Doing Business with Ukraine
Ukraine is an Eastern European country with the capital city of Kyiv on the Dnieper River. The country gained its independence in 1991. Ukraine is a unitary semi-presidential republic with a unicameral parliament (the Supreme Council of Ukraine), which is divided into 24 regions. Part of the Donetsk and Luhansk regions and Crimea are not under the control of the Ukrainian government. The president is Volodymyr Zelenskyi.
The EU-Ukraine Association Agreement has been in force since 2017, and the Ukrainian market is gradually being connected to the EU internal market. The EU is also Ukraine’s most important trading partner. Among the growing and perspective sectors of the economy are agriculture, IT (including digitization), energy, healthcare, the transport industry, etc.
In connection with Russian military aggression, Ukraine is facing a deep recession. The war affected all sectors of the economy. Most international banks, rating agencies and analytical centers estimate a 30% drop in Ukraine’s GDP in 2022. However, the examples from Iraq, Lebanon, Syria and Yemen show that the decline of the economy, which is under unprecedented pressure, could end up being much higher – in the range of 50-70%. Direct (destruction and damage to civilian and military infrastructure) and indirect (decrease in GDP, stoppage of investment, outflow of labor, additional costs of defense and social support, etc.) losses to the Ukrainian economy as a result of the war are already around a trillion euros. Currently, price increases are limited by administrative measures such as regulated fuel, gas, heat and electricity prices as well as a fixed exchange rate. With the gradual easing of restrictions, an increase in inflation is very likely. This will be caused by fuel and energy prices, rising production costs, shortages of some goods, including food previously produced in the southern regions of Ukraine, as well as significant easing of monetary policy, which is difficult to avoid under the current circumstances.
Ukraine is among the 20 most important trade partners of the Czech Republic. Thanks to the active entry of Czech companies as a result of the implementation of the economic part of the Association Agreement between the EU and Ukraine, mutual trade shows an essentially continuous growth trend. Since 2015, our exports have more than doubled and its stable growth can be assumed in the following years as well. There are more than 200 offices and representatives of Czech companies operating in Ukraine, mostly in Kyiv and Kyiv region, Lviv region, Dnepropetrovsk region and Zakarpattia region. The companies are active in a wide range of industries from traditional engineering, automotive and energy to defence, biotechnology and medical devices. In most sectors, companies were able to take advantage of the better availability of financing, including through international financial institutions (EIB, EBRD, etc. ) and also with regard to the increase of local budgets as part of decentralization. Such financial resources will be released again only in connection with the restoration of the Ukrainian economy and infrastructure after the end of hostilities.
When entering the Ukrainian market, it is necessary to take into account the great importance of personal negotiations, and it is also necessary to take into account that business negotiations usually take a long time. Increased attention should be paid to choosing reliable Ukrainian partners.
Practical telephone numbers (emergency services, police, firemen, information lines, etc.)
Emergency number – 112
Accident gas – 104
Police – 102
Medical emergency – 103
Firefighters – 101
Information on phone numbers – 109, 115
Important web links and contacts
www.president.gov.ua – Office of the President of Ukraine
www.kmu.gov.ua – Cabinet of Ministers of Ukraine
www.rada.gov.ua – Verkhovna Rada of Ukraine
http://zakon.rada.gov.ua – Ukrainian legislation
https://www.me.gov.ua – Ministry of Economy of Ukraine
https://minagro.gov.ua – Ministry of Agrarian Policy and Food Industry of Ukraine
https://thedigital.gov.ua – Ministry of Digital Transformation of Ukraine
https://mspu.gov.ua – Ministry of Strategic Industry of Ukraine
https://minre.gov.ua – Ministry of Reintegration of Temporarily Occupied Territories of Ukraine
www.minjust.gov.ua – Ministry of Justice of Ukraine
www.minfin.gov.ua – Ministry of Finance of Ukraine
https://mepr.gov.ua – Ministry of Environmental Protection and Natural Resources of Ukraine
http://mpe.kmu.gov.ua – Ministry of Energy of Ukraine
https://mtu.gov.ua/ – Ministry of Infrastructure of Ukraine
www.minregion.gov.ua – Ministry of Community and Territorial Development of Ukraine
www.mon.gov.ua – Ministry of Education and Science of Ukraine
https://mkip.gov.ua – Ministry of Culture and Information Policy of Ukraine
www.moz.gov.ua – Ministry of Health of Ukraine
https://mms.gov.ua/ – Ministry of Youth and Sports of Ukraine
www.msp.gov.ua – Ministry of Social Policy of Ukraine
http://mvs.gov.ua – Ministry of Internal Affairs of Ukraine
www.mfa.gov.ua – Ministry of Foreign Affairs of Ukraine
www.mil.gov.ua – Ministry of Defense of Ukraine
https://mva.gov.ua/ua – Ministry of Veterans of Ukraine
www.bank.gov.ua – National Bank of Ukraine
www.ucci.org.ua – Chamber of Commerce and Industry of Ukraine
https://ucci.org.ua/rieghional-ni-tpp – regional chambers of commerce and industry
https://dpss.gov.ua/ – State Service for Food Safety and Consumer Protection of Ukraine
www.ukrstat.gov.ua – State Statistics Service of Ukraine
https://nszu.gov.ua/ – State Health Service of Ukraine
https://customs.gov.ua/- State Customs Service of Ukraine
https://tax.gov.ua/ – State Tax Service of Ukraine
http://sfs.gov.ua – State Fiscal Service of Ukraine
https://dmsu.gov.ua/ – State Migration Service of Ukraine
http://www.drs.gov.ua/ – State Regulatory Service of Ukraine
Information agencies and online newspapers:
PaulSourcing: Ten Commandments for Doing Business with Ukraine
The PaulSourcing agency has prepared ten recommendations for doing business with Ukraine for Czech entrepreneurs interested in business relations with Ukraine. In 2020, it was supplemented with 4 current tips.
4 recommendations for entering the Ukrainian market during the coronavirus pandemic situation:
- Searching for business partners Although there are paid and public databases of business contacts in Ukraine, they often contain so-called “sleeping” companies that do not actually do business, which is related to the relatively high share of the shadow segment in the Ukrainian economy. For this reason, when looking for quality companies, local industry associations and associations are a good source, and we can also recommend exhibitor catalogs of relevant industry fairs, which are usually publicly accessible.Search for Ukrainian companies in the publicly accessible business register of Ukraine and verify the date of establishment, partners and persons with the right to enter into contracts. As the database of Ukrainian companies only has a Ukrainian language version, PaulSourcing’s foreign office in Kyiv (ZK Kyiv) can help you find and secure an extract from the register.
- Approaching The first approach to a Ukrainian company is recommended by ZK Kyiv to be done by phone and to verify the email address to which a letter and presentation can be sent. It often happens that the e-mail address listed on the company portal is outdated or company-wide, and if you do not include the name of the relevant employee in the subject line, your letter is unlikely to receive any attention.Knowledge of Ukrainian/Russian is a big advantage when contacting you by phone, as you will be able to communicate in English especially in the IT, banking, and media spheres. Get translation of promotional and technical materials, websites into Russian and even better into Ukrainian in advance.
- Establish communication After sending the emails within ten days, reach out to the contacted person and verify if they received the email and ask for feedback. The Ukrainian partner can offer you communication via Viber, Skype, etc., these applications are very widespread among representatives of small and medium-sized local businesses and during business meetings.A number of Ukrainian companies still work in limited administrative operation, with one or two employees on duty in the offices, the rest are in home office mode. However, local manufacturing plants and factories operate almost without restrictions. Employers provide personnel with personal hygiene products and also ensure transport between the house and production.
- Import of commodities When importing certain commodities to the market of Ukraine, there are non-tariff restrictions in the form of local certificates and attestations. This list is gradually narrowing, as Ukraine, according to the Association Agreement, is bringing local standards closer to EU standards. However, this is now the most serious technical obstacle to the import of goods to Ukraine, which can be quite demanding both in terms of time and money.
Ten points for doing business with Ukraine
- Czech production has a good reputation Czech production generally has a good reputation in Ukraine, Ukrainian partners confirm that Czech production, technology or services are of high quality and usually represent a less financially demanding product.
- Do business in Russian or Ukrainian The language of business can be Russian, knowledge of Ukrainian is an advantage that locals will appreciate in a foreigner. English works mainly in the fields of IT, banking and in large commercial or manufacturing companies. We recommend having promotional and technical materials, websites translated into Russian and even better into Ukrainian.
- Consult lawyers We recommend consulting legal offices on all legal questions, as the fragmentation and non-transparency of local by-laws remains a constant problem in the local business environment.
- Check if you need certificates Although the Deep Free Trade Zone Agreement between Ukraine and the EU has been in force since 2016, when importing some commodities, a local certificate is still required, which must be verified in advance.
- Deliver the goods within 180 days A special feature of trading with Ukrainian partners is the necessity to deliver the goods within 180 days from the date of payment of the advance, or pay for the goods within 180 days from the date of delivery – in case of non-compliance, a penalty is applied for a Ukrainian resident, in some cases, a non-resident is included on the sanctions list.
- Use a local representative When entering the Ukrainian market, it pays to use the services of a local partner or representative with knowledge of your production issues, who can represent you in public proceedings and has an overview of the entire market segment.
- Require payment in advance For the first contract, we recommend payment in advance, a letter of credit as a suitable payment instrument, after gaining trust in the partner, you can always soften the payment terms.
- Choose a suitable time for negotiations Business can be conducted in Ukraine throughout the year, with the exception of the end of the year, then the entire first half of January of the calendar year (Orthodox Christmas). The summer vacation period, like the school holidays, starts already at the beginning of June and culminates in July and August.
- Be patient Ukrainian partners are expected to be late. The length of any delay is usually within 10-20 minutes. The delay is often justified by traffic difficulties, which can be considered a legitimate reason, especially in Kyiv.
- Act personally Personal contacts are best established during informal meetings around the table. The working lunch of approximately two hours usually starts between 13.00 and 15.00, the working dinner usually starts at 19.00.