Our first class in Russia flew by and we were forced to say goodbye to Professor Sietz on Sunday. Before he left us we all went out for sushi and many hugs were exchanged before we allowed him to get in the car to go to the airport. It was now time to begin our second class in Russia and we were all looking forward to learning more about the current business environment and how the legacy of communism is still affects business, politics and the people in Russia. Over the span of five days we had the opportunity of visiting and hearing about nine entirely different companies. We heard from Patrick, the General Manager of the Courtyard Marriott and the Renaissance Hotel in St. Petersburg and learned all about the hospitality industry in St. Pete and the difficulty for a Western brand competing against Russian companies. We met with Maria, the Executive Director at the American Chamber of Commerce and learned about the Foreign Corrupt Practices Act and how this poses a real challenge for American companies who are unable to play “unclean” salaries (off the books) as some Russian companies do to avoid paying taxes and in turn can offer higher salaries to their employees. We visited pwc, International Paper, Citibank and EMC and heard from executives about the challenge of retaining employees, environmental difficulties, and the need to redefine their market and refocus their mission in order to not compete with larger state-owned enterprises.
We also did two factory tours, and I enjoyed one much more than the other. First we visited a pharmaceutical company that specializes in generic medication that is in a liquid form, such as eye drops, ampules and syringes. It was very interesting to see the machinery and the process but very disturbing to learn how only 1% of each medical vial is actually the medicine and the rest is water. Oh, and each dose is so cheap to make that there is a 800-900% mark up for each final product. I was a little disturbed by the huge profit margin on medicine and it made me feel somewhat uneasy. However, my favorite tour was to the Imperial Porcelain factory. Imperial Porcelain was created in 1744 and is known for their unbelievable hand painted ceramics. Imperial Porcelain was the porcelain that was seen in Peterhof and Catherine Palace. I was amazed walking through the factory to see all of the women hand painting the vases, plates, teacups, figurines, and much more. Each piece shrinks 40% in the kiln and the color also changes while it is fired so it is a real skill to be able to ensure such precision.
This week we gained a detailed perspective on how business in Russia is conducted and the way all different industries operate. It was wonderful meeting so many companies and people and we have a couple of more fun events this weekend which will make writing our three papers a little more bearable.