"People want to go to Armenia and do business in four days. You can't do that," warns Montreal businessman Hagop Amirian, President of Yves Martin Underwear. "I initially went six times and each trip I stayed at least 21 days. Because of Armenia I have started manufacturing new items. Armenia has revitalized my business."
Only five years ago, Amirian arrived in Armenia on the invitation of the Armenian Embassy in Canada. He landed with an open-mind and eager for a challenge. After tirelessly searching for opportunities, he now contracts work to two factories in Yerevan that together employ over 300 local workers. While his idealism and Armenian pride encouraged Amirian, he always remained realistic about the demands of the international marketplace. "Armenia must compete with the world. It needs to nurture its industries," he insists.
In fact, the Armenian Embassy in Canada is doing all it can to support businessmen like Amirian. The Embassy boasts that 50 joint ventures involving Armenian-Canadian business people already exist between the two nations. "We have many materials available to potential investors that cover everything from banking, custom duties and the legislative system in Armenia. We often invite potential investors to Armenia and facilitate their activities," says Valery Mkrtoumian, chargé d'affaires of the Embassy of the Republic of Armenia in Ottawa.
Mkrtoumian adds that while Armenia has progressed quickly in such a short time there are still obstacles that must be overcome. He explains, "Our economic reforms have been more substantial than many other former Soviet republics, but there are some laws which need to be brought into conformity with international standards. The main obstacle is certainly regional stability. As soon as the conflict in Karabakh is resolved there will be more investments."
André Nazarian André Nazarian, President of numerous companies including Magnum Integrated Technologies based outside Toronto, and fellow investors faced this reality two years ago when they planned to acquire Canaz in Yerevan. They hoped their venture would resurrect the Soviet-era aluminum company. "We brought in experts from aluminum rolling mills in Connecticut, as well as consultants from France and Saudi Arabia to analyze the prospects," Nazarian says.
"We spent two weeks evaluating the company and we decided that both the economic and political situation was not conducive to business. The project was shelved but it is not forgotten."
Amirian has heard it all before, "It's very difficult when many people in the Diaspora don't understand the system in Armenia. If you want to have your own factory, you must buy it or build it, but even then you have to be careful of hidden costs. People may own private shares in your given factory and you would have no idea until later."
He believes that the first step for many potential investors is to overcome preconceived notions they have about doing business in Armenia. He explains, "You can't judge when you haven't explored the country. You can't listen to what others say. You have to like a challenge and convince yourself that you can do it."
The owner of Yves Martin admits that his own venture required numerous visits before he found the opportunity he wanted. "It probably cost me over Cdn$50,000 in trips and phone calls before I started doing business there," he says. Thankfully Amirian's determination paid off. "Only on my sixth trip did I find a man I felt I could do business with," he says and quickly adds, "I started small and now I ship over 150,000 boxer shorts a month from Armenia."
Amirian quickly established ties to an Armenian contractor and they began to get to work. He boasts that not owning a factory has worked well for him as all daily administrative tasks were entirely off his shoulders, but other obstacles remained. Armenia's cumbersome Soviet-era fabric weaving machines were unable to produce the specialized materials his business required. As a result, Amirian decided to import fabrics from Iran, Turkey and even Canada. The next barrier was how to devise an efficient system of distribution.
Dr. Edward Safarian, senior Canadian economist and Professor Emeritus of Economics at the University of Toronto, understands that the lack of established distribution systems is a barrier that has confronted many Armenian ventures. He illustrates his point with a personal experience, "Ten years ago, I remember seeing magnificent flowers being sold on the streets of Yerevan, all from the country's numerous greenhouses. When I suggested to associates that they find a means of exporting the flowers to Amsterdam they were reluctant because Soviet bureaucracy insisted that they had to be shipped via Moscow.
"But then last September, I was surprised to find Yerevan flooded with flowers from Amsterdam. How in the world can people from Amsterdam sell flowers here and you can't sell them to Amsterdam?"
Amirian faced a similar distribution problem, "By plane it costs 25 cents per garment and takes only 6 days, while sea from Armenia is a fraction of the cost but takes 45 days. Sea cargo would save me $1.50 per dozen but I chose air because speed is important in my industry."
Now an enthusiastic evangelist of doing business in Armenia, Amirian has been doing his part to encourage Diasporan investment. "I try to open people's minds towards doing business there and be more logical about their business plans. We can do major business in Armenia but we have to be open to learning from them too," he insists.
Eager to foster entrepreneurial spirit, Amirian has allowed an associate in Armenia to distribute Yves Martin products to Russia and the United Arab Emirates, "I told him that I don't want any of the profits, only my investment back, because there's potential for big business."
Elated to have accomplished a dream of working with Armenia, his success has rewarded him in unexpected ways, "I used to come to work at 7 a.m. and now I arrive at 8:30. Thanks to Armenia I feel more relaxed."
Amirian continues to plan the next phase of his enterprise, "This is nothing. I'm trying to move 80% of my business over there because I don't have any difficulties. People have difficulties because they don't act low-key. The moment you say, 'I know and you don't know' you are in trouble."
Vahé Isnar, the President of Lily Jewellery Ltd. in Toronto, also hopes to benefit from Armenia's lower labor costs and the satisfaction that he will be helping his homeland. In 1997, he established a joint venture agreement with AVA, a diamond cutting plant in Armenia. "We established a joint venture because we compliment each other's activities. AVA is responsible for the diamond cutting, while I take care of the gold. We know that together we can provide high quality products that conform to Western standards at a fraction of Western costs," he says.
Last winter Isnar arrived in Armenia with two employees ready to teach the required skills to citizens in the village of Malishka, where the joint factory is located. "One man began as a duduk-playing shepherd and within two weeks he was able to make various items," the Istanbul born jeweler says of one particularly talented villager.
Isnar has already equipped his Armenian atelier with all the necessary supplies and equipment. He estimates that his total personal investment has been close to Cdn$75,000. "Whatever machines I have in Toronto I also have in Armenia. I originally hoped the Armenian plant would serve the Russian market but because of their weak economy we have had to look elsewhere," the jeweler says.
"I know if we can find new customers we can employ up to 300 people. Right now 18 people in Armenia are waiting in hopes of finding new markets. The Canadian market is already too saturated so I'm forced to look elsewhere."
The dilemma of new markets is one both Amirian and Isnar face. While it is the tenth biggest economy in the world, Canada's marketplace of 30 million is only the tip of the iceberg for the dreams of these entrepreneurs. Amirian elaborates, "There are limitations to what we can do in Canada as compared to the United States because of our smaller population." Both men see greater potential of expanding their Armenian operations if they could find partners or clients in the American market.
Surprisingly, while Canadian companies slowly realize the potential in Armenia, one Armenian-Canadian joint venture bucks the trend as an entrepreneur from Armenia establishes an office in Montreal.
In 1996 with the input of international experts, Canada's Grand Tabak investors researched the Armenian market and devised a business plan aimed at reviving the centuries old tobacco industry in Armenia. And today, the Armenia-based joint-venture company Grand Tobacco, reputed to be the second largest taxpayer in Armenia, employs over 900 workers.
Yerevan-resident Michael Vardanyan, Vice-President and son of the founder, currently lives in Montreal and heads the company's office in that city. Vardanyan jokes about his original trip to Montreal in 1990, "Canada was the first capitalist country I had ever encountered. Now, our office here is primarily responsible for financing and providing the Armenian operation with supplies." Though Grand Tobacco's products are exported throughout Eastern Europe, the United Arab Emirates and even Los Angeles, they have yet to be sold in Canada.
He knows that working in Armenia is not a great way to make fast money but confesses, "Part of the reason we are doing this is because of the connection to our country. I feel great every time I realize that I am helping Armenia."
With 51 brands in circulation, Grand Tobacco continues to initiate new ideas and plans. Most recently the company has begun publishing a sleek full-color weekly paper, Hay Gordsarar, in Armenia that the company hopes will contribute to the modernization of local business.
Does the Armenia-born entrepreneur have any advice for potential investors?
"It's difficult to give advice when you don't have specific knowledge of the industry they will pursue. It is vital to do research," he responds and then adds, "Personally I think the software industry is the least developed and has a lot of potential. But many things are possible with Armenia."
