Despite the bankruptcy of small Chinese retailers in Georgia, the Dragon Country’s big businesses are rapidly growing in the comparatively tiny republic.

“The business environment in Georgia is good,” says Mr. Chen Runyun, Counsellor of Economic and Commercial Counsellor’s Office of the Embassy of the People’s Republic of China in Georgia. This is the best time to invest in Georgia, says Mr. Allen Cheng, CEO of one of the fastest growing companies.

Chinese business is now presented in manufacturing, energy, construction, telecommunication, retail and gambling businesses.

Runyun says that several years ago, Georgia witnessed a boom of Chinese retail networks, but during 2009, many small sized importers became bankrupt, possibly as a result of the global economical downturn. “During 2009 the number of imported Chinese products in Georgia decreased by 50%. In Georgia the overall purchasing capacity of the nation has been sharply reduced. This caused the ruin of many Chinese retail importers in Georgia,” he says.

As late as the 17th century, Silk Road trade still passed through Georgia and the capital Tbilisi was a major commercial centre. Diplomatic relations between Georgia and the People’s Republic of China were established on 9 June, 1992.

“During recent years trade-economical relations between China and Georgia were fast developing. Trade-economical turnover between the two countries in 2006 was USD 113 million. In 2007 - USD 200 million, and in 2008 - USD 300 million. From these figures we can make conclusions about how Chinese and Georgian economical cooperation has been developing,” Chen Runyun, Counsellor of Economic and Commercial Counsellor’s Office of the Embassy of PRC in Georgia, told The FINANCIAL.

“Chinese businessmen have not recently faced any difficulties when entering the Georgian market. The business environment in Georgia is good. Georgians and Chinese have amicable relations,” Runyun declares.

The Counsellor says that he does consider retail importers to be large-scale businesspersons. “These individuals started doing business with their own small capital. Their goods were for customers of low solvency. The total number of individual Chinese importers on the Georgian market was 1% from a total capacity of Chinese executives presented in Georgia.”

“A reduction of Chinese shops in Tbilisi is evident, since for a long time there have been a large number of Chinese shops and stalls in Georgia. The recession made it clear that the existence of so many similar shops all located together was pointless. At one time there were six Chinese shops on Agmashenebeli ave. and now only two are left. After closing these shops, the number of customers has increased in our shop. We import goods from Beijing once every two months,” says Iohan, owner of a Chinese shop.

Interplast is a good example of an industrial cooperation project in Georgia. The company imports many industrial types of Chinese equipment to Georgia. Huawei Technologies and ZTE are leading Chinese companies running telecommunication services. These two companies are cooperating with UGT, Magti GSM, Geocell and Beeline.

“We have some ongoing investment projects in Georgia. We have hydro plants in Khadori that produce electricity. Collaboration between China and Georgia is not limited to trade companies only but also includes an economic cooperation project, including investment projects,” Counsellor Runyun declares.

One of Chinese companies Hualing Group has planned to establish a free industrial zone in Kutaisi. The first sum of investments will be about USD 100 million.

“This is an important project and will create lots of job places. There are several projects in the western part of Georgia. Chinese businessmen are interested in investing in five star hotels, the cement and banking sectors. Chinese businessmen are already involved in manufacturing, energy, construction, telecommunication, and retail spheres. All of the economical directions in Georgia have good prospects and we in terms of our office will maximally support the further development of Chinese and Georgian businesses,” Runyun says.

“China is the country with the largest economical and trade market in the world. Last year Chinese import and export reached USD 2.56 trillion. It is one of the largest manufacturer countries of the world. The total volume of Chinese import and export occupies only 3.8% of Georgian total volume,” says Runyun.

“We need more and more understanding of each other. Recently we have been seeing more mutual understanding between companies of these two countries. The mission of our organization is to develop collaboration between them,” Runyun says.  

“Doing business, we have to rely on time, people and the region. That is why we are here now,” says Mr. Allen Cheng, CEO of Georgian Lottery Company LLC.

He says that because of the recent economic crisis, many countries are experiencing a difficult period. However despite this Chinese investors are still actively participating in the Georgian economy. “Because we believe that this is the best time to invest in Georgia,” Allen Cheng says.

GLC recently leased a large office in the heart of Tbilisi’s most elite district, Vake.  The company is a joint venture of Hong-Kong, Israel and Canada business groups.

“As the exclusive national lottery operator, over the next 10 years our revenues will exceed GEL 4 billion, meaning our 21.5% special lottery tax represents more than GEL 900 million in taxes that will be allocated to Culture, Sports and Monuments protection. I believe those numbers can tell quite a lot about the investment the company has put in, including the amount, technology, our know-how, and human resources,” Mr.Cheng says. 

GLC holds the license for 10 years of exclusive operation in Georgia. It has already hired 120 professionals and plans to create 4,000 more new jobs.

Mr. Cheng believes Georgia has many advantages compared with other countries.

“I have to say that Georgia has an inborn factor that some of the countries in the world do not possess. This is a higher level in education, an ability to speak more than 2 languages by the citizens. In my opinion, if the Georgian Government would consider lowering the tax rate, simplifying the visa application, making use of its natural resources; to promote heavily on tourism etc, it would not be difficult for a country like Georgia to become a successful developing country.”

“The interruption of Chinese retail networks in Georgia is only a matter of time.

The People’s Republic of China (PRC) is the fasted recovered country of the economic crisis. Many local and foreign experts prove that PRC is becoming the main drive for the recovery of the global economy.

“PRC is a friendly country, we never interfere in other countries’ business or try to change them, rather we prefer to fight against crisis and share the positive results with them,” Runyun says.

“Before I came to Georgia, I heard people say that Georgia is not a safe place, but this has proved to be untrue. Not only do I feel that Georgia is a good place to invest and live, I have also made many friends here. So do not always believe popular rumours,” Mr. Allen Cheng adds.

“The economical downturn has affected the economies of all countries, while the effect of it on the Chinese economy was less than some. The result was that the Chinese government rapidly reacted to the global problem. The main goal of their work was to interrupt the downturn first of all in China and accordingly solve the global problems, as we are part of a globalized economy. Currently the Chinese economy already has a fixed 8% growth of GDP. China has had the best results in the direction of economical growth. China is actively cooperating with the USA, EU and other counties and regions in order to overcome the recession together,” Runyun says.

China is the country with the largest amount of currency reserves. China actively encourages it companies and citizens to make investments in foreign countries,” Runyun declares.