Ukraine has a wealthy supply of agricultural products and oil that boosts the economy
of the country. The main agricultural products that are produced by Ukraine are grain,
sugar beets, sunflower seeds, vegetables, beef and milk. The main industries are
coal, electric power, ferrous and non-ferrous metals, machinery and transport equipment,
chemicals and food processing, especially sugar.
The main import commodities
of Ukraine are energy, machinery, equipment and chemicals and the main export commodities
are ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery
and transport equipment and food products.
Ukraine’s main invested
sectors are, Services, Textiles, Chemicals, Food and food related industries, machinery
and energy based projects.
Advantages for Swiss Business Partners
Human resources (highly educated and highly skilled, low costs)
Open Labour market (still many places with high unemployment rates)
Platform to outsource Research and Development (many academic institutions)
Platform to outsource IT (many highly skilled programmers)
Potential for clinical research (many clinics and hospitals interested in joint venture)
Large economic market (not only Ukraine, but also the whole CIS through cross border GOST-procedures and acceptances)
Low production costs (energy, labour, etc)
It would be wrong to pretend that there are no pitfalls. Ukraine remains a challenging
environment in commercial terms. Entering the market requires far more careful preparation
than is needed in a country with a more developed market economy. In order to create
the right environment for success, Swiss companies should carry out detailed research,
including the identification of the right potential partners, and seek professional
advice where necessary. It is also essential to check whether your product will fit
The business environment in which both, Ukrainian and foreign
importers/exporters, as well as Ukrainian producers, operate, needs improvement.
Excessive taxation make firms hide their real profits, shortage of finance, problems
with sales and problems of the financial system, as well as frequent and abrupt changes
in legislation, all inhibit normal operations of importers and exporters alike.
There has been a certain improvement in the commercial climate. Pressures
from the international community as Ukraine pursues accession to the WTO and a closer
relationship with the EU will continue to force the pace of reform, as will pressure
from the international financial institutions seeking structural reform as a condition
for future funding. It will become easier to do business here, and there are signs
that this is now happening. Should Swiss companies not enter the market now, the
benchmarks will have been set by their competitors.
Also to mention:
Which sometimes are bigger than anticipated.
The most important Success Factors
Find a Reliable Partner
A reliable local partner is crucial, particularly
when a company is first starting to work in Ukraine. This partner will help the foreign
company understand the market; business etiquette, laws and regulations, and can
introduce the foreign company to potential customers. Local experts can help reduce
the risks and transaction costs by quickly and efficiently providing information
on and assessing a range of potential opportunities.
Most foreign companies that do business in Ukraine begin small. For example,
they may work with local partners to market their goods, or they may conduct marketing
from a nearby country, such as Russia, where they already have base. Foreign companies
usually wait until they have established a successful business in Ukraine, before
they consider expanding their operations in Ukraine. When they do expand, the logical
step is often to establish a permanent office in Ukraine. While this involves financial
commitment and risk, establishing a local presence is usually key to expanding one’s
customer base. Most Ukrainian enterprises prefer working with firms that employ Ukrainian
salespeople and that have a local customer service or maintenance office. Later,
if business is truly going well in Ukraine, a foreign firm might consider more costly
undertakings, such as opening multiple offices throughout the country or building
a manufacturing facility in Ukraine. Very few foreign firms to date have undertaken
such measures in Ukraine. By developing business in stages, a company can reduce
its risk and build its business based on its experience.
Look for Viable
Finally customers must be financially viable if sales and
deals are to be secure. Getting a sense of an enterprise’s financial standing
early is important, so as not to waste time. Ukrainian partners will be indispensable
in helping you assess this quickly. If you have other contacts in Ukraine, such as
contacts in banks, industry, or government, they may be able to provide some feedback
on whether a plant is worth pursuing based on its financial record. Another source
of information is an enterprise’s track-record in paying other foreign suppliers;
Ukrainian enterprise executives will usually be willing to tell you the names of
other foreign firms with which they are working.