In your sector of
transport and logistics services, foreign investment
increased up to 40% last year. What are your views
on the potential of this sector?
Mr. Korcilius - I think its development is gaining
speed every day, every week, and it is booming right
now. We have a boom in Russia, which started about
half a year ago. It is fed by factors such as the
government's closing of open-air markets, political
decisions, and some changes in taxation law. 99.9%
of the companies of our sector are Russian companies
doing business in the Russian way, providing services
in a Russian way or not providing services at all.
They provide services to Russian clients or foreign
companies, but not the way we provide services.
We are in a very particular niche because we are
the only foreign company providing such kind of
services, and we only work for foreigners. It is
not that we do not like to work with Russians; it
is just that we have a specialized office.
You are an international businessman working here
in Russia and CIS countries since 1989, but you
started this company in 2002. Why did you start
this company now here in Moscow and, what was your
initial strategy?
Mr. Korcilius - We came to starting this business
from one day to another day. We were actually trading
with Russia, sending, selling and exporting goods
like the other traders. Daily, we faced all kinds
of problems with brokers, customs brokers, the transportation,
and with security. People started to ask about us,
because we found a way of dealing with those problems,
thereby stabilizing and facilitating their business.
People started asking us more and more to help them.
And then from one day to another day we realized
we should change the business of the company into
solely providing services, using our knowledge,
experience and connections to create a company.
It came out naturally, it was not planned.
Initial success can be used as a steppingstone to
the future. How did your turnover grow last year?
How is business going now?
Mr. Korcilius - The business is expanding, the growth
rate for the last 6 months is several hundred percent
per month. We are taking off like a jet here. Clients,
who had small problems, which we solved and reasonably
charged, come to us again with more and more. And
clients, who come here, stay here, talk to other
people, and give us more business. We get invitations
from ambassadors from all countries in Moscow. Sometimes
we have no idea how they know us. It is just by
word of mouth. We are doing some promotion but not
that extreme, not so much.
So, business is taking off. In terms of turnover,
it is difficult to talk about turnover because we
are a service company. So, what is a turnover, the
amounts that I charge in Russia for my services
or the sums of goods or the value of goods, which
we transport or import on behalf of other companies?
Moreover, for many different reasons, we also provide
consulting services outside Russia. It is very difficult
to talk about turnover. What I can say is that we
had the return of capital that we invested, which
was about 250 thousand dollars. 150 thousand USD
was initial investment and about 110 thousand a
couple of weeks later, which came back after 3 months.
This is very good. Even if we compare it to property
business these days, they have a return of capital
within 1 year, if they get licenses on time. If
we look at other places in the world, even Asia
it takes 2-3-4 years for a return on an investment
to occur. Here everything is going very fast, which
can certainly be attributed to the fact that there
is money in Russia, and people are willing to use
this money if they get a quality offer for services,
or something which was not here before.
You can see it very dramatically when they opened
a new Ramstore outside of Moscow. At the opening
of a new Ramstore in Zelenograd, the police had
to be called to bring armed people to withhold the
crowd. The shop was just overcrowded; it was blocked
by cars. All these people, they bought their products
somewhere else before, but not in that volume. It
is a shop with good service, a big choice of products,
and they imported nice products. Ramstore city is
another example. There was a field there one year
ago. There was nothing, no shop. Now it is very
difficult to get a parking space. The managers are
doing a very good job there. But again, they are
also foreigners, and he is providing another level
of service, another level of quality and reliability,
cleanness etc. If this is provided, there is a market
immediately. IKEA, where many germans are in charge,
is another example.
Talking about companies, like IKEA, could we say
that foreign companies will be your main target
in the following years?
Mr. Korcilius - Yes, we provide clients with a full
service. This full service is what is most important
for us. So, we can say that we do everything for
our clients. It starts from helping them to get
a visa, protecting them during their stay here,
getting them appointments which they need, making
background checks on companies, on people, and so
on. Whatever they need we provide. This can even
mean showing them the best restaurants in Moscow.
And we also have a policy that we do not only say
what they want to hear, we always tell them what
we think, tell them you should not do this, because
you will have these and these problems.
If you just go to a lawyer in Moscow, he will say:
"Okay, we will make you a Russian company,
it will take us 6 weeks and will cost you $ 5-10
000." But, the lawyer will not tell you
when you will face which problems. They do not show
the whole picture. They are just interested in making
money quickly. Unfortunately, the whole mentality
of the Russian market, not only local companies
but many foreign companies as well, is about making
money quickly. They do not think what will be coming
next.
You work with a range of partners. How can these
partners benefit from you, and how do you benefit
from these partners?
Mr. Korcilius - We do not have many partners. We
have a couple of partners, which are also foreign
managed companies, and they provide a certain kind
of service that is useful to our clients. We then
provide another service, which is useful to their
clients. We are interactive, and have a very short
communication. For example, if my client needs security,
guards, investigations or something similar, we
just send him over to a British company, which has
been doing it for 20 years. Often they have clients
who want to import goods or have problems getting
a license or certificate or something.
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Will you be considering,
because the business is doing well, to increase
the number of partners for example from countries
like Britain, or US companies in the following years?
Mr. Korcilius - Yes, we consider this but again
only under the aspect that they have our kind of
mentality. This means that they are doing everything
immediately without any big bureaucracy or something.
So, they have to be swift, 24 hours a day reachable
on the hand-phone. They have to provide the same
kind of level of services that we provide. If not,
then we are not interested because not everybody
is of use to us.
Trend World has many different areas of service,
like consulting, security, registration, visas,
etc. Diversification is a hot topic today in any
company, in any sector. Will you consider to diversify
more in the future, is it a part of your strategy
in the future?
Mr. Korcilius - Our strategy is to provide a one-stop
shop. When a client comes here, he will need a visa,
an invitation, he needs company registration, he
needs background checks, he needs many things, and
we provide this in a one-stop shop. We do not charge
him for each single service. If he takes everything
separately he will pay a vast sum of money for the
services. We do it like a service and not to make
a huge profit. Our main profit generating areas
are custom clearance, full service, everything that
has to do with cargo and troubleshooting. These
are our two main profit makers.
I also saw it on your website that one of the company
advantages is that often you save companies more
money than the cost of your services. Is that the
main competitive advantage of your company? What
are your other competitive advantages?
Mr. Korcilius - At the moment we do not have real
competitors, who you see like competitors because
other customs brokers are working in a different
way, mainly illegally. We are working strictly on
a legal basis. We also have a policy of sticking
to our quotes so that we stick to the amount we
indicated to a client. This is very much different
from the competition. For example, the competition
will tell them that this will cost $20 000, and
then when the goods have arrived they will say that
they only release the goods if they receive another
$20 000.
Therefore, our competitive advantage is definitely
that we are foreign-managed, and that we do things
immediately, and we stick to our quotes. We are
reliable partners and the speed of our work is also
a competitive advantage.
Mrs. Tamara Vasilieva - It is very important in
Russia to have the right connections and relations
in order to get things done quickly. Sometimes you
have a lot of money but you cannot do anything because
you have no connections. We spend a lot of time
with our clients personally and do not ask them
to come to our office. We visit them personally
every second day in Moscow. And, we do not immediately
charge for the service. We first talk to people
and evaluate the situation. I think that is also
to our advantage because if you call any company
in Moscow, they will say: "Okay, come to
our office." They will already start using
their calculator. We say, "Okay, let us
meet at seven, we reserve a table at the restaurant,
and let us just talk about it." This is
also the reason why we have success. And we are
very flexible. There are people who call us and
say that they have to fly back tomorrow. We then
come immediately. We have vast experience here,
and also the companies whom we carefully choose.
We have a deep understanding of the Russian background,
their likes and dislikes, and their education. We
never forget this. They have a problem with education
and they have a communist way of thinking in their
minds. You will never be able to take it away from
especially the old generation. Only 2-3 years ago
people started traveling abroad. This was the first
time people saw something outside of Russia. Before,
they were taught that Russia is the greatest. Therefore,
they only had a cultural shock 2 or three years
ago. However, the older generation is failing to
go outside Russia. They see everything negative,
and this is very unfortunate. The new generation
also has different demands. They will no longer
go to an open-air market where you have to walk
in the dirt. They go straight to IKEA, to Metro,
and so on, because they know what to find there.
If it had not been available they would probably
have to go to the market.
This deep understanding of Russia and the Russians
helps because those who just come here to visit
for a week or two will never be able to have this
understanding.
Now we know more about Trend-World, we would also
like to introduce you to our readers as a businessman
here in Russia. Could you tell us about your professional
background?
Mr. Korcilius - Before Trend World I was just a
trader. We were doing business in Asia producing
all kind of goods for all kind of companies and
selling them to our European and American clients.
What is your vision on the future of the company?
Where would you like to see Trend World in the following
5 years?
Mr. Korcilius - I see Trend World in 5 years as
one of the main providers of customs clearance,
transportation, and troubleshooting for foreign
companies in Russia. In 5 years time, we will probably
have a couple of hundred or more, employees. We
will probably have middle management and definitely
have more foreigners from different countries as
employees. We will probably have some Americans
here, who will take care of our American clients,
because they know their mentality. Then we will
have some Europeans and people who are able to speak
more languages.
Bearing in mind that the readers of Red Herring
and our website are form the international business
community, predominantly in the United States, what
would be your final message to them? For the people
who want to do business in Rusisa, what advice could
you give them?
My advice for everybody, who wants to do business
in Russia, is to invest money in Russia, to work
with people who know Russian business for more than
10-20 years. Have dinner with them first to talk
about everything, and only after that to take the
first steps of doing business in Russia. During
this dinner they will learn much and gain a lot
of understanding about the real situation in Russia,
including big opportunities, the positive aspects
as well as the risk in general. They will have a
different view and more knowledge of the situation
and the possibilities.
Otherwise, I can just encourage everybody to
come to Russia right now, because it is the fastest,
most expanding market, and there are tremendous
opportunities, especially for foreign companies.
There are exceptions but in general Russians themselves
are not able to provide any kind of quality and
reliable services at this point of time. And they
are very happy to get companies here that are
foreign managed and reliable, which provide a
good service and a guarantee. If this is the case,
they are willing to spend money.
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