1. Business | Federation's Enthusiastic New Consul Doing Land-Office Busin... http://community.seattletimes.nwsource.com/archive/?date=19930920&sl...
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Monday, September 20, 1993 - Page updated at 12:00 AM
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Federation's Enthusiastic New Consul Doing Land-Office
Business -- Northwest Companies Rush To Russia Despite
Obstacles, Instability
By Mary Ann Gwinn
Georgi Vlaskin should be working for the Seattle Chamber of Commerce instead of the Russian Federation.
Listen to Seattle's Russian consul enthuse about the people of Seattle and the Pacific Northwest:
"Seattle, I believe, has the most wonderful people," says the 42-year-old career diplomat. "They are very
close to Russians in their approaches to the world and to life, a simplicity and openheartedness, a readiness
to help without being asked. The ability to live and work under the most harsh climactic and social Marketplace
conditions."
Vlaskin can be forgiven for a little overstatement. Since the Russian consulate opened here in December
1992, it's done a land-office business, as businessmen and tourists around the Northwest seek to link up
with the new Russian Republic, especially the Russian Far East.
They come despite reports that the Russian economy is near collapse and despite serious obstacles local
companies have encountered in doing business in Russia. Those obstacles range from rampant inflation, to
government corruption, to not knowing at any given moment who is doing the governing.
Vlaskin, who speaks seven languages and who seems at times to vibrate with enthusiasm, says his office
has processed 10,000 visas in less than a year. He estimates that about 50 people per working day apply
for business-related visas to the Russian Federation.
His office, a spare new facility in the Westin Hotel, is the only Russian consulate opened in this country since
Russia became a republic, carved out of the old Soviet Union. There are just three other Russian consulates
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in the U.S.: facilities in San Francisco and New York, and a consular division in the Russian embassy in
Browse by body s
Washington D.C.
Vlaskin says Seattle got the nod over Chicago as a consular site because of the region's historic ties with
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2. Business | Federation's Enthusiastic New Consul Doing Land-Office Busin... http://community.seattletimes.nwsource.com/archive/?date=19930920&sl...
Russia, its humanitarian gestures to the Russian people, the large number of Seattleites familiar with Most Popular Cars
Russian culture and - last but not least - the Goodwill Games, which many Russians still recall as a Mercedes-Benz
groundbreaking effort in Russian-American relations. E-Class
But it takes a lot more than goodwill to do business in Russia, and the country's economic and political
instability has kept local companies who do business there playing a nonstop who's-on-first guessing game,
as not just midlevel bureaucrats but entire governments can turn over with heart-stopping speed.
For example, two Russian Far East territories, Primorsky and Khabarovovsk, this year debated becoming
separate republics. Primorsky, site of the Russian Far East port of Vladivostok, went further, voting to
become independent, though no serious secession moves have ensued.
Don Meyer, deputy executive director of the Port of Tacoma, is a longtime Russian Far East watcher, and
worked with Vladivostok's port well before the two ports established a sister-port relationship in 1991.
Talking about the situation in the Russian Far East, he explains that "the people who live there have seen
their resources sold and plundered for the benefit of European Russia." Vladivostok is as many time zones
away from Moscow as it is from Seattle, he notes, adding, "I think they feel more affinity toward Alaska and
the Pacific Northwest than they do Moscow."
Trading on that affinity, the Puget Sound Ports Group today begins a conference in Vladivostok with the
ports of Vladivostok, Vostochnii and Nakhodka. The Port of Seattle is about to forge a sister-port
relationship with Vostochnii, a container port about four hours south of Vladivostok. American Presidents
Most read
Lines, a main customer of Seattle's port, just announced service to several Russian Far East ports.
But local companies report mixed results in making deals in Russia. As Vlaskin says, with typical Russian 1. Starbucks tests n
candor: "Doing business in Russia is, on the whole, not a bed of roses." 2. Microsoft Pri0
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-- Boeing last week received certification of its 757s and 767s from the Commonwealth of Independent 3. Jerry Brewer
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States, the new name for the old entities of the Soviet Union. It received certification for the 737 in January. 4. "The Passion of
Certification allows Russian airlines to operate the planes. hurt near Leaven
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Boeing also this month opened a technical research center two blocks from the Kremlin in Moscow, where it 6. Vacationers warn
will work with Russian researchers on projects such as computational fluid dynamics and research into 7. If The Bite's not e
Big Bites tour of
titanium as a material for airplane components and airplane performance in extremely cold conditions, says
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John Dern, Boeing spokesman.
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However, Dern says that many new Russian airlines are struggling, and significant sales in the former Soviet 10. Mariners Blog
Union will have to await the strengthening of the economy. likely trade?
Boeing also is the prime contractor in the space station project, and President Clinton this month announced
that the space station would be a joint Russian-U.S. project. But Boeing's role in working with the Russians
on that project is still unclear, said Boeing spokesman Jim Keller.
-- Weyerhaeuser is still helping Russian timber companies plant trees in Russian Far East reforestation
projects, but company spokesman Frank Mendizabal says the company's long-range plans to develop a joint
venture with a Russian company to harvest and ship timber to Asia remain theoretical.
"There've been a lot of shake-ups," he says. "It's difficult to know who you can put a business venture
together with." In some areas, local villagers have taken control of manufacturing facilities. In other cases,
party managers remain in control.
-- Tyson Foods Inc., which recently acquired the Seattle fishing firm Arctic Alaska Fisheries, has had its ups
and downs in fishing in Russian waters. Bob Womack, president of Tyson's seafood division, says the
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3. Business | Federation's Enthusiastic New Consul Doing Land-Office Busin... http://community.seattletimes.nwsource.com/archive/?date=19930920&sl...
company successfully fished for crab in 1991 and 1992, but couldn't come up with the right deal this year.
"The rules change every day in Russia," Womack says. "There's a tremendous amount of privatization in the
Far East. The old cooperatives, the old agencies that controlled things have been privatized, and you may
end up with a co-op that owns fishing rights but may or may not have any money."
Nevertheless, both big companies and small ones continue to penetrate the Russian frontier. Steve Odom of
the state Department of Trade and Economic Development gives an informal estimate of about 100
Washington businesses doing business in the former Soviet Union.
Given the relative instability of the situation, Vlaskin says that in some cases, smaller companies can do
business easier than large ones by moving faster to take advantage of opportunities. Wages are low and
the work force is highly educated, if unfamiliar with the concept of working to get ahead.
However, Steve Crown, a local attorney who advises companies on doing business in Russia, offers these
warnings:
-- Besides the difficulty of ever identifying who's in charge, those in charge continually change the rules.
Crown points to the Russian newspapers, where every day, pages and pages of new amendments, laws,
regulations and court procedures are published, governing almost every aspect of Russian life. However,
Crown says contract law is almost nonexistent.
-- Inflation, which Crown says is running at 1,000 percent per year, can cause a significant drag on profits if
money gets caught up in an unwieldy bank transfer. "There are thousands of banks, but they don't work,"
says Crown. "It can take weeks for a bank transfer."
-- Bribes are commonplace, but it's a federal crime for an American to offer one to a foreign government or
business person, either directly or through a third party. Crown says this puts American businesses at
something of a disadvantage to businesses from other countries.
Given these conditions, both Crown and Vlaskin advise finding a stable Russian business partner to
negotiate the shifts in the Russian business climate. "Russia is still a place based on relationships," says
Crown.
Vlaskin says his ministry conducts a sort of computer matchmaking service for American businesses
interested in doing deals with Russian companies, and other contacts are available through the Foundation
for Russian-American Economic Cooperation, based in Seattle. But Crown and others say any business
partner needs to be thoroughly checked out through Americans and Russians familiar with the partner's
track record. And anything other than simple importing or manufacturing ventures may get hopelessly
bogged down.
One smaller local company that has successfully negotiated Russian deals is Peak Enterprises of Bothell.
Peter Prinos, a partner, describes his firm as a trading company that has started a coffee shop in Moscow
and a venture with a Russian aerospace company to produce titanium bicycle frames.
He met his partners through personal contacts. "You don't write contracts in Russia, you establish
relationships," he says. "Once you establish relationships, Russians are a very reliable people."
However, one of Prinos' bigger challenges has been the emergence of Russian organized crime, several
groups that have emerged in the new economy to prey on legitimate business.
When his gourmet coffee store opens soon in Moscow, one employee will be a guard armed with a machine
gun. Without that sort of insurance, the store will be vulnerable to all sorts of protection-racket shakedowns,
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4. Business | Federation's Enthusiastic New Consul Doing Land-Office Busin... http://community.seattletimes.nwsource.com/archive/?date=19930920&sl...
Prinos says. Site map
Given the situation, most observers say doing business in Russia is for the forward-thinking, not the faint of
heart. "We were convinced a long time ago that there was an emerging market there," says the Port of
Tacoma's Meyer. "But you need as much stamina and sheer guts and patience as you do money."
Published Correction Date: 09/22/93 - The Russian Consulate Is In The Westin Building, 2001 6Th Ave. This Story Reported The Wrong Location.
Copyright (c) 1993 Seattle Times Company, All Rights Reserved.
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