Seeking Far East retail success.

Author:Phelps, Jack E.
Position:Slava International - Access the World
 
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Slava International is pioneering the retail trade in the Russian Far East.

When the cracks in Stalin's empire finally widened into fissures and the Union of Soviet Socialist Republics collapsed, many Western businessmen heard opportunity knocking. Eager entrepreneurs ventured east in search of a new Eldorado. Many came away disappointed.

One who found success is Steve Zelener, CEO of Anchorage-based Slava International.

Born in the Ukraine to Russian parents, Zelener immigrated to the United States in 1972. While attending the University of Alaska Fairbanks, he started a travel company. Then, in 1988, after visiting Magadan with a business delegation from Alaska, Zelener went into the import/export business with Slava International.

"We set up the first foreign joint-venture company in Magadan," he says. "It was only about number 330 (of all the joint ventures) in all of Russia."

Zelener organized Slava International to import Russian goods to America, especially novelty items such as matryoshka dolls. It soon became clear that corporate viability would depend on moving goods both ways. Opportunities abounded, Zelener says, so Slava "established several lines of products that would sell well."

LEARNING RUSSIAN LESSONS

Operating a wholesale business in Russia, Zelener found, was not the same as doing it in the United States. "We wanted to be the importer and have joint ventures with retailers," he says. "But there was no distribution network. We had to create one to be successful. Then we found there was a shortage of cold storage. So we started to create that, too. You have to create the whole infrastructure to operate efficiently."

Slava has settled on food products, mainly frozen meats, as its main export to the Russian Far East. In 1994 alone, Slava will move more than 5,000 metric tons of product. "One of our goals is to be a stable food distributor in the Russian Far East," says Zelener. But, he warns, businesses must remain flexible to survive in Russia. What is profitable to sell today may not sell tomorrow.

Volatile tariff policies are part of the problem. "Tariffs will turn on and off the tap, creating fad markets," Zelener explains. Slava's response includes developing new value-added businesses in Russia. "This is important," says Zelener, "because it will help us be able to address the changing market better if the government increases the tax on importation. So we're at the mercy of the tax structure."

Another problem is a...

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