The First Trip – Still to the Soviet Union
– I first turned up in Russia, it was still the Soviet Union then, in 1988 at the peak of Gorbachev's “Perestrioka”. I completed a six-week trip by car: to Leningrad (now St. Petersburg) via Helsinki, to Moscow, and back to Germany via Brest.I finished school in Frankfurt-on-Main in 1989. Then, if you remember, there was the collapse of the Berlin Wall and I wanted to find out what had been hidden behind the “iron curtain”. Also, I wanted to go back to Leningrad, the city I had really liked during that first trip. I managed to get a one-year visa to the Soviet Union only in 1991 and a letter of referral to study at the Philosophy Faculty of the Leningrad State University (LSU), the same faculty at which I studied in Germany. I didn't speak Russian then, and once I arrived, I immediately realised that I wouldn't be able to study without learning the language. But, jumping ahead, I will say that some years later I eventually had graduated from LSU Philosophy Faculty. While I was considering what to do, the August Putsh broke out in 1991 and the Soviet Union collapsed. But I stayed on in that “vacuum”.
What I consider to be one of my most important achievements is that in Russia I acquired the habit of learning constantly. Here, you can’t be still.
Business – Instead of Study
– But then, in November of 1991, a law regarding foreign investments was issued, according to which individuals also had the right to start their own business in Russia. In January of 1992 I submitted the paperwork to register a business and received official permission. In truth, I hadn't even declared a company profile for Ost-West KontaktService.A small digression. Whilst I was still studying in Germany, I always wondered: “Why don’t people living in poverty start their own businesses?” Superficial answers (laziness, fear etc.) I dismissed out of hand. And then the opportunity to prove in practice that anybody who wants to can run their own business and flourish fell to me. The start-up capital was the money I had left over from studying which I had brought with me when I arrived. About two thousand US dollars.What I consider to be one of my most important achievements is that in Russia I acquired the habit of learning constantly. Here, you cannot stand still: every now and then there are changes to the legislation and rules governing the conducting of business which means you need to get hold of that information and take it in.
In recent years there are more and more arriving from Asian countries: Japan, China, Taiwan, Singapore.
Initially, the route I chose was an unorthodox one: most foreign nationals invite a Russian lawyer who speaks English to deal with their affairs. But I wanted to look into everything myself so for the first seven years I spent two hours every week with a woman lawyer. We tried to talk in Russian, but she also knew English, so in the early days she was able to help me. We examined all the decrees, types of contracts etc. and now, in this respect, I feel completely at ease. I could even say that over those years I graduated from the University's Legal Faculty!
A Happy Coincidence
– I started my business doing what everybody was doing in those days - selling. Except that it wasn‘t goods that I was selling, as was the fashion at the time, but tourist services. It was life itself which pushed me in that direction: compatriots who wanted to come to St. Petersburg independently began to seek me out. They turned to me for help with securing official invitations into the country, accommodation, compiling excursion programmes, etc. Moreover, I, myself, had been amongst those first from abroad to travel around the new Russia independently. By the way, now, each year, I add new regions and compose itineraries of interest to Western tourists. Overall, it‘s great when your passion overlaps with your business – it‘s a happy coincidence.
Compatriots who wanted to come to St.Petersburg independently began to seek me out. They asked me to help with securing invitations into the country.
As a result, I opened Ost-West KontaktService‘s own office in the center of St. Petersburg on Mayakovskiy street, where I had twelve people working for me. What makes us stand out is that our customers are only those from abroad. At first they were my friends and acquaintances from Germany, and then their friends and colleagues, and so on in geometrical progression. We expanded our list of countries and now it covers almost the whole world. Apart from my native Germany (which, you could say, is the most independently travelling nation) there are a lot of tourists from neighbouring Finland, the USA and Italy. But in recent years there are more and more arriving from Asian countries: Japan, China, Taiwan, Singapore. Also tourists from India are becoming more active. We even get them from Australia and New Zealand turning to us.
The “Squeeze” of Crisis
– To establish the business and to operate without debt took five years: it was only in 1997 that I could say that, as a businesswoman, I was able to stand on my own two feet. A few years ago, a silver medal “For Outstanding Contribution to Developing Tourism in Russia” was conferred upon me, and the company was awarded the Order of Recognition.
Darya Biryukova, Director of FMCG Markets Research and Tourism Department, IndexBox:
In 2010, 2.1 million foreign tourists visited Russia. In 2011 this indicator grew by approximately 10%, the 2 million mark being surpassed according to figures for the first nine months. In comparison, in 2010, 79 million visited France, and 60 million the USA...Amongst the problems limiting incoming tourism to Russia are the insignificant amount of resources set aside for promoting the country as tourist-friendly, and the strict visa rules. But even so, Russia's potential in the tourism field is simply enormous: it has several climatic zones where all kinds of vacations are on offer, from beach vacations to skiing and winter vacations. Also, there is an enormous number of places of historical interest, natural beauty, tours to the Lake Baikal, Siberia, Kamchatka...In order to set up a travel agency, specialising in incoming tourism, a one-time investment of around 300,000 rubles (10,000 USD) is required. This is for office rental, office equipment, telephone and internet connection, hiring a few employees and advertising. The less expensive alternative is an internet company which does not require an office or staff. In this case, expenses should not exceed 80-100,000 rubles (2,700-3,300 USD), most of which is for advertising. Profitability, as a rule, is 5-10%. On average, travel agencies pay for themselves after 18 months.
During the successful years we managed to bring in more than 7,000 clients. It‘s true that the crisis of 2010 hurt us – only 3,500 clients. We had to “squeeze” ourselves. We moved to a smaller office, but still in the center of St. Petersburg, opposite the Mayakovskaya metro station. If there were 21 employees on the staff before, now it is only seven. But they are all-rounders who take the customer through everything from the receiving of their application to sending them home after their travels around Russia. In other words, they organize the invitations, book the hotels, meet them, provide the excursions and cultural programmes, develop the itinerary, if someone wants to see something other than St. Petersburg. For example, it is very fashionable to travel on the Trans-Siberian Railway via Russia and Mongolia to China.Overall, my attitude towards the crisis is a lot calmer than that of foreign colleagues who have not been here that long. For me, this crisis is already my third. For example, after the default of 1998, it took me three seasons to manoeuvre myself out of debt.
In Russia the situation changes very quickly. Every now and then new market niches open up to which you can bring your capital.
How to Become the First
– Sometimes, I help colleagues from abroad coming to St. Petersburg to start a business, to draw up their documents. They always have a lot of questions which I try to answer. The most common questions are about the registration procedure and payment of taxes.As I see it, the fundamental difference between the Russian market and that of the West is that, in Russia the situation changes very quickly. Sometimes demands for already available production or service rise fast, every now and then new market niches open up to which you can bring your capital. Here, development is more dynamic than in the West where everything has, more or less, settled down.On the other hand, despite 20 years of market relations, Russia is constantly playing catch-up with developed countries. In a lot of different areas it is a little but still behind. It is not a unique situation: after the reunification of Germany more than twenty years went by, but the East is still different from the West. So, you need to grasp where things lag behind and where it is possible to come with the necessary innovations: technological, service-based etc. And in Russia you will be the first!I speak from experience: I helped lomography (a type of analog photography) come to the market. The headquarters of the International Lomographic Society is in Vienna and its advocates arrived in 1994 after arranging a trip through me. In 2000, the first office selling lomographic cameras opened in St. Petersburg. Demand grew each year and there came a point when I could no longer stay involved with it: I simply did not have the time. My husband headed the business by starting a new company.Also, I find time to participate in social organisations: it is already two years now since I’ve started issuing in St. Petersburg the regional Russian language magazine “The Rotary Digest”, the periodical of Rotary International in Russia.
Elena Tsereteli, Chairwoman of the Public Council for Small Business Development to the Governor of St. Petersburg:
– The last seven years have observed a precipitous rise in hotel and travel business in St. Petersburg. Mainly this is linked to the fact that, since 2004, tourism development has been proclaimed as one of the city government's strategic goals. Today, 555 travel agencies from St. Petersburg are registered with the All-Russian General Register of Travel Agencies. To compare, there are 1,848 agencies from Moscow.In July of 2011, the Federal Target Programme for the Development of Domestic Tourism from 2011 to 2018 was approved. Through this 332 billion rubles (11billion USD) will be allocated to the development of tourism, 28.9% of which (or 100 billion (3.3 billion USD)) should be made up of private investments. The prospects are good, for foreign business too.In general, in terms of small business, the city on the Neva River occupies a leading place in Russia. Here an investment-friendly atmosphere has been created. In just 2010, in St. Petersburg more than 25,000 enterprises were set up and 104,000 jobs created.
No Bribes to Anyone
– To those, wanting to start their own business in Russia, I advise not to be afraid of anything. From my own experience, I am convinced that all our problems stem from our doubts. First of all, you need to make a decision and stick to it. If an entrepreneur knows where he is going, and why, then all problems will gradually be solved. There is no need to be afraid of the details: you can get to grips with them as you go along!I hope that, with time, present inconveniences will be eliminated. For example, as a foreigner, I go every year to the Office of the Federal Migration Service (FMS) to receive a work permit. The only ones who are exempt from this are those whose salary exceeds 2 million rubles (67,000 USD) a year (unfortunately, I still fall short of that). Their work permit is fast-tracked and they receive a three-year visa. However, in my opinion, it would be better if foreigners were differentiated along different lines: job creation. An individual expert is one approach; starting a business and creating jobs is another. That is how it is done in the USA, in particular: if you create more than 10 jobs, then your “green card” is delivered right to your home. But at the moment, I am in line at the FMS with Vietnamese and Chinese people and other migrant workers...
To those, wanting to start their own business in Russia, I advise not to be afraid of anything.
The second thing is the attitude towards corruption. In my opinion, this problem is exaggerated abroad. In today’s Russia a serious legislative framework has been developed and if you respect yourself as an entrepreneur then you have to try to operate within the law. To say that you have to give money to civil servants against your will is just making excuses. Company directors themselves don't want to go down the road of legal solutions of issues and each person is free to act according to his/her conscience. I personally, in my 20 years of doing business, have given a bribe only once. That was back in the nineties when people convinced me that, unless I did, my business would never get off the ground. But now I am convinced that I would have made it even without doing it. But then, I was only just setting out, and there was a lot I didn't understand...Comparing my first steps in business with the present conditions for businessmen starting off in Russia, I can say that operating now is substantially easier: the “rules of the game” have evolved; there is an algorithm to be followed. Today everything is simpler and easier to comprehend.