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October 28, 2019 - www.cbw.ge

#301

WEEK

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Georgia’s Role in Global Market

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Georgia hosted Silk Road Forum to Boost International Cooperation

Georgia needs to Establish a Paris Arbitration Court in Tbilisi

Business Tourism Potential in Georgia

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Business and Corporate Responsibility


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Georgia on 7th Place in World Bank doing Business 2020 Ranking

Vice-Prime Minister Maya Tskitishvili met Regional Director of EIB

Georgia ranked the 7th place in the Ease of Doing Business 2020 among the 190 countries covered by the World Bank Group annual report.

Vice-Prime Minister and Minister of Regional Development and Infrastructure, Maya Tskitishvili met Regional Director of European Investment Bank, Flavia Palanza in the course of Tbilisi Silk Road Forum.

Yanair to perform Additional Flights in the Direction of Ukraine-Georgia Georgian Railway to connect Transit Cargo to Europe and Asia The initiative of the Georgian Railways was implemented on regular container shipments to the Georgian-Ukrainian.

The Ukrainian air company Yanair will perform 12 additional flights between Georgia and Ukraine in the period of New Year's Eve.

Shindisi premieres in America on November 7-8 Shindisi will be premiered in America On November 7-8 in the course of Asian World Film Festival. National Bank raises Monetary Policy Rate by 1% to 8.5% The National Bank of Georgia (NBG) has raised the monetary policy rate by 1% to 8.5%, the NBG press-release reads.

Film “Georgia - Homeland of Wine� awarded by Special Prize in Paris A special prize was awarded to the film "Georgia Homeland of Wine " at the ceremony held in the Palace of Luxemburg, Paris.

National Bank President to hold Meetings as Part of IMF and WB Annual Forum Koba Gvenetadze, president of the National Bank of Georgia (NBG) is attending annual meetings of International Monetary Fund (IMF) and World Bank (WB).

Georgian Film Days in Seoul On October 22, Georgian Film Days unveiled in Seoul organized by Georgia's Embassy.

ADB finances Bakurtskikhe-Tsnori Road Building First Deputy Minister of Regional Development and Infrastructure of Georgia and chairman of the Roads Department, Irakli Karseladze, and general director of ADB, Werner Liepach were acquainted with the existed situation.

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Director: Levan Beglarishvili WWW.CBW.GE Address: Aleksidze Street 1 Sales: Mob: +995 591 01 39 36 Email: caucasianbusiness@gmail.com Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Copy Editor: Ellie Rambo Reporters: Nina Gomarteli; Mariam Kopaliani; Merab Janiashvili, Economic columnist: Andria Gvidiani; Technical Assistant: Giorgi Kheladze;


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Georgia hosted Silk Road Forum to boost International Cooperation

Tigran Avinyan: Harmonization of Politics is Essential when talking about Megaprojects

Nouriel Roubini: Silk Road Initiative and Ongoing Reforms will bring Economic Success for Georgia

Infrastructure Minister talks about Importance of Seaports “We have been making investments in logistics infrastructure all over Georgia, including in modernization of Black Sea ports, their expansion and construction of deepwater seaport in Anaklia"This infrastructure will allow Georgia to improve services for Silk Road needs, Tskitishvili said.

Georgia needs policy promoting startup business companies and small and medium enterprises and this is a key component of economic growth, Nouriel Roubini, professor of economics for Stern Business School of New York noted at Silk Road Forum in Tbilisi, at the introductory panel – Together for Joint Future: Stable and Sustainable Growth Models.

Li Hui: Georgia-China Trade Volume in 2018 Exceeded 1 billion USD "Thanks to joint efforts, we have shaped a network comprising 6 corridors, 6 interconnected routes and many countries and seaports. Georgia actively participates in these developments. It is very important that China-Georgia have signed and enforced a free trade agreement. In 2018 GeorgiaChina trading volume exceeded 1 billion USD, whilst in the first half of 2019 the figure reached 900 million USD”, representatives of the Chinese delegation noted.

Elyor Ganyiev: Baku-TbilisiKars Railway is an Important Corridor Connecting Central Asia, Caucasus and Europe

Vice President of ADB talked about Georgia’s improved Business Environment

Deputy Prime Minister of Uzbekistan, Elyor Ganiev spoke about the role of Georgia’s transport corridor and the importance of the reforms implemented in Georgia. Speaking at the Tbilisi Silk Road Forum Panel, Elyor Ganiev said that Uzbekistan plans to study the reforms that led Georgia to success.

Shixin Chen, the Vice President of the Asia Development Bank (ADB) talked about Georgia’s improved business environment at the Opening Panel of the Tbilisi Silk Road Forum. The Vice President of the Asia Development Bank stated that Georgian Government has took significant steps towards the improved business rankings. Trammo Senior Vice President: Georgia is comfortable in terms of ease of doing business

Natia Turnava: Our vision and policy are based on the openness and prioritizing the DFI The Minister outlined the Government’s vision: “Georgia is not rich in mineral resources, we are a small market and of course, in order to make our country more attractive, our vision of business model and the business climate as well as the relevant policies are based on openness and prioritizing the direct foreign investments. To stay liberal and attractive, it is important to achieve stability and predictability, including the macroeconomic stability. We have good indicators in terms of maintaining macroeconomic stability.

William Markstein explained that he meant the freight transportation from Central Asia to Batumi via the Baku Railways. According to the businessman, the project is already under elaboration and he is confident that the route will be stable. “This is a very good project. As you know, the political situation in Iran and volatile countries is difficult and we are confident that this route will be stable,” – Markstein said.

Avinyan said that the two countries had to synchronize work in transport, infrastructure and energy directions. “Every important project created on the territory of each country has to have at least little economic and real grounds. When we talk about megaprojects, logistic or digital infrastructure, I believe that harmonization of politics is the most important issue,” Avinyan stated.

Solar Alternative Energy to open Production Line in Kutaisi and Global Sales Office in Tbilisi

Senior Managing Director of Cerberus Frontier about Georgia: Here is the best business environment in the region and the opportunities are vast as well Within the frames of the Tbilisi Silk Road Forum, representatives of the leading international organizations and private companies continue to evaluate Georgia’s investment market. At the Panel “Facilitating Impact Investment”, the Senior Managing Director of Cerberus Frontier, Alexander Benard, highlighted the company’s interest in Georgia and the country’s businessfriendly sectors.

Wang Lei: Georgia tries to become guaranteed and safe supplier of natural gas to European countries “Next century, natural gas will be more important to the electricity sector since not only will the green solutions be achieved, but fewer emissions and fewer emissions as well. Georgia seeks to successfully build a bridge to Europe and become a guaranteed and safe natural gas supplier to European countries. We are implementing a project in Georgia, so we have studied this country well, we believe that Georgia is an important partner in this region”.

“We have 150 employees in Georgia and next year we are going to have about 400 people. We launched the first factory with 500 MW installed capacity in Kutaisi this year, which equals to 1,5 mln solar panels and can provide the household with the electricity,” – Maier noted.

Milaha Group (Qatar Navigation) CEO at Panel Discussion: Invest2Succeed “In Georgia I was very impressed by the approaches and directions that this country is moving forward today. As you know, we have launched the first European project which is a container shipping between Greece, Turkey, Georgia and Russia. Marketing and sales directions have many advantages in Georgia. At the same time, Georgia has great opportunities and potential in Georgia to connect the regions. I think Georgia can further improve its position in this direction,” – Abdulrahman Essa Al-Mannai said.


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Tbilisi has hosted the Silk Road Forum. In his interview for BusinessPartner TV Program, Marko Danon, senior economist for the Center for Advanced Economic Studies of Serbia (CEVES), has talked about the importance of this two-day forum. On October 22nd and23rd, the Forum hosted more than 2,000 delegates from about 60 countries. The One Belt One Road project will assist Georgia in regaining its historical place along the Silk Road route. The One Belt One Road project, which represents the concept of a so-called new Silk Road, shapes prospects for strengthening and regaining Georgia’s historic role, Danon pointed out. “It is of crucial importance to discuss this project in a wider format, for Georgia and the whole world. Dozens of countries have been participating in this project. The One Belt One Road project connects many countries, and assists them in developing their economic potential. This is a huge project, including seaports, railroads and other infrastructure works. Besides infrastructure integration, this project enhances cultural ties

Georgia’s Role in Global Market

between China and all countries along this route. In this respect, Georgia has invaluable historical experience in terms of logistics and trade, as the oldest part of the Silk Road Consequently, this project will help Georgia further strengthen its position”, Marko Danon noted. The scales of the forum and the well-organized format opens up new perspectives for Georgia, he noted. “This Forum may make an essential contribution to the development of our country. The forum was organized at a professional level, and this forum will expand Georgia’s capabilities. Delegates from more than 60 countries have met at a round table for negotiations, including politicians, businesspeople and financiers to negotiate various aspects of the One Belt One Road project. This process will assist us in realizing what specific results this project will bring, and how we can make good use of the potential of all participant countries”, Marko Danon said.


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Georgia needs to establish a Paris Arbitration Court in Tbilisi

“At this stage, the Paris Arbitration Court is not ready to enter Georgia”, Fady Asly, President of the International Chamber of Commerce in Georgia (ICC Georgia), noted. The government of Georgia and the arbitration court of the International Chamber of Commerce have signed a memorandum with the aim to establish the arbitration of the International Chamber of Commerce in Tbilisi, he added. “A delegation of Arbitration Court of International Chamber of Commerce has visited Georgia, and the delegation’s members have held training seminars after the signature of the memorandum. The memorandum was signed by the Justice Minister, Tea Tsulukiani, and the head of the Arbitration Court of International Chamber of Commerce in December 2018. Trainings were held for judges and representatives from various government offices. The next phase should be decided upon. To be frank, I do not expect the Paris Arbitration Court to launch operations in Georgia in the near future. The good thing is that it is easier to apply for arbitration, not the court, in Georgia, because the Paris

Arbitration Court is ready to accept cases from Georgia, too, despite the fact that they are not ready to enter Georgia”, Fady Asly said. The Caucasus Business Week (CBW) has inquired what the business sector thinks about these issues. Vano Ioseliani, head of the My Rancho company, noted that Georgia has implemented a lot of reforms, and the country is ready to establish an arbitration court. “Georgia is ready to establish a Paris Arbitration Court, because we see that this country can implement reforms. Competent people should manage the reformation process. The country should show willingness to resolve disputes rapidly and competently. Today, the key challenge is that many judges do not have due competences. Protracted cases and queues create another unresolved problem. Business disputes may start in 2004, then it may be appealed, and the final decision may be passed in 2024, when dispute lose relevance. This is a key problem. Businesses should know that they are able to protect their interests in arbitration or court, and the dispute is dealt with by competent bodies”, Vano Ioseliani said. Vano Ioseliani’s consideration is shared by Albatross Group founder David Begiashvili. Georgia is ready to establish a Paris Arbitration Court, but the judicial system should be fundamentally improved in the country, he noted. “I think Georgia has to improve our judicial system. The more disputes we resolve rapidly, the easier the business sector will operate. The key challenge is to ensure the development of a healthy legal environment. This issue has remained unresolved for many years. The delegation of the Arbitration Court of International Chamber of Commerce has visited Georgia and held training seminars, but I am not sure that they can change anything in the country, because these training seminars are a façade. Old judges, who have fulfilled the government’s orders, are executioners, and no amount of training can improve them,`` David Begiashvili noted. Irakli Gurchiani, the Toyota Center Tbilisi founder, provided a brief comment on the issue, and noted that there is no need for establishing an arbitration court in Georgia. Unlike Irakli Gurchiani, Irakli Iashvili, head of the EastGate Group supervisory board, noted that it is necessary to introduce an arbitration institute in Georgia. As reported, in December 2018, then Prime Minister Mamuka Bakhtadze noted that the Georgian government would sign an agreement in Paris with the aim of harmonizing the legislative system with the International Arbitration Court. After the completion of the harmonization process, Georgia will establish International Commerce Court in Tbilisi, Bakhtadze said. “Today, on December 20, we are signing an important document in Paris, under which we assume the obligation of ensuring the full adaptation of our legislation in 2019 with the International Arbitration Court. This means that, after Paris, Tbilisi will be the second location in

Europe where the international arbitration court will operate. This is commercial arbitration with the highest reputation. This will be a fundamental precondition to transform Georgia into the regional economic center”, the then Prime Minister of Georgia, Mamuka Bakhtadze, noted in 2018, when introducing the annual government report to the Parliament of Georgia. Businessman Fady Asly has been talking about the importance of International Chamber of Commerce for many years. “At this stage, the Georgian court system creates serious problems for business sector development and attracting new investments. Therefore, the establishment of arbitration courts of the International Chamber of Commerce will be able to send a clear message that investors and business partners can feel safe in this country”, Fady Asly, head of the International Chamber of Commerce in Georgia, noted in October 2018.


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Tinatin Imnadze: "The Environment is changing, that is, continuing Innovation is needed for Survival and Development" Interview with Marketing and Sales Manager at Schuchmann Wines Georgia, Tinatin Imnadze. Tell us about how you got into the field of marketing, and what factors played an important role in choosing this profession? After graduating from school, I had very different plans, and enrolled in the Art Theory faculty, and completed my studies. One summer, I had some free time to join a temporary sales associate at a wine company. For the first time, I was in touch with the world of sales, and I became interested in every detail, like why some companies had very good products but low recognition, and sales, or vice versa. In the end, all the answers brought me to marketing, and that's where my time with marketing began. Then my temporary collaboration with this company developed into a serious career, I grew and studied for 4 years, and finally settling into my profession. It is Schuchmann Wines Georgia that has helped me, and helps me, find the answers to all sorts of interesting questions What challenges do you face as a leader in marketing during a time of technological change? It is impossible to be involved in this process and not constantly be in search of change. If you created something cool yesterday, you shouldn’t stop, you need to refine it today, adjust it today, and think about what you might add to it tomorrow. Technological changes are driving us to work at such a pace that if it took at least a day to deliver specific information to a targeted segment, it now takes a minute. New technologies are changing the consumer market on a daily basis, and responding to people's demands in new ways. A well-established market leader in any industry can suddenly face a fast-growing, high-quality, low-cost competitor that will outcompete with unlimited technological research, development and marketing platforms. What has changed in the field in the last 5 years, and what changes are expected? They have been actively talking about the fourth technological revolution, the digital revolution. In this process, four factors will be important for businesses - customer expectations, product development and improvement, collaborative innovations, and organizational forms. At the epicenter of the economy are consumers, now, and therefore business development will depend on the service and product they provide. Companies will have to adjust

their methods and business models to new realities, where a simple digitization of the process is no longer enough, and which relies on innovative technologies. We need to understand that the environment is changing, that is, survival and development need constant innovation. What do you think are the most important traits a marketing manager should have, and what is his or her role in the organization in general? From personal experience, what helps me the most is the maximum involvement in the processes. Having gone through so much detail and so many steps, I have come to realize that superficial management and giving orders from the top office cannot be as effective as being onsite and dealing with staff. Competence and the ability to prioritize well are also essential. A good marketing manager should be the motivation and spark for the whole organization. What’s your organization’s business model, in terms of marketing? We produce about 2 million bottles of

wine per year, both for export and for the Georgian market. Every action, from picking grapes to finishing bottles, is fully customer-focused. It's not just a business; Georgian wine production is a tradition, part of a culture and identity. Every step is a responsibility and a danger; mistakes are not forgivable in this field. One word that describes your job. Just naming a development would not be enough, so let me use two words, continuous development. The most useful advice you’ve ever received in your life? Definitely ask what interests you and find answers everywhere, these answers can be key to many problems. This proved to be the most useful, because I found myself in this field by searching for answers. Think of a person who inspires you, professionally. People who never stop, are not satisfied with their own achievements, and are always trying to grow and develop.


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Business News

Entrepreneurship Center opens in Tbilisi

The animated film based on Rezo Gabriadze's novels "Hari-Harale, Dedao!" is in the list of 32 Animated Features Submitted for 2019 Oscar Race among Frozen II, How to Train Your Dragon: The Hidden World, Missing Link, and others.

An Entrepreneurship Center opens in Georgia in partnership with Britain's leading Henley Center for Entrepreneurship.

Dutch Investor to put 5 million USD in Anaklia Seaport Development Dutch company VAN Oord will buy a 4% stake in Anaklia Development Consortium by investing 5 million USD in the project development. PwC: Projects without Feasibility Studies bring Disastrous Outcomes

Nona Mamulashvili holds a Series of High Level Meetings in Washington DC

Lasha Janelidze, PwC Georgia auditing company managing partner has talked about the current challenges in the real estate sector. Prior to starting a project implementation, feasibility studies should be prepared.

Nona Mamulashvili – Founder and Chairwoman of Caucasus Economic Policy Institute has been selected as a Rumsfeld Fellow – Central Asia-Caucasus Program, Fall 2019.

Georgian Agency Campaign among Golden Drums Finalists Georgian company ABK is among the finalists with its campaign "Grab Popcorn". The piece of work was presented in the category of Best Cinematography. MICE Tourism B2B Session holds in Tbilisi on 30 October The Convention and Exhibition Bureau of Georgia, in partnership with the “Turkish Airlines” is organizing a first extensive familiarization trip for 34 leading MICE oriented tour-operators.

Anano Bodokia and Anna Gorozia to become Software Engineers at Microsoft Anano Bodokia and Anna Gorozia have become software engineers at Microsoft and are expected to work in the Tallinn office. JSC Nikora issues 28 Million GEL Bonds On October 22, 2019, GEL 28 million worth of 3-year bonds issued by Nikora Trade JSC has been admitted to the Georgian Central Security Depository system.

Animated Film based on Rezo Gabriadze's Novel in the List of Oscar National Park to be established in Guria With the initiative of the Agency of Protected Areas of the Ministry of Environment Protection and Agriculture, it is planned to create a national park in Guria, Chokhatauri municipality.


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T Business Tourism Potential in Georgia

he National Tourism Administration of Georgia plans to foster business tourism development in 2019, and especially in 2020, Mariam Kvrivishvili, head of the National Tourism Administration of Georgia, told BusinessPartner TV. As part of this strategy, on October 30, Georgia will host an unprecedented large-scale event in the business tourism field, she noted. Invited by the National Tourism Administration, for the first time in Georgia, the top managers of the biggest travel companies of Asia and the Far East, will arrive in the country, Kvrivishvili noted. The mentioned event will enable the domestic tourism industry to develop business tourism field and attract howbudget tourists to the country, Mariam Kvrivishvili added. Business tourism attracts high-budget tourists in all countries, and this direction is taking their first steps in Georgia. Therefore, the promotion of this segment is one of the priority tasks for the National Tourism Administration in 2019 and 2020, Mariam Kvrivishvili said. “Business tourism is a valuable segment of the economy, and it attracts visitors with the highest solvency all over the world, including in Georgia. Therefore, we have decided

to take active steps in 2019, and especially in 2020, so together with our private sector, deliver and bring in international events, conferences, forums and various arrangements to Georgia. The challenge is that we should look more at the sector of business tourism. Today, this product is being developed. Therefore, we organize events like the one that is scheduled for the 30th of October. This event will bring efficient results in 1-2 years. For instance, in terms of business tourism, this year was exceptionally active. We have attended many forums, conferences, tourism exhibitions. We have also hosted many travel companies in Georgia to help to introduce our products and increase the awareness of Georgia, connect the foreign private sector with our private sector”, Kvrivishvili noted. An October 30 event enable Georgian companies to meet and set up contacts with worldwide famous tour operators, because the representatives of 34 major travel companies attending the event will come from China, Hong Kong, Thailand, Malaysia, South Korea, Singapore and Indonesia. As part of the 4-day event, representatives of major international travel companies will receive information about Georgia’s tourism potential, and visit various regions of Georgia, see local infrastructure opportunities and Georgian tourism products, Kvrivishvili noted.

“The October 30th event is a major and unprecedented. For the first time in the history of Georgia, such important countries are represented in Georgia as Korea, Singapore, China and so on. We have invited these people to introduce them to the domestic private sector, and enable our sector to gain access to these precious contacts. The National Tourism Administration has arranged a subdivision, the Convention Bureau, which unites members from various accredited travel companies according to international standards, including travel agencies, event organizers, transport and hotels; in practice we cover the whole industry, and we give full freedom as part of a one-day format to meet each other and sell their products on foreign markets. We arrange introductory tours for these people, to help them see all of our infrastructure, logistics, and locations with opportunities for arranging major events and projects”, Mariam Kvrivishvili said. We count each Tetri received from these investments in marketing campaigns, and this is a significant amount, even more when these campaigns have long-term effects, Kvrivishvili noted. “We measure all our campaigns. The most valuable part of marketing is that all marketing activities are measurable. We measure our activities based on each GEL and each Tetri, we count the proceeds from investments put in marketing activities, because we manage the state budget and therefore are obliged to describe the whole process. Today, we can open the information that each GEL spent on the German market in JanuarySeptember has earned 46.7 GEL. This is a very high indicator, by all investment standards. There are various indicators on various markets. We have higher figures on the Saudi market. We have two-digit figures on the Baltic market”, Mariam Kvrivishvili noted. Investment proceeds are measured based on how many visitors have arrived in the country from this or that market, and how much they have spent. It is of crucial importance that marketing campaigns bring long-term effects, Kvrivishvili noted. “We should take into account that these marketing campaigns bring longterm effects. Consequently, we expect that these campaigns will have a real effect in the next few years, as well. There are markets where decisions are made rapidly, and there are other markets, where similar decisions need 8 months. Consequently, this has a continuous effect, and we expect these campaigns to more of an effect in 2020, in terms of the number of tourists and revenues”, Mariam Kvrivishvili said.


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Business and Corporate Responsibility Corporate responsibility remains a strange phenomenon for the majority of Georgian businesses, while the practice proves that investing in corporate responsibility projects brings benefits to businesses themselves, Salome Zurabishvili, Executive Director for Civil Development Agency (CIDA) non governmental organization told BusinessPartner TV, based on corporate responsibility research report prepared for the first time in Georgia by the consulting company Inova. Inova has inquired 1,053 businesses. The report has revealed that only 26% of the relevant companies take into account corporate responsibility principles in their strategy. ‘Such a large-scale report was prepared for the first time in Georgia, and it covers various areas of corporate responsibility. The objective of the research was to clarify what efforts the business sector takes in this respect, and whether they realize the importance of corporate responsibility,

and what plans they have in this regard. Regretfully, the majority of businesses cannot realize the benefits coming from corporate responsibility. The research process revealed that companies had a better understanding of charity, sponsorship projects, field development projects; however, companies frequently ignore such issues as human rights, environmental protection, labor rights standards, fighting corruption. The point is that companies do not think these activities represent corporate responsibility, and they do not take steps in this direction. They think investing in charity and sponsorship projects are more important, and PR grows the company’s profits, but the reality is different. Naturally, placing focus on corporate responsibility and making investments in this segment is profitable for the company itself,`` Zurabishvili noted. The research has also shown that, frequently, companies do not employ a corporate responsibility secretary, and their necessary functions are integrated into HR management department or a PR department, she added. Natia Ghviniashvili, a researcher for the Inova consulting company, pointed out that major business sector demonstrates a better understanding of corporate responsibility compared to small businesses. Despite only a weak knowledge of the corporate responsibility

in the Georgian private sector, the research results should not be appraised entirely negatively, because this is the first serious research in the field, and the process has not shown that the research subject’s development dynamics. “We have an absolutely different picture in the case of small and major business companies, and this is the expected reality. We have a better situation in the major business sector. Even this 26% places focus on corporate responsibility in their development strategy is quite a good figure. We should not consider these indicators as entirely good or bad, because we should perceive the entire situation, dynamically. Regretfully, similar research projects have not so far been conducted, and we do not have materials to make a comparison. However, if this 26% grows to 30% or 35%, we will have a positive trend in this field. Therefore, we should not perceive the current picture as a black and white reality”, Ghviniashvili said.


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Profile for Caucasian Business Week

Caucasus Business Week #301  

Caucasus Business Week #301