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.

Honorary Consul of the Republic of Kazakhstan 0

Posted on March 25, 2010 by KazCham

Bayou Region, LA – March 5, 2010 – Mr. Paris “Pye” Theriot, Director of International Development for the South Louisiana Economic Council, has been appointed  Honorary Consul of the Republic of Kazakhstan and  received credentials at an official ceremony Friday, March 5th in Baton Rouge.  As Honorary Consul, Mr. Theriot will serve on behalf of the Consular Department of the Kazakhstan Embassy in Washington D.C.  to promote cooperation between government, commercial and academic interests both in Kazakhstan and in the states of Louisiana, Mississippi and Alabama.  In his role as Honorary Consul of the Republic of Kazakhstan, Mr. Theriot will also serve as an official representative on behalf of the Kazakh government at state and federally sponsored events.  The appointment comes at the recommendation of Louisiana Congressman Charlie Melancon and Louisiana Lieutenant Governor Mitch Landrieu and is an official appointment of the Kazakhstan Ministry of Foreign Affairs, with approval by U.S. Department of State.

SOURCE: http://www.kazakhconsul.com/index_files/Page390.htm

New focus on small and medium-sized enterprises 0

Posted on March 18, 2010 by KazCham

SAMRUK, THE POWERFUL state holding company  which controls the ‘commanding heights’ of the  Kazakh economy, from pipelines and power lines  to railways, telecoms and oil companies, also  sponsors KazNex, an export promotion agency set  up specifically at President Nazarbayev’s request to  encourage small and medium-sized enterprises (SMEs) to raise quality and compete in export markets.

The government is keen to encourage small  companies to help diversify the economy and reduce  reliance on the extractive industries. SMEs currently  account for well under 20 per cent of GDP and  limited knowledge and penetration of export markets is one of their biggest weaknesses.

“Our vision is to become a driving force for  building support for exports. We already export  raw materials, and we want to develop exports  with higher value added,” says the KazNex agency’s  dynamic deputy chairwoman, Saule Akhmetova.  “We started with a study of best practice in other  countries, especially South Korea, Singapore,  Australia and Malaysia where growth was export led,” Akhmetova says.

“The problem in Kazakhstan is very low  awareness of the importance of exports on the  part of government, society and business. As more  international companies, including multinational  corporations such as Procter & Gamble, enter the  market, local businesses have to raise their game and focus on quality and marketing to compete effectively on both domestic and export markets,” she adds.

One company that addressed this issue was  Bekker & Co, a Kazakh-German joint venture in the  food processing sector. Bekker’s general director,  Ivan Kravchenko, says that from the moment  of independence in 1991 he realised that local businesses would not be able to compete with foreign imports. He went to the head of the German food  company, Bekker GmbH, who agreed to create a joints venture, which almost two decades later employs 770 people with an annual turnover of ?35 million.  Every 24 hours, Bekker produces nine tonnes  of sausages and 1.5 tonnes of bread and bakery  products, as well as traditional foods such as Russian pelmeni and Kazakh manti (dumplings) – always with h the emphasis on high-quality ingredients and  hand preparation.

“We employ lots of people for our relatively small  output. Most is prepared by hand, which we think is a major contributor to quality – we want our products  to be the same quality as home-cooked foods,”  says Kravchenko.

“Quality begins with raw materials in the food  industry. If you buy poor meat, no amount of effort  will improve it. Therefore we work with the best  suppliers. We buy our meat in Kazakhstan but other  products are imported,” he adds.

Almaty and the surrounding area is the main  market, but Kravchenko says the company wants to  export to the EU. “We have a large territory and a  relatively small population so we can feed ourselves  and have enough left over to sell abroad without  heavy use of chemical fertilisers. If we produce  ecologically clean products, we can sell them anywhere,” he says.

Ms Akhmetova of KazNex believes there is very  good potential for companies in the food processing,  textiles, chemicals, pharmaceuticals and paper  products sectors to boost exports but admits that  the crisis has slowed things down. “Companies  have limited access to funds, and some have even  suspended their activities temporarily,” she says.

One successful exporter is Textiline, which  produces a line of sportswear for Swiss clothing  manufacturer Assos at its state-of-the-art factory  in Talgar near Almaty. The company is one of a  new breed of Kazakh businesses where focus on  quality makes it possible to compete effectively with -international firms both at home and abroad.

Producing workwear for blue chip customers  such as TengizChevroil, KazMunaiGaz and KazZinc  accounts for around 65 per cent of its business, but Textiline also provides children’s clothes for the  domestic market and niche projects such as  making costumes and fabrics for the epic Kazakh  film, Nomad. According to sales and marketing director Inna  Apenko, investing in technology and staff training  was the only way Textiline could compete with low  cost exports from China – a perennial problem for  Kazakh businesses. High labour and operating costs  mean it costs five times more to produce a simple  t-shirt in Kazakhstan than in China or Turkey. “A  cheap labour force is a big competitive advantage for clothes manufacturers, but unfortunately, we don’t  have this. Unlike Vietnam or Indonesia, we also have  a shortage of specialists in this field so we had to set  up special courses,” Apenko explains.

“Our advantage over China is in technology  and intellectual property,” she adds. “When Assos  selected Textiline, the company said it needed to  be confident of quality production, and we could  guarantee this. We employ a team of specialists in  design, engineering and technology, whereas in  Chinese companies this work is typically carried out  in Europe.” Today, Textiline is the largest clothes  manufacturer in Kazakhstan, with six factories,  employing 1,200 people.

In recognition of the difficulties of raising  funds for investment, or even working capital,  the government has set up a new fund, called  Damu, which works with banks to finance smaller  companies. It has 117 billion tenge to lend at a preferential 12.5 per cent interest rate and a further  3 billion tenge specifically to help small companies  take part in state tenders or produce goods for export. The EBRD has also been an active provider of finance  to Kazakh banks for on-lending to SME customers,  and ATF Bank President Alexander Picker says that  the UniCredit-owned bank is using its international  experience to develop small business lending in  Kazakhstan, partly thanks to EBRD fundings

Bekker and Textiline have both had to adapt to  the economic slowdown, like most other Kazakh  companies. “Before the crisis, demand exceeded  supply, so we don’t plan to reduce output or cut  staff. But we have paid more attention to marketing  recently,” says Kravchenko.  Ms Apenko agrees on the importance of  enthusiatically promoting the company’s products.  “We plan to work actively towards exporting our  products,” she says. “But our major customers have  reduced orders by around 30 per cent, so we intend  to use this spare capacity to launch new consumer products for the domestic market.”

A study by KazNex found that funding was  actually not the main issue facing SMEs. “Our  research showed that the top problem was not  a lack of money but the need for better access  to information, better marketing skills and an understanding of international trade procedures. The most important thing is to change people’s mindset,” Akhmetova concludes.

Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Page: 88-90.

Chamber of Commerce and Industry of the Republic of Kazakhstan in the USA 9

Posted on January 05, 2010 by Sergey Sek

We are proud to announce the opening of an official representative office of the Chamber of Commerce and Industry of the Republic of Kazakhstan in the USA (“KazCham”).

Chambers of commerce have traditionally been the associations of enterprises engaged in trade, manufacturing and services. The predecessors of the medieval guild houses were merchants and artisans. The overall objective of the chambers around the world – protecting the interests of business and promoting their development.

Kazakhstan Chamber of Commerce and Industry (“Chamber”) was established in 1959 by decree of the Council of Ministers of the Kazakh Soviet Republic.

The Chamber represents interests of the Kazakhstani business community and provides a set of essential business services. The Chamber serves as the social and economic partner for small and medium-sized businesses in the dialogue with government, big business, as well as partners in foreign trade activities. The Chamber has signed over 70 cooperation agreements with foreign countries: Italy, UAE, Russian Federation, India, Turkey, Jordan, Syria, South Africa, Egypt, etc.

Each year, the Chamber, which has 16 regional chambers, provides 70 thousand services. Included are a number of expert and inspection services, consultations on foreign trade activities, assessment services for the customs value of goods, confirmation of documents on foreign trade transactions, the consideration of disputes arising between the partners.

When conducting business forums in Kazakhstan and abroad, visiting foreign markets as part of trade missions is a proven and cost-effective way to grow your business. A business visit, professionally planned and managed by Chamber specialists, allows one to achieve results much more efficiently than a few self-organized trips.

The practice shows that the majority of business contacts, organized and implemented by the Chamber, are effective.

Membership in the Chamber is voluntary.

After decades of hard work, the Chamber gained tremendous experience and serves for the benefits of your business.

In 2009 the Chamber of Commerce of the Republic of Kazakhstan celebrates its 50th anniversary.



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