Private Russian Entrepreneurs as Drivers of Social Development

In the modern world, the idea that the state’s share in the national economy should gradually decrease and private investment should become the basis of its sustainable development is increasingly heard. Over the past two years, the growth rate of private capital in Russia has been higher than in other countries. Such dynamics are explained not only by significant growth in the stock market of the Russian Federation but also by the indisputable fact that there is mainly private capital behind technical innovations. In discussing the role of private investment in the Russian economy, we decided to talk to Andrey Germash, senior director of production, one of the largest private investors in the Kamchatka Territory. His company, Vostochny Bereg, owns fishing grounds along the Kamchatka coast and on the rivers of the Kamchatka Peninsula. Vostochny Bereg is the leading mining and fish processing enterprise in the Russian Federation with 100% private capital. To obtain quotas for fishing, the company participated in a tender in 2008 and, as a result, received a permit for 20 years. Ten years have passed since then, and today’s company’s success is a prime example of adequate private capital in Russian production.

Andrey, how did you connect your activities with fishing and Kamchatka?

– Everything is very simple – I was born in the Far East in the city of Petropavlovsk-Kamchatsky, and thanks to my grandfather, I became interested in fishing in childhood. Kamchatka is my native land, and I always knew that I would do what would bring benefit and prosperity to my homeland. I wanted to be helpful to my people, to help them live better. And since the founding of the “Vostochny Bereg,” I have been confidently walking the chosen route.

Industrial fishing is one of the federal priority areas. Why didn’t you choose the form of public-private partnership for investments?

Vostochny Bereg is 100% private investment – Russia is a vast country, and it has many enterprises that require state support. We have won a bid based on a combination of required experience, creation of new jobs, indigenous population preservation, corporate financial stability, and the payment for the license. We competed with companies that have government partnership for a quota for 20 years, and we prevailed as we were the only firm which can satisfy all stringed requirements. Therefore, our only government affiliation is the 20 year fishing permit which we worked so hard to obtain and even harder to maintain.

The private company “Vostochny Bereg” was founded in 1998 and for the past 20 years has been annually increasing the catch of wild Kamchatka salmon, pink salmon, sockeye salmon, chum salmon, coho salmon, and chinook salmon, increasing processing capacity and increasing the number of jobs. Built a high-tech fish processing plant with 400 tons of finished products per day with private investment: fresh-frozen gutted fish without a head of piece and block freezing, salted salmon caviar in various packaging, salted-frozen caviar of salmon fish, frozen milt of salmon fish.

To date, the company’s total staff has about 1.5 thousand management personnel, employees, and specialists in engineering and technical service, all managed by Andrey Germash. These are all residents for whom a stable job and a decent income are essential. It is known that an increase in the number of jobs at large industrial enterprises affects the development indicators of the region, significantly reducing poverty rates and increasing the productivity of citizens. The more jobs a private entrepreneur can offer, the higher the social cohesion of society and the sense of security of each resident will be in the region. The prosperity and expansion of “Vostochny Bereg” activities help preserve the local environment, the indigenous population and permit people living in the most remote part of Russia not only survive but live well without relying on government assistance.

“I came to Vostochny Bereg after graduating from the institute, and I can say that I grew up with this company as a specialist. I have been working here for over 13 years. We have a friendly team that witnessed my wedding and the birth of my three children. Vostochny Bereg creates the most comfortable conditions for the development of employees. We have a stable income, a decent level of wages, and payment for medical insurance. I have a large family, and we receive annual financial assistance from the company to prepare children for school and New Year gifts for children. When you work in a company that appreciates you as a specialist, you want to give yourself as much as possible to your business. Like other employees of the company, I often take part in various professional development programs. We are trained, master new technologies, and implement them in our work. The result has a beneficial effect on the company itself and all members of our families,” says Roman Valentinovich Zhigarev, chief technologist at Vostochny Bereg. 

Andrey, how do you manage to maintain low staff turnover at your enterprise?

“People are our main resource. And we value each of our employees. Students come to us for internships and stay to work for many years. Our employees retire only on their initiative. It’s not for me to tell you how difficult it is to find a job if you are near retirement age, but losing a job is easy. Many families are left without money, as parents cannot get a job. It isn’t easy to find a job for graduates or people without higher education. I started my career as an electrician on fishing boats. And he walked the path that I helped young guys to pass. We do not leave personal stories unattended. We try to find a solution for every situation. And I am grateful to my employees for their dedication to the company and the justification of all the invested resources. By developing my own business, I support my fellow citizens and my native Kamchatka.

You have repeatedly mentioned the support of your native land. How are things going with support for small ethnic groups in Kamchatka?

– At the federal level, there is a unique program for regulating the traditional economic activities of the indigenous peoples of the North in the territory of the Kamchatka Territory. The Federal Agency for Fisheries allocates quotas for these peoples for catch and production by accepted standards. Must understand that for them, fishing is not just a conventional and often the only way to feed their community and earn money to purchase other goods and products necessary for life. Another question is that, unfortunately, the tribal communities of these peoples are in decline. They often do not have enough resources to engage in fishing, albeit on a minimal independently, but still on an industrial scale. There is a quota – there are no resources. But in close cooperation with the Union of Communities of Indigenous Peoples of the North, Siberia and the Far East, and the Association of Indigenous Peoples of the North of the Kamchatka Territory, we were able to find an effective compromise solution that allows elders to effectively use the quotas provided by the state and ensure the viability of their communities. By agreement with the Koryak and Itelmen communities inhabiting Kamchatka, Vostochny Bereg sells the quotas allocated to them, catches fish, processes it at our plant, sells finished products, and transfers the income received to the community treasury.

Andrey Germash is a recognized expert in the fishing industry of the Russian Federation who was able to bring his own company to the position of a market leader through private investment. The region’s government highly appreciated the contribution of the private entrepreneur Andrey Germash – last year, by the decision of the Governor of the Kamchatka Territory, he was awarded a medal and the title of “Honorary Citizen of the Kamchatka Territory.” Also, in 2007, he was awarded a diploma from the State Committee of the Russian Federation for Fisheries. “For many years of conscientious work, a great personal contribution to the development of the fishing industry of the Kamchatka Territory and active participation in the salmon fishing season of 2007.” Andrey Germash and his own company are an excellent example of private drivers of social development, whose investment and management activities, like a beacon, can point the way to other participants in the national economic process of the country.