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Daily Telegraph: DSG retreats from Russian venture as profits plunge

By Tom Stevenson
Last Updated: 1:11am BST 21/06/2007

It’s one thing to look enviously at the amazing economic growth in emerging markets but another to know how to cash in on it. BP and Shell looked clever when they muscled in on Russia’s vast oil and gas wealth, less so when a newly assertive bear decided it had given away too much, too cheaply and snatched it back again.

If President Putin is prepared to face down some of the most powerful companies in the world, it’s hardly surprising that DSG International (Dixons to you and me) should think twice about doing business there. We don’t know exactly why outgoing chief executive John Clare pulled the plug on DSG’s option to buy Eldorado, but the clue is probably in the name.

Generations of European explorers went in search of the mythical city’s gold and jewels. If they came back at all, they did so disappointed.

DSG is one of many companies to have heard the ka-ching of Russia’s consumer boom. Sky high energy prices have enabled the country to clear its debts and put aside a fast-growing stabilisation kitty.

But spending power is just part of the equation. John Clare has done his shareholders a £1bn favour by understanding that all that glisters is not Aztec gold.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/21/ccom121.xml

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