McKremlin and the Dual State
The other day we linked to a sardonic column by Yulia Latynina which commented on the contradiction between Russia’s current rampant anti-Westernism combined with its enthusiastic embrace of its well marketed branded goods. In a similar vein, today Diane Francis at the National Post blog takes a look at the extremely positive experience being enjoyed by the most American of all corporate titans imaginable: McDonald’s! Few people realize that the world’s most profitable and busy McDonald’s are located in Russia (Pushkin Square is #1, and Munich’s Karlsplatz Square is #2). According to a Wall Street Journal article from last October, “Of the 118 countries where McDonald’s Corp. does business, none can boast more activity than Russia. On average, each location serves about 850,000 diners annually — more than twice the store traffic in McDonald’s other markets.” We think it’s great whenever a foreign company is successful in Russia, but we just wish that it were true across all sectors. The positively successful experience of McDonald’s, as well as many other retail and financial institutions operating in Russia, drives home the point that the country continues to operate as a “dual state” – whereby normative rules and regulations actually function in certain segmented business areas, and a prerogative state operates in the strategic sectors, giving the state the ability to seize property with impunity. The only problem is knowing the constantly changing definition of what constitutes a “strategic” sector (hint: even media is included), and the constant risk that if you do become embroiled in a business dispute, the courts are of little help. Thankfully the restaurant giant has penetrated the market with great care, local intelligence and management, and strong corporate foreign policy – but few others can boast this level coordination. RA is quoted in the Francis piece after the cut…