We recently sat down with Chris Barter, who was head of Goldman’s Moscow office for 5 years before branching out this year to form his own company, DMC Partners, to get his opinions on doing business in Russia.
We previously published Barter’s thoughts on how investors are getting China and Russia wrong. However, we also talked a lot about Russia’s future.
One common criticism of the Russia going forward is that its economy is too tied to its natural resources and that poses a number of risks for investors.
Barter disagreed with the consensus:
“Actually, GS didn’t invest in natural resources at all. We did invest in a few natural resource service companies in Russia and Kazakhstan, but the real theme we exploited while we were there was the growth of the middle class.
The Russian middle class, depending on how you measure it, is somewhere between 30 and 40 million today, from zero before the fall of the Soviet Union. Virtually every consumer sector has been massively impacted by the huge growth in GDP production per capita, and hence consumer power, particularly since the collapse of 1998. It’s astronomical growth.”
Goldman decided to esque natural resources — for a variety of reasons, not least the fact they just thought it was too expensive before the crash. Instead, Goldman opted opted for a variety of other options to target Russia’s newest demographic, including the country’s burgeoning e-commerce sector, social networking, and even fitness clubs and car dealerships.
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