Russian importer dreading trip back

San Diego business boxed in by travails

By Dean Calbreath
STAFF WRITER

September 17, 1998

As the Russian economy continues to disintegrate and newly appointed Prime Minister Yevgeny Primakov struggles to keep the Kremlin from collapse, San Diego businessman Paul Tyutin is getting nervous about his upcoming business expedition to the Russian hinterlands.

Until the past couple weeks, the bad news for the ruble was good news for Tyutin, who specializes in buying ornately painted lacquer boxes in Russia and selling them to collectors over the Internet.

The falling value of Russian currency meant that Tyutin's firm, Russian Sunbirds Inc., could buy the boxes at bargain-basement prices, turning a handsome profit on the resale. But with its economy in ruins, Russia is becoming too hot for Tyutin to handle.

"People are in a panic," he says. "They're losing faith in any sort of currency, including the dollar. Goods are disappearing from the shelves at stores, and anything that's left is selling at an incredible price -- whether you're paying rubles or dollars."

Tyutin, a Russian expatriate who moved to San Diego three years ago, is more concerned about the state of his homeland than the state of his business.

"It's not like this is the end of Russia," he says. "But it's a pretty huge blow."

Tyutin has a unique perspective on Russia's travails. As the son of a Soviet diplomat, he spent most of his youth on Embassy Row in Washington, enjoying a much more comfortable lifestyle than most of his compatriots.

When he returned to Russia at the age of 15, in the dying days of the Brezhnev era, he was in for a culture shock.

"It was another era of shortages, although it was nothing like this," he says. "This situation is different from anything we've ever been through before."

After graduating from high school, Tyutin enrolled in Moscow State University, hoping to study business. But the prestigious university offered no Western-style business courses, so he contented himself with majoring in electrical engineering.

"That was the closest I could get to business," he says.

After graduating, Tyutin tried to find a job where he could use the English skills he had acquired in the States. But he had little luck until a couple of friends -- inspired by Mikhail Gorbachev's reforms -- decided to start a business of their own, selling lacquer boxes to the wealthy German and U.S. tourists who were beginning to flood into the country.

"It was the beginning of perestroika, which made it a good climate for business," Tyutin recalls.

Lacquer boxes -- heavily lacquered papier-mache containers decorated with miniature paintings of Russian history and folklore -- have attracted the attention of foreign collectors since the 1700s.

Although it's possible to find machine-made boxes on the black market in Russia for just a dollar or two, the price for a handmade box can range anywhere from $45 to $1,500, depending on the skill and reputation of the artist.

Tyutin and his buddies scoured the Russian countryside looking for lacquer boxes, which are mostly produced within the rural province of Vladimir, in the steppes east of Moscow. They bypassed the state-run supply chains and dealt directly with the artists, offering to pay with foreign currency or bartered goods, rather than with the little-respected ruble.

Using hard currency obtained by selling the boxes to tourists, Tyutin stocked up on exotic items unavailable to most Russians, such as gourmet foods, videocassette recorders, nail polish, cosmetics and hair spray.

In a car laden down with Western wares, he then journeyed out to remote villages, where he traded his goods for more boxes.

"A lot of the people who paint the boxes are women, so the cosmetics were the most effective," he says.

Eventually, Tyutin built a strong business, gaining a certification for foreign trade from the Russian Ministry of Culture. One of his most successful ventures was setting up a shop on the Dostoevsky, a cruise ship that sailed up and down the Volga between Moscow and then-Leningrad.

"When the river's not frozen, that cruise gets a lot of German tourists," Tyutin says.

To make the boxes more attractive to tourists, Tyutin commissioned artists to decorate the boxes with images from the towns where the Dostoevsky stopped. Instant souvenirs.

As Russia dropped its travel restrictions, Tyutin began to exhibit the boxes outside the country, traveling to trade shows in Alaska, Chicago and New York. Eventually, he decided to set up shop in the States, moving to San Diego at the suggestion of a friend.

Currently, Russian Sunbirds has its headquarters in a cramped, cluttered office in the World Trade Center downtown. But most of Tyutin's business is conducted over the Internet, where he sells lacquer boxes and amber jewelry to collectors from as far away as Italy and Hong Kong.

Tyutin travels to Russia twice a year to replenish his supply. His next trip is scheduled for later this month. But with the growing economic turmoil, Tyutin wonders if he should change his plans.

"The current situation is quite a hard blow there, especially since people were just getting used to putting their money in a bank," he says.

Crime also is on the rise, as many suddenly impoverished Russians look upon their wealthier neighbors with envious eyes.

As a result, Tyutin says, most business people in Russia tend to keep a low profile.

"They don't drive the fanciest cars," he says. "They don't show off with their money. It's not a matter of choice. It's a matter of survival."

Tyutin hasn't been immune to the turmoil.

As a minor sideline to his lacquer-box sales, Tyutin had been selling imported hunting and fishing equipment in Russia.

Demand for the imports fizzled after the ruble tanked late last month. Tyutin's profits from the venture, which were deposited in a Moscow bank, lost half their value within just a couple days.

"It wasn't a deadly blow for our business," Tyutin says. "We know we'll recuperate. But the nature of this business can be very speculative. You can win a lot, but you can also lose a lot."