PRINT THIS PAGE Russia below the radarscope10/04/2006. Source: Russian Investment Review.
In this Russian Investment Review article, Patricia Cloherty, chairman and CEO of Delta Private Equity, suggests that Russia will evolve its own style of wealth creation in their private equity market. Many emerging companies in the consumer goods and retail sector of the Russian economy appear to be following 'copycat' business models and are replicating the success of western firms. Is that fair? Frankly, most businesses are copycat. Every retailer takes inspiration-be it from Gap in the US or Zara in Spain. Apparel retailing is appealing retailing: you can have different price points, but at the end of the day, you have inventory that you have to turn over. What this illustrates is that there is not that much new under the sun-unless you really get into innovative technologies or services and they are not common.
I worked in mature markets for many years, and certainly almost everything we invested in was innovative and required invention. That, however, was because what would be classified as 'copycat' businesses were already so mature that the investment returns were extremely low. In mature economies, grocery stores or restaurants, for example, have very low margins. But in Russia, many of the models, which tend to be well known in other geographies, do not require invention but successful execution instead.
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