The Chengiz khan of our business

Alexei Goncharov

Nurlan Smagulov is not typical for the Kazakhstani elite where the business is so closely bound with public service that you can’t even imagine other characters. Who is he?, if he is a businessman who switched to public service temporarily, or he is an official establishing business empire because of boredom or for supporting his own deeds. Nurlan Smagulov is a businessman and bourgeois from top to bottom. At that, in a strange way he managed not to get dirty in politics. He is rare bigwig: he had positions neither in Komsomol, nor in the party. It is a new product of era in full measure. In the times when he was young, educated and energetic the devil itself wouldn’t deal with him.
“In 1990 I was 25. I just graduated from the university after serving in the army while being a student. It was the most suitable age for starting everything from zero when you had nothing and there was nothing to risk of. At this age we had already understood what the liberty was, didn’t know any taboos, we ourselves invented what to do and how to do and found a great pleasure in it. At that time, we didn’t know the rules of doing business, but absolutely weren’t afraid of anything. Everything began with the simple operations of purchase and sale, but by the time the scheme became complicated. This spirit of the first inventors saved in us, and even now we continue developing new spheres with gusto. Unfortunately, the new generation is different. They are more careful and pragmatic guys. Why did we begin the car business? Here in Kazakhstan, the wish I would say-the necessity to possess a car has got a genetic basis. It is the same symbol of social prestige as it was the good runner or the harness of good quality in the past.” http://www.inesnet.ru/magazine/mag_archive/free/2006ca_01/smagulov.htm
Although his Internet history has begun from the public service, he first of all displayed the qualities of a businessman even here. “The autobiography of a businessman is surprising with turns. At the end of 1990s when they began to pay a great attention to the agrarian sector in the country, it was Smagulov who had to solve hopelessly bad problem with grain. By heading JSC “The Food Contract Corporation”, the young reformer announced right there that this State food Corporation “should become the organizer of a free market”; therefore, Nurlan Smagulov introduced the so-called policy of funding the agriculture through intermediary operators. “Our principal approach is to provide only the big grain companies with money”, said Mr. Smagulov.” http://www.vlasti.net/index.php?Screen=news&id=213689
Evidently such approach didn’t justify hopes in full measure. In summer of 2000 the prices on bread rose in Almaty. The growth was insignificant compared to the autumn of previous year, but in the first summer of millennium, it made a great shock in the country, which has been on the way of stable development according to the all official reports. The chairman of State Food Corporation Nurlan Smagulov was blamed for everything. “After the rise of prices on bread in Almaty for two tenges, the corporation headed by Smagulov had to take emergency measures in order to reduce the predictable dissatisfaction of people. Smagulov himself announced that the Food Corporation is ready to send echelons with grain to Almaty for cheap prices (108 dollars per ton) in the nearest future, and the price of bread would become previous.
The bread price is a political matter. The rise on bread price against a background of last year’s over successful economy of Kazakhstan in all relations seems to be illogical from the economic point of view as well as from the political point of view”. This is how the magazine “Continent” wrote at that time. http://www.continent.kz/2001/06/11.html
In the following way, Nureke found himself in politics. The question whether politics or business has become essential.
“The Food Corporation faced with dilemma: whether to sell the grain on the market for high and get the profit or give it to the home market for its prime cost without getting profit in order to save the previous bread prices. The first one refers to commercial organization while the second one has the political aim (to act the role of a buffer to reduce the possible dissatisfaction of people). However this time Smagulov was late. The event had already taken place and unfortunately, the emergency measures weren’t able to improve the situation.”
http://www.continent.kz/2001/06/11.html
The choice was made quickly. Already 2 days after the previous event there was information on the Internet saying that “By the government regulation, the chief executive of JSC “The Food Contract Corporation” Nurlan Smagulov is dismissed from his position by his own wishes”.
“As it is said in the Food Corporation itself, at the end of last year, its chairman had got a leg injury as a result of traffic accident; the long-term care was needed. Because of the fact that the performance of his duties was doubtful, Mr. Smagulov handed in an application about the resignation from his position, which was met by the government. Nurlan Smagulov has been the Head of Corporation since 1996. In the first place he paid debt which existed at the moment of his coming. In the same period the State’s seed-stock was formed. The FCC gave support to the agricultural manufacturers by means of granting a seed loan. Exactly, under Nurlan Smagulov the corporation switched to the bimodal purchase of grain, which allowed the farmers to acquire the fuels and lubricants, seeds, chemicals and salaries on time.”
http://www.centrasia.ru/newsA.php4?st=1023522720
There is another version of Smagulov’s leaving the profitable position as well. “Some analysts suppose that the participation of Smagulov in the oppositional movement “The young Turks” – “The democratic elections of Kazakhstan” and also the position of the vice-president in the company “Astana-holding” occupied by him played last role in this resignation. In the opinion of political scientists the first years of millennium have become some kind of the end to “oligarchization” of Kazakhstani power; those who considered that they have rights to be over the interests of State and directed the budgetary funds to their personal enrichment in such great numbers, haven’t been left in the public sector by this time.” However the new trends have slightly touched Mr. Smagulov who started the rapid and quite a successful business activity after escaping from the official structure.
http://www.vlasti.net/index.php?Screen=news&id=213689
Where has Smagulov gone from the public sinecure? He continued the activity started yet in 1993 when the company “Astana-motors” had appeared. Nurlan Smagulov had almost been forgotten in the Internet environment for four years. The new appearance happened in 2004 in Shimkent when he announced about the construction of super modern mega center in the city.
“The South Kazakhstani region is the most densely-populated region in the republic and has big perspectives of economic development; we decided to build “Mega Center” yet because of the fact that the caravans of the Great Silk Road passed namely over this territory where the trade was flourished in the ancient times. Our complex will become a kind of showing the new level of trading and the new level of consumption. It is the project made jointly with the region’s akimat because the government of South Kazakhstan has supported us greatly. It is right decision because hundreds of southerners would find a job here”, said Nurlan Smagulov in the symbolical ceremony of starting the construction.
http://www.kazpravda.kz/print.php?chapter=10963117502&ar=true
It is true that the construction wasn’t handled without slips. Initially, the deadline of construction was called a year which then reached to three years.
Now there are three mega centers working in the country and in perspective they would appear in all the regional centers of Kazakhstan.
“We started to build the Trading Centers and it was a crazy attempt for us because there were no holders at the initial stage and we didn’t know their demands for the area. But someone needed to break the ice on the market. Subsequently, when we found the “anchor” holders, we had to rearrange many things according to their wishes”, admits the businessman.
http://www.expert.ru/printissues/kazakhstan/2006/18/torgovaya_nedvizhimost/
At the beginning of 2006, Nurlan Erkebulanovich tells about himself and his life priorities with pleasure. He moves as a guru, master and coryphaeus in the world of domestic business.
“We have established the official market, the concept of a civilized service. It is such rush to create a new product on the market. We still invent something new permanently; we were engaged in grain, and now we are completing the construction of trading-entertaining center, unique for Kazakhstan according to scale and conception. We are planning to begin the fourth project. All these things give great pleasure to us. We employed the French architects, the authors of the world’s famous shops, for the working out of the project and the German company for its management. We are learning all the time because we want to achieve the highest standards. In other words, by doing business, you pass a lot of new information through yourself, acquire the valuable experience, your horizon makes up 360 degrees, the ocean of life splashes around you and makes your life abundant in that way”.
And suddenly here you learn that doing business in Kazakhstan is impossible without oil.
“In order to make good money in this country one has to be engaged not only in one profile business but also to create several fields where you can work actively. Therefore working in the car, grain and developer business we are searching the new projects, privately beginning to be engaged in oil”.
http://www.inesnet.ru/magazine/mag_archive/free/2006ca_01/smagulov.htm
However Nurlan Smagulov doesn’t give details of oil business to the Internet society but he shares with car business in more details and with pleasure and it is no wonder because КМК “Astana Motors” occupies 30% of official Kazakhstani car market. He is quite mighty in this field and even brave by it. “The market the 60% of which is controlled by two companies is abnormal”, says Nurlan Smagulov. “We don’t see a competition; therefore we are made to take brands and make them strong”.
Nurlan Smagulov is persuaded that “The people of Kazakhstan choose the official dealers more than the “shady” dealers who bring the auto-trash to the country. However namely his name is connected with the sad famous attempts to ban the import of right-wheeled cars into the country.
He replies in the following way to these announcements:
“We are frequently blamed for the fact that it was us who lobbied the ban on right-wheeled cars”, said Nurlan Erkebulanovich raising a subject unsuitable for the company. “Yes we’re glad with this decision! However we say it as usual consumers. The fact that it happened is not right!”
Therefore according to Smagulov, not the official dealers but the government is to blame for the tensions, which arose around the right-wheeled cars last year.
“According to Nurlan Smagulov, the possibility of settling this matter by the market method, as it had been done in Russia, was discussed with the official dealers; in other words, just by raising the excise on the import of cars which served more than 7 years. Maybe they couldn’t agree, or thought that this method was ineffective because we see quite a different result.
“Most probably the Chinese manufacturers would get dividends”, says Nurlan Smagulov. “Now we can already see the expansion of Chinese cars in our market. We in our turn stake on the advancement of luxurious brands and don’t want to cooperate with the Chinese motor-car industry although they would be successful in the future.
And suddenly is there a faint note of pessimism or can it be called realism? It is about the establishment of our own motor-car industry.
“It is not profitable for us to be engaged in “screwdriver” technology”, says Nurlan Smagulov “And yet we don’t see the development of adjacent fields. We have a conservative attitude towards the development of Kazakhstan’s motor-car industry. The market is still too small”.
http://www.megapolis.kz/show_article.php?art_id=4333
Sometimes, the unexpected fix ideas come to the mind of Nurlan Smagulov. We can bring the establishment of world’s brand of macaroni in Kazakhstan as an example but he needs a help in this field. “The Head of “Astana Group” Nurlan Smagulov intends or rather proposes to produce macaroni and establish macaroni brand of the country so that Kazakhstan would be associated with macaroni all over the world. He decided to throw down a challenge to the Italian spaghetti but at the same time he admits that his holding alone wouldn’t be able to realize this great project. Therefore the financial assistance would be needed from the direction of government”, writes Balta Kerey at the beginning of 2007 on the site www.zona.kz.
However the grain business of Smagulov proceeds successfully on the whole. “We have united the Kazakhstani grain and the Italian technology”, says Nurlan Smagulov. “We have made a step towards the modernization of our own companies in order to enter the neighboring markets”. At the present time, the capacity of macaroni lines in three companies of “The grain-industry” including the technology installed in Uralsk makes up 3300 tons of products a month.
http://www.grain-industry.kz/about/press/?press=2
Nurlan Smagulov entered the list of Council of Domestic Invetors. He explains the reason of its existence in the following way: “The idea of establishing the Council of Domestic Investors has long been on the air. It will be controlled by the president of RK as it is done with the Council of Foreign Investors. I attach a great significance to the new Council. I don’t think that it would become a body on duty. Now the business of Kazakhstan is at that level of development when it can talk to the foreign investors on equal terms. The domestic employers contribute their mite in the formation of Gross Domestic Product (GDP) and workplaces. We are the foreign investors in Russia, Ukraine and Georgia. On this point, the Head of our State has paid great attention to the Kazakhstani business. The confidence given to us-is the big chance for entering the new markets and engaging in great projects. They include the construction of new roads, logistical centers and development of integrated power complexes”.
It is somewhat pompous, but we can see its full meaning in it. It is curtsey for the politicians. Why not? It should be in that way. The main thing is that they shouldn’t disturb the business but something disturbs anyway.
“In the first place the decisions aren’t always transparent. We don’t know how the resolutions for developing the oilfields and complex ores are taken. The second thing is the corruption. The third thing is the lack of confidence and assurance. But I think that this point has already been removed from the agenda. The political will of the superior leadership is proclaimed; the employers are the future of Kazakhstan. And it is the most important moment in the distribution of accents”.
Nurlan Smagulov is a member of Maecenas Club as well. He is sure that “if the government starts to mark the patrons, it will stir up many other businessmen. The stimulus and motivation of becoming the respectable member of society will appear.
The law about sponsorship is needed. Most of the employers of our country subscribe a great amount of money for charity. The relation of society to the employers should be changed and the sponsorship is the good opportunity to win the society’s favour. I think that it is time to break the barriers between the employers and society. Most frequently the people see nouveau riches in them; in fact, 80% of them are the “ploughman” who don’t even have a time for dinner and communication with their families. They create, take the risks and responsibilities. I think that we can become understandable to society only by means of social responsibility”.
http://www.inform.kz/index.php?;ang=rus&select=archive§ion=36&y=2007&m=5&d=17#178376
Our society which still has the understanding of soviet times sometimes sees the successful businessmen as the people who are heartless and unprincipled. They say that these businessmen reached to success over the dead bodies and heads. Nurlan Erkebulanovich doesn’t agree with such determination at all and is not afraid of defying the whiteness of his reputation publicly.
“The most important thing is the stainless reputation, the honest name. We have small country. Speaking figuratively we are all sitting in front of one “destarhan” (dining table) and are boiled in a single “kazan” (cauldron). Therefore we are made to weight our own “I” with the social opinion and to try to be friendly, open, not greedy and only then to be successful, aggressive and rich. The relations with friends and the relations in the family take the first place. We are friends with our families, rest together and appreciate the male concepts. There are also businessmen who don’t enter our circle because they feel uncomfortable in front of our table.
And we are all the representatives of one generation. We had movement “The new generation”, which wasn’t politically registered, but then there were accusations in our address, that we are – mancurts (zombies), “the asphalt Kazakhs” and that we don’t know the traditions and forgot our culture. Someone had already agreed by that time that Kazakhs shouldn’t do business because they weren’t intended to do it. These were the people who didn’t want the novelties. On the contrary, we supported the course of the Head of State for economic reforms, privatization and did it openly. We were united not to politicize but to protect from the despotism of officials. Recently our close comrade was killed violently, it was the execution and we addressed authorities in a strict form through the press with the demand to find the killers. Being together in our sad days and in joy is very important thing. We have never run to the criminal world for help, but created our elastic world to which they couldn’t find way to get”.
The different sorts of accusations for notorious mancurtism and neglecting of their ethnic originality against such people as Smagulov have become very fashionable on different layers of society. He doesn’t argue with them, but replies in the following way:
“By every year I feel my belonging to our nation more strongly and I understand strongly the importance of saving the cultural heritage in the era of globalization. Now the national and religious traditions are revived in the Republic although I must say that the consolidation of Islam in Kazakh steppe has happened not long ago, in 18th century. We had never lived according to the laws of Sheriat. In contrast to other Muslim women we had never covered our faces with shawls. We had been Tengrians which means we had worshipped the water, stone, sky and earth before taking Islam. Later the elements of paganism mixed up with Islam and although formally Kazakhs are Sunnites and it is important to invite Imam to the celebration so that he would read Sura from Koran, made one or another rite, we are still steppe people deep in our hearts.”
After making such statement it is not strange that the favourite historical hero of Smagulov is Chengiz khan, whose name is considered to be the synonym of vandalism and death.
“Chengiz khan glorified the steppe. We don’t consider him an invader, he is organic steppe person. Most of our batyrs fought under his flags and became famous as fearless warriors. Chengiz khan is the part of our history which we are proud of, but all the Mongolians consider that he belongs to them. The Japanese has the parable that in fact Chengiz khan is a Japanese Samurai. Many books were written about this historical character and his image has entered the epic literature and the people’s legends. There are Сhingizids among Kazakhs who belong to the family of aksyuyik - the white bone. We still have a strong tribalism - the division into families, juzas - the family units. Sometimes it seems abnormal, but in general, it is not bad when the person knows the seven of his fathers as we say which means the ancestors up to the seventh generation - jety kazyna”.
The admirer of Chengiz khan in the history is loyal to his style in business which naturally doesn’t seem to be odious.
“Frankly speaking I am the follower of authoritarian style of management. I think that namely this thing helped us to survive. When we need to take a lot of decisions every day, we are too busy to gather hurals. Such method of management is explained by the fact that the company grows rapidly. The people’s “skin is torn” in such growth although certainly I advise with my close companions, top-managers, associates and co-shareholders. Now we are creating the group of owners to whom the responsibilities would be distributed. Today the speech is about the division of authorities consolidated by the shares and profits. This process is not easy for any owner but now it is impossible to do it in another way.
http://www.inesnet.ru/magazine/mag_archive/free/2006ca_01/smagulov.htm
Here he doesn’t avoid even some pomposity: “The Head of the company “Astana-motors” Nurlan Smagulov has admitted decently that today the banks give credits of many millions under his name.”
http://botmaster.ru.dumaem.ru/printkz.php?st_id=94...
In the end the site http://www.mountain.kz/index1.php?p=rat_more&id=95 informs that Nurlan Smagulov is a mountain climber as well. He has been doing this kind of sport since 2000 under the beginning of the legendary coach of the country Yervanda Ilinski. The mountain climbing is not a comfortable tennis court or the field for golf. It represents the real difficulties and risks, you won’t be able to do careless work or stand out on the mountains. In December it will be the fourth time when Smagulov climbs to the pick Big Almatinskiy with the altitude of 3600 metres. This extreme for him is as the bath-house for others in a New Year. By the way there is also a bath-house. Here is the schedule of traditional climbing. “The climbing itself is not so long, of course less than (2-3 hours). But the preparation itself takes a long time!!!”
1. In the evening on the day before climbing we gather in the restaurant “Tau Dastarhan”
2. Then we have a night’s rally up to the observatory GAISH
3. After that we admire the winter’s starry sky in the observatory.
4. Small “pellet” before going to bed.
5. In the morning we have the climbing till 12.
6. In the end we will go to the Russian sauna with font, and then talks, talks and talks.
Smagulov doesn’t only go to the mountains himself, but also ready to become the sponsor of the most daring beginnings of Kazakh mountaineers and participate in them within reasonable limits of his strength. “Nurlan Smagulov announced himself as a general sponsor of climbing to the K2 of our team in 2007”, informs the portal http://www.mountain.kz/index1.php?p=publication

Smagulov Nurlan Erkebulanovich

Was born in 1965 in the city of Alma-Ata. He graduated from the biological faculty of Kazakh State University (1990).
He was a fish-breeder in 1990. In the period of 1990-92 he was the Head of the Local Concern “Nurbulak” at KazGU. In the period of 1992-93 he was the commercial manager of JSC “Sayat-Brok”, Local Concern “Madina”. From 1993 till 1996 he was the president of the company “Astana-Motors”, vice-president of “Astana-Holding”. From 1996 till 1997 he was the president of Republican State Company “The State Food Contract Corporation”, and since 1997 JSC “The Food Contract Corporation”
D. Ashimbaev “Who is in Kazakhstan”, Almaty, 2002, p.415