Dmitry Ostashenko and Inna Malashchenko moved to Georgia three years ago. In Tbilisi, they launched a totally new business, a wedding agency they called Mandarini Wedding. The founders of the project met Invest Foresight to explain how they managed to establish themselves in the local weddings market and to within a year make their business profitable. They also explained why boundaries are no obstacles for successful entrepreneurs.
I was born and grown up in Kaliningrad and educated in Moscow, Inna says. I had always dreamed of being a journalist, but my parents insisted I graduated from logistics department of the Higher School of Economics. When I was in my last university year, I came to the CenterObuv footware chain store to collect data for my diploma paper. I then worked for them for four years, starting as a logistics manager. When I resigned, I was a supply/delivery chain director. My husband lived all of his life in Moscow. When in school, he fancied foreign languages. But to prove his intelligence to his Maths teacher who had questioned his smartness, he joined Moscow State University’s Mechanics and Mathematics Department. After his graduation, Dmitry happened to deal with logistics in a small company where he came to help his friend out for a few days. He then ended up being a logistics specialist for ten years, working for Schenker, M.Video and CenterObuv.
We met when working at the office and launching the project of bringing CenterObuv to the European market. He was my superior and at the beginning I did not like him at all. It took us six months to build up business relationship. But then, our affair started to develop volcanically. Dmitry asked me to marry him on the very next day of our informal relations. At some point we decided to quit our hired employment and launched our own business. At first, we started a gifts delivery, then we went into an online flowers delivery. Our gifts delivery was quite successful, but it was very much season dependent and could not guarantee a stable revenue all year round. With the aggravating crisis in Russia, our flowers delivery company went bankrupt.
We had had some thoughts of emigration for quite some time, and we seriously considered moving over to Poland or Ukraine. But the final decision was made after we travelled to Georgia in 2012. We went there for mountain skiing and fell in love with the country at the very first sight. We then visited it few more times. In 2014 we decided to celebrate our formal wedding there as well. While in preparation and regularly flying there, we had the feeling our hearts were always in Georgia and only the physical bodies were occasionally traveling back to Moscow. The very next morning after our wedding we knew for sure we were to move there forever. Our irrational emotions were matched by the quite pragmatic reasoning. Georgia is close to Russia, hence it is no problem to visit our relatives. There is no language barrier there since nearly everyone in Tbilisi speaks Russian. Besides, Georgians are Orthodox Christians and very much loyal towards Russians. Besides, Georgia’s developing economy offers unlimited possibilities for developing business.
30 min registration
Opening a private business in Georgia is a grounds for getting a residence permit (At the moment, nationals of most countries can stay in Georgia for the duration of a year with no residence permit and with no restrictions on business activities). Over the first six months, we settled ourselves here, establishing contacts and networking. Before coming here, we made up a list of prospect projects, including a wedding agency. I registered myself at a Russian wedding aggregator service and totally forgot about that. Yet in a while I got the first letter from a soon-to-be-bride. That is how Mandarini Wedding agency came to existence.
At the very beginning, our investments were immaterial, our time and efforts. So for about a year we had no vacations or days off. Money can’t buy you an entry ticket to a weddings market. During the first year, we managed to live with no webpage since our clients found us by personal recommendations. Out charge was at the bottom-level as we had to build up our portfolio and reputation. In a while, we produced a web-page, and did it all by ourselves. Step by step, we established our presence in social networks and started to do some advertizing. Mandarini Wedding is registered as a limited liability company. The overall registration procedure at the Palace of Justice, took us some 30 minutes. All we needed was a passport of the company founder, a legalized written consent for providing a registered address in Georgia (or, instead, an oral confirmation from a friend, a Georgian national, ready to provide such an address, would suffice), and an interpreter, or, as a matter of fact, the said friend acting as an interpreter.
We also drafted the articles of incorporation and paid the registration fee of 100 lari ($40). A day later, we collected the registration documents. In case corporate documents are required immediately, the fee doubles to 200 lari ($80). Still, usually people can wait. Then, we had to open a bank account and visit tax authorities (Revenue Service) to get an online access to a taxpayer Internet office. In Georgia, one can not register a business online, but that is not really required since the entire registration process does not take much time. The Palace of Justice is so fast and efficient that it is easier to visit them. For Georgians, a social communication is part of the local culture, so they do not rush to replace it with Internet services.
The niche of weddings in Georgia has got some special and amazing features. Georgians often get married fairly early. Their wedding is usually paid for by their parents who make the decisions on where and when it should take place. Subsequently, modern Georgian weddings are celebrated in line with scenarios which are one or more centuries old. It always means several hundred guests in attendance, of which a marrying couple hardly knows one half. The tables are abundant with dishes being placed in two or even three layers and representing the entire diversity of the Georgian cuisine. Tons of local wine are brought by the honored guests from their own wineries. A Georgian wedding can not happen without a toastmaster (tamada) and his neverending toasts. A wedding can hardly be imagined without traditional dresses, Georgian folk songs and igniting dances.
So the local wedding industry is entirely focused on the traditional samples. A special segment of restaurants here would offer all inclusive wedding services, namely catering, flower design, a show, a wedding cake and fireworks. Usually, all arrangements are set and remain intact and reproduce themselves time after time. In a situation like that, a wedding agency can offer nothing new at the local market. So our choice was operating in the international market of destination weddings. Georgia has become a new but a very bright star in this market which is well established for decades. With its unique nature, cuisine, wine and rich national culture of feasting, Georgia is now a strong competitor to Cyprus, Czech Republic, Italy and France.
The market niche of weddings for foreigners is mainly occupied by the agencies whose owners have moved to Georgia or come to operate there during the wedding season. Most of the local agencies are aimed at corporate customers. These days, given Georgia’s growing popularity, there appear many private providers who are ready to engage in any sort of services from arranging weddings and private tours to leasing vehicles and apartments. Their only goal is profit, so their services are of a rather poor quality and hence damaging for the market reputation. But the competition keeps growing year after year. Over the past twelve months, about a dozen new companies have entered the market, including those from Russia, Ukraine and the Baltic republics. For us, that is a powerful impulse for further development since we must always improve our professionalism and efficiency and be the best.
Due to the market specifics and seasonality, our venture broke even in a year. At the moment, the company is actively expanding. We do not merely promote ourselves, but also promote Georgia as a great location for destination weddings. We are now offering new options, such as very small weddings and official marriage registration ceremonies. We have also opened one more agency called Ori (‘Two’, in Georgian). To launch it, we spent some $6,000. The agency only operates its first season and therefore it is difficult to assess the exact number of the implemented projects, but we set for our team a goal of operating at a large scale. Mandarini Wedding is focused on large customized projects which involves a most detailed concept, a very high quality service and a substantial budget. We therefore do not arrange more than 30 weddings a year.
Local couples have started to approach us, but they make decisions on signing a contract quite rarely, as they do not see any point in hiring a wedding organizer and prefer to prepare their weddings in a traditional manner, making arrangements for a church ceremony and booking a restaurant which has a standard entertainment show.
At times, we are approached by Georgian couples who reside and work abroad but want to celebrate their wedding in their native country. Their Europeanized vision of their weddings often coincides with ours. Still, our major customers are couples from the CIS countries (60%) or the English speaking world (40%).
In January 2017 Georgia introduced Estonian taxation principles. It replaced profit tax with a 15% dividend tax. If the profit remains on the corporate balance sheet, no tax is to be paid. This way, the authorities stimulate business development through reinvestment. Besides, there is also an income tax of 25% and a VAT of 18%. Since next June, the authorities intend to seriously ease the VAT application. The benchmark under which no VAT applies, will be raised from the current $45K to $220K per annum.
Georgia is also actively improving its business environment. It is very comfortable to operate here since there are no bureaucracy, repressive audits, while accounting requirements are very simple and may be handled online. We have resided here for three years and have witnessed country’s fast and dynamic development, the construction of new airports and highways, exploitation of renewable energy sources, etc. True, that is not happening as fast as I would want, but, possibly, I’m a bit impatient. But anyway, Georgia is a very young country and all of its breakthroughs are still ahead.
The launch of our project was surprisingly smooth, as if guided by the hand of God. Quite unbelievably, despite our most limited experience and absence of any advertisements, the couples approached us all by themselves and trusted us with arranging the most important day of their lives. For a year after we moved in here, it was hard to adapt to the local culture of doing business, to accept it and to add our European vision to it. For Georgians, the most important matters are friendship, family, and socializing. Money or personal growth are not very strong motivators. Pure capitalism does not function in Georgia. Everything is based on personal relationships here.
In the Western world, every minute is treasured while in Georgia time is not valued that much. A contractor, for example, can be few hours late and would not think that is any problem at all since he has ultimately arrived for a meeting. It is not customary for businesses here to advertise, or market, or promote themselves, therefore it is hardly possible to find a contractor in the Internet, only personal contacts can help. No contractors have any portfolios since everyone relies on personal relations and word of mouth. It is very difficult to discuss an issue over the phone or to sort it out by emails, as you will inevitably be invited to have a meeting over coffee.
Most of Georgians do not accept positive criticism, so there is no point in objurgating or penalizing them. Instead, one should patiently and fondly explain the subject matter of a problem. If a Georgian feels offended, you will most certainly loose a partner. We are in a permanent search of like-minded employees and strive to build a reliable team. We also devote a lot of time to building relations and educating our contractors, so these efforts have stated to yield fruit. We now have six people in our team. Our partners include only people and companies we can fully rely on. Usually a wedding only happens once in a lifetime and hence its significance and emotional component can not be overrated. As we produce memories to stay for the entire life, we have no right to fail.
Quality of life
We have lived in Georgia for three years and understand perfectly well the importance of leaning Georgian, but we have not made any significant progress with that so far. Georgian can not be learnt by intuition, it requires devotion. At the present stage, we do understand many things, but the available vocabulary only allows us to shop in a store or make an order at a restaurant. Our learning process is very slow because here there is no urgent need to speak the local language since everyone speaks either Russian or English. But we have made mastering Georgian one of our priorities for this year.
In terms of the level and quality of life, Georgia is close to Eastern Europe. The signs of communism and the USSR disintegration times are noticeable in the country, but as years go by, they are getting less visible. The stunning results of the war on crime in 2004-2012 should be mentioned. The crime rate is now negligible. The reforms had also eliminated in people’s lives bureaucracy as a phenomenon. Georgia is a global leader as far as simplicity of real estate deals is concerned. One can buy or sell an apartment here within quarter an hour.
The healthcare is totally private. For Georgian citizens, the state guarantees some medical care benefits within the frameworks of the obligatory medical insurance. Luckily, we have not been in situations when essential medical assistance was required. For us, a fairly inexpensive – by Russia’s standards – medical insurance ($15-20 a month) is sufficient. With it, we get discounts at private clinics ranging from 30% to 90% depending on the assistance provided. We are fully satisfied with the basic level of services. Dental services, for instance, are much cheaper in Georgia than in Russia or in Europe, yet they meet the best modern standards. The main and only problem in healthcare is, until recently most of good doctors tried to move to Russia, Europe or US. So to find a good doctor in Georgia, one needs to get reliable recommendations.
The situation in housing is not simple either. Most residential premises had been constructed long ago, in the years of the USSR or even before that. Couple of years ago construction industry started booming. Due to a dramatic surge in supply and demand, lots of private and poorly qualified housebuilders appeared who employ the cheapest technologies. Recently, some serious players came to the market and now attempt to improve the construction quality and hence raise the housing standards to reasonable levels. A booming construction industry produces serious drawbacks since a new construction site can appear at any moment next to your home, or office, or both. Another problem which one faces after moving to Tbilisi, is a bad environment. There are very many vehicles there and the air is much polluted. This year, Georgia will introduce an obligatory technical inspection for all vehicles and that will hopefully result in reduction in numbers of old and worn out cars.
Nevertheless, despite some shortfalls, we have never regretted our decision to move here over those three years. In Georgia, we have a feeling of freedom, safety and inspiration. Here, if you do not interfere with the lives of other people, nobody would interfere with yours. You can practice any religion, have any political views and be of any nationality. In the contemporary world full of prejudice and mistrust, a genuine tolerance we see here is worth its weight in gold.
By Olga Grinevich