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Moscow News
January 22-28, 2003
Moscow To Be Left without Kopeika
Foreign retail chains begin to move in on the Russian capital
By Natalya Davydova

They sensed big money and made the right move.

Whereas the tight-fisted average Frenchman spent 10 percent of his monthly income on Christmas shopping, Muscovites managed to cram into one cart two average monthly wages' worth of goods. And foreign retail chains are not afraid of competition, often operating in the same area. Shortly before New Year's, a Ramstore supermarket (owned by Turks) with a total space of 72,000 m2 was opened on Leningradskoye Shosse, opposite a Metro Cash&Carry store (owned by Germans).

Metro has three small wholesale centers approximately 10,000 m2 each, but within the next four years it is planning to open another seven stores.

Add here the first French-owned Auchan hypermarket in Moscow as well as the intention by Wal-Mart Stores Inc., owner of 4,200 same-name stores in various countries across the world, to build two dozen hypermarkets in Moscow (they say a Moscow development company controlled by Shalva Chigirinsky, known for his close links with the city government, is involved in the $500 million project).

As a result of foreign retail intervention, Muscovites could soon be left without the Kopeika ("kopeck" in Russian) as well as other domestic retail chains. So they are making the invadors' life as difficult as possible. The latter are already complaining to journalists: Their Russian competitors are siccing tax inspectors and police on them, filing complaints with the Russian Agency for Antimonopoly Policy alleging unfair competition practices, and initiating lawsuits. In late 2002 the media leaked information about an upcoming counteroffensive by the domestic retail chains: Bowing to their pressure, the Economic Development Ministry is already drafting a document designed to cramp the aliens' style so that they will stop hindering the development of Russian retail trade with their low prices and long-term contracts with domestic producers.

True, it is not quite clear whether we will act more prudently than, say, our wise Chinese comrades. In Beijing, where Western retail chains account for nearly 60 percent of consumer sales, no one is complaining or shouting "Bash Outsiders!" Moreover, Muscovites, forgetting about patriotism, will continue to vote with their pocketbooks. After all, many choose foreign retail chains on the simple principle: He who offers the better price is the best choice.

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