Could you give us some background information of British American Tobacco Uzbekistan in terms of its history and structure today?
The joint venture British American Tobacco Uzbekistan as created in 1994 and since then we have made investments over 200 million USD. Our strategy is directed to becoming the number one Tobacco Company not only in Uzbekistan but also in Central Asia. Our analysis of Uzbekistan and the potential markets in Central Asia showed that Uzbekistan is a better place to make investment due to the favorable location and natural resource. Based on this we started our operations, built a new state-of the-art factory in Samarkand and modernized leaf processing factory in Urgut. Since then we are trying to produce highest quality cigarettes, introduce new brands in the local markets such as Karvon, Astra and Xon. We are also importing Lucky Strike and Kent from the USA. We used to produce Hollywood cigarettes for the local market but today we produce them only for export. This is another area of our development where we try to serve the surrounding countries in the whole Central Asia. We achieved exports of 1.1 billion cigarettes in 1999 and now we are close to 3 billion cigarettes. This represents a huge achievement for the company during last 3 years.
I think that we are also here helping different sectors in the economy. For example we support twenty five thousand farmers. We support them through providing agriculture and technical emphasizes. Last year we bought 20 Case tractors. We provide the full maintenance service including the driver. It takes 6 months to pick the tobacco leaf and the farmers that are supporting the tobacco-growing program also set the benefit using our tractors for another 6 months.
We pay great attention to training of the local staff. I have worked in many different countries, but people here are very talented, outstanding and pay attention to self-development. The total amount of investment for training is over 12 million USD, which is quite substantial. On top of that we have many other programs where we send our managers overseas to different markets where we are operating. They are exposed to different types of culture, values, and market dynamics and then they come back here and use their knowledge and spread their experience with other colleagues. I think the best way to measure success is to look at the initial number of expatriates from the year of foundation which accompanies around 70 people and today we have around 16-17 foreigners in our company. It gives me great pleasure to see that Uzbek people demonstrate their capabilities. The potential here is good, compared to many markets our intention is to develop local talent for our top management and Directors roles.
Can you elaborate a little bit on your strategy in expanding to surrounding countries and what is your relation to the British American Tobacco in terms of the structure and decision making structure?
British American Tobacco is divided into regions
and our region is called MESCA (Middle East, South
and Central Asia). We believe in developing the
concept of giving freedom through responsibility
to any given end market. This means that you really
empower the markets to make their own decision.
The headquarters is responsible or determining strategy,
for providing guidance, to develop promotion and
share best practice, to develop management and to
introduce management information and reports for
statutory purpose. We are solely responsible for
implementation of the strategy and any operational
execution belongs to us. We have a regional discussion
where each general manager or a director presents
the status of active positions and projections. |
As for the export, two plants which are manufacturing plants and leaf processing plants are located in Uzbekistan and we are going to develop them even further. Uzbekistan will be the source of our cigarettes for the domestic market and export to other countries. What we have been doing since last year is that we have been building our team in those neighboring countries. Our sales are growing and in the near future we feel that we will be in a quite good position in Central Asia. Also what we are trying to do is to exploit out capabilities in Samarkand because it is not that easy to get necessary permission to produce what we call international brands. You have to reach a standard where the factory is allowed to produce international brands, and our factories because of their potential, people, and processing equipment are competitive and they were approved, which means that we are for example producing Hollywood for export. If one day we decide to produce an international brand we are allowed to do it, because we have one of the best laboratories for quality analysis to ensure that we are delivering the standard that we are looking for to satisfy all the consumers' demand.
What can you tell us about being the biggest investor here and what are the main advantages for investors here? What would be your final message to our readers that are potential investors here?
It is very nice to be one of the biggest investors because the level of contributing to the economy development is quite significant, and I think that the bigger your business is the higher your opportunities are to feel that you are really contributing to the development of the country.
British American Tobacco is a long-term investor, and there are two dynamics of that because any given market show the short term and long term opportunities. The big international companies like ours will always be taking decision on investment for long term. It means that somehow you will be at a certain level of risk and return associated with this investment. If you look at Uzbekistan it is amazing how long their history and their culture values are. I do not feel comfortable when people start to make comparisons with developed countries, and believe this has been a huge change in the country considering the fact that it is very young. But on the other side I think that because we are here for long term investment there is a risk associated with this and during the process of development we all face difficulties on return on investment. In today's business when we are talking about investments over 200 million dollars we are actually mentioning the size of our flexibility. I should say that if the short-term investor here is not making money then he should close the door and get out. This happens not only in Uzbekistan but it is a basic understanding worldwide. If tomorrow will be an opportunity to make money it will be open the door here, but this is not the case for the long-term investors such as British American Tobacco. We try to understand the difficulties, we are trying to continuously talk with the government authorities, we are trying to mutually cooperate in a way that we can balance the return on the investment and support the process that Uzbekistan is going through.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions. |
British American Tobacco Central Asia 