Lesia Ignatyk-Eriksen tells Ukrainenu that there are obstacles when doing business in Ukraine related to a different culture in Ukraine. However, it doesn’t change the fact that Ukraine has a lot of opportunities.
Scandinavian companies often rely on help when doing business in Ukraine due to the different cultures and laws in a new country. In Ukraine, NordicUkraineInvest is one of those companies. CEO Lesia Ignatyk-Eriksen explains to Ukrainenu that there are good reasons to be careful when doing business in Ukraine, but that obstacles can be overcome.
She has had her own company since 2018 and has helped several Scandinavian companies get a foothold in Ukraine, establishing cooperation with Ukrainian companies in different industries such as furniture building and metalwork.
“The main obstacles are related to deadlines and quality,” says Ignatyk-Eriksen to Ukrainenu, “Ukraine has a lot of opportunities with its location close to the home market, qualified workers, and its low salaries, but it still does have some difficulties.”
She adds that she never had problems with corruption or issues related to the war in Eastern Ukraine, which is often what comes to mind when people first hear about Ukraine. Instead, it is related to the different cultures between Ukraine and Scandinavia. Ignatyk-Eriksen points out that Ukraine historically mainly exported to the Russian market, where the expectations for quality were lower, and deadlines were less strict.
“Ukraine has great potential and huge know-how in production, but many factories aren’t exporting anymore due to the war that stopped exports to Russia. So they are now looking towards Western Europe, but it is a new market they need to get used to,” she says.
The Ukrainian exports to Russia since 1995 in Billion dollars:
The problems can be overcome
Ignatyk-Eriksen helps Scandinavian companies connect with Ukrainian factories, and she visits dozens of them every year to check their quality and work ethic. She says that some factories don’t have anyone speaking English and don’t see the need to hire anyone. Furthermore, some factories have problems understanding that Western companies don’t accept deliveries unless they are completely perfect and they need them on time.
She recalls how a Ukrainian company at one time delivered tables with minor scratches in them to a Danish customer and was surprised when they found out that they weren’t accepted. Ignatyk-Eriksen adds that those things are possible to overcome, but Scandinavian companies need to expect a longer adaptation time in Ukraine.
“There are more communication mistakes here, but that being said, when those are overcome, it is possible to get high-quality work done here at low costs,” she adds and says that Scandinavian companies who want to enter the Ukrainian market would benefit from contacting the local embassy first or companies like her own.
“If not, it is possible to lose a lot of money here, but if you hire Ukrainian speaking people, who know how to speak to these people, it can be overcome,” Ignatyk-Eriksen adds.
People from, for example, Denmark are much more detail-oriented than Ukrainians, she says and adds that Ukrainians are less focussed on long-term plans. Ukraine is often experiencing some kind of political turmoil or other instability, which makes Ukrainians less plan-oriented.
Be more patient
Ignatyk-Eriksen says that Scandinavian companies will need to expect that it takes more time to establish themselves in Ukraine than it would take to get things done in Scandinavia. She estimates that it will take about six months from a contract is signed until the Ukrainian company understands how a company from Scandinavia thinks and how they are expected to act. It can take longer for companies that don’t usually work with Western companies. It might seem like a long time, she says.
“But the companies who managed to get it worked out, they get great quality, sometimes even better than they could do at home, for a fraction of the prize,” says Ignatyk-Eriksen and adds that it is essential that the Scandinavian companies focus on getting the Ukrainian companies to think like themselves.
That is why she advises Scandinavian companies to seek help. Furthermore, she also recommends that Scandinavian companies take their time and seek more offers.
“I always say that it will be good to get an offer from three or four factories because a factory, which doesn’t normally export to the West, can be three of four times cheaper and deliver products of the same quality,” says Ignatyk-Eriksen.
“I will also advise companies to look to Western Ukraine firstly because it is closer to the EU and transportation is shorter. You can also look to Eastern Ukraine, but you need to consider the extra transportation costs and time,” she says.
Ukraine is experiencing a rush
Ukrainenu has previously written about how Ukraine has been experiencing a large influx of Western companies since the pandemic. The pandemic has changed the global supply chains are changing. The association agreement with the EU makes it easy to export products all over Europe. The excellent location near the EU borders makes Ukraine an ideal choice if companies are moving from Asia, she says.
“It is going fast now, but Ukraine is still underestimated. Ukraine has many factories with high-quality, highly educated workers and specialists with the right machinery. They are more than able to compete on prices and quality,” says Ignatyk-Eriksen.
She adds that she is seeing two tendencies right now. Firstly, Ignatyk-Eriksen has noticed how more Ukrainian companies are starting to look to the EU market with an eye for exports. Secondly, she is experiencing how more and more Western companies are looking for an alternative to Asia due to the higher prices, especially in China, the long delivery times, and the insecurity related to the pandemic lockdowns and the geopolitical situation.
“Ukraine is close to the EU, and it doesn’t take more than 48 hours until a truckload from Lviv makes it all the way to Denmark. Ukraine still has low salaries and high quality, so it is offering an alternative,” she says, “There are obstacles here, but they can be overcome.”