The EconomistFebruary 24th 2018 Business 5512 It is also too early to gauge how the win-
ners will spend their gains. According to
Americans for Tax Reform, a lobbying
group, 377 companies have announced
pay awards linked to the tax reform, in-
cludingAT&Tand American Airlines. Most
are bonuses that amount to a small part of
the total gains, leading sceptics to attribute
the announcements to clever public rela-
tions. A few firms have gone further, an-
nouncing permanent wage increases or
new investment projects. But these were
probably in the pipeline anyway, given im-
proving demand, says Matt Gardner, from
the Institute on Taxation and Economic
Policy, a think-tank.
That said, most analysts do expect the
lower corporate-tax rate to make investing
in America more attractive in the longer
term. But if the past is any guide, argues Ms
Blouin, repatriated earnings will mostly be
returned to shareholders. Last week Cisco,
a tech company, said that was precisely
what it would do with most of the $67bn it
was bringing home. Like Mr Trump, inves-
tors, too, are in for some fun. 7Europe’s flourishing gunmakersTrigger happy
I
T WAS a blunder by Heckler & Koch, a
big German gunmaker. On February
15th the firm apologised for a “mistake”
after itsAmerican subsidiary posted a
Valentine’s image showing a handgun
surrounded by ammunition arranged in
the shape of a heart. The image went out
to social media shortly after a deadly
school shooting in Florida.
The post was also a reminder that
although Europeans often criticise lax
firearm-ownership laws across the Atlan-
tic, the region’s firms are increasingly
present in America’s market for small
arms—defined as revolvers, pistols, rifles
and shotguns. Americans buy far more
such weapons than any other nationality
and their appetites have been growing
steadily. This year they are likely to buy
14.5m such firearms, notes Jurgen Brauer
of Smalls Arms Analytics, a consultancy.
Europeans have proved deft at grabbing a
sizeable portion of all this.
Foreign firms’ share of American
firearms sales rose from 10% in 1980 to a
peak of 45% in 2007, before dropping to
33% in 2016. The lion’s share of thesecame from Europe, which accounted for
three-quarters of the 3.7m imported
handguns in 2016, for example. Austria
alone, home to Glock, exported 1.3m
handguns to America.
European firms are also producing
more small arms inside America. Beretta,
of Italy, relies on American sales for over
half of its revenues. It opened a factory at
Gallatin, Tennessee, in 2016. Sig Sauer, a
big Swiss-German firm, has produced
weapons in America since 1990 and
opened a big factory in New Hampshire
in 2014. Glock, which supplies two-thirds
of American police forces, has a produc-
tion site in Georgia. FNHerstal, a Belgian
maker of small arms mostly for military
and sporting use, is owned by Wallonia’s
government and has operations in South
Carolina. As well as making rifles it is
lifting outputof pistols for civilians.
Some European companies appear to
be as keen as American rivals to lobby
lawmakers on gun-ownership regu-
lation. Glock said it gave over $100,000 in
2016 to branches of the National Rifle
Association (NRA). The NRAhas ac-
knowledged the Beretta family as a high-
ranking donor for giving more than $1m
over the years, granting them the title of
“ring of freedom”.
America’s acceptance of foreign gun
brands is well-established. Mr Brauer
notes that Sig Sauer accounted for 12.3%
of pistol sales in 2016, and Glock 7.8%;
respectively they are the third- and
fourth-biggestsellers ofpistols. What
explains Europe’s success? It has tech-
nically capable firms with long histories
and skilled workers. Glock innovated
with its early use of polymers to make
lighter handguns. It and Sig Sauer entered
America’s civilian market after first sup-
plying police and armed forces there. As
in the luxury industry, European guns are
sold on their excellent design and quality.
Then there is their lethal force.PARIS
Firms in Europe prosper from Americans’ love of firearmsBeretta hits its sales targetI
N THE Russian business community
Sergei Galitskyserved as a rare example
of a self-made billionaire who rose with
relativelylittle state help and outside the
natural-resources trade. He built his retail
company, Magnit, from scratch into Rus-
sia’s largest network; it has more than
16,000 stores. Rather than moving to Mos-
cow, he kept his headquartersin his home-
town of Krasnodar, where he also founded
a football club. On February 16th he made
a telling exit, announcing he would sell
nearly all of his shares in Magnit—29.1%—to
VTB, a state bank.
That Mr Galitsky (pictured, above) de-
cided to sell is the result of a tough business
cycle and some strategic mistakes. More re-
markable is that he found a buyer not on
the domestic private markets, or from
among foreign investors. Selling to a pubic-
sector bank reflects the growing role of the
state in the Russian economy. Russia’sfed-
eral anti-monopoly service puts its share at
70%. Yet the retail sector had largely been
insulated from the trend. Now the Magnit
deal could become “a landmark for Puti-
nomics”, wrote Tatiana Stanovaya of Mos-
cow’s Center of Political Technologies this
week, marking the expansion of the state
into a sphere where private competitors
had reigned. Businessmen make mistakes,
she noted, “but in market conditions this
doesn’t automatically lead to the sale of as-
sets to state structures”.
Mr Galitsky got hisstart selling house-
hold chemicals and cosmetics in the
mid-1990s before expanding into groceries
and retail. Magnit kept prices low, focusing
on working-class customers, and ventured
into far-flung towns and small cities thatMagnit and retailingLast checkout
MOSCOW
One of Russia’s most successful private
entrepreneurs sells to the state