– How do you come to be in Moscow?
– I first came to Moscow in 2004 at the invitation of the National Factoring Company. They wanted me to help them gain access to the international market. I was also asked to provide consultancy services to the company’s board of directors, and to organise the instruction of personnel and training sessions.
About Barry Rogers
Barry Rogers graduated from the British Institute of Credit Management. He worked at Lloyds TSB. In June 2000, he set up a company in London – Factoring and Discount Consultancy. Then he worked in Moscow in the National Factoring Company, at PricewaterhouseCoopers, then he held the position of Vice-President of “Probiznesbank”. He acted as an independent consultant. In 2009, he founded ABL Advisory. ABL stands for assets based lending. ABL Advisory provided consultancy services to finance companies, mainly those in the ABL credit sector and factoring.
– Why did you move to “Probiznesbank”? What did you do there?
– I had a one-year contract with NFC but I was actually there for 20 months. I left NFC because I had fulfilled all my contractual obligations and completed all the tasks I had been set. I was among the founders of Life Factoring Company, which represents the factoring interests of the financial group Life, created on the basis of “Probiznesbank”..
– How did you get to PricewaterhouseCoopers?
– I realised that I had done all that was required at “Probiznesbank”. And I wanted a change of career path towards the consultancy business. I went to PWC a year before the financial crisis. I worked out financial proposals for consultancy services in the factoring, leasing and credit fields. But the financial crisis changed the market considerably, and not only in the banking business. The business model had to be revised, things had to be changed. Many ex-pats left Moscow at that time. But I started my own business here.
What is factoring?
Factoring is a financial service not unlike crediting, but with its own special features. An organisation (supplier) which has sent bills to contractors (debtors) can apply to a factoring company to receive immediately up to 90% of the sum of the debtor’s debt on which the payment term has not yet expired. Financing takes place on the basis of conceding the cash claims of the supplier against the debtor to the factoring company. The remaining 10%, after deduction of commissions for financing and factoring services, is transferred to the supplier after the money from the debtors reaches the factoring company. Factoring is an effective tool for speeding up the turn-round time of assets for small and large enterprises. It started in Europe more than three centuries ago.
– How and when did you get the idea of doing that?
– I had already had my own business in London from 2000 to 2004. In addition to that, I had worked as an independent consultant. So the experience was there.
– But why in the Russian capital in particular?
– I decided I had better opportunities in Moscow than in London. I saw it as the “red and blue oceans” concept. A red ocean is a developed market with very fierce competition. But a blue ocean is calm, quiet, transparent, hardly any competition at all. The factoring market in Moscow in those years was a blue ocean. The difference was that there were many specialists like Barry Rogers in London, offering the same services. But in Moscow, it was just Barry Rogers – there was no-one else. When I first came here in 2004, the factoring market in Russia was only five years old, now it is 15 years old. There are many more specialists, so of course the blue ocean is becoming a red one.
In 2005, Professors Chan Kim and Renée Moborne of the INSEAD Business School published a book called ‘Blue Ocean Strategy’, which became an international bestseller. The authors’ concept is that business activity has to be transferred from those sectors of the market where the competition is very fierce (‘red ocean’) to where there is simply no competition (‘blue ocean’), i.e. to seek out business ideas to form a new demand and new markets.
– Do you have any partners, or are you the sole owner of the business?
– I am the sole owner. After all, my business is nowhere near as big as PWC.
– Western entrepreneurs starting a business in Moscow are usually advised to acquire a local partner.
– I absolutely agree, but it was rather different in my case. I was used to working by myself.
– Please tell us about how you started your business.
– I think that in starting up any business, the main thing is to become well enough known in the market. You need marketing, you need contacts. I knew very well what to offer the market, because I had been in the business myself for many years. I realised that my market was factoring and leasing companies, and I tried to make sure that they knew who I was.
I knew very well what to offer the market, because I had been in the business myself for many years.
– How did you do that?
– One of the main tools was the business social network LinkedIn. I sent out emails to the managing directors of companies, visited conferences and exhibitions in this field, and thus became known in my sector..
– What investments were required?
– Hardly any, apart from my personal time, which is itself quite expensive.
– What caused the most difficulties in organising a business in Moscow?
– For me, the only difficulty of any significance was the Russian language. I am not fluent in Russian. But after nine years in Moscow, I have fully mastered the local business processes and come to understand the specific features of Russian business culture. You can learn a lot moving around in the Moscow business community. Of course, I wouldn’t claim to know Russian business as well as Russian entrepreneurs, but I’m getting close.
– You run your company as an international one. Where do you have most clients?
– Most of my clients are in Russia, in Moscow, but I have quite a few clients in Turkey, where I went last year.
– Are your Russian clients major companies or medium-sized ones?
– Both. Mainly in Moscow.
– How do Russian clients differ from Western ones?
– I would say that Russian clients are more demanding and expect a higher return on their money than Western ones.
Russian clients are more demanding and expect a higher return on their money than Western ones.
– You mentioned that you understand the particular features of the Russian business culture. What are these particular features, and what conclusions should a foreign entrepreneur draw from them?
– By comparison with Western companies, Russian ones are much less transparent in their activities. It stands to reason that it is riskier to conduct business in Russia than in the West, but the same can be said of India and China. You can’t manage what you don’t know. You can’t assess the local risks, you don’t know them. That’s why it’s so important for a foreigner opening a business in Moscow to acquire a local partner, who knows these risks and can manage them.
– What is the personnel situation in Moscow? What do you think of Russian specialists?
– As far as my sector is concerned, as I have already said, nine years ago they were few in number. But now, no problems arise in finding a specialist in factoring. In general, there are excellent specialists in Moscow, and not only in the field of finance.
– What are salaries like in Moscow? Where are qualified personnel more expensive – In Moscow or in London? And by how much?
– Strange as it may seem, the salary level for qualified personnel in Moscow is almost the same as in London. Salaries fell after the crisis. Competition became fiercer, budgets were cut, more was required from staff. But in the past two years, the markets have stabilised, and salaries are approaching what they were before the crisis.
Mikhail Treivish, Chairman of the Asian Department of International Factors Group:
“The factoring market continues to be the fastest growing sector of the Russian finance industry. Last year, factoring turnover in Russia increased by 63% to a total of more than 1.4 billion roubles, which is more than 2% of GDP. This is much less than the European average of 6%, but there is no doubt that if current growth rates are maintained, Russia will soon catch up with Europe. The removal of the licensing requirement from factoring two years ago significantly changed the landscape of the market. Many factoring directorates and departments of banks have been reorganised into separate companies. It is not yet clear along what lines the further development of the Russian factoring market will proceed: on the European model in which factors forming part of bank groups predominate, or on the American model with a large number of private companies. The obstacle to the further growth of private companies is their common problem with funding. It may be solved by expanding the bank crediting of factors, or by the securitisation of factoring portfolios. For both these, adequate methods of assessment and monitoring are required. Another problem is price competition, which leads to a gradual reduction in margins. On the whole, the Russian factoring market has reached a fully mature state, and the technology it uses serves as an example for activities in the newly developing markets of Asia, and in the future also those of Africa.”
– Who are your competitors in the Russian market?
– PwC, Ernst&Young, Deloitte and KPMG. That’s a joke, of course, because my business is nothing like on the same scale, but for level of qualification, I am in no way inferior to their factoring and leasing specialists. As for people like me, there are several professionals in Moscow, but they can hardly compete with me – I have more experience.
– Do you take account of the specifics of the Russian mentality in your work? And what are they, in your opinion?
– Every market has its own special cultural features. But I think that many in the West would be astonished at how quickly Russian businessmen assess a situation and take decisions, how rapidly they take advantage of the opportunities that open up for them. Wherever you go in Moscow, you will keep coming across ATMs through which you can pay bills for your mobile phone, internet, electricity and gas. There is nothing like it in Britain. In some aspects, Russia is at times ahead of the developed markets, because 23 years ago there was nothing here at all, no kind of technology. Russia started virtually with a clean sheet, people here brought a totally fresh approach to things. With some exceptions. For example, it seems to me that the financial and banking software produced in Russia is not up to world standards.
I think that many in the West would be astonished at how quickly Russian businessmen assess a situation and take decisions.
– Were there problems with the Russian regulators and tax authorities
– Fortunately not. But I know that problems are possible. Of course one should be as careful as possible in such matters.
– Have you come across corrupt schemes in Moscow?
– Not corrupt schemes as such, but I have come across swindles in which false payment documents were submitted. Unfortunately, factoring is very much subject to swindling. But this doesn’t only concern Russia. Last year a British factoring company lost £20,000,000 because of swindles. That’s why continuous study is so important in the financial field.
– What would be your advice to Western entrepreneurs intending to open a business in Moscow?
– My first advice has already been mentioned more than once – to acquire a reliable local partner. You mustn’t make a mistake here, otherwise you could have a lot of trouble in store. Many joint ventures collapse because of a conflict between the partners. Before entering into any agreement, you must understand your partner as a person, make human contact with him. And even this is no guarantee, because different ambitions, different ideas about the sources of income, and so on, can begin to have an effect.
Dmitry Chirkov, Managing Partner of Life Factoring company:
“There are quite a few examples in Russia’s history of turning to foreign consultants to resolve governmental, political and economic issues. Foreign experience is also very highly sought after on today’s market in Russia. The contribution made by expatriates to forming and developing our financial sector is immense: many currently successful businesses, financial strategies and entire markets have come about with the participation of colleagues from overseas. New financial instruments and financial services arrived in modern Russia overnight. We didn’t have the time to evolve, so much (including legal practice) was simply copied from countries with developed financial sectors.
The factoring market was no exception. Barry Rogers was the foreign expert who stood at the wellsprings of the Russian factoring market, and with whose help a whole raft of powerful market players came into being. Barry Rogers is a widely acknowledged authority, and an expert known the world over. In my view, Barry is a perfect example of how the experience of other countries in certain sectors of the market can be modified, adapted and successfully integrated into contemporary Russian reality.”
The Western entrepreneur should be prepared for a higher level of corruption and lack of transparency in Russian companies. And most important, one should not forget that people are the main asset. If you don’t have a good team, you don’t have anything. Quality of personnel is a decisive factor in any business. But you must know how to work with Russian staff. There are significant differences here, compared with Western Europe and the USA. In my opinion, personnel management in Russia requires a stricter, more formal approach, which is possibly a matter of traditions.
– How do you find life in Moscow?
– I like living here. It’s a lively atmosphere, there is vibrant life all around you. It isn’t easy to conduct business in Moscow, but it’s interesting. When I arrive in London, I’m bored. But in Moscow everything is always changing – you won’t get bored here! That’s why I am here and not in London.