Accessibility links

Ukrainian Business - East or West?


Ukraine lies in the geographic center of Europe, which gives the former Soviet republic the option of orienting its economy toward Russia and the east, or the European Union and the west. VOA Correspondent Peter Fedynsky recently visited both ends of the former Soviet republic and reports on some of the realities that may determine where and how well Ukraine does most of its business.

The market and business have no nationality or borders, says this western Ukrainian businessman.

Nor do they have any smell, adds a smiling eastern Ukrainian counterpart. And both agree that money is money.

Yevhen Bisovsky earns his money as director of the RosanPak Packaging Company in the western city of Lviv. Nearly 30 percent of RosanPak's $40 million annual turnover is in Russia.

Oleh Lohvinov is director of the Konti Confection Company in the eastern city of Donetsk.

Konti's $90 million sales in Russia in the first half of 2008 slightly exceeded those in Ukraine.

Lohvinov says Konti's priority is to expand in Ukraine, Russia, China and other post-Soviet markets, instead of the European Union.

Lohvinov says the European market has long been saturated and stabilized, adding that it takes colossal amounts of capital to establish and distribute a brand in the European market.

The businessman notes there are a number of countries where he can spend less and get a better result.

High-speed machines at RosanPak mold various types of containers for cakes, ice cream or anything a producer may want to package in plastic.

Director Yevhen Bisovsky says less than one-fourth of the company's sales are in the European Union. He adds that the so-called Shengen Customs Zone, the strict EU border-control arrangement, makes it difficult for Ukrainian business to expand westward.

For a RosanPak employee to head west, says Bisovsky, he needs a visa; initially for a month, then three months, and half a year.

The businessman says there is no such thing as a five-year Shengen Zone visa, which would allow a RosanPak representative to enter and work the EU market. Instead, he needs an invitation, and must wait in very long lines at consulates each time.

Trucks that deliver cargo to the European Union often get stuck for days at Ukraine's western borders because of the lack of streamlined customs procedures and a shortage of crossing points.

Ukrainian truck driver Anatoly Ruchka of Dnipropetrovsk Oblast has driven in both directions. He agrees with the assessment of businesspeople, who give roads in the West high marks compared to those in Ukraine and Russia.

Ruchka also notes how well roads in the West are maintained, how clean they are and how well drivers are treated. In Russia, he says, Ukrainian drivers are also referred to in the pejorative "khokhol," unlike the West where drivers are treated equally regardless of their nationality."

Some Ukrainians fear Russian investment will also bring unwelcome Russian cultural influence to the country. Yuri Pukalsky, vice president of the Lviv Chamber of Commerce, says that may happen, but should not be feared.

Pukalsky says Ukrainians themselves should become stronger, and then Russian influences will not be so frightening. That way, he adds, Russian money will work for the Ukrainian economy, but he repeats - it is up to Ukrainians to become stronger.

Pukalsky's counterpart in Donetsk, Hennadi Chizhikov, says Ukrainian businesspeople are doing just that, not only recognizing Russian competition, but developing a sense of national identity to meet foreign competitors head on.

Chizhikov says he likes the fact that Ukrainian retailers are beginning to form associations. He calls that an example of emerging civil society in Ukraine.

But a lot remains to be done before Ukrainian business is fully able to compete, not least of which is the enactment of economic reforms now stymied by political infighting in Kyiv, as struggles between the president and prime minister spill over into a parliament that cannot pass much-needed legislation.

XS
SM
MD
LG