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by M. Douglas Keene


As you read what follows, observe that what Mr. Keene accomplishes is he..

...defines the questions that are pertinent

...outlines the scope of the engagement

...defines what is needed and by whom it can be provided

He makes it evident that the solutions are not yet known, but that the information that is needed to find the solution is known. At this stage the project is no where near the point where it can be deciding what should be done, or what amount of money would be needed, or what should be done with this money. But a foundation is laid upon which the additional work can be soundly based.

PRELIMINARY PROJECT ANALYSIS Existing Russian High Technology Product Proposed for Sale in the West

{modified to provide a generic example)

Prepared by: M. Douglas Keene & Associates Copyright 1997, M. Douglas Keene & Associates


Every project should be reviewed with "project analysis" and not with generic consulting. As an example of the former, the report below was just completed after more than 24 hours of review of the correspondence of a small firm and various technical, manufacturing, and investment discussions that have proceeded up to this point between a Russian company, and Palms & Company, Inc. Investment Bankers, regarding the development of this complex (factory) into a viable new business with an international customer base. The company makes precision measuring equipment that uses lasers and computers to offer a high level of accuracy. The company also has a staff of very skilled engineers who have considered the possibility of selling their expertise as an alternative to actual products. The company is currently renting space in an older large factory facility, and holds an inventory of some outdated but unsold production products.

We have done a very short and cursory review of the current U.S. marketplace and have done an equally short and cursory review of the technical capability of the two laser interferometer products presented, and how they fit into the current marketplace. I have also formed some preliminary opinions and have several observations and perhaps more questions that I will share with you.

Please understand that to do an adequate and proper job of analyzing the market for current factory technology, resources or expertise would require a much larger and more intense and lengthy review and analysis than this document can provide, but since this is being done as only a preliminary it will be somewhat limited in scope, breadth, and perhaps even accuracy, but it should provide a few observations that are still useful in evaluating the viability of the proposals being discussed.

As a final qualification I want to point out that while I can provide a broad technical background to apply to this analysis, laser interferometry is not specifically my area of expertise, but manufacturing and application of precision electronic and mechanical machinery and measuring systems is an area I am familiar with and this includes the manufacture and use of these types of equipment in Russia, China, Korea, Singapore, as well as in the U.S.

SUBJECT OF ANALYSIS: Russian Precision Equipment Manufacturer

Current Manufacturing Capability:

After having reviewed and analyzed several Russian plants, as well as several in China and elsewhere, I have come to the clear conclusion that there is no way to adequately or accurately review a factory or business without a personal inspection and an on-site detailed analysis of not only the physical plant, but also the management, the workers, the engineers, and the technical and product history of the complex. This usually requires a stay of at least 2 weeks or more in the area of the plant with adequate time to develop communication and personal relationships with the plant personnel, and perhaps meet with local officials or the trade chamber as necessary. In this case this review is done without this very necessary visitation, and is based on a volume of correspondence and data provided by the plant.

Only after an on-site review would a potential investor be adequately sure of the viability of the people and facility and its capability to eventually grow to international standards and be able to compete on the world market. In some cases, after an initial review it is necessary to go home and digest the information, review the issues with potential customers and investors, and then return again to deal with questions and new issues that inevitably develop at that point. The goal of these visits is not just to be an auditor, though that is part of the job, but to also provide advice and counsel to the overseas plant management, face to face, that can assist them in adjusting their enterprise to more adequately meet the special requirements of the world market. In this way it is perhaps 60% audit and 40% educational [if the plant managers are willing to listen and learn, that is]. I have found this dual task approach to be most effective and useful in bringing the two parties (investor/customer and plant) to a point where they can work effectively as a team, which is an absolute necessity if the enterprise and partnership is to be a success.

That having been said, we can still offer some observations on the limited information that we do have in the correspondence.


As I understand it from the correspondence, the plant has a history of manufacturing precision optical measurement equipment, including products using laser interferometry of varying degrees of precision, and as components or as complete measurement systems. The plant also manufactured its own electronic controls for the interpretation, coding and decoding, and digitizing of the data from the measurement systems using PC type computers as a human interface. The optical measuring systems are used as sensors in providing data to CNC (Computerized Numerical Control) machinery or other similar applications.

The software for these systems is currently DOS based [on the assumption that this is all that was available 5 years ago] and the interface language has not yet been defined in the correspondence. {U.S. systems usually work from dxf files generated from CAD (Computer Aided Design) software such as AutoCad and many are now quickly moving to Windows based software}.

The reference to the HP-2588A as a comparable U.S. product was evaluated. I could find no one at HP who could even discuss this model, let alone give me some price comparison info. The current line of HP laser measurement products, including interferometers and related hardware and electronics, is now in the part number series HP-10700 to 10799, which you can review on the internet WWW by going to: sheets

which has complete specifications available. I would also recommend that you look at TELETRAC Corporation's web page at:

and look at their many data sheets and specifications for similar equipment. These people are quite successful and well respected as a company that was displaced from the aerospace industry when perestroika arrived, and converted their primarily military business into a successful commercial enterprise. [you will need Netscape and the Acrobat 2.0 plug-in, which is available on their page for download in order to look at their specifications]. I used to work next door to this company for many years, and in fact 10 of the 42 vendors are close by my location here in Southern California.

By the way, these guys at Teletrac have an 11,000 sq. ft. (3352 sq. mtr.) factory and about 40 employees. so this should give you some idea of how you must compete for costs in this market. Remember, in this country there are no vertically integrated factories. You own what you must, and purchase everything else on the open market, so little space and few employees are needed. The Russian facility is smaller, 2,624 sq. ft., but with 40 employees (if all were on the payroll) this seems like too much employee overhead for the factory space and capacity.

In my cursory review, it would seem that the current crop of laser interferometry products at HP have advanced a bit beyond the EI2000 series at SPCPE. I would recommend that the Russian company prepare a comparative analysis of their current capability with this popular HP series of laser based measuring products and address the differences and whether they are capable of manufacturing at the HP technical level on a volume basis. They should also review the newest HP laser measuring and callibration machines (numbers provided on request) as possible items for technical comparison. You might want to do the same with TELETRAC.

Analyzing the price differences between SPCPE and HP or Teletrac is not possible at this point because we would be "comparing apples and oranges", when what we need is a point for point direct technical comparison to make any sense whatsoever of any price differentials that would be useful in analyzing the potential market or the viability of an investment.

When you wish to enter someone else's marketplace, you have to start with the products already in that marketplace and establish them as the "benchmark" on which all other comparisons are made. In this way, it makes no difference whether you are planning on making better technology (not a bad idea) or perhaps a lower cost low-technology alternative (sometimes a good idea), you still have the existing benchmark to gauge your business plan against. Analyzing the current market is always one of the most difficult and lengthy parts of the entrepreneur's job, but failure to do this will almost always guarantee failure. There are endless examples of current Russian companies who have made this mistake, usually leading to them to observe that "in the end nothing happened".

This is not unique to Russia, as it happens now and then in the U.S. also, but here, since most businesses are started on bank credit or with very careful investors, there is a natural tendency to be very cautious before loaning money, especially if the market analysis feels inadequate. A weak business plan almost never gets funded. Unfortunately in Russia, weak business plans still often get funded, often, in my opinion, because the business is done by phone, fax,, e-mail or with extremely short visits, with little on-site analysis, and little understanding of the unique issues that face a Russian businessman and a Russian business. This also leads to the foreign investor failing to see the possibilities for success that he might have seen if some changes were made or recommended on the basis of his on-site analysis. I have often seen things in the back corner of a factory that proved useful, when the Russian Director had never even considered putting that item or idea to work for him.

I did a short analysis of laser interferometer manufacturers in the U.S., and found that currently there are at least 42 very visible businesses that in one way or another either manufacture or use laser interferometers in their equipment or products. HP is probably the largest such company, but there are several others who make equivalent or even more advanced products that compete head to head with HP. Those companies who make products in the same general category as SPCPE are primarily selling to the following markets:

1. The computer disk drive manufacturing industry (used for making and testing heads, disks, and other precision mechanisms)

2. The Semiconductor Manufacturing and Equipment Industry (used for measuring and evaluating semiconductor wafers and flat panel display components during and after processing)

3. The Optical Industry (mostly scientific analytical and calibration equipment)

4. Industrial Metrology (robotics, CNC, calibration, inspection, etc.)

5. Visual and Machine Vision Inspection (robotic inspection, robotic vision applications, usually on high speed, high volume production lines)

None of these industries represent what could be defined as truly high volume capital purchase environments. Most customers are buying fairly expensive capital equipment in limited volume. On the other hand, when the semiconductor product companies are expanding, as they are right now, then each new wafer fabrication plant will make several purchases for growth. The same goes for robotics and CNC equipment. These purchases are made during expansions, and all purchasing stops when their industry is in a downturn. In fact, in the latter case, the market is often flooded with used equipment.

All of these markets are currently being supplied by vendors who have shelf stock of all of their items, capable of almost immediate delivery. I have my doubts that anyone would be willing to wait 6 to 8 months for a build to order product when U.S. suppliers can supply everything they need almost overnight. This needs to be considered carefully when analyzing how they might serve this market. Most likely, any products delivered would have to be to a distributor company who could build and hold an inventory for quick deliver. This adds a link to the distribution chain, and adds extra sales cost that has a tendency to force manufacturing costs down to compensate. The selling price is usually inflexible, so any compensation comes from the selling or manufacturing costs. In general, I usually estimate that a Russian exporter of a distributed product must be able to sell it at the border (minus shipping and fees) for approximately 25% of the final retail sales price. This may vary with certain items, but it is still a good starting point. A Russian company selling direct to an end customer is usually not a good idea and will create many problems that can be avoided by selling wholesale to a distributor or importer. The Russians have enough problems trying to deal with their own environment, and usually would not benefit from the added complications of direct selling in a foreign country with all of its idiosyncrasies, regulatory requirements, and unfamiliar market forces.

Analyzing the true market value for this company's product is quite difficult at this point, as the normal method of purchase is to create a "market basket" of small components (laser, various mounts, reflectors, optics, splitters, electronic controllers and power supplies, digitizers, PC interfaces, etc.), depending on the particular and unique application. The only way to make a fair comparison would be to develop a one for one comparison of SPCPE components versus industry leader components of similar or closely comparable parts. With this analysis it would then be possible to establish some understanding of the size and availability of a market. This comparison must be first done by the SPCPE people. In fact, as they do this they will learn a great deal about themselves and just what segment of this market they could best attack with expertise and confidence.

One must remember that having "expertise" or "the best engineer in the world" does not create a good or successful business if the expertise cannot be efficiently converted into marketable products. The market is defined first by the customers, not the producer. This is a concept that cannot be over emphasized, especially in the post-communist business environment in Russia. If you have not analyzed the customer and his needs and wants and willingness to spend his money, then you have no business, you have only wishes and good ideas, and wishes and good ideas do not buy food or pay the rent. The Russian company may have already done this analysis, and if they have, then good, but the correspondence I have read does not make this visible.

The situation gets rather complicated in some of the potential markets. As an example, if one were to sell to the disk drive builders, one has to also be aware of an industry group called the Committee for Open Architecture Test, that defines the various requirements for vendors of applicable equipment. Certainly there are other issues like UL approval of any electrical or electronic components, OSHA requirements for laser safety controls, and several industry standard groups related to use and application of lasers. For this reason, a true market analysis would involve more than one person, including at least one consultant who is a specialist in the field of laser measurement applications to provide some very specific data in this unique area. A manufacturing consultant generalist like myself can manage such a program, prioritize and consolidate the information and provide any other detail that is necessary.

You see, since The Russian company is a manufacturer of what we would call a "niche" product (a product that satisfies a unique and limited part of the overall market), then the decision to compete in this market with at least 42 other vendors becomes somewhat problematic, and it is for this reason that all parties need to do a little more work in analyzing the possibilities and capabilities before jumping into this crowded pond. Keep in mind also that there are several notable vendors also in Europe, in Japan, and in Taiwan. There is also a growing laser industry in China. People selling raw materials or broad usage products have the advantage of entering a widely understood and well documented market where information is readily available and easily analyzed. So, the Russian company must hit the market with something either unique, better in performance, lower in cost with equal performance, or designed to open up an as yet undefined new market (not recommended). These are decisions that the Russian company must make as they define their business plan, and they must be able to support their decisions with real and accurate data.


1. Providing Offshore Manufacturing facilities for a foreign manufacturer. The product you sell here is plant capacity, low cost labor, and expertise. The issues you have to deal with are current technical and industrial capability versus customer's needs versus capital needed to meet requirements. In many cases, if all else looks good, you may be able to convince a customer or partner to provide certain equipment, but there will have to be some way to guarantee that he will not lose his ownership of the equipment or his investment. Do not under any case underestimate the seriousness of the latter, as no day passes without the press reporting another "disaster" that befell an American business guy who lost everything to a dishonest or self-serving company or government entity or both. To succeed in this arena you must adjust to the concept of "customer is always right". Even more important is to forget the patriotic view that you can improve or build his product "the better Russian way". This will kill a deal every time. The task is to build to the customer requirements EXACTLY, without complaining or "improving". He knows his market and the task is to give him exactly what he wants, no more, no less, but at a competitive price. This means that you must decide how much plant capacity and overhead is needed for only his job, and set up your accounting so he is only charged for what he uses, not the overhead for all the rest of the empty or unused factory or overhead. If you do this, you will make a profit on his products and the price will usually be about right to get the orders.

2. Selling Your Expertise. While this is certainly a good possibility, and a good way to bring in some revenue while you are getting other market issues resolved, one must realize that this will probably be a business with many ups and downs, as this will be a contract business which usually represents short term commitments and no guarantee of follow on contracts. This business has worked well in the software business in Russia, but one must remember that writing software is a production process more than a selling of expertise. The problem with selling expertise is that eventually the expertise is transferred to the customer then is no longer needed. Please do not misunderstand me. This is a good way to bring in revenue, but it is usually a relatively unsound foundation on which to build an entire company. The other thing to keep in mind is that this is expertise in the Russian context, and selling this expertise in the foreign market where you have little personal experience can often be difficult at best.

3. New Products Building on Current Technology. This is an area that should be explored, but carefully. The laser expertise has a lot of possibilities in itself. The Chinese and Taiwanese took scientific laser technology and learned how to mass produce inexpensive laser pointers for public speakers to use in darkened rooms. Laser technology is being used in traffic speed checkers for the police. There are several important products being developed in the security products industry. Laser and fiber optic communication is another area to explore. Teletrac also sells laser optics "kits" for use in high schools and colleges for classroom and laboratory instruction. It is creative and useful ideas that have a use in the U.S. or European (or even Asian) markets that offer opportunity. I don't pretend to know how far this can be taken, that is for the engineers and marketeers (on site in the U.S.) to figure out, but there is plenty of room for creativity.


I am highly impressed by the professional, honest, and enthusiastic approach that the Russian company has presented in their correspondence. They appear to be knowledgeable as to what foreign investors are looking for and seem effective in exploring and communicating these needs to their management peers at the company, which is a very good sign. The attitude at The Russian company is more positive and constructive than in any proposal that either Palms & Company, Inc. has presented to me or that I have seen on my own, which is another very positive point. If this positive energy can be channeled into a thorough marketing analysis, a search for potential customers (more important now than investors), and a serious and creative technical development process is started to address the actual tangible needs of the market that is defined, then this firm has a good chance for success. This is not to say that this will be either quick or easy.

The Russian company and perhaps their excellent engineers should be spending their time in the U.S. visiting vendors and potential customers to learn the market, along with a skilled guide or consultant to assist and make this process productive. They should not wait for this to be done. It should be number one priority. I am confident that once this is started, the rest of the pieces of the puzzle will fall into place in short order.

At this point, I feel that there is need for additional market analysis and an upgrading of the business plan to reflect this new information before any serious investment is considered. While there may be some benefit to offering a loan for additional market analysis and R&D, it should be understood that this is with the risk that the analysis may prove the current business plan not viable. It seems that if the Russian company can get some funding from the administration to cover this research, this would be productive and probably the best solution in the near term.


I would be willing to assist the Russian company with any phase of this process, as necessary. I could act as guide and facilitator during a marketing analysis visit to the U.S. I would be willing to spend time at the factory assisting in audit, analysis, or supporting the plant staff in any way that seems useful, and I can schedule my work to allow extended travel or any other requirements. We can discuss fees in a separate correspondence if something develops.

------------------------------------------------------------------- M. Douglas Keene & Associates Worldwide Consulting for Industry Rancho La Costa, California USA

Phone: 1-760-944-0397 FAX: 1-760-944-0619 E-mail: Internet Web Pages Start At: ---------------------------------------------------------------------------- ---

properconsult.html [I modified the title for my pages, use whatever you want]

( An Article on the Proper Use of a Consultant in a Russian Business, entitled: Consultant; Friend or Foe? )

CONSULTANT: FRIEND OR FOE? A guide to the effective use of a consultant in a business in the Former Soviet Union


Douglas Keene President, M. Douglas Keene & Associates Copyright 1997, M. Douglas Keene

The complaints are growing about the costs of Western Consultants working in Russian business and industry, even though these consultants often work at considerably lower hourly rates than for the same work done in the West. Much of this noise is the result of a feeling that the consultant's work is not paying for itself in the growth of business or profits, even though often this is not the fault of the consultant but perhaps a much more basic and ingrown problem in the management of the business or the understanding of the new economic realities in Russia today. It is my belief, however, that if a consultant is chosen carefully, and if the consultant is utilized properly, the benefits can potentially be great. Here is a typical quotation coming recently from a Russian businessman commenting on Western consultants:

The problem is that there's not enough evidence of the potential benefit. [Russian] Directors can't sense the benefit. No one would like for the money they spend for professional consulting services to result in, "no, you are not suitable for the market." Those who need advice usually are short of money. Those who have money are usually not in need of advice, since money usually comes from good performance [or from crime]."

Of course this observation is mostly correct, but part of the problem is the current usage of consultants in Russia. They are either providing "basic classroom training" or "Evaluation of Resources and Proposals". I'm told that the former is now getting tiresome and repetitive since the availability of free classroom training and seminars is common in almost every city and the messages are always the same. The Directors feel that this training never brings orders or investors , so it is felt to be a waste of time. Of course this is a faulty expectation, but it still prevails. The latter use, evaluation, is guaranteed to disappoint the Director, frequently leaving him feeling he hasn't been served if the evaluation is negative, which it often necessarily is. I think this is a wrong use of a consultant,, or at least it shouldn't be his primary role. In the U.S. we don't hire a consultant to tell us whether our business is OK or not. We usually hire a consultant to provide specific technical or procedural guidance, to provide a specialized view of an issue or a market as an independent researcher, and when an issue is critical [like the survival of our business is at stake] we hire more than one to get a broader range of information and possible solutions.

The speaker above, for instance, rather than bemoaning the negative consultant analysis, could just as easily have been led by a good consultant to realize that this analysis was only describing current obstacles, but that each of these obstacles when overcome may represent the very foundation of a successful enterprise. Then the task would be to develop plans for winning this "war against obstacles". This is where good consulting goes beyond the analysis and report and continues on as a trusting relationship where he and the company are working toward common goals, effectively using the resources available and affordable in the business plan (which hopefully the consultant also assisted in developing).

We think that the proper use of a consultant by a Russian manufacturer, is as a facilitator, a second set of eyes that can see the market from a non-Russian viewpoint [if the plan is to sell to non-Russians] and a person who can guide and teach rather than judge. He should be a source of new ideas, or new possibilities, and should act as a guide in leading the clients to these visions. He should also be capable and willing to pay close attention to the unique elements and issues of the Russian business environment and assist in the integration of goals and objectives from both differing cultures.

In our work we have been amazed at the daily misunderstandings among the Russian managers as they attempt to work with the American marketplace and its demands on suppliers. We are equally amazed at the lack of understanding of simple accounting and cost analysis by company directors and managers. We include not only Russian factories who wish to sell their products, but also those who want to sell production capability as an offshore provider to U.S. manufacturers, and those who want to establish joint enterprises. These are all viable areas where the guidance of a good consultant can help the company to overcome these weaknesses, helping them to avoid the "potholes" in the road.

We have repeatedly visited Russian factories who want to do everything at once. Pay all the bills, get rich, hire back all the old employees, and do this all on a small assembly project that is primarily being offered to begin a relationship, not provide wealth to either party. The typical Russian Director will quote an outrageous price for something like a recent 300,000 piece golf club head project, because he would expect this project to cover all of his unsupported overhead and expenses as well as guarantee himself a profit. Another example comes to mind when our client attempted to buy dental drills in Russia, and the Director of the empty plant quoted a number over 10 times the actual market price as he attempted to cover all of his expenses with this one little order. In reality, a first order like this should not ever expect to be profitable and no one should take any profit money out of the business till the profit break even point is reached after all the startup and capital expenses are paid off.

The U.S. investors are also often at fault in bringing about this situation as they commonly over-promise because they don't understand the environment, and they also are so price driven [which is why they are looking to Russia for production in the first place] and have a tendency to squeeze so tight that the Russian side leaves the bargaining table feeling defeated. The resulting sour relationship usually leads to a failure and lost opportunities for both sides. Often this squeezing is unnecessary and the plant should be allowed to build up its capability to offer lower priced production in stages. This leads me to the final role of the consultant and that is acting as a mediator between the foreign and Russian organizations, guiding both sides, both technical and management, to take reasonable and prudent steps, paving the road between them to assure good long-term communication and understanding.

As our Russian associates and friends have stated often to us, many Russian Directors are desperate and want to see immediate results, and failure to achieve this expectation quickly then looks like a failure in the Director's eyes. While many of the projects that we have reviewed sound interesting as projects, they are generally somewhat limited in scope and do not provide the long term view of eventual prosperity that most Directors are seeking. The Directors are often not willing to take this process one step at a time [like most of us have had to do in the U.S.], and we of course understand the reasons why [capital, heavy social responsibilities, pressure from above, desire for quick wealth, stockholders, etc.]. The proper consultant facilitator will work carefully but purposefully with the Director and customer/investor to devise and implement a plan to bring the new program into existence in the proper step by step manner, with realistically achievable solutions to the critical issues that appear as obstacles to progress. Both sides must be left with a feeling that they are achieving their goals, even if the achievement is incremental.

Finally, we want to mention that the Russian observation that "if you have no money you cannot afford consulting" [or anything else], is often a product of another missing element of the Russian business model. The concept of starting small and building as you earn your way toward growth. The typical Russian factory is an large old vertically integrated facility that once was healthy and busy and now has a tremendous physical plant that is almost empty and has thousands of workers on leave, and tired equipment that is rusting away [sorry for the generalization, but bear with me please]. In this scenario, of course they cannot afford anything because the unsupported overhead is killing them.

What is often needed is the concept of the "spin-off" company. That is, an entirely new company that "spins off" from the old, is financially and physically independent, and "down sized" to include only the people, facility and equipment necessary to get started and begin to bring in some revenue. A typical U.S. entrepreneur starts in the proverbial garage of his house with maybe himself and one employee [maybe an engineer] and he doesn't expand until he has done enough sales to support it, or has enough business to support a loan. Overhead is usually the least of his concerns in the beginning, rightfully so. His attention is focused on market penetration, including developing products and customers. Until this part is complete he cannot even dream of talking to an investor. We might add that often another early "employee" of a new company is a contractor/consultant, offering his services at a low rate in return for a share of the business ownership if it survives. Often this consultant later joins the firm and becomes one of its senior managers or executives. A similar role may be appropriate for a trusted consultant in a Russian venture. His experience in dealing with the unique and varied problems of the spin-off model can be helpful, and if some equity (stock) or joint management role as a Joint Venture Director or something similar is offered, the consultant will feel more of a personal commitment and responsibility toward the success of the venture. This approach is most successful if implemented by the foreign partner, but it can be successful on either side or even with a simple non-JV Russian startup company.

We are not offering these comments as criticism or analysis, but as some brain-storming material for the Russian [and Foreign managers] to think about. Its time for these Russian Directors to start being more creative and more aggressive in their entrepreneurship.

We work also in China now and then, and I can tell you that the primary difference between Russian and Chinese entrepreneurship is evident in the scenarios just described above. We just finished a project transferring a precision tool manufacturing job from a U.S. manufacturer to a Chinese factory, and the Chinese director did a spin-off from an older factory, had a minimum of employees on the payroll, worked in very minimal production space, and built his business one order at a time until he had expanded to provide a broad range of services. He had no government subsidies. In the 8 yrs we have worked with the Chinese, We have never once heard of a Director asking for money up front [except for occasional special tooling charges] or complain about the U.S. clients paying too little (after the negotiation was complete, of course). The Chinese government provides 5 years tax moratorium for new Joint Ventures, and the law protects the foreign investors pretty well. Most Chinese joint venture we have seen, was initiated by the U.S. investor, not by the Chinese.

The Chinese ask for purchase orders, the Russians ask for investment [and provide little safety to the investor's money]. Believe me, most of these Chinese plant directors have just as many problems or more than the Russians do; old factories, old employees, extremely low skill levels, poor equipment, etc., but they just do the work, take the money and build their businesses. The Russians have an advantage in the quality of workers and engineers, but it is wasted by all the fumbling around that is done that this wasteful activity often drives away the business. I might add that the new bankruptcy law of China has been a great benefit to some of these older under-utilized factories, allowing the liquidation of assets and restart of a cleaner business without the worry of debt or long standing social responsibilities.

We are still optimistic that the lessons will be eventually learned, and we intend to continue to assist in that process through our own consultation work. Looking down the road about 10 years we can see Russia as a world leader in manufacturing and supplier to the world, with quality and performance better than from Asia. Its going to take some thoughtful and diligent work in the near term to reach that position in the marketplace and properly utilized consultants will most likely be working shoulder to shoulder with the new Russian managers and directors who have the vision to strive for this goal.

M. Douglas Keene & Associates Worldwide Consulting for Industry Rancho La Costa, California USA

Phone: 1-760-944-0397 FAX: 1-760-944-0619 E-mail: Internet Web Pages Start At:

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Palms & Company, Inc. Founded 1934
Palms Bayshore Building, Penthouse Suite #408
6421 Lake Washington Boulevard North East
State of Washington, United States of America, 98033-6876
Phone: 1-425-828-6774 & 1-425-827-5528
Branches: 41 World-wide 
Consulting telephone: click HERE 
Created 1995 Last Revision: 6/23/2004
Copyright 1995-1996, Palms and Company, Inc., All rights reserved