Best Buy is coming to Russia
Many have wondered whether the conflict in U.S.-Russian relations over Georgia was going to affect business relations between private corporations of the two countries. Tentative indications are "no." Last week, reports Reuters, Best Buy Co Inc (BBY.N), the leading U.S. retail electronics chain, expanded into Russia, having registered its Future Shop trademark to operate in the fast-growing market. Victoria's Secret, owned by Limited Brands (LTD.N), and Japanese retailer Muji have also registered trademarks in Russia this month, Kommersant reported, as a decade of economic growth continues to boost wages and demand for high-end goods.
Vedomosti newspaper, citing the government patent agency Rospatent, said Best Buy had entered its license application for Future Shop, a Canadian subsidiary, in 2006, but has never voiced any intentions of opening stores in Russia. Rospatent has registered the Future Shop brand and is still reviewing the application for the Best Buy trademark, Vedomosti reported. Kommersant also reported that Best Buy had this month been granted Russian trademark rights for Future Shop. The move of Victoria's Secret, Bes tBuy, and Rospatent, most likely, has no relationship to the ongoing conflict, but is a great indicator that the American-Russian business has a bright future.
Victoria's Secret: coming soon to a Russian mall near you
Meanwhile, the Russian stock market has dropped to a 20-month low, but analysts cited declining oil prices and the global credit crisis for the decline, ahead of the Georgian invasion, according to a report by Market Watch. "The armed conflict between Georgia and Russia over breakaway South Ossetia wiped $7 billion off the Russian stock market," said Russian Finance Minister Alexei Kudrin. Stocks of Russian energy companies like Gazprom and Rosneft fell seriously. Russia does need its European energy costumers and continued direct foreign investment. Let's hope that business leads the way in calming down all the sides of this conflict.
U.S. Commerce Department data show that in the first half of 2008, the United States imported 17.5 million barrels of oil worth nearly $2 billion from Russia. Russian oil is just part of a larger trade flow between the two frenemies. According to the Commerce Department (see Part B, Exhibit 14 of the full release available here), in the first half of 2008, U.S. exports to Russia were $4.66 billion and imports were $13.3 billion.
Gross also writes about the Russian Central Bank's multi-billion dollar holdings of U.S. government-backed short term paper, including that of the troubled mortgage lenders Fannie Mae and Freddie Mac.