Kazakhstan Chamber of Commerce in the USA

KazCham



It’s time to change the oil-Borate image of Kazakhstan in America 2

Posted on April 26, 2010 by KazCham

United States has been successful trade and economic partner for the countries of Central Asia for many years. However, this partnership was limited mostly to work of U.S. energy companies upon requests of Washington to hand in the operations of coalition forces in Afghanistan. From the other side, it’s extremely difficult to enter the US market for the Central Asian States due to many obstacles.

It’s symbolic that the first country of Central Asia, which opened a representative office of its Chamber of Commerce in the United States (New York City), was Kazakhstan. The head of the representation, Yuliya Daurova, is going to tell about main activities of the chamber and how it is going to revive the Kazakh-American business cooperation.

According to Yuliya Daurova, ROI in Kazakhstan reaches 150%.

– Promotion of the political interests of Kazakhstan has been doing actively for a long time. It includes the current chairmanship of the OSCE and the Organization of Islamic States the next year  – as vivid examples. What about intentions of foreign countries to develop the business and economic cooperation with Kazakhstan? And how can Kazakhstan Chamber of Commerce promote that?


– During the crisis, the interest of American companies to developing promising markets increased. It includes Kazakhstan. The introduction of industrial-innovative strategy by the Government of Kazakhstan has intensified the interest of investment companies and banks in the United States to the country. Thus, major part of requests in our representative office comes from them.

For example, one of the largest U.S. private equity companies believes that its best investment over the past 10 years was a project in Kazakhstan, where the internal rate of return of these investments amounted to 150%, which is a high rate. However, many U.S. companies just want to know more about the economic situation in our country, since they are still afraid of the political and financial risks. Yes, U.S. companies now show interest in Kazakhstan, for example in the agricultural sector and the chemical production, but in my opinion, they are still very cautious.

Thus, we plan to hold regular seminars and conferences which are tailored to target audiences in individual sectors on issues of doing business in Kazakhstan. Seminars are supported by Grata Law Firm (New York), auditing company PricewaterhouseCoopers Kazakhstan, Broad Street Capital Group and, of course, the Embassy and the Consulate of Kazakhstan in the United States.

We have already launched social networks marketing and plan to hold a series of activities to promote the business image of our country in America, because we are often told that  it is very difficult to learn about Kazakhstan. So, we’ll try to change this attitude.

I want to stress once again that there is the interest – both by U.S. companies and by Kazakhstan firms – to conduct joint business. Basically, it’s about joint ventures and export-import operations. But it’s very difficult to contact the right people in Kazakhstan for American companies. They do not know how to do this and fall into an information vacuum.

Our embassy in Washington has been working on this problem over years, but it is over workloaded. So, we hope to become the “business bridge” between our two countries and to provide operational information about projects, legislation and investment climate in Kazakhstan.

– United States companies have been actively working in the republic in the energy industry since Kazakhstan proclamation of independence. What do they do now in this area? And what is the approximate ratio of involvement of U.S. businesses in other areas to oil production involvement in Kazakhstan?

– The United States have invested in Kazakhstan’s economy 14.3 billion (from 1993), mostly in oil and gas industry and commensurate services. Now, U.S. exports to Kazakhstan has fallen to 2005 levels and totaled $ 600 million in 2009, although there was a time when it reached a billion. It includes 40% for equipment for the oil industry, 25% for transportation equipment, and the rest for computers, telecommunications, electronics and chemical industries.

Despite the fact that today some American agriculture, medical equipment, and educational firms are very interested in Kazakhstan market, it seems to me that the current ratio of investment into O&G complex comparing to other areas will not change. Probably, it’ll be the same 65% of U.S. investments on oil, gas and associated transport lines development.

– Do you think that the image of “business background” of Kazakhstan in America has been changed compared to the times when the cooperation just began? Do not you think that Americans, despite their nearly twenty-year presence in the country, are still very poorly informed about Kazakhstan and its real business potential?

– Kazakhstan, oil , Borat – that’s the image of Kazakhstan for the majority of Americans, still. Many U.S. investors react vigorously with the word “oil” in relation to Kazakhstan, but they are still completely unaware of the fact that Kazakhstan is, for example, one of the world’s largest exporter of copper, uranium and grain.

When you tell them that, it is a real discovery. Therefore, the change of country’s image will take a lot of work. I need result as follows: the word “copper” should be associated with the company “Kazakhmys”, aluminum with ENRC and so on.

So far, the general business relations between the United States and Kazakhstan has not been changed. Oil is still in the first place. The Kazakh exports to the U.S. for the crisis year declined only  by $ 65 million and amounted to 1,545 billion dollars. Of course, that was mostly oil. Everything else is mainly ores and metals.

– Energy and its development is the priority area for the United States regarding the cooperation with Kazakhstan. But today Kazakhstan needs money for the development of agriculture, small business and transport industries from U. S. What has been done to bring U.S. companies of non-energy sector to Kazakhstan over the years?

– You know, this is a difficult question. Judging by the fact that most American companies which come to us are investment companies, they are, in principle, interested in launching projects in Kazakhstan. However, the U.S. firms are interested in public-private partnership or joint ventures with local partners. U.S. investors need sound guarantees to work in Kazakhstan.

As I see, American companies usually submit projects to Kazakhstan ministries, and then hope to get any response over the years. I think that if U.S. investors were more knowledgeable about our country, they would contact partner companies directly, and it would certainly accelerate the process. But today American companies get into the information vacuum.

– What are the interests of Kazakhstani business in America? And how representation of your Chamber of Commerce can help Kazakh businessmen to work in the U.S. market?

– Officially our Kazakhstani business in the United States represented by only one company – Wimpex (vodka). However, our oil companies have strong business ties with our American partners, they have their kind of rep. offices, plus Astana airlines reside in New Jersey.

I have met several private investors from Kazakhstan in America. For example, a Kazakh young man opened a glass factory and resold it then. There is a company owned by one beautiful Kazakh lady, which deals with the import of caviar from Kazakhstan to the United States. Our young guys here opened an advertising agency, created a design studio and a model agency.

If we talk about the prospects of Kazakhstan’s business in the United States, there are great opportunities to work with mining companies and grain producers. In America, there are potential buyers of Kazakh uranium, gold and grain. I mean there is a potential for mutual cooperation.

And I think that it exists for small businesses from Kazakhstan too. For example, in such a huge city like New York, there is no a Kazakh restaurant while there are about 10 thousand Kazakhs living here plus two million Russian-speakers. Add here a very active go-out population of other nations, it’ll be approximately 10 million of inhabitants. Here you have an opportunity for our Alasha or Tubeteika.

With specific regard to our work, we are ready to help in finding partners, customers, and co-financing in the United States. Also, we help with registration, immigration and other issues.  So, if you have a good business proposal and a partial funding, it is possible to organize the Kazakhstani business here in the United States.

– What, in your opinion, are the main problems which have prevented the Kazakhstan and American entrepreneurs to interact so far? Is there only problem of the lack of adequate information about each other, or it is more mentality, lifestyle, cultural differences?

– In general, people face several problems: the absence of proper information, the different languages, and the distances between the countries. On the other hand, Chinese and Russian companies work successfully in the United States regardless these problems. Some of them even do not speak English at all and work here for years.

I agree that it happens partly due to the differences in mentality. In my opinion, there are purely social and cultural aspects in the relations between the two countries. For example, the Kazakhs live patriarchal structure, derived from the ancient times, and it is much harder for them to adapt to specific American culture. Americans are, by nature, more open and assertive in their behavior, and it is easier to do business for them. The same dress code, for example, is pretty simple, but something may be unacceptable in the same clothing for Kazakhs. But since we talk about business and not well-established family relations which have thousands years of tradition, so, perhaps, there should be more flexible and less formal relations. Still the main constraint in enhancing the bilateral relations is the lack of timely and reliable information about each other.

– Given the fact that a centralized bureaucracy in the U.S. is extremely strong and it does not solve problems of small business operationally, isn’t it more profitable for you to contact senators of individual states in the country directly, since they are much more flexible in making decisions and will be more interested in helping US companies with investments and projects in Kazakhstan.

– Unfortunately, the bureaucracy stifles business development not only in the United States, but in Kazakhstan as well. Definitely the situation has improved with the arrival of young and dynamic vice-ministers in the Kazakh government, who are easier to reach. They are more open to contact and react more quickly to certain requests.

Yet, the situations with the bureaucratic obstacles remain severe. For example, government people there sent me approved scanned, signed and stamped answers on official forms to my email requests. Businessmen barely do that. They will email me back within 48 hours as usual.

There is also a significant difference in the affairs of government agencies of both countries. For example, in the United States a businessman will receive an answer for an request, sooner or later. It usually takes a couple of weeks, sometimes, two months. Still, the answer will there. Moreover, the higher the rank, to whom you are applying, the more assurance that you’ll get a prompt response in U.S. In Kazakhstan a businessman finds himself in the Bermuda Triangle.

As for senators of states and their interest in cooperation with Kazakhstan, you are absolutely right. We have already established connections with the state of Louisiana in the south of the USA; Nebraska – an agricultural state; Washington on the Pacific coast. We are now working to expand our business ties in California, and also plan to enter into agreements with local business associations in New York.

We are open and glad to various forms of bilateral cooperation, we actively try to help companies to enter and work in both markets and look forward to successful implementation of our plans to strengthen trade relations between the U.S. and Kazakhstan.

SOURCE: Delovaya nedelya Kazakhstana. Yuriy Sigov. 2 April 2010.



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