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Doing business in Belarus 31 of January 2012

Doing business in Belarus 31 of January 2012. The structure of the Olvi group. OLVI PLC Finland. 100 %. 98,2 %. 99,57 %. 91,6 %. AS A. Le Coq Estonia. A/S Cesu Alus Latvia. Volfas Engelman Lithuania. JSC ” Lida beer ” Belarus. Why Belarus?.

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Doing business in Belarus 31 of January 2012

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  1. Doing business in Belarus 31 of January 2012

  2. The structure of the Olvigroup OLVI PLC Finland 100 % 98,2 % 99,57 % 91,6 % AS A. Le Coq Estonia A/S Cesu Alus Latvia Volfas Engelman Lithuania JSC ”Lida beer” Belarus

  3. Why Belarus? • Geographic location and opportunity grow for Olvi group. • Access to Russian market andother markets of common custom zone • Ready-to-do production • Formed management team

  4. Risks • Political influence on economic processes • Control of only 51% at the beginning of investment Out –of-control Something controllable

  5. Actions to make things happen • Increase Authorized Capital Stock and issue additional shares • Make great offer to minor shareholders control packet of shares (51 %) 91,6 % of shares

  6. Result of investment. Expectations and reality • Met all profit indicators through 2009-2011 years. Result: Totally new sales team New system of distribution New logistic system Personnel replacement Investments to capacity and quality Influence of crisis: Restructuring investment flow Reducing personnelcost Decreasing of profitability

  7. Olvi Challenges • Difference in mentalities influences on the attitude for changes. Resistance is higher. • Great investments in to education of personnel in order to motivate them to work differently. • Slowing down all process (construction took 1,5 more years). It is all about people

  8. Points you have to consider • Politic defines economic: • Belarus have to produce import substitute. Main direction is to copy instead of to invent. • Protection of local producers by administrative measures. • Local currency devaluation process and covering this by complicated accounting system.

  9. Plans and reality • According to presidential decree in 2012 • GDP has to grow on 5 – 5,5%, • inflation rate 19-22% • Export growth 11,6-12,3% • In comparison with 2011 forecast was: • For inflation rate – 7,5-8,5% (fact 110%) • For local currency devaluation – 8% (fact 180%) Could be equal, but through tough measures

  10. Recommendation for doing business • Consider economic model of Belarus: • Power of government officials • Social economy orientation exceeds business reasonability • Consider negative scenario: • Must have anti-crisis plan: strategy, resources, flexibility in business procedures and processes

  11. Recommendation for doing business • Top management: • Think in advance about who you will work with (knowledge of language, proper education (MBA), western style of working experience) • Think about whole team (recruiting one by one will slow down all the processes)

  12. Recommendation for doing business • Your business “hardware” • Consider real price of company where you are going to invest. (difference in reality and accounting documentation could be significant)

  13. Something you can get use to  • Business trip it is a complicated process: Set a meeting Set a meeting Go to meeting Send memo to accounting Send internal memo Take a stamp on authority docs Write assignment for business trip Get back and write a report Go to meeting Come back Prepare an order for trip Get travel expenses

  14. Thank you

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