GEORGIAN BUSINESS GOES ABROAD

Investor.ge profiles three Georgian companies expanding to the United States to secure new markets and new investment for Georgia.

Maia Edilashvili

The Georgian government has set its sights on bringing foreign business to Georgia, but  three Georgian businesses are eyeing the U.S. market for expansion.

United Global Technologies (UGT)

This year, after more than 13 years in the Georgian market, United Global Technologies   announced that it has become the first Georgian company to start “commercial activities in the US in parallel with its Georgian operations.”

UGT, one of Georgia’s largest system integrators and IT solutions providers, opened a branch in Dallas, Texas in early June and plans to open another office in Washington, D.C.

“We’ve been eying the US market for the past several years,” Giorgi Chirakadze, President of UGT said, noting that the global financial crisis was not an obstacle for the company.

“Crisis always requires additional efforts in order to succeed. If you look at successful companies, they all started during hard times. So we had been preparing for this step and decided to take the opportunity right now.”

UGT’s head office in the States will be located in Texas.

According to Chirakadze, Dallas is the fastest growing US city, hosting a major part of headquarters of the largest IT companies in the US, excluding California’s Silicon Valley.

The second office, which will open by the end of 2010, will mostly focus on governmental projects – making the U.S. capital an obvious choice.

According to Chirakadze, the Georgian IT market’s key problem is its small size – the turnover, excluding telecommunications, is approximately $150 million and UGT holds around 25 percent of it.

UGT, over the past 13 years, has built a reputation as an innovator in Georgia’s IT market. The company has completed complex projects for both the government and the private sector, although it might be best known for its role in creating a Georgian language version of Microsoft’s Windows operating software.

Opening operations in the US, Chirakadze noted, is a logical step for the company as it eyes bigger and better projects.

Chirakadze says that some projects in the US are estimated at ten times a higher price than the Georgian market is worth, making expansion to the US a potentially lucrative proposal.

UGT, Chirakadze said, has already secured its first job in the states: delivering technology and services to the U.S. State Department in New Jersey.

“[It’s] not a big project for America, but quite a good start to get experience and grow,” he said.

“The U.S. Market represents around 25 % of the world’s IT industry and is pretty complicated. So you can’t go far with simple technologies or management.”

Wouter Mets, Director of Consulting and Complex of UGT, will manage the company’s U.S. operations but local staff will also be employed, including the CEO and sales people. Chirakadze says the investment volume of the U.S. extension is quite sizable, although he did not disclose any details because the process is not complete.

Silk Road Group – Silk Road Trans Atlantic Alliance (SRTA)

For the Silk Road Group, the United States was a logical place to attract investors to the company’s growing portfolio of projects.

According to Giorgi Rtskhiladze of SRTA, the company is a bridge between the U.S. private sector and the Georgian private sector and government.

SRTA, he said, serves to “safely channel” U.S. investments into “well thought out and strategically important” Georgian projects.

SRTA was created just two years ago but has already succeeded in bringing Donald Trump’s Special Counsel Michael Cohen to Tbilisi and Batumi for a three-day tour of potential properties in the capital and Achara Autonomous Republic. For more information, please see page 27.

The company also brought Italian fashion designer Roberto Cavalli to Georgia, as well as Trump’s former wife, Ivana – a successful entrepreneur who visited Batumi several months before Cohen’s trip. “SRTA’s unique ability to get necessary media support for any important Georgian project really positions SRTA as a full package, one stop service provider for any meaningful Georgian business in North America and especially in the US,” Rtskhiladze explained to Investor.ge in an e-mail interview.

The Silk Road Group (SRG), the founder of Silk Road Transatlantic Alliance, was established in the early 1990s. Since then the company has developed into a regional commodity transportation network with partners in Asia, Europe and the US. Apart from transportation – mostly of oil and oil products – SRG deals in trading, infrastructure, real estate, banking and telecommunications businesses.

Georgian Development and Political Club

Gela Andrew Suli is a New York-based Georgian-born entrepreneur who has created two successful businesses in the United States and now hopes to help other Georgians do the same.

“Earlier this year, I, together with my colleagues, incorporated a New York-based not-for-profit called the GDP Club (which stands for Georgian Development and Political Club),” he explained. The Club, among other services, offers various areas of development for Georgian businesses that wish to enter the United States’ markets by assisting them with connections, expertise and money.

According to Suli, “tenacity and good education” are the keys to success and the American dream.

“I know several successful Georgians, people who came to this country in pursuit of their professional careers, who had to work very hard, sometimes taking exams that they had already passed elsewhere,” Suli said.

“Still, once everything was done, they’ve managed to become what constitutes an upper-middle class (in terms of their income) in America.”

Georgian companies who decide to expand to the US are opening themselves to “a multi-billion dollar market” in nearly every sector, he said.

In particular, Suli sees potential for Georgian companies in several main areas: the development of new products and services in Georgia, testing them for economy-of-scale markets in America and finding a niche for an existing service or product.

Suli has found success in a number of areas. He is a partner in a production/advertising company (site4view.com) that produces various ads both for American and foreign companies as well as a consultant for foreign technological companies by helping them enter the U.S. Market.

“For my production/advertising job, we get various projects, big and small, that over the last ten years led us to producing for major American and international brands, such as IBM, Microsoft, American Express, L’Oreal,” Suli told Investor.ge in an e-mailed interview.

As a consultant, he has had the opportunity to work with a variety of products and clients. Currently, he is working with two Georgian companies. Both projects involve technologies developed in Georgia and the nearby area that will be tested and established in American markets.

Suli notes that since the American market is thousands of times larger than the Georgian market, even a small competitive edge may propel the newcomer to capturing a sizable share of this market.

“Gaining even a small share of this particular market can bring about huge financial rewards,” he said.

“I know many … successful Georgian-Americans and even counting them, I suspect, they represent just the tip of the iceberg, and more successful Georgian-American businesses will be emerging in the near future.”

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