Jumping to Kazakhstan from Turkey, Russia
Kazakhstan was given a bum rap by the movie “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan,” in which Sacha Baron Cohen portrayed the country as a backward, barbaric place.
Here are four things to know about Kazakhstan before going in:
1.) The former Soviet Union state doesn’t resemble the setting of the 2006 movie “Borat.”
2.) It’s a country without a McDonald’s, although one is reportedly being built there.
A mosque in the moonlight in Kazakhstan with modern buildings in the background.
3.) It lost out on its bid for the 2022 winter Olympics to Beijing, although the country has more real mountains and snow than the Chinese city.
4.) The U.S. was the first country to establish an embassy there.
Since gaining its independence from Russia in 1991, Kazakhstan’s GDP has increased by 10 times, according to Aljazeera.com’s English site. And while there’s always speculation that Russia may want the oil and natural resources-rich country back in the fold, Kazakhstan’s government has formed economic alliances with China, rather than Putin’s Russia, a recent online article in the NewStatesman pointed out.
Located at the intersection of Europe and Asia, Kazakhstan is the ninth largest country in the world. Its population, however, is just 17.5 million. And it’s landlocked, sharing a border with five countries: Russia, Turkmenistan, China, Kyrgyzstan and Uzbekistan.
Although its roots are in the nomadic culture, Kazakhstan ranks 37th out of 124 countries on the 2015 Human Capital Index, a ranking by the World Economic Forum on countries’ “talent base,” which includes information such as the education levels of the employed and unemployed.
Its capital, Astana, is home to some of the most beautiful buildings in the world, including one called “the banana” for its bright yellow rocket shape, and a building that’s a national monument that was sketched out by the current Kazakhstani president, according to an article on National Geographic’s website.
What about franchising?
Most of the franchising in Kazakhstan is done through sub-franchising by developers in nearby countries, such as Turkey or Russia. “Not many see it as a gateway to central Asia,” said Aliya Shaikhina, a commercial specialist with the U.S. Commercial Service from Kazakhstan. Shaikhina was visiting the U.S. Commercial Services office in Minneapolis recently, and we had a chance to talk to her in person.
A yurt, a portable nomadic house
Kazy, sausage made of horse rib meat
A bid for the 2022 Winter Olympics was passed over.
Currently there is a five-year visa for Kazakhstanis to come here, with talks of upping it to 10 years. The reason for the leniency, she said, is because the vast majority of people on those visas want to go back to their home country and not stay in the U.S.
An increase in visas to Kazakhstanis translates into more people becoming familiar with U.S. brands—a boon to U.S. franchisors wanting name-recognition abroad.
Coca-Cola entered the country in the early 1990s, but U.S. business-format franchise offerings have been slow to enter the market, Shaikhina said. Burger King arrived in 2012, and the Hard Rock Cafe in 2014, she added, and just recently Subway announced it was coming via a sub-franchising agreement. Other franchises there include KFC and Hardee’s, and a handful of hotel brands.
Establishing a supply chain has been a logistical problem for U.S. companies moving there, she said, but the fact that McDonald’s is getting ready to open in Kazakhstan is “a good sign that the supply issues are on the way to being resolved,” she said.
Non-food franchises can find success there as well. When the government closed kindergarten programs, there was a demand for English-speaking “fun” classes, such as FasTracKids, Shaikhina said. A demand for training has welcomed franchises like Dale Carnegie and Franklin Covey.
Other signs of economic well-being include consumer spending is up, the number of malls is increasing and Chevrolet has an assembly plant located there, which is increasing the number of skilled jobs.
Now is the time to consider planting your flag in Kazakhstan, she said, because many U.S. brands already have established franchise operations in the region, especially in Turkey.
The two countries have both a close cultural and business connection, so the same groups who develop Turkey will have the infrastructure to expand across the border into Kazakhstan. Her advice, however, is that if franchisors expand via their Turkey or Russian masters that they keep the U.S. entity involved, since Kazakhstanis want the U.S. connection.
The government, on the other hand, wants to see more small and medium-sized businesses, rather than large companies. Another reason why franchising should work well there.