The severe economic crisis which hit our country in 2014-2015 became a true endurance test for Ukrainian businesses, which stimulated companies to revise their operating procedures, find additional sales markets and look for more development opportunities. The signature of the Ukraine-EU Association Agreement and creation of the free trade area became such a new opportunity. And while some Ukrainians remain skeptical about that move, others actively explore this window of opportunities.
EU4Business, a European Union’s program providing support to small and medium-sized enterprises in Ukraine, was launched in Ukraine in 2016. According to the EU Delegation to Ukraine, the general purpose of this program is to facilitate sustainable economic development of Ukraine by promoting business growth and increasing employment opportunities.
For that purpose, a network of 15 regional Centers for Information Support to Businesses (CISBs) was opened in Ukraine in 2016 under EU4Business program. These centers offer financial assistance and information support to small and medium-sized enterprises in the form of training seminars devoted to various aspects of technical regulation, quality and standards of the free trade area, and export promotion trainings. In addition, this project helps Ukrainian businesses participate in international trade fairs and receive continuous support from sectoral specialists.
“European countries realize the difficult situation in which our businesses found themselves after 2014, and using the programs like EU4Business the Europeans are trying to help them reach higher and become competitive in international markets,” Andrii Kutz, Vice President of the Zaporizhia Chamber of Commerce and Industry, said in his interview to First Zaporizhian. In Zaporizhia, the Center for Information Support to Businesses operates on the basis of this organization.
Educational events at the Center for Information Support to Businesses in Zaporizhia
Crisis in the country became a window of opportunities for two enterprises in Zaporizhia. Building up on their own experience and taking advantage of the assistance provided by the Center for Information Support to Businesses, these companies are actively exporting their products to other countries.
The history of Roll Grand, a Zaporizhia-based manufacturer of components for gates of all types, began in 2003. And to expand their sales markets, the company started foreign economic operations as early as in 2006.
“Before the war, a substantial portion of our sales went to Russia – it was a very large market for us. But we had something like a premonition, and diversified our sales to count on not just the Russian but also the European market. Therefore, our export turnover fell in 2014, but not very significantly for us,” the company’s director Vladyslav Baschevanji says.
Today, the company exports its products to all Baltic States, Moldova and CIS states. Exports account for almost 30% of Roll Grand’s total sales turnover.
According to the company’s CEO, they were able to enter foreign markets thanks, first of all, to participation in specialized trade fairs, both abroad and in Ukraine, as exhibitors and as visitors.
“We present our Ukrainian product there. We are very pleased that Ukraine is perceived at trade fairs abroad not just as an agricultural country or a fragile state but also as a manufacturer competing in the European market. And most importantly, that concerns not only large industrial and other enterprises but also small businesses. It’s great,” Vladyslav Baschevanji says.
The Roll Grand team at BUDMA 2019 international construction fair in Poznan, Poland and at InterBuidExpo 2019 international construction fair in Kyiv
Despite healthy sales abroad, the company’s director admits that the manufacturer’s own efforts are often not enough for greater expansion of the sales market.
“Ukrainian manufacturers are competitive in terms of products but absolutely uncompetitive in terms of legislation and economic policy concerning businesses. In Europe, the government turns its face towards manufacturers. For example, if a company is steadily growing and wants to develop, they can get a low-interest loan or compensation from the government. Every five years, a company can upgrade their equipment and manufacture highest-quality products. There is no such opportunity in Ukraine. Surely, we have the government program of Affordable Loans at 5-7-9%, but the maximum financing amount of 3 million is too little to purchase advanced equipment. In addition, there are other problems, such as automatic VAT refunds and so on,” Roll Grand CEO says, explaining why it is difficult for the moment to enter the markets of such successful European countries as Germany, France and others with your product. “When you go shopping, you see a lot of goods made in China. They cannot be manufactured and sold for export in such quantities simply because the enterprise works so well. It also has something to do with a certain government policy.”
In the opinion of our interlocutor, the chamber of commerce and industry with which EU4Business works became the only organization today which does a truly useful job of supporting businesses.
“Thanks to their efforts, we participated in trade fairs abroad and had business trips with representatives of companies in other countries. We participate in programs which teach the rules of doing business, European norms and standards. It’s really useful,” Vladyslav Baschevanji sumps up.
Since 2004, Zaporizhia-based company Korundkeramika Plus has been manufacturing technical ceramics for steelmaking, electro-technical and other industries. The company has been operating in the international market since 2010.
“We made first attempts to enter the European market even before the war, in early 2013. We began paying closer attention to markets having no connections with CIS states. The outbreak of war had a greater effect on our work with suppliers: we switched from Russian to European raw materials. Ukraine does not have an own production. For us, this risk became an advantage, because the changes have seriously affected the increase of product quality,” Oleksii Nadtochii, Korundkeramika Plus Deputy Director, says.
The Russian market was the very first for this enterprise, but today, technical ceramics made in Zaporizhia are also shipped to Lithuania, Poland, Moldova and Belarus. During 10 years, the company was able to gain respect in foreign markets, and today, more than 90% of its production output is sold abroad.
“What helped us enter new markets? Visits to specialized trade fairs, use of international online resources for product sales, and work with the chamber of commerce and industry and the Center for Information Support to Businesses,” the company’s Deputy Director says. “We have a long history of working closely with them. They provide companies with information about potential customers and organize educational events. I have been in foreign economic operations since 2000 and have certain knowledge of that, but still continue to visit informational events. Certain changes in legislation, in standardization constantly take place in various countries. And I often receive the entire new information at educational meetings held at the Center for Information Support to Businesses.”
According to our interlocutor, decline of the Ukrainian economy in recent years led to a situation when the share of export of Korundkeramika products has already exceeded 90%. Because of the difficult situation in the manufacturing sector, the number of regular domestic customers is decreasing, and therefore, the enterprise has to work on selling its products outside Ukraine. Oleksii Nadtochii believes that in the conditions of unstable Ukrainian economy, the entry into European markets is a necessity for small and medium-sized businesses to survive and grow today.
For detailed information about the access to markets and financial resources, registration of a business, and for answers to other questions, visit EU4Business website.
Author: Andrii Vavilov