Page 71 - bne Magazine February 2023

bne February 2023 Eurasia I 71
Kyrgyzstan has one factory, Avangard, that makes around 180,000 washing machines and fridges a year. And Turkmenistan produces TVs and computers at the Aydyn Gijeler factory.
Artel is one of the unsung success stories of the “new Uzbekistan” that Mirziyoyev is trying to build. The company already dominates its home market, selling to the ballooning middle class, and has seen exports explode in the last few years.
Like many of the successful companies emerging from the chaos of the 1990s, the holding group that gave birth to Artel began life as a trading operation. The company imported aluminium and plastic products such as door and window frames that were in high demand in the noughties, before eventually going into the production of white goods in the teenies to become Uzbekistan’s leading privately owned company today.
Starting with gas cookers, the company quickly expanded into things like vacuum cleaners, including a joint venture with
Samsung, but today makes over 50 different items, including the de rigueur washing machines, fridges and TVs.
The pandemic caused a pause in the company’s growth, thanks to supply chain disruptions, but as Uzbekistan’s economy bounced back strongly, so have the company’s sales. Across the majority of product lines, Artel Group products now occupy 40-60% market share.
Regional market in the making
One of the changes Mirziyoyev has brought is increasing regional integration amongst the Central Asia states. Kazakhstan may be richer than Uzbekistan but with only 19mn inhabitants spread out over a territory the size of Europe, it is a dilute market and not an obvious production centre. Now Uzbekistan’s manufacturing sector is coming of age, exports to Kazakhstan are an obvious next step. The same argument applies to Tajikistan and Kyrgyzstan, which are also important export destinations, and increasingly to Azerbaijan, another oil-rich country with only 10mn people.
Since 2018 Artel’s exports to Kazakhstan
have exploded and will hit a forecast $50mn for this year, an increase of 124% year on year. Those to Tajikistan are up by a quarter over the same period, while Artel is now in the process of opening the Kyrgyz and Azerbaijani markets.
“We are exporting the same goods as we sell in the local markets, but we decided to export with 0% profit while we build up our market share. In Kazakhstan we already earn profits, as we have a strong presence there now, but most of the other markets, particularly in the CIS, are still in development," said Murodov. “Next year we will further build on our export to MENA countries as well and expect good growth there too.”
Artel is also looking further afield and has begun exports Africa in the last couple of years. Certain product lines have now also received certification that will allow them to be exported to Europe. For example, since Uzbekistan won export duty privileges to the EU in the last years, textile exports have exploded. Domestic sales still account for more than two thirds of its business.
Emerging Europe’s greatest scams bne IntelliNews
As thousands of Mongolians besiege the government offices in Ulanbataar over the alleged embezzlement of up to MNT44 trillion ($12.8bn) in state coal export revenues, bne IntelliNews takes a look at some of the other great scams across Emerging Europe, Central Asia and Iran over the last three decades.
The ‘Wild East’ years of the early transi- tion proved fertile ground for people to get rich quick while their less savvy (or less ruthless) compatriots were still adjusting to the new capitalist era. That period of barely regulated capitalism and murky privatisations led to the emergence of a new class of super-rich in a region where most people were struggling to survive. Even now, more than 30 years later,
persistent corruption and cosy relation- ships between government officials, businesspeople, bankers and criminal elites have facilitated a series of multi- billion dollar scams, of which the events in Mongolia are just the latest.
1990s
Ponzi schemes prey on financially illiterate East Europeans
The first really big financial scams in the Former Soviet Union (FSU) were a raft of pyramid schemes inflicted on the financially illiterate people who were just coming to grips with capitalism.
One of the most famous was the MMM scheme, set up in 1989 by small-time computer trader Sergei Mavrodi and his
brother. It quickly ballooned into one of the biggest Ponzi schemes in history, pulling in 5mn-10mn people who sunk their life’s savings into the scam and quickly lost everything.
At its peak MMM was taking in millions of dollars a day and Mavrodi himself has obtained a sort of cult status amongst Russians. He died in 2018 at the age of 62 from heart problems. The quirk in the story is most investors knew it was
a scam but hoped to get their money and profits out before it collapsed.
If Russia had a very large scheme that duped a lot of people, then Albania had a plague of huge pyramid schemes, many of them endorsed by government officials, that started to collapse in 1997.
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