The Belarusian light industry has been going through pretty hard times after the country joined the free trade zone of the Single Economic Space. Many domestic companies have been struggling due to many reasons, starting from the value for money ratio and ending with the poor marketing policy. Thus, the track record of the companies which could rise to the challenges and build successful businesses is of great interest. The private company Conte Spa was established in Grodno about 20 years ago. Since then it has grown to become one of the most profitable light industry companies in Belarus and one of the biggest legwear producers in the postSoviet space. Valentin BAIKO, the company owner, chairman of the general meeting of shareholders, member of the Entrepreneurship Council under the auspices of Belarus’ President, tells the Economy of Belarus Magazine about the business environment in Belarus, the company growth and competition with big-name global brands.
Mr Baiko, Conte Spa has to compete mainly with foreign companies both on the domestic and foreign markets and the company is said to monopolize the domestic legwear market. Is it an advantage or a disadvantage?
Those who say that we are a monopolist are a bit out of touch with reality. In the conditions of the Single Economic Space when goods from all over the world freely flow to Belarus via Russia, the statements alleging that we are a monopolist do not make any sense. Besides, now
that domestic companies operate in the free market there is no need to sanction those who were believed to be monopolists.
As far as competition is concerned, the time runs very fast, the situation changes all the time. A number of aggressive producers and distributors have emerged on the Belarusian market. They have made significant strides and we already feel them breathing down our neck. On the other hand, we have to compete with famous foreign brands in the entire postSoviet space.
As the competition gets tougher, what markets are you going to prioritize and fight for?
Our major sales markets are Belarus, Russia and Ukraine. We are growing our business, first of all, on the territory of the former USSR republics. Here we see the biggest growth opportunities. Of course, we sell in Western Europe, the United States and Israel. We would like to expand our presence in these countries, too. However these are not our target markets. Let’s speak frankly: it is easier and more lucrative to sell things on traditional markets.
Market relations in European countries have been developing for decades and even centuries. The European market is very mature, with all the market niches taken. I am convinced that this is true about other economic sectors, too. Operating on the Russian market is also quite a challenge, but it is easier (though not easy!) to secure a presence there compared to the European market.
What factors, in your opinion, have the biggest impact on the success of a business in Belarus?
If you are asking me whether there are conditions for doing business in Belarus, I will say that clearly there are. We, for example, have grown our business on our own. Within a span of 20 years, we have built a successful and recognizable brand. Therefore, our example and my own personal experience are evidence that you can do business and achieve good results in Belarus...
I think that the basic condition for being successful in business in any country is to talk less and do more. I am convinced that if there’s a will there’s a way. The main thing is to set realistic targets so that you would not look for excuses for failure afterwards...
What are the issues that need to be addressed to improve the conditions for small and mediumsized businesses in our country?
I think there are no specific three or five problems that, when solved, will make the situation perfect. After solving some problems, others will arise...
We should stop the “talkfest”. We have no problems. If you want to work, then do it! Who is stopping you? This is what I sincerely believe in.
The limited access to loans is often cited as the problem. Here is an example from my life. When applying for my first loan I offered my apartment as collateral to a bank. However, as it turned out, there was no legislation at that time that would allow doing so. But I had this resolve and faith in what I wanted to do. I knew I would repay the loan and was ready to offer my property as collateral. Now we often see that people (especially young people) complain that they are denied loans but at the same time they are not willing to offer guarantees to a bank.
In my opinion, nobody owes anything to anyone. The conditions are there, get down to work! If you are not yet ready to work, this niche will be taken by others while you are sorting out your preferences.
The main key to success is the will and willingness to work. Plus, of course, time. There is one famous formula: if you want to become a pro, you need to invest three hours daily into what you do and you will be there in ten years. If you want this faster, you need to invest 15 hours daily. I share this opinion.
Financial and credit support is crucial for any business. What are Conte Spa’s sources of investment?
Today we mainly reinvest profits. We direct almost all our profits towards growth. This year we will not even pay dividends as there is a need for investment. More funds will be invested in Brest Hosiery Mill. The second traditional source of investment for us is loans of Belarusian banks.
What are the plans of the main shareholder regarding Brest Hosiery Mill?
We want to put this company back on growth track. In October, Conte Spa and affiliated companies acquired a 19.39% stake in this enterprise from the state and thus increased our share to almost 90%. Purchasing these shares we signed up to difficult and costly terms. And we are sure we will achieve our targets.
Conte Spa purchased Brest Hosiery Mill at a time when that company was not simply broken but was sinking fast. The manufacturer lost its market in Russia, began losing the Belarusian one where it was squeezed out by the previously unknown competitors.
First off, we replaced the management. We changed the product portfolio, came up with a new product lineup, improved the product quality, and upgraded technologies and equipment. Today the company operates more than 100 new state-of-the-art machines. The new equipment had been installed before the final buyingout of the state share. Now we are busy restoring our positions in Belarus and advancing to Russia under the Brest Socks trademark. We have been working in Russia at a loss in order to bring Brest Hosiery Mill back to that market. We are determined to do this most aggressively. In August the Brest-based company posted profits for the first time in many years.
We position Conte Spa in a different price niche, closer to the premium segment. Brest Socks products will be better in quality yet budget-friendly. We plan further modernization of the company. We are planning to invest more than $5 million in the development of the company.