From manufacturing window blinds to operating a factory equipped with modern technologies – what Dio’s 23-year history can tell us about doing business in Georgia.
You started your business in 1996 with zero capital. This was a period when many businesses sprung up, but few managed to grow, expand and retain a high profile. Dio is one of the few exceptions, which is why Forbes Georgia is interested in you and your business.
During the post-Soviet period, the country’s economy was on the brink of collapse. People in Georgia were finding it difficult to survive. Like many other families at that time, we were also struggling to make ends meet. Indeed, we started our company with zero capital. This is a family business. We decided to import Venetian blinds and introduce this new product to the local consumers.
We began by going door-to-door in 1996, as we had no cash to invest in our business. We would meet people, describe to them what window blinds were, and show them photos. On one occasion, a customer showed us enough trust to pay for in advance. This allowed us to purchase materials.
Back then, I was a student. I remember installing window blinds in a nightclub one night, while my peers were downstairs enjoying themselves. However, I never regretted choosing this path, and I knew that I had to go to the end. This is still my philosophy today: believe in your idea and spare no resource to realize it. Being highly motivated is 50% of achieving success.
Life in Georgia in the 1990s was tough. I remember many businessmen making a bit of money for themselves and immediately spending it on a new car. We, on the other hand, reinvested all our revenue into our business. Buying a fancy car or another item of luxury was never the goal for us. The aim was always to develop our business.
So, you created a market for a virtually unknown product, which is unusual. How challenging was it for you, and who were your first clients?
Introducing our product to consumers required an enormous effort. People had no money, so we had very few buyers. Our early clients were legal entities, embassies and international organizations. They were familiar with our product, so it was easier to deal with them. Gradually, individual customers also began to show interest and started to trust us. Trust was very important; we had no seed capital and had to convince prospective buyers that their money was safe with us, that they would be getting a quality product.
How did you manage to deal with the many problems and challenges that came with that period?
We certainly had to deal with many challenges. The customs and revenue service and other state structures were not operating properly, crime levels were extremely high, and corruption was rampant. Consequently, businesses were under pressure.
Nevertheless, there was one positive aspect from that period – the enormous motivation to create something and succeed. Every tetri that we earned was put back into the company.
Many businesses did not survive that era, and my explanation is this: people did not put every possible effort into the success of their business and they did not reinvest what they earned. We turned down personal luxuries and justified the trust shown to us by customers during that difficult period by reinvesting all our revenues.
Naturally, you could not have achieved all of this on your own. You needed a team. How did you managed find professional personnel?
This may sound like a paradox, but back then it was easier to find more qualified personnel than it is now.
Why?
After the collapse of the USSR, many professionals were left unemployed. They were, therefore, highly motivated. Professionals with top education were willing to personally perform all kinds of technical tasks. These highly qualified individuals greatly contributed towards the success of our company.
To what extent have consumer demands changed over the last 23 years, and has it affected your business?
Our company introduced several new products to the Georgian consumer, including Venetian blinds, external shutters, automatic garage doors and shade tents. We were also first to introduce pergolas to the local market. The same applies to blinds between glass, which we now produce locally ourselves. This is a product that is protected from wear and dust. The list of products that Georgian consumers first heard about through us is quite long.
Our operating model back then was simple: if we saw that the newly imported product established itself easily on the market, we would begin to produce it locally. One year after importing our first product in 1995/1996, we were already producing goods. Starting to produce locally was not easy, but we knew that it was necessary.
To this day, we are not involved in the buying and selling of products. Instead, we try to adopt the relevant technologies and create more added value on site – employ more people and ensure that more money remains in Georgia. This is what our country currently needs.
We have also developed a feedback system that allows us to find out – both online and through face-to-face meetings – what customers think. We are always mindful that our salaries are paid by our customers.
Your company website talks extensively about quality and standards. To what extent are customers currently prepared to pay for such quality?
This is a challenge for us, and I always prefer to use the word “challenge” instead of “problem”. Otherwise, I would have to contend that I have spent my whole life dealing with problems. I do not want anyone to look at our path in a negative light. On the contrary, we are constantly progressing and rising to challenges.
Since 2005, we have had an ISO certificate issued by German authorities. It is renewed annually on the back of the company undergoing appropriate inspections.
Dio has traditionally stood for high quality and relatively high prices. Over time, we managed to start to manufacture lower-priced products. This means that we can now offer customers the same quality at more affordable rates. In the meantime, Georgians have come to appreciate quality. They now know that buying cheap windows means having to pay twice.
If you were to start a business in today’s age of digital solutions, intense competition and new technologies, would you still be able to get going without seed capital?
I would like to believe that even today it is possible to come up with an idea that can be transformed into a proper business with zero capital. The environment in Georgia is more competitive today, but at the same time, new information and technology is more accessible.
When we were starting out, there was no internet, no mobile phone and no properly functioning landline available to us. A pager was the first long-distance communication tool that we could use to communicate tasks to employees.
In this age of new technologies, we can come up with many ideas, but only if we constantly work on ourselves: I strongly believe that if all of us have the willingness to obtain an education and hone our skills, Georgia will be able to repeat the achievements of the Baltic States in the post-Soviet era.
Do you see yourself as a large business?
It is not our aim to be a large business. We want our development to be stable, rather than quick, allowing us to retain the quality of both our products and services. We will increase our ambitions as soon as the country’s economic growth allows us to do so.
Is there a direct link between the development of the country’s economy and that of your own company?
Business development is tied to the country’s development rate. If the economy is growing fast, the amount of Georgian businesses that see a future for themselves increases as well. Slow growth and the absence of a vision for economic development leads to a drain of intellectual and other resources.
Where is Georgia currently in this continuum?
Georgia still has a chance to hold down a special place in the global economy. However, this opportunity will not be available forever, and must be used now. Anyone can become a businessman or businesswoman, and the government must encourage the involvement of as many people as possible in business (i.e. through economic activity).
What or who should be developing the economy? F
irst and foremost, we require a healthy business environment and as much foreign investment as possible. We should always remember that when it comes to attracting foreign investment, we are facing fierce competition, especially from the countries of Eastern Europe and Asia. These countries are looking for investors that bring new technology and knowledge with them.
All international financial and ranking organizations are stating that Georgia needs to conduct structural reforms in order to make its business environment more attractive. What would your priorities look like?
We must invest in the future generation. Education should be a priority. When it comes to skills such as reading and math, our young people are lagging their peers in developing countries, let alone those in developed states. The business sector cannot move forward without educated people. Business requires professionalism.
A professional education is also very important. There is currently a severe shortage of individuals with a professional education in Georgia. Germany and other northern European countries are good examples of the success of professional education. Our company would happily train factory personnel, but Georgia does not have an orderly system for connecting interested individuals to us through institutions of professional education.
How easy is it to join your team as a new member?
When we hire an individual, we make sure that they are familiar with the company’s corporate culture, which includes customer care, honesty and helping each other internally. These are the core values that all of us in the company agree on. If our views and opinions on these issues diverge, then we cannot work together. We never lie to the customer, as we never lie to each other within the company.
Our approach can be summed up as follows: wherever you work, you must give your all. Quality is achieved through paying attention to details. We do not want people to work at Dio for the sake of a salary alone. We want to give our employees an opportunity to enhance their knowledge and skills. We would like to know where each of our 200 employees see themselves, what their ambitions are and what work they are interested in. Inner motivation is crucial. People are most productive when they do a job that interests them, as opposed to them working for a salary alone.
All our employees are being challenged to destroy the notion that “Georgians cannot provide good service” once and for all. We know the value of each customer and we know that our mission is to create comfort in their offices and homes alike.
I can see that you have a specific and consistent vision about developing the economy, business, qualified personnel and the country as a whole. Does the government share your vision?
The objective should be to have a simpler business environment.
Is it, therefore, not contradictory for the government, on the one hand, to move towards tax liberalization by taxing distributed profit, while on the other hand, restricting the free market by introducing many EU regulations without prior impact assessment?
The introduction of health and safety regulations has been a positive step. However, various other regulations are creating unnecessary bureaucracy. For example, when a company wants to build a plant, it has to deal with various regulatory state authorities that do not act in a coordinated manner. This problem could be resolved by bringing public services for business together into a single space. This idea was previously put forward by the Business House but was never followed up on.
In the past, we had no regulations at all. It is very important that regulations concerning people’s health have been introduced. In Georgia we must think more about occupational safety to ensure that construction no longer claims human lives. This is possible by implementing and enforcing appropriate standards. Naturally, the new health and safety rules are associated with higher costs and efforts for businesses, but these are necessary costs and efforts. If the developed countries can implement them, then why can we not do the same?
It is often said that businesspeople are unpopular in Georgia. Where do these stereotypes come from, and what is fueling them?
I think that these are stereotypes from the post-Soviet era. Back then, many people enriched themselves by acquiring public property for peanuts. However, I must add that business approaches differ from each other. There are plenty of honest and law-abiding businesspeople in this country. The work of these people ought to be highlighted and publicized to ensure that doing business is being associated with positive values in the mind of the public. If this can be achieved, then the country will no longer be dependent on social support, instead creating real wealth that is vital for competition and for tackling poverty.
How easy is it to learn from one’s mistakes? What did you learn from yours, and are you happy with your company’s achievements in this regard?
We constantly communicate with our customers. A client once wrote on social media that he took a faulty product to Dio for repair and asked how much it would cost him. He was told that the repairs would be free of charge, as the fault was with the company. The client was surprised and grateful. Honesty and openness are values that Georgian business ought to be built upon, however difficult this path may appear.
What is your opinion about the topical issue of corporate social responsibility, and what does it mean to you?
Customers often think that businesses will do noth- ing without directly profiting from it. That is not my approach at all. We do not wish to be a rich business in a poor country. All our employees are Georgian citizens and we share our country’s anguish. We, therefore, try to provide support where it is most needed. From the day of its opening, we have helped the Children’s Hospice that provides services for chronically and terminally ill children and their families free of charge. The hospice was opened several years ago at the initiative of the Open Society Georgia Foundation. We have also helped restore and open libraries in various parts of Georgia. We try to encourage development of education by providing incentives for teachers, and we promote the implementation of healthy lifestyle among young people.
The business routine is quite tough. We are happy to temporarily break free from it and distribute the resources obtained from our business in a manner that makes us certain that we are performing a good deed. This increases our motivation to go back to the everyday business routine and even more actively.
International rankings do not reflect all the aspects of doing business which you have highlighted. However, we can agree that starting a business in Georgia is easy. Is it also easy to maintain and expand it?
This is an interesting question, as starting, maintaining and expanding a business are three different propositions. When we were starting out during the 1990s, we also had certain benefits available to us: a new company was exempt from tax inspections for a certain period of time and its profits were only taxed after two years. These were significant benefits that everyone took advantage of at that time. However, crime and corruption made it difficult to maintain a business back then. In the end, therefore, the benefits lost their value.
In the current circumstances, business development may be hindered by low economic growth, devaluation of the national currency or unfair competition on the market. I firmly believe that nobody is intentionally harming business today. There may be certain unpleasant cases, but they are few and far between. Business is currently free, and the priority should be to create an environment that provides investors with better development opportunities.
I see the devaluation of the Lari as an indirect tax that each one of us has to pay as a result of economic mismanagement. Do you agree?
Yes, we are paying for economic mismanagement. Ultimately, this also affects the mood in the business sector. Businesses are keeping an eye on the exchange rate, while consumers look at what is in their fridge. If neither can detect a change for the better, then the numbers on the paper do not mean anything.
The devaluation of the currency is also one of the reasons for higher inflation…
Moreover, inflation only takes into account the rise in the price of essential goods. We should not only be measuring whether people can purchase products that are essential for their survival. That is wrong.
Are you saying that real inflation is even higher?
Of course. People naturally seek to earn more and accumulate wealth. They should not only care about survival, but also about improving their quality of life. They must be given the opportunity to achieve this. Many Georgians are unable to even earn what they need to make ends meet.
What is your opinion about banking regulations?
I agree that it was wrong to issue so many loans at once. Regulating this field is the right thing to do, to ensure that people are not being tempted and led astray.
Where does this temptation come from? Are these regulations designed to fight the causes or the effects?
At this point, we are indeed fighting the effects. The causes are rooted in lower investment and economic growth. The bank became the only investor in this country, but this is certainly not the bank’s fault.
What does the future hold for Dio?
We are in the process of expanding. We are currently building a new plant with modern equipment. New jobs will be created, and the production process will be streamlined. Most importantly, part of the production process will be conducted in Kutaisi, which makes me very proud. It is important to ensure that not everything is concentrated in Tbilisi. I am delighted that we can create jobs for local people in Kutaisi also.
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