Galia Dzhunusalieva, the deputy head of the German economy representative office in Central Asia and representative for Kazakhstan, gives an interview to the Kazakhstan magazine.
Can you please tell us about the operations of the German economy representative office in Central Asia and, first of all, in Kazakhstan?
The German economy representative office in Central Asia is a member of German chambers of commerce network (АНК), having over 120 representative offices in 80 countries of the world. The control, organization and financial support for the chambers of commerce activities are provided by the German Chamber of Commerce Union (DIHK) and the Ministry of economy and technologies. In its turn, DIHK unites 83 chambers inside FRG, including over 3.5 million of German member enterprises.
The chambers of commerce are constituent members of the foreign economic links development system in Germany. They started opening branches in countries of Eastern Europe and the former USSR at the end of 1980s and beginning of 1990s. As a general rule, at the initial phase the German economy representative offices included local personnel. In Kazakhstan this representative office started operations in 1994.
At the second phase they formed a bureau of agents by delegation that differ from foreign chambers only in the fact that they are not based on board and members of the chamber and are agents by delegation from Germany. We gained this status in 2008 when our operations had expanded into 5 republics of Central Asia while the representative office was headed by German citizen. Under certain conditions, the next phase in our AHK development must become the establishment of a member organization – i.e. direct Kazakhstani-German bilateral chamber of trade and industry or chamber of trade.
Speaking of the area of our work we cover all fields of foreign economic activities, including information support and building contacts at various levels. Of course we cooperate with the embassy here. If the embassy receives a certain inquiry on economic issues, it sends out it to us. For instance, if the official delegation is planning to visit Kazakhstan, the embassy will cover the political component while we take care of economic component. As the representative office we also accompany the German Ambassador or the consul general on their trips to the regions of Kazakhstan as economic delegation members.
Also the Germany Trade and Invest (GTAI) is involved in this process; this is the agency for trade and investment under the German Ministry for Economy and Technologies. Therefore, the embassies, representative offices and GRAI are the major components of the structure, responsible for the development of German foreign economic activity today. Having their own authorities, they also have to exchange information and cooperate with each other.
What kind of hands-on assistance is provided by the representative office to German and Kazakhstani companies, willing to cooperate with the partners from Germany?
Our main task is to provide hands-on assistance with the purpose to build real economic contacts between Kazakhstani and German entrepreneurs. We are not involved in the political lobby of the German economy – we have other effective instruments. First of all, we help with searching for potential partners for German enterprises, using an extensive database, generated from various sources. We also cooperate with Akimats and the Industry Ministry, the employers’ union, chambers of commerce, which also have important information about the conditions of businesses in the regions, as well as various Kazakhstani foreign economic organizations.
We also help German enterprises run "advanced projects", i.e. at the phase of their implementation. As a news bureau we provide legal information, participate in the dispute resolution with Kazakhstani partners. We run marketing analysis on certain industries of the economy and deliver consulting in the field, named as Doing Business in Kazakhstan.
At the same time, the Kazakhstani companies more and more frequently contact us and mainly ask to help find equipment suppliers from Germany. Also individuals come to our office in order to offer their service as representatives in Kazakhstan. Often times we are asked how to establish a subsidiary company in Germany, buy a stake in a corporation or entire company, and register a trade mark. Of course we are not able to provide answers to all the questions. However, since we have a large network of DIHK we can contact the appropriate chamber of trade and industry under the Union or foreign economic organization under the Ministry of Economy in the certain federal state and get a response to our inquiry.
How did the recession impact the interest of German and Kazakhstani companies in each other?
I believe the recession only motivated them to search for new opportunities; for instance, the employment of this service, provided by us, as the organization of cooperation exchanges when a German delegation, represented by a few dozen firms, operating in various industries, visits Kazakhstan. Sometimes the delegation is accompanied by a politician – Minister, Secretary of State or Prime-Minister from a certain federal state. We develop an economic program for this delegation that assumes running a one-day cooperation exchange. Its main point is that we receive information from each German company, the part of delegation, in advance and build business contacts for it. Therefore, coming here, a representative of this company already has the schedule of meetings with 10-20 local enterprises that face real needs in certain products or services. If a few of these meetings result in the signing of real contracts – this means we did our job well.
We do not observe the outflow of German enterprises from Kazakhstan; vice versa, our monitoring activities indicate that since 2009 about 20 branches of German companies were established here in various forms of incorporation: LLC, representative offices and branches. Today, Kazakhstani statistics agencies report over 800 German enterprises, registered in Kazakhstan.
What role does the German economy Club in Kazakhstan play in the development of ties between the business communities of our countries?
German economy Club (DWK) was established in 1994, a little earlier than the representative office. The members included the individuals and those German companies that registered their branches and representative offices here in Kazakhstan. As any other economic organization it was launched in order to discuss day-to-day problems and general issues, presenting and lobbying the interests of German business in Kazakhstan. Today, DWK officially has over 100 members, representing various fields of the economy. The major goal of the Club, is, first of all, the facilitation to successful operations of German enterprises in Kazakhstan, ensuring dialogue between German and Kazakhstani enterprises, involved in bilateral economic relations. This is the reason why we amended its charter last year, so that the local companies could also become DWK members. The format of club activities includes monthly working sessions, discussing the most important issues. For instance, we have recently considered the new Kazakhstani rules for getting visas. In addition, there are general events, conducted throughout the year, such as the German economy Day, we traditionally organize every autumn.
We view the club as the basis for the future bilateral Kazakhstani-German chamber of commerce or chamber of trade. This is the third phase of AHK development that assumes the establishment of a structure that, on one hand, will become the carrier of economic links and, on the other hand, the instrument, strengthening these ties through offering appropriate services.
It is essential that there should be certain prepared conditions for that since the establishment of such structure is already an economic and political venture. This will be not simply an economic club or service club – but the organization will gain new status.
What obstacles need to be eliminated to facilitate more effective economic and investment cooperation between Kazakhstan and Germany?
I could not say currently there are certain barriers in terms of legal regulation. Yes, there were a few in 1990s, but at the moment the legislation of Kazakhstan already has high standards. Often times there are barriers in the subjective field. Kazakhstani businessmen need to pay special attention to entrepreneurial ethics, loyalty to contracts and unconditional fulfillment of contract duties. There is the saying: “The pen is mightier than sword”. This concept is essential for the German entrepreneur and it is natural for him to expect the same from the partners. Unfortunately, not all Kazakhstani companies have reached this level of understanding yet. To be completely fair, it has to be mentioned that sometimes (although less frequently) the German partners also violate the agreement terms. In such cases we do our best to help the partners reach mutual agreement, build instruments and options for problem resolution. If this is impossible we recommend addressing the judicial authorities.
We know that Germany is a leader in the export of equipment, technologies and know-how. Are there opportunities for cooperation between Kazakhstan and Germany under the implementation of the Accelerated Industrial and Innovative Development program?
I believe that there are certain opportunities in this field as long as the beneficiaries use them well. Last year the President of Kazakhstan said the following: it is time to stop buying cheap stuff – let us buy high-quality products and target the modern solutions. It is common knowledge that German machine building is number one in the world, first of all, in terms of processing industries. This means that from the viewpoint of diversifying the Kazakhstani economy, it is able to offer what we are currently trying to do.
In my opinion, Kazakhstan needs more detailed analysis of the economic development strategy. The key points of strong sides of the republic (meaning non-raw material industries) and, most importantly, the selection of the right partner for the developing the diversification of the right industries. Often times I get an impression that there is no such analysis and, therefore, unfortunately all countries are offered the same projects. Meanwhile, different states and investors have different priorities, own specifics, expectations in terms of guarantees and preferences. Therefore, the investment attraction approach should be diversified as well.
In order to achieve industrial and innovation development it is very important to have professional experts, particularly blue-collor occupations in all the industries. Their absence or lack, including low quality of training, may become the obstacle for the sustainable development of investment projects and, ultimately, the economy; thus, we need to pay higher attention to professional training particularly through international cooperation and raising standards.
Summarizing, what events are being planned by the representative office in 2010 under the Year of Germany in Kazakhstan?
In 2009 we put major focus on economic details under the Year of Kazakhstan in Germany. In its turn, the Year of Germany in Kazakhstan is planned by the embassy, where the main accent is put on cultural and social events. The goal is inform Kazakhstanis about Germany: this is not only, to say, the powerful economy, but also, first and foremost, the people that build it. I suppose, cultural communication is very important for understanding each other and will produce a positive impact, including the development of economic relations.
Speaking of our scope of responsibility, the representative office is planning a number of events with certain business contacts, the development of current projects and, hopefully, the launch of new ones. Kazakhstan will be visited by very respectable delegations from Lower Saxony and Baden-Wurttemberg, headed by the Economy Ministers in these federal states, as well as few smaller delegations. In the spring in cooperation with Spectaris, the German industrial association of medical equipment producers, we are planning to organize the forum under a project, financed by EU. The event will be attended by the producers of medical equipment from Germany and Spain as well as Kazakhstani enterprises and organizations. For the autumn we have scheduled the traditional German economy Day. Also the German federal stand will be presented to the participants and guests in 6 international exhibitions, to be held in the republic in 2010. A number of events, dedicated to economic cooperation between Germany and Kazakhstan as well as other Central Asian republics – Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – will be held in Germany. Finally, German enterprises, operating in Kazakhstan, have planned a number of their own corporate events in Kazakhstan for this year.