Evil Empire—Kazakhstan
By Todd Jagerson
Soon after my arrival in Kazakhstan, in the mid-90s, one of my first public events was to meet with a small group to whom we had just “sold” a large factory. The group was the same five men, all experienced engineers, who had run the factory for the last 15 years. They seem to be good men but they have no money (like everyone else), so the purchase agreement – the “binding contract” -- was very clear that the price of the factory is to be paid out of future profits. The occasion I was attending was the gala signing of the purchase documents. Wives, children, and local officials are all in attendance, and there is much vodka, laughter and many shouted toasts as the signing takes place. When it is my turn to make a toast, I do not hesitate: “Congratulations and Good luck!” I shouted enthusiastically, “…And long live The ‘Four Ps!’”
Suddenly, the crowd paused, a little confused. “What?” asked my translator, who gave me a questioning look. And, when I gesture for her to say it – “The Four Ps” -- the entire room goes silent and looks at me, as I rush to fill the awkward silence. “You know…” I bumbled, “the four fundamentals of marketing: Price… Product… Place… and Promotion?”
Silence and questioning looks all around, and then, luckily, someone shouted out another toast and the party resumed. Oh my, this is not good. Later, when talking to the new owners privately, I realize that, while they may be fine engineers, none of them has the faintest idea what any of the ‘Four Ps’ mean, which means they have no idea how ‘the market’ in a market economy works. When I volunteer to meet with them to discuss these fundamental marketing ideas they politely beg off – they insist they will be too busy during the next year raking in the profits.
Sadly, as was the case in much of the former Evil Empire, these ‘new owners’ faced insurmountable obstacles in every possible category: the Product was obsolete; the Price less than the cost to produce; the place is unreachable; and Promotion has no marketing channels.
What happened? I passed by the factory several times during the next year and it was just another sad abandoned wreck. Within three months of the celebration party, on a Friday night, a number of men arrived at the factory with large trucks. They drove right in, and over the weekend everything of conceivable value was loaded into the trucks and carted away – from massive machines down to the copper wiring in the walls. By Monday morning, when the “theft” was reported to the local police, it was all gone. The fact that the thieves had the keys and the factory guards slept (for two days?) through the whole thing are a part of this still ‘unsolved mystery.’
But, wait a minute; what about the binding contract used to purchase the factory in the first place? Weren’t the owners liable for the total loss of this valued asset which they bought for zero money down? Someday, perhaps, but not until the business laws are written that prohibit such obvious fraud and theft; and the judges are trained to enforce those laws; and the accountants are trained to… and on and on. What happened to the five ‘owners’? Nothing, except – as the old saying goes – ‘their wives are wearing much nicer coats this winter.’ Actually, I’ve heard that this same group approached us about buying another major property, this time a large hotel.
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