TSKHINVALI, South Ossetia -- This neighborhood, where many of the buildings are still without replacements for windows blown out during five days of combat in August, seems an unlikely place for a new retail outlet.

But South Ossetian President Eduard Kokoity and Yevroset chairman Yevgeny Chichvarkin were both on hand Wednesday for the opening in Tskhinvali, the capital of the separatist Georgian republic recognized as independent by Moscow after Russian forces turned back a Georgian military assault in August.

"Thanks for taking this important and risky step," Kokoity said to Chichvarkin as the two cut the red ribbon at the entrance to the store, a submachine gun-toting guard standing nearby.

Chichvarkin said the new location for Yevroset -- Russia's largest cell phone retailer -- was an answer to President Dmitry Medvedev's call at a meeting with business leaders to set up shop in South Ossetia and Abkhazia.

"I [was at the meeting] with Medvedev and within an hour decided to open a shop in Tskhinvali," Chichvarkin said.

"We will lead the way for the rest of Russian business."

While he said he could provide no investment figures or details on talks, Kokoity identified retail chain Magnit, Sberbank and Rosselkhozbank as some of the Russian companies that were ready to move into the South Ossetian market.

"We still have problems, but we are placing big hopes on Russian investment," he said. "The troubles have come to an end; it's time to do business."

Marina Dzigoyeva, head of the South Ossetia Chamber of Industrialists and Entrepreneurs, said her group had already been in talks with big business in Moscow.

"We are now holding negotiations with the Russian Union of Industrialists and Entrepreneurs," she said.

What South Ossetia needed most of all, Kokoity said, was housing.

Mayor Yury Luzhkov was scheduled to visit on Thursday to lay the first stone in the construction of a new block of buildings to be built by Russian construction giant SU-155.

Security also remains an issue.

"We hear shots every night, but still plan to have lots of clients," said one of the new store's employees, who would only give his first name, Valery. He said he had just moved to Tshkinvali from Vladikavkaz, in bordering North Ossetia.

The new clients he expects will use Megafon, Russia's third-largest cellular company, as their service provder. Megafon already covers the entire territory of South Ossetia and has 36,000 users signed on, Kokoity said.

And Chichvarkin said the store would be carrying the latest in handsets, with Apple's iPhone to go on sale by the end of the week.

"You shouldn't be left behind all of civilization," he said.