Taming Russian Capitalists

The Wild East

When Mikhail Goncharov launched his own company two years ago importing Chinese electronics into Russia, it was hardly a leap in the dark.

For three careful years he had learned the business at a larger firm, and only when he had the contacts, the capital, and the confidence did he branch out on his own.

"Five years ago, all you needed to make a business succeed in Russia was daring. Nowadays that is not enough," says Mr. Goncharov. "You have to have knowledge and you have to be professional."

Call it the civilization of Russian capitalism. Business may not be boring in the once "Wild East," but at least it is developing features recognizable to Western eyes.

Increasingly, say local businessmen and women, the world of hit men, bank failures, daylight robberies, and currency speculation is giving way to a more ordered universe where entrepreneurs have business degrees, bank loans are repaid, and fortunes are no longer made or lost overnight.

Most important, they add, they have less to fear from gangsters, as the criminals who have preyed on Russia's burgeoning business class grow out of the protection racket and seek respectability by transforming themselves into investors.

To be sure, the commanding heights of the Russian economy are largely in the hands of a few oligarchic cliques, whose banking, media, and resource empires have been built on insider deals that scarcely meet international norms of business transparency. And the sectors of the Russian economy where really spectacular sums of money are in play, such as oil, gas, timber, and minerals, are the preserves of brave men with skilled bodyguards.

But at the everyday level of ordinary commerce, more and more small- to medium-sized entrepreneurs are expanding their businesses, and expanding the Russian economy along with them. Government figures suggest that the economy has grown by 2.1 percent so far this year - the first growth recorded since 1990.

AS the raucous bazaar of Russia's "wild capitalism" settles into the more-restrained forms of a market, "the mentality of Russian businessmen is changing," says Galina Bondarenko, a footwear importer.

"They used to try to make quick money because it was the first time in their lives they had seen any money at all. But today there are people who understand that doing business is not just a question of making money, but of making a life," she says.

If street smarts were at a premium in the helter-skelter early days of the free market here, formal schooling is now coming into its own.

"You need a good education to get a good job," says Vladimir Andreyenkov, who heads the Institute for Comparative Social Research in Moscow. "When high school kids choose careers now, they want to go to college to study economics or law or marketing."

So new private universities are springing up in the big cities to meet the demand, and a more-open, Western-style job market is developing for their graduates.

Where only a few years ago, businesses were largely family affairs or run by close friends because nobody trusted a stranger, "I get faxes all the time now from young people sending me their rsums unsolicited," says Nikolai Leonov, who runs a budding mail order company selling J.C. Penney goods.

Personal styles are changing, too. The thick necks, bristle haircuts, red jackets, and ostentatious gold jewelry that were once the caricature of the "New Russian" are seen less often today on Moscow streets.

Partly, says Dr. Andreyenko, this is because "law enforcement is stronger than it used to be and people don't want to show off their wealth" for fear of attracting the tax man's attention.

But also, suggests one extremely wealthy New Russian who asked not to be identified, "lots of the people who spent their money on flashy things don't have any left. The ones who realized that you have to be careful have not just changed their dress style, they have grown up, their heads have changed too."

Growing up has meant learning the rules of business, points out Mr. Leonov. And he says if gangsters have made some businesses criminal, those rules have turned a lot of criminals into businessmen. "Taking out bank loans and not repaying them used to be popular," he recalls. "But that is not a trick you can play twice."

"If a criminal is not an absolute idiot, he soon sees it is more profitable to be involved in business than in crime," Leonov adds.

"Business is getting more civilized, and even the criminals are getting more civilized," says one businesswoman who acknowledges that her company has attracted capital from dubious sources.

She says, "They don't want their sons to be gangsters. They have got a lot of money and now they want to invest it in legal businesses."

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