Meeting

Report

 
BOBBY VAGT
President, Davidson College
Business Environment in Russia
by Matt Joyner
       
What do Davidson College, Duke Divinity School, the N.C. Department of Corrections, the Massachusetts Department of Corrections, the New York Municipal Assistance Corporation, the international oil and gas industry and, now, Charlotte Rotary have in common? All at one time have been graced by Bobby Vagt, 16th President of Davidson College. On Tuesday Vagt spoke to Charlotte Rotary about his experience doing business in Russia and his impressions of the business environment there.
 
Vagt set the context for his remarks noting that Russia is almost twice the size of the United States geographically, spans 11 time zones and has 31 administrative governmental units divided basically along ethnic lines. Its literacy rate is approximately 98%, but its life expectancy has dropped from 66 to 57. In 1990 Russia was broke, major territories were seceding, fuel and food were sporadically available and the people were clamoring for capitalism after seeing neighboring Poland's successful transition.
 
Characterizing the Russian national personality as "warm, thoughtful and pigheaded," Vagt noted that doing business in Russia "is a must" in light of the country's vast resources and size of its markets. Russia is the only country that could replace Saudi Arabia's oil resources in the event they became unavailable to the world market. Vagt noted several initial challenges to Westerners doing business in Russia when it opened up in the 1990's:
   

By living standard, it is a Third World economy, although it was a shock to the proud Russian people to find that out when their country was opened to the West; Russians don't get basic economic concepts such as the time value of money; "Mother Russia" mentality has made for a dysfunctional, grudging attitude toward Western business; Russians are educated, but present lots of apparent contradictions in their odd blend of Eastern and Western mindsets; Russians are proud, unable to admit they needed help, and suspicious, still afraid of being taken over; The Russian Mafia was and is still aimed primarily at Russian businesses; Russian bureaucracy makes the North Carolina DMV pale by comparison.

When Russia first opened in 1990 the promise of investment potential was huge, but was not soon forthcoming due to the many impediments to doing business there. Consequently the Russian economy began to slide in the 1990's and the ruble was devalued in 1998. Fortuitously the devaluation of the currency actually made the country more competitive. The dollar incentives ultimately worked and the Russian economy has improved vastly. Russians have gradually learned how to do business and they like the material things freedom has brought. The advent of consumer culture and the availability of goods have made a big difference to the economic climate there. Last year the Russian economy experienced 7% growth. Going forward, the big picture issues as stated in Daniel Yergin's book Russia 2010 are the movement from dictatorship to democracy, from command to free economy and from empire to nation state. Vladimir Putin has recently restrained regional autonomy and civil freedoms in a move to reign in a situation that was spinning out of control after Boris Yeltsin's tenure. According to Vagt, Putin "did what he had to do." The Russians see their repression of Chechnya as a necessary move against domestic terrorism even more justifiable than the U.S. activities in Iraq. Socially, the country is challenged by the "prices of freedom" of drugs, crime and school dropouts.
 
Head Table:
Sam Spencer, Ron Mikels, Ed Kizer, Catherine Browning, Juius Melton, John Snyder; Invocation: Donald Haack
        
Visitors and Guests:
Harley Dickson; Health & Happiness: David Anderson; Song: David Erdman

 

NEW MEMBER PROFILE

Tracy Thomas Cottingham, III (Tom) Hunton & Williams LLP Classification: Law, Litigation 101 S. Tryon St, Ste 3500 (28280) 704-378-4700 tcottingham@hunton.com

Tom grew up in Fayetteville, NC and graduated from Davidson College in 1969. After Davidson, Tom served four years as an Army officer, which included tours of duty in Germany and Vietnam. After the Army, Tom attended Cornell Law School and graduated in 1976. He then went to Birmingham, Alabama, where he practiced law for 22 years as a partner in the law firm of Burr & Forman. In 1998, Tom moved to Charlotte and joined the new office of the law firm of Hunton & Williams, where he serves as managing partner. Since moving to Charlotte, Tom has been active in the Chamber of Commerce, Arts & Science Council, and the American Bar Association. He is currently a member of the Leadership Group of the Litigation Section of the American Bar Association and serves as Co-Chair of the Expert Witness Committee. Tom is married to Jeanie Cottingham, an occupational therapist. Tom and Jeanie have two sons. Tracy, who lives in Greensboro with his wife and two children, and Chris, an environmental scientist working for ATC Associates in Portland, Oregon.

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