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. Last Updated: 07/27/2016

Sweet Scent Of Success For Russian Industrialist




RIGA, Latvia -- Ilya Gerchikov is a survivor.


Gerchikov has been in charge of the former Soviet Union's best known perfume and cosmetics factory, Dzintars, for 24 years. He successfully made the transition from the command to the market economy, has battled off an invasion of recognized Western brands and remains an ethnic Russian and a noncitizen in charge of a major Latvian industrial concern.


For Soviet women, Dzintars was like Chanel - a whiff of almost European sophistication. In many respects the made-in-Riga perfume epitomized the overall Soviet attitude toward the Baltic states: a piece of Western civilization within the Soviet Union.


Then the Soviet Union collapsed, state funding evaporated and Gerchikov found himself running a behemoth of a factory - inside a suddenly hostile nation.


"It was terrible," Gerchikov said of the early years of Latvia's independence. In 1992 and 1993 he received threats at home and at work, while Latvian government auditors repeatedly inspected his books. It was all the work of Latvian nationalists who sought the removal of Russian enterprise directors like him on grounds that they were Moscow's fifth column.


What saved Gerchikov was that Dzintars had been privatized in 1991 under Mikhail Gorbachev as an "economic experiment." As he was not a state employee, he could not be easily removed. And over the years, as Dzintars has reformed itself and built up an international reputation, Gerchikov's position has improved. Though nationalists still view him and other non-Latvian enterprise managers with suspicion, the government has started to solicit his advice as an economic consultant, and pressure on him has eased.


"They realize that we are promoting Latvia's image internationally," he said in an interview.


Born in Belarus and educated in Leningrad, Gerchikov said he had a "typical Soviet destiny." Decades in Latvia have left him able to understand Latvian but not to speak it. Today, at the age of 60, he says it is too late for him to learn Latvian in order to pass the state exam and receive citizenship.


Today, Dzintars has been retooled with Western machinery. It buys its raw materials in Europe and exports 70 percent of its production, mainly to Russia and the rest of the former Soviet Union - where it has so much name recognition that Gerchikov spends a mere 5 percent of its sales revenues on advertising. Its profit for 1997 was $1 million, and this year it intends to surpass that despite the economic crisis in Russia, he said.


The plant employs 300 people, down from 900 in the Soviet era, when it produced in addition to everything else an amazing 40 million bottles of eau de cologne known as "drinking cologne," because it was favored by Soviet alcoholics for its cheap price.


But remaining so dependent on Russia, Dzintars was badly hit by the economic crisis. On Nov. 12, only one out of four lipstick production lines was working, while employees said before the Aug. 17 default and devaluation, all four were roaring along.