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Entrepreneurs suggest Russia's oligarchs have the wrong attitude about capitalism

31 January 2008
Associated Press

Since the fall of the Soviet Union, Russia's flamboyant tycoons have been the focus of wide public resentment, but on Thursday they were criticized by an unusual source – wealthy businessmen.

Speakers at the Troika Dialog Russia Forum investment conference lobbed biting remarks and quasi-parental advice at the "oligarchs" who amassed vast fortunes after the 1991 collapse of Communism in shadowy auctions of state property and spend their money on limousines, yachts and tasteless country houses.

The remarks suggest that Russians are beginning to see capitalism as more than just acquiring.

"We have so many problems in Russia ... I don't understand why Russians get so excited about Roman Abramovich buying a new yacht," said Oleg Tinkov, a prominent entrepreneur whose startups include a credit card company.

Abramovich is a Russian businessman who bought London's Chelsea soccer club.

The spirit of entrepreneurship is "not to dream about money – it's to dream about more than money," said Ruben Vardanyan, head of the Troika Dialog brokerage and investment firm.

Sir Richard Branson, whose Virgin group is looking at entering the Russian market with an airline and radio stations, echoed the concerns.

"I don't think it's going to give you a lot of satisfaction" to have a larger boat or a multiple summer houses, he said, "and ultimately it gives capitalism a bad name."

Branson's companies fund not only his attention-getting exploits such as attempts to fly a balloon around the globe but social initiatives as well. He said wealthy individuals "must behave like a small nation" and redistribute some of their wealth.

Other forum participants declared that there's plenty of wealth yet to be made in Russia, even though its core natural resource industries are consolidating or coming under state control.

Russia's consumer goods segment is growing by some 10 percent and the total size of the consumer market is expected to exceed France's by 2012, according to Richard Smyth, general manager of Russia and CIS operations for Mars LLC, who said "20 percent of our global organic growth is in Russia."

"The Russian consumer is a remarkable consumer; their level of consumption is unparalleled by anyone in the world," said Jere Calmes, president of the pharmacy chain 36.6.

And they're increasingly to be found outside the boomtowns of Moscow and St. Petersburg, as prosperity spreads into the vast depths of the provinces. That's a prospect that businessmen are eager to exploit.

Outside the big cities, few consumers know about Western designer brands such as Hermes, noted Lev Khasis, general director of the X5 supermarket company.