Open for Business?: Debate continues over French Carrefour’s entry into Armenian market

Open for Business?: Debate continues over French Carrefour’s entry into Armenian market

The potential expansion to Armenia by major “hypermarket” network Carrefour into the oligarchic and monopolized Armenian economy has raised heated discussions despite the government assurances that the legislative field in the country is favorable for foreign investment.

“The Republic of Armenia and the government are interested in Carrefour to be represented and start operating in the Armenian market to offer the kind of services it does all over the world. It is important for our economy in terms of formation of a competitive field, introduction of a new culture, a new type of institutes and infrastructures,” stated Prime Minister Tigran Sargsyan.

Management expert Harutyun Mesrobyan conditions the panic in the local business world over Carrefour’s opening by several factors. He says, the oligarchic, monopolized economy is fearful, because it is always dealing with bureaucrats, the system, and always wants to have a “preferential” field. It takes over the market by non-market rules, and as a consequence it cannot be competitive.

“Of course, when any new major player joins the game, domestic economic entities have to be protected in our country, but not oligarchs. An oligarch should be put into this difficult position, so that it becomes obvious whether he is that tough in fact, or it’s just a show-off,” says Mesrobyan.

Le Café de Paris former owner Valerie Ashkhen Gortsunian, who was forced to sell her business because of the years-long unfavorable business conditions and leave for France, says that if one does not have a “back” among the authorities in Armenia, no business can be successful here.

The businesswoman says that in order to sustain a business in Armenia, one needs an insider in the Customs House to file bogus receipts and someone in the tax bureau to keep collectors away.

“The situation in Armenia is very dangerous and that’s the reality, laws have no force in the country,” she says.

Meanwhile, Vardan Ayvazyan, chairing the NA Standing Committee on Economic Issues, is amused over why Carrefour’s introduction into Armenia is so politicized. After all, he says, the country’s legislation does not prohibit a business’s access to the country. The Republican MP is convinced that “the economy is on the right track” now in Armenia and that “monopolies are being overcome”.

Karen Vardanyan, heading the Department for Business Environment Improvement at RA Ministry of Economy, says negotiations are in process with Carrefour representatives and most probably the world’s second biggest retailer will have opened a branch in Armenia by the end of this year.

The speculations over Carrefour were initially sparked among public by signs at Dalma Gardens Mall (belonging to Russia-based Armenian businessman Samvel Karapetyan), announcing the network of shops, which later were removed. Further on, news appeared in the local press claiming that the authorities had decided to negotiate with Republican businessman Samvel Alexanyan and convince him to sell his Yerevan City supermarket chain to Carrefour.

“To my knowledge, Carrefour has asked for 35,000-40,000 square meters of space. I have heard that Alexanyan has expressed willingness to sell his premises,” says Ayvazyan. local daily reports that Alexanyan claimed he himself had no business but that he was aware that his family business was offered for sale to Carrefour. The word goes among local media, however, that Samvel Karapetyan suspended the Carrefour deal and that it was allegedly done largely due to Alexanyan’s rather productive efforts.

The Carrefour issue was discussed in March at a meeting between Armenian Vice-Premier, minister of territorial administration Armen Gevorgyan, during his working visit to the United Arab Emirates, and Arab Majid Al Futtaim company leadership. (Majid Al Futtaim is a leading company in the Middle East and South Africa specialized in running multi-functional complex shopping and entertainment centers. In that region it is French Carrefour hypermarket chain’s licensed partner.)

Vice-premier Gevorgyan says Carrefour would not only offer new-quality services in Armenia, but would also enable domestic agricultural and processed products to exit into the world market through its huge network as a hypermarket.

US Ambassador in Armenia John Heffern made a related twitter post: “Hear Carrefour wants to open in Yerevan. I used to shop there in Brussels. Would be good for competition here. Hope it happens,” he wrote.