Tagged: samvel
puzzled
Do monopolies really influence quality?
As far as I know, and as far as the world’s history teaches – yes. And mainly in a negative way.
When something is monopolized you will rarely see any quality, everything produced sells, at any offered price. There is a market demand and no offer except yours.
Imagine if there was no alternative to Ford cars from the very beginning. And imagine if there was only Microsoft. And remember the times when Armentel was the only mobile operator in Armenia. There was no quality, little coverage, high prices and lame service. You don’t want Armentel? – live without mobile phone. It should be mentioned that Armentel was also the only landline operator then. So you imagine the quality of service….The company that eventually acquired Armentel went through a painful rebranding process to get rid of that bad image heritage.
Now coming back to modern days Armenia – few vital products and services are monopolized. Import of fuel, sugar and flour (or grains) is still monopolized. Not because the state forbids importing and not because it is licensed. I cover the reasons and conclusions here in this post. But now let’s talk only about quality. Not the price, but the quality.
I can not say that I’m unhappy with the quality of sugar, flour or fuel they sell nowadays in Armenia. The quality of fuel was a problem few years back, but not now. And I don’t recall any problem with the quality of sugar and flour since it was monopolized in 1991.
And all monopolized products are widely available. When you want to refill your car fuel – they will serve you at no extra cost, you don’t even have to leave your car. All you need to do is to open your window and pay. Something you will never see in Europe.
Sugar and flour are sold in every shop. Literally every food store. In unlimited quantity. 24/7.
Now let’s talk about one of the most “non-monopolized” services in Armenia. Taxi.
I think this is the most widespread small business in Armenia today. Taxis are plenty, various cars, names and services. I even dedicated a post here.
However, the service is awful. I won’t go into details, but it’s a paradox. There is no monopoly for taxi, means it should compete, grow and develop. Service should become better everyday. It should be close to excellent. But it’s not.
So services that are monopolized in Armenia are of good quality, but the most non-monopolized service in Armenia doesn’t even move towards better quality. So do monopolies really influence quality in Armenia?
I’m puzzled.
to close the closed market case
Yerevan’s closed market is an icon of soviet architecture and one of modern Yerevan’s oldest monuments. Acquired by Gagik Tsarukyan it was serving the needs of fruit and vegetable resellers who have been buying those from peasants and selling with extra price in the territory of closed market.
Recently Mr. Tsarukyan sold the market to another tycoon, Samvel Alexanyan. In his turn Mr. Alexanyan started a big renovation project, claiming that the market will remain the market and his main idea is to renovate and modernize it. I personally like that idea.
A number of NGOs pitched to stop the renovation project, stating that civil construction as well as state monuments’ protection rules have been violated. They claim that renovation was never reported to municipality and the Ministry of Culture. Which is indeed a violation. The letter with the demand was addressed to the Prime Minister and Mayor of Yerevan.
Finally, our civil society has learned how to address demands and how to fix the target. This comes after all recent cases of wrongly addressed demands and badly managed campaigns described here.
I don’t know if those NGOs are properly informed about the case, however the good sign is they request answers from local authorities and government, i.e. those who must report to society. They demand information from those who should provide answers, but not church or businessmen, or other irrelevant parties as it was the case before.
would you produce Sugababes?
Do you really need money to start a big, game changing business in Armenia?
Not that much. You need time, effort and connections more than hard cash. One may argue that time is money, well yes. But I’ve got lots of friends, they have lots of time, but they have trouble transferring that time into money.
To create a big business in Armenia you will need protection, in case you want to create a game changing enterprise (for example another mobile operator, or another air company, or another brandy company). In 70-80% of countries you will need protection to invest and create a game changing company (caveat, I don’t talk about small and medium enterprises). I talk about a company that takes the contracts away from Samsung in Korea, takes the contracts away from Volkswagen or Deutsche Telecom in Germany, takes the contracts away from Sony and Toyota in Japan, takes the contracts away from main weapon sellers to Pentagon, takes the contracts away from AT&T, General Electric or Boeing in US, takes the contracts away from Gasprom in Russia, etc.. Game changing, rule setting, iconic companies, monopolies that are highly linked to governments in a long run.
Naturally, if you want to change the game in almost every country – you will need guarantees or at least promises. So, Armenia is no different. For example, sugar is a monopoly.
If you want to import sugar here – no one will stop you. If someone tells you “they won’t let you import sugar in Armenia” – don’t believe them. Again, no one will stop you. This is not Uzbekistan.
But the main importer, highly linked to the government will reduce sugar prices so much, that you will want to eat all the sugar you imported yourself. You will gain weight, you will open bakery chain to finally spend all the sugar you imported. You may even start producing Sugababes pop group or become the biggest sugar charity in Eastern Europe.
How come he can reduce prices and you can not? They actually do let you import sugar in Armenia and pay customs fees. But the main importer guy doesn’t pay all the state fees (while you pay), that’s why he can reduce the price. Needless to say, army or other main sugar utilizers will never buy sugar from you. In one word – corruption. It has always been like this from Day 1 of our independence, just in case you think changing the president will solve this problem.
You can claim the same for new Boeing or new weapon producers in US, or new Samsung in Korea, or new Deutsche Telecom in Germany. No one will stop you if you want to create one. You will simply have no contracts and will eventually close the shop.
Coming back to Armenia, it doesn’t matter who the main importer of sugar in Armenia is. His name actually does not matter. One needs to be narrow minded to blame that guy, as he is just the product of a corrupt system. The government can change that name overnight if it decides that importer B will be the main sugar importer from now on.
Moreover, I’m sure that if this guy is educated enough (and he is not) and he simply calculates the amount of bribes he pays, he may end up wanting to pay taxes instead.
The monopoly problem in Armenia is so deep, so delicate and vulnerable that even if you brake this monopoly scheme today, 90% of sugar buyers will buy it from the same guy automatically, by default. They have never known other sources from the day Levon Ter-Petrosyan first swore and promised to protect the country and it’s people. The problem is so big and again delicate, that I did not even touch it here.
I hope to talk about small and medium enterprises in another post soon. The picture is much brighter and the air is much fresher there. After all, Armenia is an Eastern European country and a member of Council of Europe. AND, my friends and I are determined to create a small enterprise this year.
