Hundreds of companies in Mongolia - and thousands across the EBRD region - are developing new strategies and improving their products’ quality with the help of business advice from the EBRD’s Small Business Support programme.
One of them, Hungun Beton, already Mongolia’s largest producer of cement bricks, plans to further modernise its factory and boost the quality of its output to compete not only with local producers but also with imports from China.
“This is our raw material section. Lime arrives here by train or truck,” Hungun Beton’s automation engineer, Odbileg, explained in good English.
“We have conveyors and crushers here. That’s cement. Lime, sand and cement get transported from here to the plant”.
Funded in Mongolia by the EU, and by multilateral and bilateral donors and the EBRD itself across the region, the SBS know-how is transforming businesses from many countries. Mongolia’s rapid growth makes this success even more obvious.
Mongolian companies such as Hungun Beton, cashmere garments manufacturer Ezio Foradori or the kitchen cabinet maker Kitchenall have grown into market leaders since SBS first started working with them. These three – and many others – are now working with the EBRD’s Manufacturing and Services team and have either received EBRD financing or are applying for it.
SBS puts businesses together with the best local and international experts, from product design to marketing. Quality control is especially popular in Mongolia, where businesses want to raise competitiveness.
Learning how to work with international partners is crucial too – especially to companies like the cashmere garment manufacturer with an unexpectedly Italian name, Ezio Foradori, which supplies menswear to Dunhill.
It also helps prepare companies to apply for and receive financing from banks, including multilateral banks like the EBRD itself.
Charlotte Ruhe, the Director of the Small Business Support team, said: “You can call us the fast response team, because we can start working with the donor resources in new countries of our operations, before the EBRD is able to start financing as a bank.
“This was the case in Mongolia: we started here before the Bank was able to start lending. We built up the companies and later enabled them to take advantage of financing from the EBRD.
“And I see this happening now in the Southern and Eastern Mediterranean region, where we were also present before the Bank, and our clients are starting to access financing from the Bank”.
Ms Ruhe often visits client companies to hear more about their plans and needs. On the way to see clients in Darkhan, Mongolia’s second largest industrial city, she called on Kitchenall, the leading Mongolian manufacturer of high-end kitchens, to see the building site for their new factory outside Ulaanbaatar. The work was in full swing. Kitchenall received both expert advice, donor-funded by the European Union, and a loan from the EBRD.
Matthias Reusing, the European Union Delegation's Head of Section for Mongolia cooperation, said: “We know from the European experience that SMEs – such as Kitchenall - are drivers of an economy, and the EBRD is a natural partner for us in helping them develop in other transition countries in Eastern Europe, Central Asia and now in Mongolia.
“We are here to stay, to be on the Mongolian side and to support them in the future”.
Small and medium-sized business is key to EBRD activities anywhere, but in Mongolia, the EBRD has a unique programme to develop small and medium-sized businesses, funded by the European Union.
The programme works both with individual enterprises and with the organisations in the country that support the SME sector, like the SME Department in the Ministry of Labour, the Chamber of Commerce and the Banking and Finance Academy.
The EU has contributed €3.8 million for the programme for the five years from 2012 to 2016. Funding has also been received from the EBRD’s Shareholder Special Fund and the Early Transition Countries (ETC) fund, the government of Japan and private companies.
Since 2001, SBS has provided over 350 small businesses in Mongolia with know-how and expertise. As of November 2013, the programme already supported more than 60 businesses, with a focus on wool and cashmere, mining services, tourism and construction. There is also an emphasis on regional development and gender – since 2012 over 40 women-owned and managed SMEs have become clients.
One of these women-managed SMEs is Hungun Beton, the concrete blocks manufacturer, which developed an investment business plan and received support with management and human resources.
The female CEO is soon expected back from her maternity leave; her team knows that big changes are on the way.
“Our factory last modernized in the 1980s,” said Odbileg, the engineer. “Thanks to our previous cooperation with SBS and EBRD bankers, we know our direction; now we need to find financing and get going.”