Once again, Georgians across the country are preparing for the holiday season, making travel plans, crushing walnuts for gozinaki, and buying gifts for their friends and families. Gifts are an important part of celebrating the New Year and Christmas, signifying the importance of friendship and allowing us to treat our loved ones to something to start a brand new year in style. It is, therefore, no coincidence that November and December are some of the strongest months for purchasing consumer goods in Georgia, not to mention across Europe and America. 

A quick look at statistical data reveals that Georgia’s imports are concentrated at the very end of the year, in December. On the one hand, this follows from the last-minute spending pattern of many public and private sector organizations, which tend to delay major procurement decisions until the very end of the budget year. On the other, the end-of-the-year spike in imports is also affected by people’s collective tendency to go on a spending spree as part of the New Year/Christmas routine. And since most Georgians shop for imported gifts – be it branded watches, gadgets, or clothing – the result is a yawning gap in the country’s trade deficit. 

In January-October 2015, Georgia’s trade deficit – the difference between the value of goods Georgia imports and those it exports – reached almost 4.5bln USD. And accounting for what is coming in the last three months of 2015, this figure will easily exceed last year’s record-high trade deficit level of 5.73bln USD.

CONSUMERS’ PRIDE AND PREJUDICE

Georgian consumers and businesses may not have any domestic options as far as cars, machinery, and manufacturing equipment are concerned. However, this is not true when it comes to many consumer goods produced by Georgia’s small businesses and artisans, and, most certainly, gifts. 

While not providing any kind of silver bullet, buying Georgian goods, especially from small businesses, could go a long way in helping the health of the economy. Nearly 100% of the money spent on local products stays in the Georgian economy, going to salaries of Georgian workers, buying source material from Georgian suppliers, and providing Georgian entrepreneurs with the capital needed to expand and innovate. 

Yet, Georgia does not yet have a culture of buying small and local. According to Tariel Zivzivadze, founder of the www.Kar.ge website that seeks to promote Georgian producers, “people don’t feel any pride from buying Georgian.” One’s ego is better served by buying an expensive foreign electronic device as a gift (see our earlier work on the Economics of Boasting), not in the least because the quality of production and brand management by Georgian companies still leaves much to be desired. 

Some progress can be noticed in recent years. Mister Zivzivadze’s Kar.ge runs an annual challenge for Georgians to buy local products in December and post their descriptions and pictures online. Tariel hopes that his initiatives will create a social movement whereby “people think to first buy Georgian and only if there is no high-quality alternative, revert to foreign products.” 

That said, convincing a larger portion of Georgians to buy small and local – and thus make a generous holiday gift to the country – may require a concerted effort by businesses, consumers, and the government. The problem we are looking at is a vicious circle that could only be overcome by simultaneously encouraging businesses to invest in properly branded, higher quality products, and removing the stigma that buying a Georgian product is somehow cheap and not cool.

SMALL BUSINESS SATURDAY: AN EXAMPLE FROM ACROSS THE ATLANTIC 

As we buy our gifts this season, we may consider an excellent overseas tradition of spending holiday money on local goods and buying from small businesses. In America, the tradition of buying Christmas gifts after the Thanksgiving holiday is almost as powerful a symbol of the country as the bald eagle – or so it seems when watching the horrendous scenes of Black Friday shopping with people clamoring over each other at large chain stores to buy a TV set that’s 50% off or a $10 sweater sewn in Thailand. 

Starting in 2010, a credit card company American Express started a new and more benevolent trend in American holiday shopping – Small Business Saturday. They encouraged card-holders to skip the mayhem of Black Friday and instead shop at small and local businesses for their gifts the next day. Additionally, the company worked with small businesses on how to structure competitive sales, and market their good deals out to consumers. 

The idea was a smashing hit, and in 2011 the US Congress officially recognized it and committed its support. Today, on the Saturday after Thanksgiving, social media buzzes with stylized hashtags and examples of people “buying small.” Even President Obama gets in the spirit each year and visits an independent bookstore in Washington DC to pick up his reading list for the next year. 

According to a 2014 report by the US Small Business Association, small businesses (having fewer than 500 employees) account for almost half of all private-sector jobs in America. Thanks to a successful media campaign and government support, Small Business Saturday shopping is now providing a massive injection of revenue for this critical portion of the American economy. About 88 million “small shoppers” spent nearly $14.3 billion on independent retailers on 2014’s Small Business Saturday, according to Forbes. Moreover, the trend is catching on worldwide. The UK, Japan, and even Turkey now have social and investment campaigns centered on local producers as well.

BRINGING “BUYING SMALL” TO GEORGIA?

Small Business Saturday became a stunningly successful endeavor in the United States because it addressed a real need and had the support of major private sector players, small businesses, communities, and government. According to Mr. Zivzivadze, a similar coordination effort would be required to encourage buying small on Georgia’s own Small Business Saturday, right after Giorgoba, when people start to consider their holiday shopping needs. Political declarations alone would not do it. 

On the small business side, there is the need to focus the energies of Georgian agricultural smallholder communities, artists, and artisans in developing unique, locally branded products, be it chacha, wine or honey, special kinds of churchkhela or tklapi, pottery or wood carving, wicker baskets or furniture. Georgia already has many examples of specialized communities. What is lacking is a national branding and marketing effort to be modeled, for example, after Japan’s One Village One Product movement. 

To nurture a culture of buying small, Georgian businesses and government will have to work together to develop and protect local brands, on the one hand, and organize bazaars and marketing events like the upcoming exhibition at the Karvasla shopping center, on the other. Educating local producers and consumers would require a protracted and well-coordinated effort, yet, even a journey of a thousand miles begins with a single step… 

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The coming holidays are a great opportunity to vote with our wallets for innovative, entrepreneurial, middle-class Georgian business owners who not only can provide our families with gifts of quality, but, more importantly, gifts with purpose and meaning. Isn’t that what the holidays are all about!?

Merry Christmas and a Happy New Year!