Does Gazprom’s hometown have a business-friendly environment?

View of the Cathedral of Our Savior on Spilled Blood in St. Petersburg.

View of the Cathedral of Our Savior on Spilled Blood in St. Petersburg.

Anton Malkov
Businessmen in St. Petersburg are not used to relying on the government for help. Some see this as recipe for building Russia's largest companies.

Musician Anton Belyankin, the leader of the band Dva Samolyota (two planes in Russian), opened two bars with his friends in St. Petersburg in late 2014, right in the midst of the financial crisis. Now, he has six bars in the city center. Belyankin was the first to bring Western-style bar culture to St. Petersburg and Russia.

He opened his first bar, Dacha, 11 years ago and it is still in business. In 2004, Dacha was the only enterprise in the city that followed the traditional bar concept, a small room that only served alcohol and snacks. Consequently, it was a must-see destination for all visiting foreigners.

Since then, hundreds of similar ventures have opened in St. Petersburg. “The more bars that open, the more people go to them,” says Belyankin.

Interestingly, restaurants and cafes close almost daily in Moscow, but in St. Petersburg, they continue to work. “Bars are opened by enthusiasts. That's why most of them don't close,” Belyankin says.

Of course, it’s not just enthusiasm that keeps bars open. In St. Petersburg, it is easier to find space for a bar, and the rent is lower than in Moscow.

Gazprom’s city

Now, St. Petersburg is celebrated as the birthplace of Vladimir Putin. That could be why many companies are moving their offices to the city.

Gazprom is the city's main taxpayer. Its head, Alexei Miller is, of course, from St. Petersburg. Gazprom has a very branched structure. But most of its companies have already moved to St. Petersburg. Gazprom Group companies that have not yet moved to the northern capital should do so in the near future.

Gazprom is a sponsor of Russia's football champion Zenith and the country's best hockey club SKA, which is Ilya Kovalchuk’s current team.

At the same time, the gas giant is not liked in the city. When it wanted to build a skyscraper, which would have ruined the historical skyline (St. Petersburg still has no skyscrapers), the city reacted with large-scale protests. As a result, Gazprom had to abandon the project and is now trying unsuccessfully to sell the land on which it planned to build the skyscraper.

The hospitality and food and beverage industries are doing well in St. Petersburg. Scandinavian businesspeople traditionally like to invest in the Russian border areas. For instance, Denmark's Carlsberg brewery group owns the Baltika brewery in St. Petersburg, Europe's largest.

St. Petersburg has an automobile cluster, which hosts, among other companies, GM and Ford. For Western companies, St. Petersburg is interesting as it is located a few hours' drive from the European Union, from where it is very easy to export goods and receive components for their enterprises.

St. Petersburg style of business

Gazprom does not define the business face of the city. St. Petersburg has a class of businessmen, who were able to become market leaders in their sectors without the help of any influential people in the Kremlin. They also managed to succeed without Western investment.

Businessmen Andrei Rogachyov and Alexander Girda became the first Russian billionaires to make their fortunes in an industry other than oil or banking. They built the Pyatyorochka discount-store chain.

Rogachyov now says he’s “retired.” In a conversation with RBTH, he called his success in developing the chain “accidental.” At the same time, he is believed to be developing a new chain of stores. But he does not officially admit it. It can also be called the St. Petersburg style of business.

Rogachyov avoids being photographed and does not have a spokesman. In general, he has a reputation of being Russia's most private billionaire. He described the style of St. Petersburg businessmen as “decent and responsible.” He named Oleg Tinkov as St. Petersburg's most talented businessman.

Tinkov, indeed, has an interesting profile, and is the complete opposite of Rogachyov. He can be compared with Richard Branson.

Tinkov got into business in the 1990s by selling home electronics and appliances. He then set up a plant to make dumplings. The factory was later sold to one of Roman Abramovich’s companies.

He then founded a chain of beer parlors and even built a brewery near St. Petersburg, which he sold to Sun Inbew (now part of Anheuser-Busch InBev).

Now Tinkov is developing the Tinkoff Bank, which is seen as a successful venture. People who know Tinkov say that at some point he gets bored with his ventures and then sells them. Judging by the variety of areas in which he applied his talent, it seems to be true.

Despite the fact that Tinkov has for long been working across the country, he considers himself a St. Petersburg businessman.

“The biggest competition in Russia is in St. Petersburg, because the market is already large, but not yet as large as in Moscow,” Tinkov told RBTH. “As a result, the product must be must be polished to perfection, and you pay dearly for mistakes there, since competition is several times higher than in Moscow and the regions, where the members of the business elite are basically tied to the administrative machinery.”

According to Tinkov, the special style of St. Petersburg businessmen can be defined as “honesty toward the consumer, being less money-oriented and having rational relationships with partners.” He adds that  “kindness” is also a major aspect of this style.

Another success story from St. Petersburg is the Ginza restaurant holding company. It has 83 restaurants that are spread across Russia and a few other countries.

Interestingly, the company has more restaurants in St. Petersburg than in Moscow (40 to 38), even if the Moscow market is about twice as large. The holding company closed many restaurants in Moscow due to the current crisis.

At the same time, Ginza has even entered the US market by opening a restaurant in New York.

“We see ourselves as an international holding company, but with St. Petersburg roots,” says co-owner Vadim Lapin. “We open our restaurants not only in Russia but also in Baku, in London and in other countries.” He adds that the company has strong communication channels with its foreign partners, a key element of the St Petersburg style of business.

Read the Vladimir Putin's column on APEC: Toward open, equal cooperation in the interests of development

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