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. Last Updated: 07/27/2016

Salamander to Shed Russian Factory

St. Petersburg's oldest joint venture is coming to an end next month as the German shoe manufacturer Salamander has decided to part company with its Russian partner Lenwest.

Officials from both firms were tight-lipped on the reasons behind the separation, but emphasized that each will continue to produce shoes for the Russian market and that Moscow's upmarket Salamander stores will stay open.

"Russia is a very important market for us, the biggest in the East," said Hajo Petschler, manager of Salamander's Eastern exports, adding that approximately 1 million pairs of German-produced Salamander shoes are exported to Moscow every year.

Although the two companies have had joint production arrangements since 1987, most shoes with the Salamander label were produced in Germany, while Lenwest used the Western technology for its own brand of footwear.

Valery Mityushkin, deputy general director of Lenwest, said the St. Petersburg shoemaker next month will buy back the 85 percent stake held by Salamander for about 30 million Deutsche marks (about $19.6 million).

Calling the partnership St. Petersburg's oldest joint venture, Mityushkin said that in its early days customers from the countryside would travel for hours and wait in long lines to buy the German-quality shoes instead of the bland, standard Soviet-standard ones available in other stores. But now, he said, Lenwest could manage by itself.

"Over the past years, our management has reached a high level of quality, [therefore] we no longer need German specialists on hand all the time," Mityushkin said.

Mityushkin did not directly address statements last week made by Salamander chief executive Gerhard Wacker, who blamed Lenwest for millions of marks in lost profits since 1993, according to Reuters.

Petschler would not elaborate on any financial difficulties, and Salamander officials in Germany refused to comment.

A Moscow lawyer said the Salamander-Lenwest divorce is part of a common trend that has seen many Russian-Western joint ventures progressively lose steam, just as fast they spruced up several years ago.

"Joint ventures are the most difficult way of doing business, for as many reasons as there are JVs," said Robert Langer, a lawyer at Chadbourne and Parke, adding that he did not know specifics about the Salamander case.

Lydia Andreyevna, manager of one of Moscow's five Salamander stores, said the dissolution of the joint venture would not affect the stores' business since all their products were imported.

However, Salamander will retain some influence within the St. Petersburg company. It plans to purchase a 10 percent stake in the privatized Proletarskaya Pobeda shoe factory that owns Lenwest, Mityushkin said.

"At present, this new type of cooperation will be more profitable," he said.

Salamander will continue to work with its daughter company Ryazanwest in the central Russian city of Ryazan, where Salamander shoes "will be solely made from German leather and according to German techniques and know-how," Petschler said.

But he said Salamander has no plans to find itself a new Russian partner.