A Little Bit of Kiwi Enterprise in Russia

When people find out that I share in a small Kiwi business in Saint Petersburg in Russia, inevitably their first questions are about Mafia, corruption and more recently parliamentary fisticuffs. This is not surprising given Kiwi media’s idea of what’s newsworthy in Russia. (Interestingly if a fight such as shown between Russian MPs occurred here our Parliamentary TV coverage rules would miss it as they must focus on the speaking MP.)

The business is basically a small property development unit, taking advantage of several trends including the upgrading and renewal of rundown parts of central city buildings (similar to urban gentrification here), the re-emergence of Saint Petersburg as one of the most beautiful cites anywhere and now Europe’s gateway to Russia, and lastly the result of the dreadful experiment of Stalinist re-settlement of seventy years ago.

That move forced many thousands of peasant families into single room accommodation in the city centre where they all shared bathroom and kitchen facilities as part of the new co-operative approach of communism. What was not foreseen was that shared facilities meant that no-one was actually responsible and hence no-one looked after the shared bits. (Sound vaguely like some of the team building, consultative drivel currently popular back here?).
The net result was families crowded into single bedrooms for decades with dreadful decay of everything shared, -toilets, bathrooms, kitchens, stairwells, and so on. Now of course these people want out into their own apartments with their own facilities, even if they are in small multi storey suburban boxes that most Kiwis would turn their noses up at.

But what to do for equity to get this apartment? Their only asset is the occupational claim to their family bedroom and their share of the rundown (often disgusting) shared areas. This lack of a recognised title puts off most investors but as Kiwis, we are used to the concept of customary title and have learnt how to research occupying families’ rights of occupation and how these can be turned into an asset to allow them sufficient equity to move into their dream suburban box.

Slowly and painstakingly a whole floor can be cleared to obtain a more formal title allowing us to fully upgrade the floor as tourist or office accommodation, both in short supply. Hence bit by bit central Saint Petersburg is returning to its former glory with a central area more in keeping with the beauty of the restored canals and wonderful public buildings housing some of the world’s best treasures in some of its best museums such as the Hermitage, recently featured in the movie "Russian Ark."

Back to the Mafia and corruption! Well there are undoubtedly signs of heavy looking dudes with dark glasses in black Mercedes with dark tinted windows, (just like can be found in some places here) but these guys are associated with the usual occupations of nightclubs, casinos, Italian restaurants etc and not in room renovation.

It also raises the question of why Kiwis only think corruption goes on overseas. Read our own papers, full of criminal activity and anyone who has had to deal with the Resource Management Act will know from experience how this institutionalises our own forms of corruption.

Russia challenges our views on almost everything at every level. In some ways it is backward and alarming, but in others can teach us many a lesson. Trains run on time and full at all hours of the day in every city. In Moscow, the underground trains are monstrous 300 metre long things that roar in and out of platforms one every minute 24x7 into every station on the network.

The country has little external debt, the most gas, diamonds and the second most oil and worryingly for us the most forests all right next to railways. The people are well educated but frustrated by seventy years of lousy economic management that has built up a huge demand for consumer products that will run for years once they have worked through the lack of financial services that we take for granted.

Our big companies like Fonterra are sadly not on show, yet there are 200 million people here who love fatty food and adore ice cream. Russia is modernising and offers great opportunities to us as a nation seen in a positive light. As it steadily opens up and integrates with its Nordic neighbours the value of investing there will become obvious.

Agribusiness investors from UK are making good profits and so should we. After all Russia is one place where the warming of the atmosphere will definitely improve both the climate and production. Have a look at nevanews.com., the local English paper we own there.

Wayne Brown