TBY talks to Vugar Z. Abbasov, President of Cahan Holding, on the holding’s target sectors, its strategies, and his outlook for the Azerbaijani economy.
TBY What are the origins of Cahan Holding, and in what sectors is it involved in?
VUGAR Z. ABBASOV Cahan Holding was established in 1995 in the city of Nakhchivan. Our first main sector was the automobile sector and the main development of the holding company started after 2000. Now we have operations in many different sectors including automobile, industry, and services. We also officially represent some well-known brands in Azerbaijan. At the moment, our company has over 3,000 employees.
Which are your most significant sectors?
Right now we are focusing our attention on the industrial sector—we have four large factories. One of them is a tobacco factory and we buy raw materials from Zimbabwe and India and then produce in Nakhchivan. The other is a tea factory, to which we bring in material from Sri Lanka, and then package and distribute it throughout the country. We also have an industrial interest in building materials and construction. We produce air conditioning and heating systems. Our raw materials and components come from Turkey, and we manufacture the units in Nakhchivan before exporting them to different countries. Additionally, we produce 80 different plastic products under Cahan Pen, including plastic doors and windows as well as latches. Since we buy raw materials and components from different countries we decided to open our own offices in Turkey, Kazakhstan, China, the UAE, Iran, and Switzerland. Across all of our offices we employ Azerbaijani citizens as well as locals.
What are the benefits in representing international brands in Azerbaijan?
We want to bring more international companies to Azerbaijan. Right now, we are talking to Ikea about coming to Azerbaijan. We have a site ready for it. We also want to bring in Burger King. We are a very young country, and so we are still learning. Working with these brands helps us develop our own management and marketing practices, as well as improves our economy. International brands are very specific, but at the same time we have our own ideas for the future. As we work with them, we gain experience. We know what they want and we try to push our limits. We are also constructing two duty free shops in Nakhchivan. We are working with Heinemann from Germany on this project as it is the largest international duty free company. There are 21 companies that operate under Cahan Holding. One of them represents Wyndham Group from the US—the Days Brand, also JT International, Berhad, and Redbull, as well as tea brands such as Alokozay Tea, AlFakher, Ahmad Tea, and Akbar. We also import Cuban cigars. In the automobile sector we have four showrooms for the Opel brand. One is in Nakhchivan and the other three are in Baku. We also have a large trade center in Nakhchivan that boasts 500 shops.
What is Cahan’s strategy in the banking sector?
Nahçıvan Bank operates under Cahan Holding, but we don’t limit ourselves to just our own bank. We work with International Bank of Azerbaijan and Bank Standard as well. Our bank is very young, and naturally other banks have more experience than us. Our bank is only two years old, and so we are trying to learn from our competitors.
Cahan has diversified a lot over the years. How did this help during the crisis?
Diversity helped us benefit from the crisis. The construction sector was very badly affected, but our agribusiness segment boomed. This brought a certain level of balance. In 2008 we grew 12% and in 2009 we grew 9%. The first couple of months in 2011 show that it is going to be a good year. In Azerbaijan, the budget is getting bigger and consumer buying power is growing. Furthermore, President Ilham Aliyev reformed the pension system. Previously, people who retired after 2006 were paid more than those who retired before 2006. Now they have increased the pensions of people who retired before 2006. This affects the market positively. Our President is very innovative and he wants to develop the country, which is positive for us.
How do you coordinate your operations between Baku and Nakhchivan? How would you compare the two cities?
Nakhchivan is an inseparable part of Azerbaijan. Because of Nakhchivan is close to Turkey, it is the best-developed region in Azerbaijan. There are five-star hotels in Nakhchivan that can be compared to hotels in London. Turkey is developed in terms of industry, management, and tourism. In 2008-2009, many Turkish employees came to Nakhchivan to work and we learned a lot from them. People are very straightforward and hard -working there.
In what areas do you see the holding expanding in the short term?
We need to focus more on industry. We have a tobacco business, and we want to produce more quality products and export abroad. Additionally, we are planning to establish a tile manufacturing facility. It is a €5 million investment. We want to manufacture and sell our own products. We have made a start with construction materials and we have an advantage compared with Turkey because we have low tax agreements with CIS countries.
What is your outlook for the future of Azerbaijan’s economy in the medium term?
Azerbaijan is very young country and its development is faster than any other country within the region. Its people are clever and learn quickly. In 10 years, Azerbaijan will be in a much better position. Geographically Azerbaijan sits in a good place. We have a young population and bountiful natural resources. We predict strong development in Azerbaijan’s future. Everybody should work towards realizing this economic development potential. Our people should be well educated. Before there weren’t so many people who studied abroad, but now there are a lot. This trend will see more ideas brought back from abroad, and this can only be positive.
© The Business Year