Sergio Men explains why Russian companies wanting to access China should use HK

Russian entrepreneur Sergio Men knew he was on a winning formula when he set up his company in Hong Kong four years ago catering to a niche market – Hong Kong firms wanting to access the booming Russian market and Russian companies wanting a foothold in China via Hong Kong.  

Mr Men, General Manager of Eurasia, who studied Mandarin and English at the Moscow Foreign Language Institute, said you can't go wrong if you follow the right track. "Consider China as the factory, Hong Kong as the sales and marketing office with efficient supply chain management and the rest of the world as a big shopping mall." It would appear his whole career and experience in Moscow in the 90s had prepared him for his present role as a mediator for Sino Russian trade and business links.

He had his own company in Moscow bringing Chinese private and state owned enterprises (SOEs) to Moscow while he acted as a risk manager for Russian companies in China. In 1997, he got his first job in the Russian President Administrative Department of Construction, essentially a department for international relations and dealing with building materials, high tech and other innovative products.

Right time

"This was a government job under President Boris Yeltsin and after one year, I knew I was ready to start my own government relations agency helping foreign companies come to Russia," said Mr Men. It was a very unsettling time. "It was not about guanxi (cultivating relationship in the Chinese way). Russia was a socialist state after being a communist state for a long time and there was no information available anywhere. People did not know how to do business," he explained.
 
From 1999-2002, he represented a US events management company, an offshoot of Ziff-Davis/CNET, one of the largest exhibition companies in the world. "I was the chief representative in Moscow promoting US technology, IT and pharmaceutical products and arranging meetings for their top level staff with the Russian and CIS governments."

Mr Men said he noticed one very significant factor in all his travels abroad. "Everywhere I went, the core of business discussions and decisions moved to China. I realised that if I didn't follow the trend, I'd miss the boat. It was logical for me to be doing business related to China as I spoke Mandarin."

Right place

In 2002, he travelled to all the big Chinese cities - Beijing, Shanghai, Guangzhou – to find out which location was the best base. "I found that Hong Kong was still the best base. China was a great base if you wanted to have a factory or you needed it for quality control but you never really know what happens in the country. The best way to know China was from the outside and in my case, Hong Kong was the perfect place as it was near enough," said Mr Men.

"I don't consider Hong Kong as a city but a giant corporation where the head of the government is the CEO. It's great to be in my business, to be a mediator between China and the rest of the world. That is the reason why I am in Hong Kong."

Mr Men said he positioned his company Eurasia – a name derived from Europe and Asia with Hong Kong logistically in the centre – as a China business development office. "We tell our clients that the most strategic way to enter the China market is though Hong Kong. It is not just the best way but the only way."

Eurasia is on the board of the Russia Hong Kong Business Association organised by the Hong Kong Trade Development Council (HKTDC) to promote two way trade links. It has lately gone into a joint venture with the Sallmanns Group which prepared China's ICBC's initial public offering – the largest in the world.

Exports rise

Trade links are on the rise. Hong Kong's total exports to Russia rose by 64 per cent to US$461 million in the first seven months of this year and the Russian economy is forecasted to grow by 7 per cent in 2007. Mr Men said understandably Hong Kong companies are trying to access the flourishing market. The HKTDC-organised Style HK held in Moscow in September was a good way for SMEs to access the market.

"Hong Kong companies would do well in retail, pharmaceuticals, fashion, toys, gifts and fur in the Russian market," said Mr Men. Already, Hong Kong fashion retailer Giordano and AS Watson have set up stores there.

Mr Men said he considers Hong Kong as China's solutions provider for Russia. Norilsk Nickel, the world's largest nickel provider, set up an office in Hong Kong after he arranged a meeting between them and InvestHK, the Government agency tasked with attracting inward investment. He is working with the Hong Kong Stock Exchange which is keen to attract Russian and Kazakhstan companies to list in Hong Kong.    

Although small – a total of five staff in Hong Kong, with representative offices in Shanghai, Beijing, Shenzhen, Guangzhou and Moscow – Mr Men said he has recently started a Russian language centre for Hong Kong businessmen wanting "real solutions" when working in Russia.

"My task is to work around the bureaucracy in Russia and also try to help Russian companies, both big and SMEs, enter China and the Asia Pacific region. I am more convinced than ever that Hong Kong is the best place to do this kind of business," said Mr Men.
 
Related links
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