NOTHING VENTURED

Hugues Laurent:

Working in Russia is a challenge. And an interesting one!

“When talking about the nuances of the Russian market, you can’t avoid mentioning the unpredictability. You never know what will happen a year or two years from now. But that’s what makes your market interesting. It’s very much alive,” said Hugues LAURENT, General Manager at GEODIS Russia, in an exclusive interview with Capital Ideas.

Mr. Laurent, Geodis has been operating in Russia since 1969. Could you tell us how it all began?

The group of transportation and logistics companies that are unified by the GEODIS brand have existed for over 100 years. So far as I know, when GEODIS first started operating in Russia in 1969, everything started with relatively insignificant projects between the Soviet Union and France. We imported and exported somethings. Unfortunately, I’m not exactly sure what. But I do know that GEODIS was transporting Lada cars into Europe in the late 1980s. I want to point out that this was a really affordable and reliable car that was relatively popular in the West.

In the early 90s, when I was already with the company, we did a lot of humanitarian aid projects for the European Union. We shipped flour, meat, and butter from Europe to countries from the former USSR: Georgia, Armenia, Azerbaijan, and Central Asia. We shipped products through Belarus and St. Petersburg.

Around the same time we started getting serious oil and gas projects. One of them, for example, was in Nizhny Novgorod. These were non-standard oversized shipments - complicated equipment we shipped from Europe for Russian oil and gas enterprises.

You do all kinds of shipments in Russia now, right?

Yes, we offer the full spectrum of transportation and logistics services. We do all kinds of shipments, including auto, rail, sea, and by air. When a client contacts us, we search for the optimal and least expensive route from point A to point B, regardless of where the items are located. GEODIS operates in 120 countries. We don’t necessarily have a presence everywhere, but we have agents in those places. We are directly represented in 67 countries. And we offer door-to-door services everywhere.

What do you ship to Russia and what do you ship out of Russia?

We work with imports more than with exports. We do everything, from tech products and electronics to complicated shipments for the industrial sector: equipment for oil and gas enterprises, the mining industry, and a lot of other shipments that require special solutions and experience.

Since you work with imports, you must have been affected by the sanctions...

Right, import volumes dropped sharply after the sanctions from the West and Russia’s counter-sanctions. Some goods were affected by all of these sanctions. At the same time, the ruble fell and importing products became more expensive. Of course our shipment volumes declined, and the market as a whole shrank as well.

How do you feel under these conditions? Have you thought about pulling out of Russia altogether?

Never. It’s important to understand that GEODIS is one of the top logistics companies in the world. It’s important for us to have a presence everywhere. Russia is part of the huge network that we have. So we have to keep ourselves in good shape in order to be ready for a lot of business once the sanctions are lifted. It’s also obvious that it’s very difficult to re-enter a market once you leave it.

Do you have your own transport?

No, we have a contract here and get vehicles from our subcontractors. Although the company in Europe has its own park.

Could you give me an idea about how you work. Say a company contacts you. They need to ship a container with clothes from China to Moscow. What happens?

We discuss the offer with the client in detail and sign a contract. Then we contact our office in China. They collect the goods from the warehouse and take them to the port. Then, everything is shipped by sea to St. Petersburg, for example, and from there is taken to Moscow. If the shipment is something like office equipment, it usually needs to be delivered to several places. In this case, we take everything to our warehouse outside of Moscow, then use small trucks to take the shipments to wherever they need to go.

Can you explain why you’re the best company to contact when a shipment needs to be made? There are a lot of logistics companies in Russia. What are your advantages?

There are a lot of them. It would be difficult to list them all. We’re a global brand, we have our own extensive network which really simplifies everything. Since we have a unified system, we can track the movement of the shipment from point A to point B. This kind of monitoring is possible thanks to our unique IRIS system, which not many companies have. We also use it to monitor security. This is very important to a lot of companies, especially in the US - they want to protect their reputation. Another important point: we operate in accordance with all customs laws and regulations. This is not simple, but it’s the right thing to do and is also very important for clients who choose GEODIS. And, of course, since we have our own international network, we can offer great transportation and storage conditions with subsequent distribution.

How many clients do you have today?

Over 150. For the most part, these are international companies. I’ve already said that we follow all laws and regulations. Russian companies don’t pay as much attention to this - that is no secret. Our big clients include a lot of industrial projects. This entails delivering equipment for oil and gas or coal enterprises. The shipment usually has to be collected from several countries. It involves unusual solutions and special shipments that require extra attentions. By the way, we’ve delivered a complicated shipment like locks for the Panama Canal from Italy to Panama.

Does the Russian company only have this office in Moscow?

No, we have them in other cities, like St. Petersburg and Astrakhan.

Everything you’ve said sounds great so far. Are there any challenges in Russia? It’s not a simple market...

You know, there are probably no simple markets anywhere. So far as Russia is concerned, there is a lot of paperwork here. We have to hire a lot of employees who have to deal with endless bureaucratic issues. Contracts have to be put together, lots of signatures need to be obtained… it’s not great in France either, but here it’s even more complicated. For example, we have to hire three times as many people to deal with this here. All of this paperwork takes a lot of energy and money, so we have to hire a lot of people.

When talking about the nuances of the Russian market, you can’t avoid mentioning the unpredictability. You never know what will happen a year or two years from now. But that’s what makes your market interesting. It’s very much alive.

It sounds like you’re being honest, not joking. You like adventure?

You could say that. In any case, it’s a challenge, it forces you to adapt constantly. In France, where everything is known and planned in advance, even the protests, I get bored. (Smiles)

In your opinion, why is the Russian market so unpredictable?

I think this is how Russian people approach life. i think this is an old habit that dates back to the Soviet era, where there were deficits everywhere. One day you manage to get something at the store and you’re happy. But there is no way of knowing if it will be there tomorrow. People would buy extra potatoes and store them because they didn’t know if they would be able to get potatoes the next day. This is why Russians still don’t think much about tomorrow and live exclusively in the present. On the one hand this type of unpredictability can be irritating, but on the other hand it forced people to be flexible.

What do you mean when you talk about flexibility?

You always need to have people on your team who are ready for the unexpected and can make rational decisions under these circumstances. I was saying that our shipment volumes have dropped, but they might go right back up tomorrow. So you need to have experts on your team who can quickly adapt to the changes on the Russian market, who are ready to re-think decisions that have already been made due to the instability.

What kind of advice would you give to foreign businessmen who want to come to Russia but are still thinking about it?

You need to come to Russia for the long-term. The days of the 90s, when you could make money here very quickly, are long gone. Nothing is done quickly anymore. These days you have to seriously study the local market, create something that is your own, and then wait for your ideas to become profitable. You can spend five or ten years waiting for this to happen. It used to be that companies would come here, open an office, sell their products, and make money quickly. Now you really have to create and build. Yes, it’s expensive, but it brings stability.

And another thing. You have to work honestly here.

Is this difficult in Russia?

It’s not if you know what you’re doing. If you don’t, you risk ruining your reputation. It’s important to always be independent in life. When you do business on the basis of having an understanding with somebody, you have to then rely on this person. This kind of business will be short-lived. It’s only good while this person has power and can help.

I’ll say it again - it’s not as difficult as it might seem to do business honestly in Russia. Assuming that everybody understands this ahead of time. That’s what the business model needs to look like.

You’ve been living in Moscow for 25 years. How has Moscow changed? Has it lost its charm?

I don’t think so. It just has a different kind of charm now. Back in the 90s, the charm was about watching everything and being amazed at how strangely it all works. There wasn’t much in the stores. But I wasn’t terrified, I was really curious about everything. As a person who studied Russian at university, I was really interested in watching everything the Western papers wrote so much about with my own eyes.

Everything has changed a lot in Moscow over the past few years. There are pedestrian areas now. Before there were cars everywhere and you could only go for walks around the Red Square. This is pleasant for me - to walk the streets without fear.

I also remember how difficult it used to be to find a decent restaurant in the city. You couldn’t even get a nice pizza. Once I ordered pizza and a glass of wine at Intourist (which is now the Ritz-Carlton), and ended up paying 100 dollars for it. Moscow is changing in accordance with Western standards, but this is a good thing.

You have a lot of experience talking to Russians. Could you tell us the best way to break the ice between a foreigner and a Russian person, how to gain people’s trust?

There is no right recipe here. It’s always individual. I think something we have in common is a sense of humor. You can use it to make contact and then talking to each other becomes easier, more fun. Russians have the same sense of self-irony that we do, which brings us closer. I don’t know about other Westerners, but Russians have a positive attitude toward French people. I think it worked out that way historically. We have a special relationship. (Laughs)

 

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