malls which we launching new products manufactured locally. ■

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Write to Sergo Kukhianidze at [email protected]

April-June 2016 CAPITAL IDEAS 53 NOTHING VENTURED Anke Pötzsch: When one door closes, two new doors open

The German holding Anke Pötzsch founded INTERPONT in 1994, while she company INTERPONT, was a student from GDR studying in Moscow. She was an which provides consulting exchange student at the Moscow State Linguistic University, and outsourcing services learning how to be a translator, as well as an economist and lawyer. Life circumstances pushed the German student to and has been operating go into business. After the reunification of Germany in 1990, in Russia for over two all previous agreements between Moscow and Berlin were decades, is a unique no longer in effect. Things were changing quickly, and one of enterprise. It wasn’t the things that changed was that Anke now had to pay for “imported” from abroad, university with money she did not have. but rather founded from After thinking things over, the entrepreneurial German scratch right here in student set up a German-Russian venture with her Russian Moscow. friend: a tailoring shop for curvaceous women. Anke was quite inventive and her fashionable outfits started selling immediately. She even had to hire additional help. Anke liked living in Russia and decided to stay in Moscow, figuring that her knowledge and experience in starting a business in Russia with respect to tax, accounting and legal nuances may be useful to Germans who want to start doing business in Russia. This is how INTERPONT was born. Not much time passed before the goal-oriented German student turned into a successful businesswoman people turn to for advice and support.

54 CAPITAL IDEAS April-June 2016

NOTHING Ms. Pötzsch, you founded INTERPONT 22 years ern, methodical approach to all issues. We offer a very VENTURED ago and now help others do business in Russia. wide range of services, including: outsourcing busi- Were things easier back then, or are they easier ness processes, legal support, auditing, accounting now? How much have things changed for peo- and tax consultations, certification, administration, ple looking to set up a business in Russia, both in personnel management and office solutions. terms of organizational challenges and political nuances? How many clients do you currently have? Is IN- TERPONT’s client base limited to German com- You know, business is always difficult – that’s just the panies, or do entrepreneurs from other countries nature of business. Anybody who tells you otherwise use your services as well? Do you only work with is lying. On the other hand, it is very interesting. In my small and medium-size businesses, or do your cli- opinion, comparing the challenges of different time ents include big companies? periods won’t give you a complete picture. INTERPONT’s client base includes over 400 compa- You develop and grow with the market and with the nies. 55% of these companies are German, 20% come country, you set new goals and objectives, overcome from other European countries, and the rest are from new challenges and enjoy your shared success. Of the US, India, China, Japan and even Russia. It’s easy to course, a lot has changed since 1994 and many as- imagine a scenario in which we, an open organization pects of doing business change quickly: tax nuances, with a multi-cultural employee base, would gladly licensing and registration procedures, our everyday work with companies that are not part of the German reality (such as the introduction of sanctions) and segment. Our door is open to everybody who needs many other things. This is one of our professional our services. competencies – to always stay on top of changes in order to help our clients. As I have already pointed out, INTERPONT started operating at the international level a long time ago. One online review of your company states the In addition to our branches in Russia, Kazakhstan and following: “a stable German consulting company Ukraine, we have opened offices in Warsaw and Hong that is active on the Russian market.” How stable Kong. and active are you? And what specific services do you offer? We have many different types of clients, but we deal with a lot of medium-size businesses (companies The number of years we have been in business (22) with turnover of about 50 million euros per year), as is already a good indicator of our stability. Our large well as large international corporations and multina- client base is another factor that has remained sta- tional companies. We also work with small successful ble – it continues to grow, together with our com- companies. For us, every client has always been and pany (Smiles). will always be important, which is why we are happy to help any company that seeks our services. The fact that we have been in the same office on Tverskaya 16 and have expanded our company to take Do you have a lot of employees in Russia? Obvi- up three floors also speaks to the stability of our com- ously, most of your employees here are Russian. pany. How would assess their level of professionalism?

But all jokes aside, our constant expansion and de- I always say that it is impossible to do business in Rus- velopment, the opening of new regional and interna- sia without Russian employees. This is why almost all tional offices, new clients: all of these are indicators of our employees are locals. We currently have over that point to how active we are on the market. We do one hundred Russian employees that I expect to be everything gradually, step by step and, as the popu- responsible and take initiative. lar saying goes, measure seven times before cutting once. Like all Germans, we are extremely careful and They always have a right to voice their opinions and think every decision over several times. I am interested in hearing them – especially when it comes to young professionals who have grown up in Right now we are working on the Asian market with a different world and have an entirely different ap- the help of our offices in China and Kazakhstan. Our proach to business. I value the professionalism of my colleagues from Germany, Brussels and Warsaw are colleagues, otherwise I would not have offered them helping us attract European clients, especially clients a job at INTERPONT. It is very important that the level from the Benelux and Poland. of service we provide to clients meets their demands. I respect, value and like my colleagues. Even our appearance is going to change soon: we are actively working on updating our corporate style in Western businessmen frequently express con- order to ensure it falls in line with the development cerns about working in Russia. They bring up bu- of our company and is a better reflection of our mod- reaucracy, corruption and crime. What has your

56 CAPITAL IDEAS April-June 2016 experience and the experience of your clients a positive indicator and I see evidence of it every day been like? while working with our clients.

I think that these concerns are somewhat exagger- Another aspect of the problem is that Western ated. There is bureaucracy everywhere, it’s just easier sanctions have pushed Moscow to more actively to navigate in some places than in others. There is also seek cooperation with other countries – China, corruption and crime everywhere. Russia is a wonder- for example. Are German companies at risk of los- ful country with great opportunities, as well as a big ing their share of the market in Russia, along with market for goods and services. their long-term Russian clients?

Foreigners are sometimes scared to enter the Rus- No! I don’t think that there will be a complete shift to- sian market because they fear dishonest partners or ward Asia. Moreover, the credibility of German com- financial scams. This happens, first and foremost, be- panies in Russia has always been and will continue to cause foreign media distorts information and misleads be high. Even if there is a decline in market share, we people. This is why, aside from providing the services will see a return to previous dynamics as soon as there outlined above, we try to alleviate some of these fears. is a positive change. We tell our clients how great Russia is and show them what life here is really like. Of course, we also offer In your opinion, what spheres will be most attrac- to run background checks on future partners or out- tive for small and medium-size businesses from source accounting and legal support in order to put Germany and other foreign countries in the near our clients at ease once and for all. future?

According to the Committee on Eastern European I am no superb business analyst, but, according to Economic relations, trade turnover between Rus- GTAI research, there will be higher demand for pack- sia and Germany fell by about 25% in 2015, shrink- aging equipment and greenhouses, for example. Since ing from the 80 billion euro high posted in 2012 to Russia is gradually developing domestic production 50 billion euros. Many experts say that the rea- and values technology from Germany and Western sons behind the decrease include the plummeting Europe, there should be a lot of opportunities in this ruble and oil prices, as well as economic sanctions. sphere. Have you or your clients felt the effects of these negative factors? If so, in what way? Russia also intends to utilize German technology in projects that have already supposedly been contract- You know, the biggest challenge is the exchange rate ed out to Asian countries. The reason is simple: Russia and the decrease in consumer activity. This has a di- and Germany have many things in common, not just rect impact on contracts, accounts, payments – on history… the financial livelihood of companies. Yes, these are also challenging times for us… When one door closes, two new doors open. This same rule applies to business. ■ Our clients are constantly in contact with their partners, fixing exchange rates, granting extensions, expanding their range of services, providing discounts. We are always ready to discuss terms with our clients in order to make sure that everybody is happy. I think German companies were hit the hardest by the sanctions…

One relevant trend in the development of the Russian economy is import substitution. Do you think this will scare off Western entrepreneurs?

Import substitution does not preclude the participation of international companies and, so far as I can tell, Russia does not plan to completely do away with imported goods. The summer economic forum in St. Petersburg, for example, confirms this.

Among other things, we’ve seen the results of a re- cent Ernst&Young study: in spite of the fact that 90% of polled foreign investors did not see the current economic situation as favorable, 39% of them planned to expand their presence in Russia. In my opinion, this is

April-June 2016 CAPITAL IDEAS 57 EXPERT TIPS It's worth investing in Moscow

Swedish national Fredrik up an office in 1990 in what Svensson has been living and was then the Soviet Union. working in Moscow since 2007. In this interview, Fredrik He is a partner at Mannheimer Svensson talks about the Swartling, which is the largest continuing investment law firm of the Nordic countries. attraction of Russia and its Mannheimer Swartling was the capital for small and medium first European law firm to open businesses.

Take Swedish investors, for example. Who would you say are among the most successful?

Your market is very attractive for producers of consumer goods. Off the top of my head, I can certainly name the Swed- collection of articles entitled “How ish furniture company IKEA, and also the popular brand of to invest in Russia”, published fashion clothing H&M. They are working very well in Russia. more than a year ago by the As- One might also mention the successful investments of enter- sociation of European Business prises connected with the mining industry. Up to today, things included one by you, headed “Go have gone very well for them but they are of course affected into Russia in a joint venture: currently by the low commodity prices. Or take the IT field – To be or not to be?” How would the Internet trading portal AVITO. This is a Russian company, you answer Hamlet’s question on this theme today? but it was founded by Swedes. The lads came to Russia and started virtually from scratch. They created and expanded To invest in Russia is always a good idea. It is a country with a their company, which is now worth around two billion dollars. 140,000,000 consumers, it has sound state finances compared to some European countries, and it has a stable political sys- So you think that even in conditions of financial instability, a tem. In my opinion, it is always worth investing in Russia and its reduction in the purchasing power of the population and in capital, but you need to do it in a responsible manner. its investment rating, the risk of investing is justified today?

58 CAPITAL IDEAS April-June 2016 It's worth investing in Moscow

You know, investments always involve a certain risk. But you each other. Investors dislike unpredicability. This problem varies have to be both patient and bold. To leave the Russian market from industry to industry. For example, in the consumer goods today will cost you a lot of money the day you want to return. field, the laws are quite stable. But as for the oil industry or me- In a couple of years (if not sooner), Russian will again be a “hop dia business, the rules can change in a way that cannot always topic” and where companies want to establish business. I think be understood. For example, in the media business, legal lim- Warren Buffet said once: “Be Fearful When Others Are Greedy its have been placed on the holding of media shares by foreign and Greedy When Others Are Fearful” investors. As a result, to take one example, the major Finnish media holding Sanoma was forced to sell its Russian shares. In connection with sanctions and a certain tension in international relations, has the climate in Russia changed for Of course sanctions have had an effect on business, although Western business? on the whole, we are not seeing any panic in Russia. Many of our businessmen have been here a very long time, they have On the whole, the climate has not changed. I think the Russian strong links... Yes, some have been forced to leave Russia, e.g. government and the Moscow authorities are trying to create a exporters of food products. However, this is a good thing for better playing field for business, but it takes time. your country in a way, you can set up your own production facilities on the spot. But of course things could be a lot better. One of the things that worries investors is that the laws and the rules of the games As for relations with foreigners working in Moscow, they have sometimes change too quickly. Sometimes also laws contradict not changed at all. The Russians take a very healthy attitude.

April-June 2016 CAPITAL IDEAS 59 EXPERT TIPS

For example, no-one (and I have many Russian acquaintances) rate financing but also on e.g., infra-structure projects where has said to me that he doesn’t like me because I am a foreigner. you often lease the large machines and ancillary equipment.

Have sanctions had any effect on your firm? As far as I know, in your legal practice you also specialized in questions of anti-corruption laws. How do you think mat- They have not touched on our work directly. We do not work ters stand with regard to corruption in Russia? with companies subject to sanctions. But as lawyers, we give a lot of advice to our clients as to what they can and cannot do in Corruption is a general problem. It is present also in Asia, Eu- Russia under sanctions. rope and America. But a serious fight against it is being waged in the Western countries today. Strict anti-corruption legisla- A policy of import replacement, of developing our own production has been adopted and is being applied. Even the biggest tion facilities, has been proclaimed in our country. In this con- companies, if they become involved in bribes, whether at home nection, in your opinion, how interesting for the foreign inves- or abroad, can be fined, and fined billions of dollars. tor could the idea of localization of production in Russia be? While we’re talking about Russia... I don’t think the level of corrup- I personally have always been in favour of completely free trade. tion in Russia is higher than in the other BRICS countries. In China But at the same time, Russia is far from being the only coun- it’s at the same level or even worse. I repeat: there are temptations try urging import replacement; Brazil, Argentine, China and to to do everything more quickly, but not altogether legally. The al- some extent the USA also support their own local producers. ternative is to keep strictly to the rules, although this takes more As for localization of foreign production in Russia, the situation time. We try to convince our clients that the second way will be has to be assessed for each specific case. I think that for certain a lot cheaper in the long run. But if someone in a client company industry sectors, it could be an option for a foreign company has done something wrong, then we are there to assess the risks, to consider local production, in particular for those companies what needs to be done and who may bear any legal responsibility. who participate in state tenders. They like to frighten foreigners with Russian bureaucracy... Can you give an example of a Scandinavian investor who has invested in Russia and in Moscow recently? Well , if anyone has to deal with bureaucracy, we lawyers do. Of course it sometimes creates unnecessary obstacles. Yes, in Swe- I know that many companies which are already present here den it takes one day to set up a new company, here it takes a are working on new projects. As for the newcomers, particu- month. But bureaucracy is something you just have to work with. larly from small and medium business... We must admit that the environment is not very favourable for this today. The at- In 1990, Mannheimer Swartling became the first European mosphere in Europe around Russia, mainly in the media, leaves law firm to open a branch in Moscow, which of course gave much to be desired, and in my opinion is too negative in many it the advantage of being in at the start. But what are its respects. I have no desire at all to give advice to your govern- competitive advantages today? ment, but I think Russia should pay more attention to its image in the eyes of the European investor. Probably mainly the experience of working in Russia that it has ac- cumulated over the past years. When the firm came to Moscow, it What is your opinion, as a lawyer working with business: how was still in the time of the USSR. When we wrote a business plan, difficult is it for a Western entrepreneur to open a business in no-one had the faintest idea that the Union would collapse... Moscow, particularly for small and medium businesses? In Russia, you need time to learn, to understand the country To start a business in a developing market is always a challenge. and its cultures, to get to know what business is like here... But as I usually say, specifically to small and medium business- When I came in 2007, I thought I would only spend a few years men, it is no more difficult in Russia than, say, in China, Indo- in Moscow. Yet I am still here. nesia or Brazil. However, in Europe it is often considered, again under the influence of the media, that everything is far more How did you turn up in Moscow? Before that, you had difficult here. This is not the case. The important thing is to worked in your firm’s branches in Sweden... study the rules thoroughly and follow them. And not to listen to the advice of those who come up to you and say: with my But I had always wanted to work abroad, In 2007, Mannheimer help you could well “cut a few corners” and do everything more Swartling made considerable extra investments to expand quickly. This is a very dangerous path. its Moscow business. And they offered the post here to me. I jumped on the first train... What are the difficulties facing a new investor in our market today? You don’t regret it?

Probably local financing. Obtaining credit in Russia is expensive No, I don’t. It’s even funny, sometimes, when people at home ask: and quite difficult. This does not only have an effect on corpo- “How can you survive in that place, Moscow? It’s dangerous there!”

60 CAPITAL IDEAS April-June 2016 But I’m not just “surviving”, I’m living a normal life. And I’m not But surely you can’t like everything here? What is the main alone. My future wife is living with me and she is from Vienna, thing that displeases you? Austria. She has already met friends and enjoys it here in Mos- cow. Virtually every one of the foreigners I know working and The very overloaded traffic. And of course the fact that drivers living in Moscow speaks very positively about the Russian capital. race round the city too fast. That’s wrong. I think the traffic police should be stricter on reckless drivers. And you don’t feel any danger? You said that at first you planned to remain in Moscow for Absolutely not. I can’t recall that any of my foreign colleagues only a few years, but you’ve been working here for eight have ever complained on this issue. years now. Is the end of the Russian period of your life in sight yet? What impression did Moscow produce on you in your first days here? I keep on working. I have not set myself any limit. I may not carry on living here all the way to a pension, but actually I’m not I have to say, over the years of my stay here, Moscow has sure I’ll stay in Sweden either... ■ changed very considerably. It used to seem more grey some- how. Your mayor Sobyanin did good work. For Capital Ideas courtesy of BIGMOSCOW

Five pieces of advice from Fredrik Svensson to foreigners wishing to open their own business in Moscow 1 Study the situation in your selected field of business Do your homework. Think through carefully just how you are going to integrate your company into the business already existing in Russia. 2 Pick your team This is perhaps the most difficult. Don’t think you can hire personnel on the cheap in Russia. But you can find good and loyal workers here, to whom it is worth paying a decent salary. 3 Study Russian laws and try to conform to them But don’t try to get round them. Sometimes you may be offered a way to “cut corners” – but don’t give way to temptation. 4 If you come here, plan for the long term There is no sense in only coming to Russia for a year. The situation changes, there are rises and falls. Don’t fall at the first fence. 5 Make more contacts and links This will help in your business. I’m not talking about common corruption. I would prefer to call it the legal “corruption of friendship”.

Friendly contacts may get you out of a difficult situation.

April-June 2016 CAPITAL IDEAS 61 OUR INTERVIEW Nikolay Kovalyov: The law should work like an electrical outlet...

“Corruption is one of the biggest dangers for Russia,” Nikolay Kovalyov said in an interview with Alexander Mikhailov, a famous journalist who specializes in law and order. Nikolay Kovalyov is a member of the State Duma, General of the Army and former Director of the Federal Security Service (FSB).

Mr. Kovalyov, there is so much talk about corruption and aggression from the outside, to overcome things like sanc- bribes that one gets the impression that this is a wide- tions. But what we have here is more like radiation – corrup- spread problem. But I have a question: have you encoun- tion without color or smell. It infiltrates our society, stimulating tered a lot of corrupt officials? metastases throughout the country. It has penetrated not only the authorities but also law enforcement and the court system. Ofcourse. There was a time when I worked in the Moscow anti- corruption department and I also supervised the organized crime All of this is evidence of the fact that among the threats and investigation division during my time with the FSB. I remember challenges of our century, corruption is one of biggest dangers one case very clearly. Back in the nineties, we arrested the pre- facing Russia. fect for the city of Moscow. We caught him red-handed with a bribe of 1 million rubles, which at the time was an extremely large I recently read a Facebook post that said “If you chop off sum of money. I remember the look on his face. He was sitting in an official’s head, they will still be stealing for the next 20 a chair in his underwear and a wifebeater. This sorry-looking guy seconds”… was sitting there in front of a box that was packed with stacks of cash. I didn’t feel any pity or sympathy for him, just loathing and Believe me when I say that I don’t want to justify crooks, but this disgust. I remember this image every time I come across cor- common view of government officials is often cruel and unjusti- rupt officials today. These people are only imposing and arrogant fied. If they were all like that, I don’t know where Russia would be before they get caught. Gucci, Hugo Boss, Rolex...but they’re all today. Corruption is not inherent to the system – it’s an anomaly. essentially like that guy. Aside from being disgusted, though, you Yes, it’s a widespread anomaly, but nonetheless an anomaly that start feeling something else: rage. Remember what Gleb Zhiglov we must work to eradicate. I understand that an official operat- said in the filmThe Meeting Place Cannot be Changed: “You weren’t ing in today’s tense climate is very vulnerable. But I don’t want thinking about your job and your comrades. You were thinking government officials to come across as latent criminals. After all, about a piglet and a house in the village.” there are many of them who don’t make a lot of money at all, but still refuse to take bribes. And there are millions of them. People aren’t simply trying to curb this phenomenon – they are desperate, because they understand that an internal enemy is Still, it’s a difficult situation. just as big of a threat to the government as an external one. These people undermine our economy, as well as our ethics. And I’m not saying that it’s simple. But those who want to find Corrupt officials corrode society from within. It is difficult to a way look for solutions, while those who don’t look for ex- deal with an external enemy, but it’s possible. When the borders cuses. In all fairness, I want to point out that our law enforce- are clear, it is easy to tell your people apart from the enemy. ment knows how to handle these cases. Moreover, I want to When we need to, we can come together and stand up against note that there are a lot fewer people protecting those who

62 CAPITAL IDEAS April-June 2016 April-June 2016 CAPITAL IDEAS 63 OUR INTERVIEW

are detained for corruption. Although telephone justice still has with a position – they didn’t step over anybody to get there! its place. How can we not have it, when arrested officials at Today, we often have situations like the one in Ganndy Polki’s the regional and municipal level used to be chairmen of anti- film Republic of ShKID: “Pick me chums, I will not hurt you!” And corruption commissions. Bees turning against honey? they don’t hurt you, but at the expense of the state.

As a member of the State Duma and chairman of the anti-cor- So, here is what I think needs to be done. ruprion comission I am always receiving all kinds of information on corrupt practices. And I want to point out that people are First, we have to constantly strengthen and improve our sys- very receptive to my requests. tem of law enforcement. That’s one thing. The other thing we must do is establish strict control and prosecutorial oversight of To be honest, I’m concerned about something else – the fact that these government bodies. the corrosion of greed has infiltrated the legal system. This is a serious matter. It is an extremely dangerous process. It is no co- Second, we have to do thorough background checks on any- incidence that our President has directly addressed the practice body who is appointed to a government position and track their of designed cases that destroy business, the foundation of our bank accounts. And this has to apply to their relatives as well. country. Today, it is important to create conditions to ensure that After all, a government position is not a private business. If you the law works like an electrical outlet: no matter who sticks their have a house, explain where it came from, as well as where you fingers in – the prosecutor, investigator, clerk or deputy – there got your cars, your villa and how you can afford to send your will be an electric shock. But in order for this to happen, we have kids to study abroad. Give us all of your income statements over to create a climate of total social control. Real control. the past 10 years and the value of your property. Same for your children. The Federal Financial Monitoring Service must estab- So what’s missing? Laws, maybe? lish total control over all family members of our civil servants.

There are actually enough laws, and the regulatory framework is Third, and this may be an unpopular opinion, but I would classify also quite decent. We just need to be tougher and more decisive. taking bribes in the sphere of defense and public administration I remember Arvid Yanovich Pelshe and his Party Control Com- (from the governor level and up) as treason instead of “crime mittee. The PCC was a very powerful instrument. He could dis- with gainful intent.” Same thing goes for crimes committed by miss just about anybody, even for a minor indiscretion: for lead- investigators, prosecutors and judges. It would be controversial, ing a luxurious lifestyle, arrogance, or using an official standing but definitely effective. for personal gain. If an official were to use a government vehicle for personal transportation – taking his wife to the hairdresser, Fourth, we need some kind of control committee (similar to the for example – that was it. And a lot of times it was more than just PCC). The Presidential Administration technically has something a verbal lashing: people would lose their jobs forever. Because like this, but we need a more powerful governmental body. deterioration starts with these minor transgressions. Fifth, we need to restore the practice of confiscating funds and Now there is a new breed of corrupt officials. As soon as they property. secure a position of power, they immediately start stealing. We don’t have to think hard to find an example. We had just sen- Sixth, I am certain we need to revisit the issue of legalization of tenced Yevgenia Vasileva, and her successor immediately repeat- so-called “provocations of bribery” when it comes to officials, as ed her mistakes and was sentenced as well. He probably thought it is done in the West. he would have enough time while things were being sorted out with her. I’m not even going to get into officials at the municipal Do you really think all of this is possible? Do you believe level. We are probably the global leader in terms of how many your own words? mayors ad deputy mayors we have put behind bars. There is a positive side to this, though: we know how to catch them! I wouldn’t be saying any of this if I didn’t believe it could happen. We just have to want for it to happen. Very often, it is this desire So why does this happen? and professionalism that are missing. We often hear about the need for some kind of political will. But the will, including our There are several reasons. The chaos of the 90s is one. Back political will, is in the law. What other kind of will do we need? then, people could get away with doing whatever they wanted. Orders for mass arrests? As a result of this, our moral core was completely deformed. Corruption in Russia is no phantom. Every manifestation of it … and human error? has a name and surname and, unfortunately, a government job. And all of the Law’s wrath should be directed toward intercept- …that too. You know, the KGB never used to appoint officials ing these cases. It is not acceptable when a thief and a bastard who threw their comrades under the bus. They would appoint who has defiled the government sits in a comfortable office people who could manage, but were stubborn. These people chair instead of in a prison cell simply because some loafer in a make good bosses. That’s because these people were entrusted uniform can’t or doesn’t know how to deal with him. ■

64 CAPITAL IDEAS April-June 2016 useful info

Chamber of commerce and industry of the Russian Federation Address: 109012 Moscow, St. Ilyinka, 6/1, bldg. 1 Ph: +7 (495) 620 00 09 Fax: +7 (495) 620 03 60 E-mail: [email protected] http://www.tpprf.ru/en/

Department for Work with Foreign Legal Entities and their Representative Offices Address: 109012 Moscow, St. Ilyinka, 6/1, bldg. 1 Ph: +7 (495) 620 02 14, 620 02 22 Fax: +7 (495) 620 01 70 E-mail: [email protected] http://www.tpprf.ru

Moscow Chamber of commerce and industry Address: 107031, Moscow, St. Petrovka, 15, bldg. 1. Ph: +7 (499) 940 33 16, +7 (499) 940 33 25 E-mail: [email protected] http://www.mostpp.ru

Main Administration for Service to the Diplomatic Corps (GlavUpDK) Address: 20 Prechistinka Street, Moscow, 119034 Ph: +7 (495) 637 23 26 Fax: +7 (495) 637 31 71 E-mail: [email protected] http://www.updk.ru

April-June 2016 CAPITAL IDEAS 65 FACE TO FACE

Vladislav Tretiak: The cold war period in hockey has been over for a long time

66 CAPITAL IDEAS January-March 2016 The cold war period in hockey has been over for a long time

On May 6th, Moscow and St. Petersburg will be hosting the 80th Ice Hockey World Championship. Before the event, Vladislav TRETIAK, the President of the Ice Hockey Federation of Russia, agreed to give an exclusive interview to Sergo Kukhianidze, Editor-in-Chief at Capital Ideas.

Mr. Tretiak, how are you feeling a few days before the start of the championship?

I’m nervous, although everything is already one hundred percent ready. There are no organizational issues left to resolve. But the fact that I’m nervous is only natural. After all, when you are hosting the world championships, you have a responsibility to the fans, who become more active during these big tournaments. For example, I have no doubt that the majority of our country will be closely watching the Russian national team. People are going to be expecting one thing – victory.

So losing is not an option for Russia?

Well, of course we can’t say that. (Smiles). It’s not a bad phrase, but it’s left over from Soviet times. We have to understand that there is a lot of competition in hockey these days. There are five or six teams who could potentially end up with the gold medal.

How many fans from abroad are we expecting?

It’s difficult to answer this question right now. We are still processing documents. I think that there will be a lot of hockey fans from Finland and Sweden, especially in St. Petersburg. Americans and Canadians are not big fans of coming over to this side of the world, so we are not expecting big tourist volumes from there. Of course, we will have a lot of Czechs and Norwegians.

January-MarchApril-June 2016 CAPITAL IDEAS 67 FACE TO FACE

Do you think that tensions between Russia and the West will have an effect on the championship?

No, we have great relationships with all of the hockey federations – in the US, in Canada, Sweden, Finland… There are no politics here, no disagreements. We con- gratulate each other on victories and our families are friends. I’ll admit that during the Soviet era, after the tragic events in Prague in 1968, our relationship with representatives from Czechoslovakia suffered. It got so bad that we wouldn’t even stay at the same hotel. But generally, the only representatives we were actually on good terms with during the Cold War era were the Finns. We had issues with everybody else. But now we have great relationships with everybody. We hold a lot of tournaments together and always try to help each other. In short, all of us need each other.

By the way, back during the Cold War era, US President Ronald Reagan once said: “Sport is the human activity closest to war that isn't lethal.” Do you agree with him?

Yes, that’s how it was. You know, Bobby Clarke, who was on the Canadian team during the legendary series of matches in 1972, once confessed that his coach instructed him to injure Valery Kharlamov in order to eliminate him from the game. Things like that don’t happen now. Of course, hockey is a tough game, this isn’t chess, but we don’t hate each other. So I wouldn’t call what happens on the ice between us and Americans or Canadians a war. We have Pavel Datsyuk playing for Detroit, Sasha Ovechkin playing for Washington and Zhenya Malkin playing for Pitts- burgh. That’s not what war looks like!

You have been participating in world championships since 1970. The first Moscow Championship you took part was held in 1973. Do you remember it?

Of course – we won every match at this championship! It was a true celebration of hockey and we always had a full stadium. Even back then we knew how to host such large-scale competitions.

How much has hockey changed since then?

A lot, including the rules of the game. The game is played at a faster pace now and hockey players have just a few fractions of a second to make decisions. Everything on the ice changes very quickly. Even the hockey sticks have changed – they have become more flexible and lighter. Hockey has become so fast and so tough that kids start playing at age 5 now, instead of around age 11 like before.

Can the current Kontinental Hockey League (KHL) be compared with the USSR...

68 CAPITAL IDEAS April-June 2016 Of course not. The USSR championship had a total of eight teams, while the KHL has twenty eight, including teams from Finland, Latvia, Slovakia, Croatia and Kazakhstan.

I meant in terms of quality, not quantity. Can we compare the KHL to the USSR championship in terms of how heated things get during the games?

In terms of this, the only thing that can compare to the USSR championships are the KHL playoffs. The playoffs usually have the strongest teams playing. It’s no surprise that the stadiums are completely full during these games. Back then, the stadiums were full at every game. You see, back then all of our best hockey players played for the home teams. Unfortunately, now our best players leave for the NHL. By the way, this year marks the anniversary of national hockey – we are turning 70.

In your opinion, is Russia still a global hockey superpower?

Absolutely. If this weren’t the case, we would not have been entrusted to host the 80th world championship.

April-June 2016 CAPITAL IDEAS 69 FACE TO FACE

People respect us. We are always 1st or second in the ratings. Let’s also not forget that, in spite of all of the KHL’s shortcomings, it is the second most important league in the world.

The most important one is the NHL, I take it?

Of course. There is no need to hide the fact that it’s a stronger league. After all, the best hockey players in the world are all there – the best Finns, Swedes, Czechs...

Of course, there is a lot of money there. As Vladi- mir Vysotsky wrote in his poem about Canadian professionals, “They get paid mad money, thousands, even for losing and for ties!”

By the way, KHL star players also make a lot of money. I’ll say more: in terms of money, many of our leading teams are no worse than foreign ones. Don’t forget that our players get taxed thirteen percent, while theirs pay fifty.

Why do we not have exciting New Year games between the best KHL and NHL teams, similar to the ones we used to have during the Soviet era?

70 CAPITAL IDEAS April-June 2016 We’re ready to have these matches. We are not Russian national team? There are examples of afraid to have them, because we are sure that this happening in football and basketball... these kinds of games will propel the development of hockey forward. But the NHL isn’t receptive I personally am against this kind of development. The right now. thing is that I am deeply convinced that only a Russian person – a person with a Russian soul – will be able to It’s a well-known fact that our wealthy people effectively communicate with our players. You’re going buy foreign sports clubs. In your opinion, when to say that the current coach of the hockey team, Oleg will foreigners start investing in Russian hock- Znarok, is a German citizen. But he is Russian through ey? and through! No matter what people say, we are very different from Westerners. We are not like them and When it becomes profitable. When the stadiums in require a completely different approach. A coach has to Russia fill up with 20,000 fans, when Russians start understand this and be a real psychologist. making decent money. Do you know that the price of a single ticket to an NHL game can cost up to Mr. Tretiak, you are a unique person who is loved $500? You see, our clubs are not profitable, while by many all over the world. Both Russians and over there hockey is a business. Over here, it is a Americans like you. I am curious – is there any- socio-political project. But, of course, we owe those thing you regret? who are already investing in Russian hockey a big thank you. They are doing a great thing. They are No. Although maybe there is a little bit of regret over not only making hockey as popular as it used to be, never playing for the NHL. but are investing in our nation’s health by building new hockey rinks. What do you need the NHL for? And trust me, nobody doubts that you played for the NHL!... I have another question about foreigners. Is it possible that a foreigner will be in charge of the I know (Laughs loudly). ■

April-June 2016 CAPITAL IDEAS 71 FACEMOSCOW TO FACE VOCABULARY

This section of the magazine – “Moscow Vocabulary” – was born of remembering … Ronald Reagan, who appeared to be a fan – and collector – of Russian proverbs and sayings. Well, and we would like to guide you into a world of Russian idioms – just as bright and colorful.

МЕДВЕДЬ НА УХО НАСТУПИЛ – medved’ na ukho nastupil. (A bear stepped on someone’s ear) Explanation: Someone has no ear for music

ЗАБЛУДИТЬСЯ В ТРЕХ СОСНАХ – zabludittsa v trokh sosnakh (To lose one’s way among three pine trees) Explanation: To fail to find a solution to a simple problem

ВОДОЙ НЕ РАЗОЛЬЕШЬ – vodoy ne razol’yosh. (You couldn’t split them apart with water) Explanation: To be always together, to be very close to each other

ВИДНО ПТИЦУ ПО ПОЛЕТУ – vidno ptitsu po pol’otu. (A bird is seen by its flight)

Pictures by Anastasia Saifulina Pictures Explanation: You can judge a person by his actions

БЫТЬ НЕ ИЗ РОБКОГО ДЕСЯТКА – byt’ ne iz robkovo des’atka. (To be not of the timid dozen) Explanation: Not easily frightened

ВЫРАСТАТЬ В чьих-либо ГЛАЗАХ – virastat’ v glazakh. (To grow in someone’s eyes) Explanation: To improve in someone’s opinion

7272 CAPITALCAPITAL IDEAS IDEAS January-MarchApril-June 2016 2016 ВЫТЯГИВАТЬСЯ В СТРУНКУ – vyt'agivattsa v strunku. (To stretch oneself into a string) Explanation: To stand at attention

ГЛАЗА РАЗГОРЕЛИСЬ – glaza razgorelis’. (One’s eyes have lit up) Explanation: One desires something earnestly

ДАВАТЬ кому-либо СДАЧИ – davat’ zdachi. (To give someone the change) Explanation: To return insult for insult

ВЕШАТЬ НОС – veshat’ nos. (To hang one’s nose) Explanation: To be discouraged

КОТ НАПЛАКАЛ – kot naplakal. (Something the cat cried out) Explanation: Very little, nothing to speak of

ЛОВИТЬ НА ЛЕТУ – lovit’ na letu. (To catch something in flight) Explanation: To grasp something easily, at once

January-March 2016 CAPITAL IDEAS 73 BOOKSHELF What could you do better or more for the company if given the opportunity?

This was a question where I was expecting everyone to ask for a promotion.

placement (formal job assistance for departing staff that com- OVERLOADED panies sometimes have) was something we did start and sold as a service to companies and individuals, and it was a “feel- “Too many now”…”I have enough on my plate now”…”I have a lot to good” service during hard times for a lot of people. learn still”… Out-staffing (the hosting/transfer of a portion of a company’s Fair enough. I do believe that staying focused on present re- payroll to another legal entity) was something we went on to sponsibilities, what you are currently doing, and being success- create and by one of the managers quoted above. We are de- ful at it, can be a positive thing under certain circumstances. veloping this as client demand dictates (semi-actively as it is not our core business) and have several clients already. Employees want: • Nothing at all sometimes. Employees want: • To help create, launch and manage new services. NEW SERVICES

“Help with out-staffing – new services creation”…”Out-placement is MOTIVATING STAFF difficult to get going in this crisis, out-staffing is a new option too and I hope this works”… “I worked in consulting before and I have the skills to motivate people to work long hard hours (while having fun), now Consultants skip updates I appreciate people that want to develop the company and frequently and do not put priority on my vacancies sometimes, also I love have creative ideas, as this is how my mind thinks as well. Out- the way Maks works, lots of communication – he is a really smart guy”…

74 CAPITAL IDEAS April-June 2016 I am all for working long, hard hours as this is something I often Employees want: do myself. Furthermore, I just really enjoy working. However, • To try and help the company in different way, at times. many people just do not share this drive to the same degree, and I understand that, so I let the first part of the comment ride. Consultants skipping updates on a frequent basis is not accept- TRAINING able as this is part of the job that places us a few levels above our competition. The Consultant that is not putting occasional “I am very strong in conducting sales, I am ready to train all in sales priority on vacancies is something that also needs to be looking and to share my skills”…”Trainings, anything to help develop the into, and a note was made to watch Maks, as it is possible he company”…”I can help with training new staff as I was a profession- could develop into a top performer for us. al trainer”…”I teach at University in management and HR, and I can teach Staffwell on this”… Employees want: • To utilize what they feel are their own natural talents This was also great to hear. This is a very easy suggestion to ac- and skills; and commodate and it would be highly useful in the development • To be given the authority to help others perform better. of the team. I made notes on everyone interested in conducting training sessions for the team.

SELL – IF SOMEONE WERE DOING Employees want: • To train others at what they are good at, and have THE ACTUAL SELLING FOR ME expertise in; and • To share their knowledge for the benefit of the com- “Doing what I can do but could do more cold calling and could do more pany. and better if someone was doing the cold calling for me and the BD [Business Development] team”… HELP MANAGEMENT TO MANAGE The job is the job. If we had to hire a new sales team to get clients for the current sales team – then we would have to either “Help the management to identify what the Directors and Consultants reduce salaries or put profitability at risk, or both. The top BD need, want to be the leader in my sectors but do not want to man- performers make good money and there are no caps on earn- age, I do not dream about the Commercial Director role, I want to be ings. We eventually parted ways with this person as he simply client-facing, I do like managing my sector team though and want to was not “sales material”. keep this in place”…

Employees want: It is very satisfying to hear that some people love the exact role • As much assistance as they can get, in order to do they are in. I also made a note that this person would like to as- their job as best they can; and sist management in their role and, as this would motivate him • An easier ride, on occasion, at the same salary level. and he is a solid senior performer, we can create opportunities for him to do this.

COLD CALLING Employees want: • To be close to management; “More cold calling” • To help management; and • Not always to have career aspirations in manage- This was music to my ears. I think my heart may have even ment. skipped a beat.

Employees want: MANAGEMENT • To try harder, and to work harder. “I love to manage and build teams, but not to sell, but I can develop sales, I would like to develop the Consultants team to do more and go CREATE RESEARCH REPORTS after top level clients and candidates, to make the team more asser- tive, to cold call to top level people”…”I believe I have a lot to offer in “I can create industry research; I like it, it is interesting and I come from a sales-oriented leadership role and I believe my career to date sup- a higher education background”…”Research, statistics, analysis, criti- ports this, we have discussed this in the past”…”I am an experienced cal thinking, IT, can prepare full blown studies”…”Harder to sell right Consultant and would love team leader responsibilities, to train new now but would be willing to make market analysis for PR”… people and to mentor them”…

I was pleased to hear this and think it could be very useful for Two of the people quoted above were our two top perform- the company. I made notes on everyone interested in doing this. ing business development Directors. They were asking for more

April-June 2016 CAPITAL IDEAS 75 BOOKSHELF

and I felt they deserved it. Promoting these two people is something that I took into very serious consideration. In the case of MENTOR our Commercial Director, she had already stated she was overloaded and it was clear to me that she was. “Mentor”…”I can also be a coach or mentor for new staff”…

Employees want: This was great to hear and I noted this person’s interest. • To occasionally move into managerial roles (TL: when they are ready, desire it, and deserve it). Employees want: • To mentor staff in areas in which they have expertise. KEY ACCOUNT MANAGEMENT (KAM) HELPING THE TEAM “I have already taken on an additional sector, but would also like KAM, more client work, but not the sales part of it”…”KAM for some com- “Helping other departments when people are on holiday”… panies –to provide more services to the clients and to be a Director to some clients”…”KAM, BD should focus on sales only and I should focus I thought this was a good response as well, and I noted this on dealing with clients and solving clients issues and negotiating with person’s interest in doing this. clients and I will even create a proposal and present it to you on it – this will help bring more revenue from the clients we have”… This was a topic that I decided I needed to look into further, in terms of policies and other areas covered in our Operations This issue had been brought up before. Some Consultants want Manual. This is because it is crucial to our business that clients to be assigned a Director role as well, without having to do receive a seamless approach when we render services to them, sales and cold calling. This does not exactly work for me. There and that full coverage is always in place when our team mem- is a reason we deliberately separated the two roles: in order to bers are absent, for example, on holiday or are ill. create a system of checks and balances for the client that, in the process, provides, I believe, a superior client service. Of course we do this now and have in the past, but it brought to my mind whether any of this had actually been formalized. Once a week, the Directors monitor progress made by the Con- sultants, and then provide an update to the client. At the same Employees want: time, the Directors check if there are any issues that the client • To help the company, and other team members, by may have about internal matters or with our work. covering for them when they are on holiday or are ill.

Having just explained my views on a combined role, I did listen to the comments and took into consideration what was de- LANGUAGE SKILLS sired: primarily, that the Consultant’s team would like to introduce an official Key Account Manager role and title. This would “Speaking French to clients and candidates, but not comfortable as a create the most senior role within the team of Recruitment full-time focus as it is a little rusty”… Consultants. While having some reservations, I decided that I needed to take this issue seriously, and to work with our man- The Consultant replying here is willing to help, which is good. agement team to come up with a potential solution whereby However, in this particular case, I thought we had to take a we could continue to provide our customers with same, if not pass, as I felt her confidence level and abilities were insuffi- better, quality of service. cient.

Employees want: Employees want: • To work more with clients; • To help the company by using their foreign language • To help clients more; and skills. • To give clients better service. COMBINATION ROLE BETTER CLIENT SERVICE “Business development – doing more of it; Stas was a good example of “I always try to do the best, and try to provide the best service to cli- a good recruiter and negotiator and attracted some of his own clients, ents and candidates”… he got to know all the candidates in his sector and I want to do this too; to become an expert Consultant and BD in my sector or other My reaction: wonderful. sectors, plus KAM and I want to be seen as a star and perfect mentor to be looked up to, to be a universal person and a future goal is to get Employees want: an MBA at a Western business school”…”I want more responsibility • To give clients better service. to take on BD too, a combined role”…”I was given the opportunity to

76 CAPITAL IDEAS April-June 2016 work in an additional sector and I acted as the client’s Consultant and our energy on locating and placing openings for lawyers at cor- Director”…”I work well with clients and would also be interested in BD porations within industry sectors. for my sector”…”I now try to do research to help the Consultants, I just started and I like it”…”I now have a lot of work and a lot of planned Within law firms, we focused on placing Partners capable of work, but think I can develop clients by going to PR/marketing/adver- creating a valid business plan and bringing a book of business tising conferences as I am a good negotiator, and to be involved with and team members with them. This also proved successful the website and new things”… for us.

I was very happy to hear that many within our recruitment Our incumbent legal sector business, along with a focus on the team also wanted to try their hand at sales – in order to help two new angles within our legal recruitment sector, enabled us the company and to develop themselves. I have always pro- to more than double our results in this sector. vided this opportunity to everyone and was pleased that some felt they were ready. Employees want: • More clients on a retained and exclusive basis; and Nonetheless, the reality is that some of the people above who • To try a variety of strategies to enhance their success, mentioned this to me never summoned the nerve to actually as well as that of the company. dive in and do it, as they were encouraged to do. Instead, they just kept to their standard work that they had always been doing and chose to remain in their comfort zone. Having said that, NOTHING I do believe that there is nothing wrong with employees staying within the confines of their assigned work (i.e., to the status “I am quite satisfied with my role right now”… quo). This is because the way in which our Directors and Con- sultants presently work is equally important to the success of This person left us within a month. our business. Employees want: I am pleased to note that one of our Consultants, who did in- • Nothing sometimes, which could also be a red flag. deed follow-through on her ambitions to take on a combined role, has really done a fantastic job in helping to develop and maintain a very strong industry practice group for us. We en- SPECIALIZE couraged and supported her efforts along the way and we have all benefited from the success that has come from it. “I really like executive search projects, preparing reports, etc. and I had two major ones that I closed successfully”… “I am an accountant in Employees want: my soul so I would like to stay in that and keep improving and moving • To take on more. higher”

There was nothing to act upon here. It was just nice to know BETTER RESULTS that some people really liked what they were doing.

“I could do more if the Directors brought more retained, exclusive Employees want: searches”…”My sector is very slow right now so I will go after in-house • To focus in areas they enjoy and are good at. positions and focus on another sector and get the Directors to call into their clients for in-house positions I can close, and get our PR person to search for new vacancies and get the Consultant I work with to NEW ROLE help me input candidates I have interviewed”…”Maybe close different vacancies in more lucrative areas”…”Contact ex-candidates and find “I like my job but would also like to try being a Consultant or Di- out where they are right now and try to get them as clients as it might rector, but know my English is not great”…”Our former HR [Human be easier for me to do this than BD”…”I can find leads from candidates Resources person] offered me, as an idea, a Consultant’s role as a I interview”… career growth area, so maybe I could do research for a sector team and eventually become a Consultant”… This was great to hear: employees with concrete ideas and plans on how to get more business in difficult market times. Indeed, both of the people commented above are good in the Many of these strategies were successfully employed. roles they have and would, potentially, be good as Consultants as well. I noted their desires and committed to speak to our One of our success stories within this topic has been our legal management team about them for future consideration. sector team. Most of our recruitment work prior to the 2008 crisis was on behalf of law firms operating in the market. As Employees want: many of our legal firm clients decreased, or even curtailed, hir- • To change roles on occasion (TL: and if they are a good ing in 2009-2010, we instead re-directed, with great success, employee it can potentially be beneficial for everyone). ■

April-June 2016 CAPITAL IDEAS 77 FACETHIS TO AND FACE THAT Savoir vivre People may think that the Russian soul is mysterious, but there is very little mystery to it!

t happened several years ago. An ex- Nikolai Berdyaev pointed out one of the key hibition that focused on the famous aspects of the Russian mentality. Yes, unlike “savoir vivre” – the French ability to Westerners, our people smile less and are live elegantly across all aspects of life less optimistic. We often appear to be mel- – came to Russia from France. To cel- ancholy or even sad. Perhaps this is why so ebrate the occasion, the French am- many people make references to the myste- bassador to Russia set up an elaborate re- rious nature of the Russian soul? ceptionI at his residence – a luxurious old mansion on Bolshata Yakimanka. During The truth is that there is nothing mysterious his address, the ambassador said that he is about it. It is simply different, because Russia genuinely happy to introduce the Russian has a different history, different geography, people to the French way of living, which is different climate and, as a result, a different defined by great taste and elegance. After life, different traditions and different habits a short speech, the ambassador invited his that have been formed over the course of guests to share their honest impressions of several centuries. what they saw at the exhibition. But this is true of any country. Is the Japanese The first person who spoke up had the soul not mysterious? How about the Ameri- crowd roaring with laughter. He said that he can or Canadian soul? Is the soul of an Argen- liked everything exhibition: how stylish the tinian, Chinese or Australian person so trans- French were, their refined taste in delicious parent and easy to understand? The alien soul food and drinks. “But all of this is not for is dark, a famous Russian proverb correctly Russians,” he said, “Simply put, foie gras and points out. It is hard to understand. But, if we oysters are great, but our people are used to want to relate to each other, there is no other herring and potatoes!” way. Russia will never become the US, India Pictures by Anastasia Saifulina Pictures will never be Japan, Portugal will not be Spain In spite of the laughter, everybody agreed that and Afghanistan will not be Iran. Thank god all peoples have their own tastes and habits that this is so! Every country has its own phi- that shape the lifestyles of different nations. losophy, its own customs and traditions, its For example, how can one even begin to com- own history and form of government. pare Bavarian beer and sausages with Japanese sushi and sake? These differences come down This is why one country’s way of life will never to mentality rather than culinary skills. After all, work in another country. Take, for example, food is part of our culture. Nikolai Berdyaev, a Italy and France – they are neighbors. It may famous Russian philosopher, highlighted the seem like they have a lot in common, but, for difference between French and Russian peo- example, the French will never be able to con- ple back in the 19th century. “Compared to us vince Italians that foie gras is enjoyable. Italians Russians, the French know how to enjoy life, will also never pick French wine and cheese to extract the most pleasure out of it, to enjoy over their own – they will never trade in their both intellectual and material dishes,” he wrote lifestyle for a different one. In other words, they in his book Self-Knowledge. will always opt for dolche vita over savoir vivre!

7878 CAPITALCAPITAL IDEAS IDEAS January-MarchApril-June 2016 2016 a la Russe

This is why we shouldn’t be surprised by the fact that Russians are different. Even our understanding of what happiness is seems to be different – it most certainly has nothing to do with wealth or material things. The Russian understanding of happiness has undoubtedly been influenced by Orthodox Christianity, especially when it comes to the belief that happiness can only be achieved through suffering. Fyodor Dostoyevsky thought that suffering shapes a person’s character. Russians think that suffering is necessary to make a person more compassionate and attentive to the plights of others. Even the Russian word for happiness, “schastie,” means “good for- tune” when translated from Old Russian. Great food, warmth and comfort, sunny days and luck will never be enough to make a Russian person happy. “This is why you shouldn’t criticize Russians for appearing sad or never smiling, for complaining about life or creating music that is depressing,” says Alla Sergeeva, a philologist, “they are not being whimsical. This is part of the Russian approach to life, which should be approached tactfully.”

By the way, sadness is not the reason Rus- sians opt for vodka over wine! Russians know how to have fun better than just about anybody else. It’s just that temperature stays below zero in Russia for at least six months out of the year, and vodka warms you up when it’s cold. We drink it differently than people in the West, too – we don’t add ice or juice. Russian vodka goes best with a traditional Russian snack: herring with potatoes, pick- les, pickled mushrooms and salo with black bread. Try it at least once, and nobody will be able to drag you away from the table! ■

January-March 2016 CAPITAL IDEAS 79 LIFE&CULTURE Entertainment for everybody: from Queen Elizabeth to Julio Iglesias

80 CAPITAL IDEAS April-June 2016 Entertainment for everybody: from Queen Elizabeth to Julio Iglesias

The cultural events of the spring and summer will help the Moscow’s guests and residents liven up any day of the week. And everybody will be able to find something they like.

oscow’s theatre-lovers are in for a big 2016 was declared the Year of Language and Litera- premiere. In April, Lenkom Theatre is ture of Russia and the United Kingdom. Within the planning the first show of the new play scope of the celebrations dedicated to this event, “The Idiot,” which is based on Fyodor Tretyakov Gallery will be setting up a grandiose ex- Dostoyevsky’s famous novel. The story hibition called “From Elizabeth to Victoria” for the Mof Count Myshkin, who was considered strange and Russian public. From April 22 until July 24, portraits of absurdly eccentric by everybody around him, has al- key figures in English history and culture from the 17th ways been a favorite of directors and producers (and to the 19th centuries will be featured in the gallery – not just in theatre). The first film adaptation of the works from the collection of the National Portrait The Idiot was released in 1910. Ivan Pyryev, a well- Gallery in London. Some of the highlights include por- known figure in cinematography, also took a swing traits of Elizabeth I, Queen Victoria, Oliver Cromwell, at an adaptation of Myshkin’s story in 1958. Yuri Ya- Sir Isaac Newton, James Cook, William Shakespeare, kovlev, a famous Soviet actor, played Count Myshkin Robert Burns, George Gordon Byron, Walter Scott and in the film. many others.

In 2003, a series by director Vladimir Bortko in which the talented actor Evgeniy Mironoc played Count My- shkin, graced our television screens. Now, the time for another theatrical production has arrived. So far, we have no idea who has been cast in the leading role, but we do know that the play director is Konstantin Bogomolov. His first production with Lenkom, an adaptation of Pushkin’s Boris Godunov (2014), is still extremely popular with the general public.

The play won several awards at theatre festivals, and several of the play’s actors, including Aleksandr Zbruev and Maria Mironova, won awards as well. Konstontin Bogomolov actively works with various theatres in Moscow. He became extremely popular for the plays he directed at the Chekhov Moscow Art Theatre, including the adaptations of Oscar Wilde’s An Ideal Hus- band and Dostoyevsky’s Brothers Karamazov, as well as “Jewelers's Jubilee,” which was created specifically for the 80th birthday of the theater’s artistic director Oleg Tabakov. www.rustoria.ru

April-June 2016 CAPITAL IDEAS 81 LIFE&CULTURE

On Orthodox Easter Day, which is on May 1st this year, religious people will be treated to a musical gift. The stage at Crocus City Hall will be hosting a concert dedicated to Easter by the chorus of Sretensky Mon- astery. The concert will feature church music, along with folk songs. On May 2nd, the Vaalamsky Monas- tery choir will be performing on at the Kremlin Palace. The chorus repertoire includes modern music along with traditional songs. Both concerts will be a delight to those who value church music, and the unique concerts will bring joy to those who don’t consider themselves to be religious as well.

In the middle of May, the Bolshoi Theatre will be hosting an entire series of “Sleeping Beauty” ballets. Reviewers call the ballet “an example of true classical, timeless beauty.” Pyotr Tchaikovsky’s magnifi- cent music and the excellence of Russia’s masters of ballet will be appreciated by ballet connoisseurs and amateurs alike. “Sleeping Beauty” is a true hit that has been a part of the theatre’s repertoire since the end of the 19th century and has always drawn huge audi- ences.

On May 23rd, the fabulous dancer Ulyana Lopatkina will be performing at Crocus City Hall. The Mariinsky Theatre’s prima ballerina doesn’t come to the capital often, and her performance in Moscow is a rare occasion. Interestingly, another famous dancer, Svetlana Zakharova, will be performing immediately after her on May 24th and 25th. Zakharova will be gracing the stage of her “home turf” – the Bolshoi Theatre.

On May 25th, the performance of 36-year-old Svet- lana Zakharova, the prima ballerina of the Bolshoi Theatre and La Scala, will be rivaled by 72-year-old Julio Iglesias. The legendary performer will be coming to the Kremlin palace for just one concert. 300 million records sold all over the world have propelled Iglesias to mega-stardom. By the way, Iglesias has not toured for a long time because of a contract he had signed with one of the most famous casinos in Las Vegas. Ac- cording to the agreement, the singer could only perform at the casino for a period of three years. Luckily for the fans, the contract is no longer in effect.

Fans of the famous performer Phil Collins, who has won 7 GRAMMY awards, will finally be able to at- tend the star’s concert at Crocus City hall on May 26th. Phil left the group “Genesis” in 1997 and has started working on his own again. The artist’s solo career has brought him a great deal of fame, along with profits from the sale of 150 million CDs. Phil became one of the wealthiest singers in Great Britain, but he is far from ending his career. The 65-year-old singer per- forms regularly and is still touring.

On June 2nd, the singer Yolka will be performing at the Hermitage Garden Theater. Yolka is one of the young-

82 CAPITAL IDEAS April-June 2016 est performers among Russian pop singers. “Yolka” is tra for 23 years. The orchestra dates back to 1924, is a stage name adopted by the young actress Elizaveta extremely popular, and plays music from the most Ivatsiv, who is originally from Uzhgorod. The name, popular Russian films. along with her strong voice, interesting presentation and original costumes, have brought her fame. She is Fans of classical music will also be treated to a Vivaldi sometimes even referred to as “Lady Extravaganza” Orchestra performance at the Tchaikovsky Concert and compared to Lady Gaga (though of course her Hall on June 8th. The orchestra’s conductor is Svetlana outfits are not nearly as extreme – there are no meat Bezrodnaya, who is the daughter of the personal doc- slabs or teddy bears). Yolka loves unusual dresses, tall tor for Joseph Stalin, Boris Levin and the singer Irina and grotesque hairstyles and gigantic topknots. She Shepshelevich-Lobovskaya. It’s an all-female orchestra, wears flashy jewelry and makeup, which also draws and is appreciated by connoisseurs of classical music. the public’s attention to her. On June 10th, fans of the duo “Modern Talking” have a On June 7th, Tchaikovsky Concert Hall is hosting a date with the remarkable Thomas Anders. The sweet- performance by the Russian State Symphony Cin- talking singer is a frequent guest in the Russian capital ema Orchestra, led by the famous conductor Sergei and has a ton of fans here. Of course, the audience Skripka. He has been the conductor for this orches- is primarily made up of women. Crocus City Hall will

April-June 2016 CAPITAL IDEAS 83 LIFE&CULTURE

and the chance to hear him play in the Russian capital is rare. The musician tours the world frequently and doesn’t play in Moscow often.

Another important event is scheduled for the beginning of the summer in Moscow. On June 23rd, an international film festival that will gather the leading figures of modern cinematography will be held. The celebration will take place in Moscow for the 38th time and the history of the forum dates back to 1935, when Udarnik movie theatre hosted the first Soviet Film Festival. Sergey Eisenstein was the chairman of the jury, and the program started with the famous film Chapaev. Interestingly, Walt Disney cartoons were included in the Soviet festival – they even won awards! After WWII, the festival went on hiatus until 1959.

In 1999, director Nikita Mikhailkov became chairman of the festival. What kinds of movies received awards? Different kinds, from Stanislav Rostotsky’sWe’ll Live Till Monday, Georgy Daneli’s Mimino and Alexander Avalov’s/Vladimir Naumov’s Teheran-43 to Federico most likely be hosting a lot of people who were 16-20 Fellini’s Interview and Krzysztof Zanussi’s Life as a Fatal in 1984 and used to dance to "You're My Heart, You're Sexually Transmitted Disease. The festival’s guests have My Soul" at discotheques. included Hollywood stars such as Brad Pitt and Robert De Niro. Last year, Jacqueline Bisset won the award On June 14th, the Kremlin Palace will be hosting a for best actress. The actress was visibly moved. The concert by the unique pianist Denis Matsuev. Per- biggest award went to Bulgarian director Ivaylo Hris- formances by this talented artist are always remem- tov, for his filmLosers . bered for his colossal temperament and expression. Denis even broke the piano he was playing on dur- On June 25th, one of the greatest rock groups, Iron ing one of his concerts. Matsuev is truly a mega-star, Maiden, is going to come to Moscow. The legend-

84 CAPITAL IDEAS April-June 2016 ary collective has given the world at least 100 mil- Her songs combine pop music with elements of hip- lion CDs and influenced the development of heavy hop, which has made her extremely successful. The metal tremendously. The awaited performance by performer’s first concert took place at the New York the heavy weights of metal will be held at Olympic club The Box, and her career has been gaining mo- Stadium in Moscow. mentum since then. Her albums are always at the top of the charts and her shows are always success- On July 10th, American show business star Lana Del ful. Lana is already being compared to Britney Spears Rey will be performing in Moscow for the first time. and Lady Gaga. ■

April-June 2016 CAPITAL IDEAS 85 FACELife& leisureTO FACE UnusualAndrei Sharonov museums: Moscowvalenki, never retro cars and Olympic bear sleepsThere are a lot of world-famous museums here in Moscow: the Tretyakov Gallery, the Pushkin Museum, the Kremlin Armoury and so on. A lot of Andrei Sharonov,Muscovites and visitors know aboutYes, it isthese a challenge museums as well. But and it is visit a real themopportunity on aand what is important – it is a reality. Deputy Moscowregular Mayor basis.for Economic But our cityPolicy, also has other interesting, but less famous places Isn’t it a challenge? shared with CAPITALto explore. IDEAS Capital his vision Ideas of has compiled a list of unusual museums that feature Moscow as an international financial center Yes, it is a challenge as well. But it is a real opportunity and what the most unexpected exhibits in isthe important – city. it is a reality.

Bunker-42 on Taganka

Bunker-42 highlights the historical significance of a difficult time period in the USSR, when the country was in conflict with NATO states in the 1950s-1980s. It is the only museum in the world that is entirely dedicated to the Cold War! Originally constructed as an antinuclear shelter for the leaders of the USSR, the facility is located in the very center of Moscow. It was designed and erected after the Soviet Union conducted the first series of nuclear weapons tests. The tests enabled experts to establish how these types of facilities need to be designed (prior to this, no other country in the world had constructed a similar facility). It was determined that the optimal depth for the bunker is over 50 meters. The location was selected because the bunker needed to be located close enough to the Moscow Kremlin – the proximity would allow Stalin and other members of the government to take shelter quickly and continue to give orders in case of a nuclear attack. Today, Bunker-42 continues to serve a very important function. Every day, people descend 65 meters underground in order to experience an era during which the world was at the brink of a nuclear war. Guests who book a special tour will get a historical and technical introduction to the bunker, visit the fourth block with an emergency post, walk across halls that have been restored to their original Soviet appearance, explore the dark tunnels of the life supply unit, and climb up to the ventilation shaft.

Address: 5th Kotelnicheskiy Pereulok 11, m. Taganskaya, Marksistskaya Tel.: +7 (499) 703-44-55, +7 (495) 500-05-54, +7 (495) 500-05-53 Hours: every day, 24 hours a day, but you must book the tour in advance. Book tours and events by phone from 9:00am to 8:00pm. Ticket price: 400–2,000 RUB Website: www.bunker42.com

86 CAPITAL IDEAS January-MarchApril-June 2016 2016 The Vodka museum

The Vodka Museum is considered to be one of the most interesting Museums in Mos- cow. Aside from everything else, the museum’s expositions contain various types of containers used to store vodka – the schaal, the stof and the quarter. Visit the museum to find out what real vodka is, when people first started making it, and learn about the role it played in Russian history. The staff will tell you about the process of making vodka, which used to be referred to as “vinokureniye” in ancient Rus. As many people already know, the first vodka was made in monasteries. The museum’s guests will see a unique exhibit that shows a Russian monk in front of one of the first machines, and learn in detail about how it works. A bottle used for the famous “Moscovskaya Osobaya” vodka holds a special place among the museum’s rarities – this vodka became Russia’s official national drink soon after it was patented by the government in 1894. The museum complex also houses a restaurant of Russian cuisine, the interiors of which resemble Russian restaurants at the end of the 19th century.

Address: Izmailovskoye Shosse 73 Z, “Kremlin in Izmailovo” Cultural and Entertainment Complex, m. Partizanskaya Order a tour by phone: +7 (499) 166-50-97 Hours: daily, 10:00am – 08:00pm Ticket price: 120-400 RUB Website: http://vodkamuseum.ru Torture museum

A unique collection of ancient torture instruments and devices. Reconstructions of torture machines that have not survived to the present day. A collection of engravings on the subject of torture and executions that are too terrifying to be published. There are similar museums abroad, but these museums usually focus on general horror – witches, demons and vampires. This museum is about legal forms of physical punishment: torture, execution, corporal punishment.

Address: Arbat 25/36, m. Arbatskaya, Smolenskaya Tel.: +7 (926) 497-18-24, +7 (919) 965-49-39 Hours: Mon – Sun, 12:00 pm – 10:00 pm Ticket price: 300–400 RUB Website: www.pereverzev.su Museum of Soviet arcade games

This museum is like a time machine – it brings people back to their happy childhood days: favorite cartoon characters and drawings from the “Murzilka” magazine, the bear from the Olympic games and “Lakomka” ice cream. When people think about their childhoods, they frequently recall their time spent in class as young pioneers and the ceiling of the planetarium, or playing football until late in the evening with friends. The pioneer camp on the Black Sea and songs by the fire, hikes through the forest and games of cops and robbers. If any of these things make you nostalgic, the Museum of Arcade Games will bring back a lot of pleasant memories. The museum contains 40 different kind of arcade games, including games that you can still play.

Address: Kuznetsky Most 12, m. Kuznetsky Most Tel. +7 (499) 261-11-47 Hours: Mon – Sun, 11:00 am – 09:00 pm Ticket price: 450 RUB, free entry for children under 6 Website: 15kop.ru

January-MarchApril-June 2016 CAPITAL IDEAS 87 FACELife& leisureTO FACE AndreiRussian Sharonov Valenki museum

The only museum in Moscow where you can learn a lot of new things about a seem- ingly mundane object and its significance. The exposition features different models, from 19th century embroidered valenki to the felt boots work by the Russian Olym- pic team in 2002. The museum’s mission is to remind visitors how our ancestors once lived in harmony with nature, taking only what they needed and leaving the rest in place. MoscowChildren and adults nevercan take workshops on decorating valenki and working with felt. Address: 2nd Kozhevnichesky pereulok 12, m. Paveletskaya Tel: +7 (910) 402-59-13, +7 (495) 775-25-77 (ext. 279) Hours: Tuesday, Wednesday, Friday, Saturday, 11:00am – 05:30pm sleeps Website: www.gorizont.org/muzey/ekspozytsiya/

Andrei Sharonov, Yes, it is a challenge as well. But it is a real opportunity and what is important – it is a reality. Deputy Moscow Mayor for Economic Policy, sharedMuseum with CAPITAL of IDEASMoney his vision of Isn’t it a challenge?

Moscow as an international financialThe museum center is relativelyYes, small, it is a challengewhich means as well. that But the it standsis a real and opportunity displays can’tand what feature the entire collectionis important – at the same it time is a reality.(about 4,000 exhibits). You can see different types of money that was used in the past, currencies from exotic countries and contemporary bills. Currently, 231 countries are represented across the museums 4,232 exhibits (3,142 are bills, while the other 1,093 are coins). You can also order interesting tours that will introduce you to mysterious places created by nature and artificial monuments of human history. Find out what the ancient Slavs used for money, visit Vladimir the Great’s coin factory and see what the first Rus- sian coins looked like, listen to a story about Ivan the Terrible’s cheshuiki and Peter the Great’s rubles, see a bill that was dubbed “Katenka” and find out why the first paper bills in Russia were referred to as “red” and “blue.”

Address: Leningradskoye Shosse 59, in the Moscow River Shipping Company building, m. Rechnoy Vokzal Tel.: +7 (499) 652-94-56 Hours: Mon – Fri, 10:00 am – 06:00 pm, Sat – Sun, 11:00 am – 07:00 pm Ticket price: 50–200 RUB Website: www.muzeydeneg.ru

88 CAPITAL IDEAS January-MarchApril-June 2016 2016 Mosfilm museum

A corner of the legendary film studio that has been used to make Russian films for many years. The museum is unusual because the exhibits featured here change all the time, as some of them are still used for filming. There is also a unique collection of retro cars featured in Mosfilm movies, costumes and fabulous decorations. Here, you can find out what a movie set looks like and walk the halls of the main building, which houses various stands with sketches, make-up, camera equipment and more. Unfortunately, the pavilions are not open for tours when filming is in progress because visitors interfere with the work of actors, directors and the whole crew.

Address: Mosfilmovskaya Ulitsya 1, m. Kievskaya Tel./Fax: +7 (499) 143-95-99, +7 (499) 143-91-18 Tours for individuals: groups (sign up in advance): Tue – 03:00 pm, Thu – 03.00 pm, 06:30, duration 1h30. Ticket price: children – 270 RUB, adults – 390 RUB Website: www.mosfilm.ru/fans/ekskursii.php

Experimentarium science museum

The museum is an interactive exposition that covers all major scientific fields. Every room has exhibits that you need to interact with: explore, put together, solve, pull, jump and even scream. This museum actually encourages you to touch and play with the exhibits! The museum is rightfully considered to be the first interactive museum for children in Russia – a place where kids can try out and experiment with complex disciplines like electromagnetics and mechanics, chemistry, physics, anatomy, optics and more. The museum also has a spherical theatre that shows scientific films about space, the Universe and distant plants. The theatre is located on the second floor, between the Electromagnetism and Optics sections.

Address: Leningradsky Prospect 80 bldg. 11, m. Sokol Tel.: +7 (495) 120-05-20 Hours: weekdays – 9:30 am – 07:00pm, weekends and holidays – 10:00 am – 08:00 pm Ticket price: 450 – 2,150 RUB Website: www.experimentanium.ru/ru/

January-MarchApril-June 2016 CAPITAL IDEAS 89 LIFE&LEISURE White Collar Fest: it’s magic time! They say that those who work hard play hard. Magic Time’s performance at the New Year corporate party was Employees of The Boston Consulting Group don’t a huge hit. The band was supposed to only play for a half hour, but the crowd forced them to keep going for almost the entire doubt this for a second! night. They were asked for encores of all the Russian and foreign hits that were included in their repertoire. “This was fantastic,” o matter what anybody says, boredom saves the world – Anton recalls, “We weren’t expecting anything like it. The next it is a powerful force that pushes people to create. After day the entire office treated us like rock stars and wanted to all, those who are bored want to stop being bored im- know when we would lay again. We didn’t know what to say. Nmediately and enrich their lives with excitement. We didn’t have any plans after the corporate party!” This is approximately what Anton Stepanenko and Sergey Ish- After thinking about what to do, the group decided to put to- kov, 32-year-old employees of The Boston Consulting Group (an gether a festival that would include bands from other companies international company that specializes in management consult- working in Moscow. “We knew that there were bands like this at ing), were thinking when they decided to start playing guitar. Sberbank, Rosnano, VTB, PwC from our colleagues,” Sergey said, They weren’t planning on leaving their well-paid, interesting “so all we had to do was find a place to perform and invite them.” jobs. They just wanted to add something different to their lives, They selected B-2 club, invited other bands and... which were mostly devoted to work. “I’m not exaggerating when I say that work takes up almost all of our time,” Sergey says, “We What happened on May 29th, 2014 at the famous Moscow literally sit in our office from morning until late in the evening. Of nightclub will probably make history, and not just the fact that course you eventually start wanting a change.” the concert drew a crowd of almost eight hundred people. The most important thing is that the night gave birth to White Collar There was no question about what they were going to do to Fest – a night for managers and employees of international and make it happen. Both of them wanted to be musicians when Russian companies. they were kids. “You know,” Anton confesses, “sometimes you close your eyes and see yourself on stage with a microphone, not As of today, a total of three White Collar Fests have been held in an office in front of a computer.” in Moscow. Germany even hosted a similar festival, dedicated to the 25th anniversary of the fall of the Berlin wall. Magic Time per- The idea to turn their dream into reality occurred to the two formed at the festival with a band from the Berlin BCG office. At friends at the end of 2013. The New Year was approaching, and the end, our guys played “Winds of Change,” while the German they decided to perform at their corporate party as a band. They band performed “Doroga Dlinnaya.” The next White Collar Fest is had no problem finding others to join them. Sergey and Anton going to take place in Moscow on June 4th. “The festival is grow- easily found colleagues who also wanted to be on stage and ing,” the guys say, “We have a lot of things in the works. We are started to practice. inviting all corporate groups and want to have an annual contest. The band that wins will have an opportunity to take the next It was immediately decided to name the band Magic Time. “This step in their semi-professional music careers – to film a clip that is a term that means something specific in our company,” Sergey will get airtime with our support.” But they don’t want to take it explains, “At BCG, ‘magic time’ refers to time that is not dedicat- too far. “We don’t want to have our own music awards or any- ed to a project and can be used however the employee likes. We thing,” they say, “We don’t want to cross the line that separates aren’t officially entitled to this time, but everybody figures out a us from professional show business. After all, the most important way to make this happen.” thing about White Collar Fest is having a good time!” ■

90 CAPITAL IDEAS April-June 2016 useful info

City Government Address: Voznesensky Per., 21, Moscow, 125032 Ph: +7 (495) 633-51-90 http://www.mos.ru/en/index/php

Moscow Investment Portal Address: 119019, Moscow, Novy Arbat St., 11, bldg. 1 E-mail: [email protected] http://www.mosinvest.mos.ru

Moscow Innovation Development Center Address: Voznesensky Per., 22, Moscow, 125009 Business Center Usadba, Ph: +7 (495) 225-92-52 http://inno.msk.ru

Business Protection Headquarters Address: Voznesensky Per., 22 (5th floor), Moscow, 125009 Business Center Usadba Ph: +7 (495) 620-20-45 http://shtab.mos.ru

Department for Competition Policy Address: 12 Pechatnikov Pereylok, Moscow, 107045 Ph: +7 (495)-957-99-31, +7 (495) 957-99-77 Fax: +7 (495) 957 99 95 E-mail: [email protected] http:// www.tender.mos.ru

April-June 2016 CAPITAL IDEAS 91 FOOD&DRINK Roberto: food like art Federico Fellini famously said that life is a combination of magic and pasta. The Italian restaurant Roberto, which is located on Rozhdestvensky Boulevard, serves pasta and other dishes so magical that the life of every visitor turns into a true dolce vita.

t’s difficult to find somebody with more per- severance than Maurizio Pizzuti – a restaurateur from Rome who has been in the business for almost 40 years. In the 20 years that Maurizio has been working in Moscow, he has become an incorrigible optimist. Since 1990, he has taken part (as a partner or owner) in the open- ingI of four Italian restaurants in Moscow! Some of them existed for several years, others for several months, but, in spite of having to start over so many times, Pizzuti never gave up. Even when Russia fell on hard times and his charming Russian wife Vera (they got married in 1996) proposed to leave Rus- sia and move back to Italy, he convinced her they should stay. “I always told her no, repeating over and over that there are a lot more opportunities here in Moscow,” Maurizio recalls, smiling.

It turns out he was right all along. His restaurant Roberto, which he opened in Moscow in 2001, is considered to be one of the best Italian restaurants in the Russian capital.

92 CAPITAL IDEAS April-June 2016

This is explained, first and foremost, by the fact that Roberto is the only Italian restaurant in Mos- cow that is completely managed by Italians. As the owner, Maurizio Pizzuti is the general manager of the place. The kitchen is under the control of Francesco Voce – a chef from Calabria, located at the very tip of the country’s boot-shaped pen- insula. Both of them work every day, from early morning late into the evening. The experienced chef uses the kitchen for more than simple cooking – he is a true creator. The dishes on the menu at Roberto are a true work of art, and Francesco is a food designer. Regardless of what the dish might be – a simple pizza or Risotto con anatra zucchine e Vino Rosso caramellato – everything will be executed perfectly. “For me, food is culture,” Franc- esco confesses.

Interestingly, the way Mr. Voce came to Moscow was an adventure that can rival the plotline of famous Blockbusters. It happened in 2002. “One day, I got a phonecall about putting together a menu for a banquet that Gazprom was planning to hold in Tyumen. ‘Why not,’ I thought to myself. I carefully thought through all of the dishes and sent them in. Everybody liked it, and a few days later I was in Tyumen,” the chef recalls. Tyumen wel- comed Francesco with a wall of snow and freezing temperatures – it was -45 outside! But the cold

94 CAPITAL IDEAS April-June 2016 didn’t scare him off. After the banquet, he stayed in the mysterious Siberian town out of sheer cu- riosity. Then, he got offered a job in Moscow. He has been working in the Russian since then, and started his job at Roberto in 2004.

Mr. Voce has been a chef for over 30 years. “I am a professional chef,” he says, smiling, “Unfortunately, in Russia just about anybody can call themselves a chef, even if they were a cab driver just a few months ago. In Italy, this is simply unthinkable!” It is no surprise that a lot of restaurants in the capital that refer to themselves as “Italian” serve things like pizza with chicken. “This is nonsense! What planet did these people come from?!” Francesco laughs.

At Roberto, all of the Italian dishes are really Ital- ian. “We don’t experiment,” Maurizio and Voce say. Francesco took a course at the Barilla Parma Italia Academy in September 2014. In other words, if you order veal with tuna sauce at Roberto, the sauce will most definitely be made out of tuna, not may- onnaise or ketchup. And, of course, your tiramisu will be made with mascarpone cheese, not with cream. The restaurant menu is updated every six months, and Francesco’s favorite dish is the Spa- ghetti Pomodoro (but really, every dish Francesco makes can be considered his favorite). The famous film director Andrei Konchalovsky, who is a big

April-June 2016 CAPITAL IDEAS 95 FOOD&DRINK

fan of Italian cuisine, loves Roberto’s Pasta Aglio e is made in Moscow, although this is not the best Olio. In general, the restaurant is a frequented by substitute. It’s more of an imitation.” By the way, many celebrities, including famous designers, TV the restaurant’s wine list, which features wines personalities and athletes. from every region in Italy, is a particular source of pride for the owner. Roberto always holds the bar Have the sanctions affected the restaurant’s op- high. It is not surprising that some time ago the erations? “Yes, this has been a bit of a problem for Italian Ministry of Foreign Affairs awarded Maur- some time,” Maurizio says, “since we want to use izio Pizzuti with a certificate of excellence, which real Italian cheese, for example. Of course, we are confirms that Roberto is the best Italian restaurant looking for ways to deal. We get similar cheese that outside of Italy. ■

96 CAPITAL IDEAS April-June 2016

One hive is just a hive, but five hives is an apiary!