ODU – ECONOMY · During 30 years of independence, Ukraine has continuously provided business opportunities to Dutch companies. During the economic panel of the anniversary conference that OpenDoorUkraine.NL (ODU) organized in The Hague with the support of the Embassy of Ukraine in the Netherlands, businessmen from both countries discussed the benefits and pitfalls of investing in Ukraine.
Ukraine has a lot to learn from the Netherlands. For this reason, the Ukrainian energy giant DTEK has established a subdivision for sustainable activities in Amsterdam to build on Dutch knowledge and competitiveness, according to director Oleksandr Kucherenko. In Ukraine, the company developed solar and wind farms with a capacity of 1 gigawatt and is pushing for decarbonization, hydrogen as an energy source and the introduction of battery storage. Here, the business community is joining the government’s agenda, which wants to disconnect the country from the Russian-Belarusian energy system and follow the objectives of the EU Green Deal.
For the Dutch entrepreneur Frans Lavooij, who started the coffee company Lviv Galca in Ukraine almost 30 years ago, the key to this success was Ukrainian technical expertise, Lavooij said. “When we make new investments, we buy one copy abroad and have our technicians build a copy. The first time I asked, ‘Are you sure this is going to work? This is sophisticated stuff, you know!’ But they surprised me every time.”
DTEK’s Kucherenko sees the people as Ukraine’s greatest asset. “I once visited Silicon Valley and was surprised to find a former student of mine as the chief IT manager in Mark Zuckerberg’s office. I was very proud, but also angry that this young man had not been able to continue his career at home.’
A key factor for business success in Ukraine is having a reliable, well-integrated partner who can help you avoid mistakes. Take the time to find one, is Lavooij’s advice, and Peter van Milt agrees. His company Vanderlande develops automated material handling systems for airports, warehouses, etc. and started working on occasional projects in Ukraine from 2007 onwards. But their involvement there only gained a solid foundation after they entered into a partnership with postal company Nova Poshta in 2014.
“Over time we have built up a fruitful and successful relationship of trust. We developed their first automated system that can process 8,000 packages per hour, and by next year they will have increased that number to 250,000.” Nova Poshta, in turn, helps Vandelande as a delivery company to get the materials it needs for projects in Ukraine across the border.
For a good relationship you must first overcome cultural differences. “When you arrive in Ukraine from the Netherlands, you need someone to help you cross that bridge,” says Yuri Levontuiev, who works in agribusiness for the Dutch development bank FMO. “I remember that we once met colleagues in central Ukraine. In my work, small talk is important, but these people only gave short answers to all our questions. It was only at the end of the day, when we went to the sauna with them and had drinks and dinner with them, that the conversation started – and never stopped!”
Lavooij recalled that when he started doing business in Ukraine, corruption was endemic, but now it is considerably less so. “The best remedy is to be part of the community. We developed a system of investments in schools, hospitals and other local projects. It was remarkable how quickly we disappeared from the list of favorite targets for corruption!”
Although corruption has decreased, the Ukrainian legal system is still difficult for foreign investors to understand. “There is a huge turnover of documents, which must have the right stamps in the right color,” sighed Levontuiev. “But I must say that things have been getting better in recent years.” Panel moderator Irina Papusha, head of ODU’s economic table, is confident that the development of digital government in Ukraine will put an end to many such problems.
Reforms can also help improve the situation. “We can certainly see the changes brought about by reforms, but a lot depends on how they are implemented,” Kucherenko said. They also send an important signal to the youth of Ukraine: “The young generation needs more and faster changes, further integration with the EU, through close cooperation between state and business.”
The participants remain optimistic about doing business in Ukraine. Levontuiev: “When I started in agribusiness in Ukraine years ago, it mainly concerned grains such as wheat and corn. Now companies produce frozen berries, tomato paste and other processed food products. People in Ukraine are very enterprising, they are constantly learning and developing new skills and products.”
(by Diederik Kramers)
Watch the video here .
Photo, from left to right: Irina Papusha (moderator), Oleksandr Kucherenko (DTEK), Yuri Levontuiev (FMO), Peter van Milt (Vandelande) and Frans Lavooij (Galca).