How a Ukrainian toy manufacturer attracted European investments

Two years ago, Vip-Toys launched production of children’s toys in Rivne under the Doloni-Toys trademark. Production immediately began to grow quickly. At the time of launch, the range of products was small. The company manufactured and sold 4 types of toys with 15 people working and using 2 units of equipment. And now, the range includes dozens of items, employing 65 people and using 14 units of equipment. The amount of the company’s production over the past year has doubled, and 80% of the structure of sales is export.

 

Affordable loans for the purchase of new equipment

“Over the past year, Vip-Toys has been granted loans for the purchase of new equipment. These are all investment loans, i.e. loans for the purchase of production equipment,” says Roksolana Vakulenko, director of the company. “We have purchased equipment for the manufacture of plastic toys and goods for children, thus significantly expanding the product range and production capacity of the company.”

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Affordable loans are received immediately in two areas. The company has one loan within the framework of EU4Business with the German-Ukrainian Fund, whose activities are carried out, in particular with the financial support of the German Government. This program partially compensated for the interest rate – the company received the loan under 14.85% annual. Such low interest rates do not even exist in Ukraine. And four other loans were received by Doloni-Toys under EU4Business with the European Investment Bank. This program provided them with preferential conditions for their collateral. The interest rate fluctuated from 19% to 20%. Consequently, with the help of EU programs, entrepreneurs have all the necessary funds to finance development projects.

Indeed, entrepreneurs often do not take loans because of high credit rates. Small and medium-sized enterprises also do not have sufficient credit security. These two components do not allow developing, creating new products, employing new personnel and so on.

“Often, entrepreneurs, addressing the issue of expanding their business, face one and the same problem, which is the inability to be granted the amount of loan they want at favourable interest rates because they cannot provide collateral for a bank. Indeed, if you plan to increase production capacity, you need money for development. And, it is desirable that this loan should not be unconscionable,” commented Valerii Maiboroda, Acting Chairperson of the German-Ukrainian Fund.

In this case, the German-Ukrainian Fund’s small and medium-sized enterprises support program comes in to help and provides preferential loans in combination with the loan guarantees of the European Investment Bank under the EU4Business initiative.

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New equipment for business expansion

For the most part, the Ukrainian children’s toys of the Doloni-Toys trademark are exported to the countries of the European Union and Belarus.

“It was difficult for us to work with Europeans during the first year,” says Roksolana Vakulenko. “After all, we had a small product range, and potential partners did not trust us. It took a little time to overcome these barriers. But now we have entered foreign markets. To work with foreign partners without difficulty, you need to know their standards and requirements for the goods,” explains the director of the company. “We adhere to all European requirements, use high-quality European raw materials and develop a safe design. So certification is not a problem for us.”

However, Europeans test toys very carefully – the test methods are described on several hundreds of pages. For example, the company tested a sliding board. European laboratories clearly define whether the width and the length of steps, the angle of inclination meet the requirements, or the sliding board supports the weight of a child, etc. There are many requirements, but they are mandatory.

The director of the Ukrainian company adds that the procedures are complicated, but this is the company’s reputation: if you are a manufacturer certified by the European Union, then they will not be afraid to cooperate with you and buy your products.

“We have a great ambition,” Roksolana Vakulenko smiles, “that every child in the world plays with our toys.” “We see how such a big company like Lego is developing. Our goal is to be as good as they are and even better.”

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“Everything is right – the best in your segment should be an example for you. The history of Roksolana and her Doloni-Toys business is quite typical for Ukraine,” says Valerii Maiboroda of the German-Ukrainian Fund. “There is a good idea, a good product, but not enough funding to go to the next level. It most difficult for small and medium-sized production enterprises to get a loan, since investing in new industrial solutions requires banks to spend more on business model and risk assessment. At the same time, banks’ income from such lending is lower compared to lending to large companies. Therefore, our Foundation provides not only affordable funding to its clients, but also trains partner banks to effectively evaluate small and medium-sized entrepreneurs planning to implement investment projects.”

According to the German-Ukrainian Fund, the enterprises of the processing industry need the largest investment for the modernization of their equipment. These enterprises manufacture the national product, which, in turn, promotes financial stability of the country.

As you can see, Ukrainian entrepreneurs should not be afraid of lending. Moreover, the European Union provides real opportunities for Ukrainian small and medium-sized entrepreneurs in order to develop intensively. Ukrainians have all the conditions to compete not only in the national market, but also going beyond its boundaries, in particular to international markets.

 

By Iryna Hudz

Source – delo.ua

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