Editor’s Note: This Kyiv Post feature introduces readers to interesting expatriates who have chosen to make Ukraine their home. We welcome readers' suggestions about expats to profile. Please send ideas to [email protected]
Uwe Klenk
Nationality: Austrian
Age: 49
Position: chief executive officer at Foxtrot Home Appliances
Length of time in Ukraine: 18 months
Tips for succeeding in Ukraine: “It is very important that the person, whoever is coming into a country like Ukraine, accepts the rules here, that you understand them, but, for sure, you go your own way. You need just to convince people, either the board members or the shareholders, that this is the right way to go.”
During his first year as a chief executive officer at Foxtrot, 49-year-old Austrian Uwe Klenk faced two main challenges: first, to pull Ukraine’s biggest consumer electronics chain out of the economic crisis, and second, to keep the business running despite investigations and a raid by law enforcement bodies.
Foxtrot witnessed the heavy-handed tactics of law enforcement on Sept. 22 when masked and armed police officers burst into its main office in Kyiv.
They occupied the building for two days and sealed Foxtrot’s warehouses for several weeks. The company’s largest warehouse near Kyiv remains closed, disrupting the company’s goods supply stores all over Ukraine.
Klenk had never come across anything like this while working in senior executive positions in the United Kingdom, Germany, Canada, United States and Latin and South America for Wal-Mart, one of the world’s biggest companies.
He has little to say about the situation, citing the ongoing investigation.
“It’s the first time I personally heard about this kind of thing,” Klenk said. “I heard from other CEOs [in Ukraine] that they have been also investigated.”
In a statement, Valeriy Makovetskiy, the co-founder of the Foxtrot Group of companies, said:
“Law enforcement activities were unexpected for us, as no one from the representatives of the investigative agencies addressed us with inquiries related to the criminal case investigations.
We found out from the Internet that some criminal case does exist, in investigation of which the search was sanctioned.”
The Interior Ministry told the Kyiv Post through an official statement that the search of Foxtrot was conducted “within the framework of investigation of … a hired murder of a private entrepreneur in Kirovohrad” – an accusation Foxtrot owners dismiss.
On Sept. 22, armed and masked police officers raid the main office of Foxtrot electronics store in Kyiv. The building was occupied for two days and one of the firm’s warehouses remains closed, disrupting supplies. (Liga.net)
But Vasyl Farynnyk, the ministry’s chief investigator, told Ukrainska Pravda that the criminal case is connected with huge money inflows.
But other unnamed sources of Ukrainska Pravda are quoted as saying that someone who wants to get a stake in Foxtrot is behind the investigations.
Despite the investigation, Foxtrot managed to get “back to normal business,” Klenk said. A week after the raid, Foxtrot opened a new store in Kyiv
At the end of October, Foxtrot finished rebranding its 32 FoxMart hypermarkets into Foxtrot.
Stores with new signs were opened in 23 Ukrainian cities, increasing the total amount of Foxtrot stores in Ukraine to 228.
Rebranding was part of the restructuring process conducted by Klenk, who started working as an external consultant for Foxtrot in May 2010 and was appointed as CEO of the company in July last year.
Another task was to stabilize the existing business and prepare it for a potential initial public offering, which could take place in 2013.
“The business was really struggling significantly until the end of June last year. Since July 1 we are providing the shareholders the right results,” Klenk said.
According to preliminary data, the company’s sales amounted to Hr 6.8 billion, which is 2 billion hryvnias more than in 2009.
He also managed to preserve Foxtrot’s 20 percent share of the appliances and electronics sector, leading the pack that also includes Eldorado, Comfy and Technopolis. The fifth player, Megamax, went bankrupt during the last economic crisis.
Foxtrot is going to continue with its expansion plan. Klenk’s object is to open up to five new Foxtrot stores by the end of this year and then to launch 10-20 more per year.
Within the next 12 months there will be a lot of changes at Foxtrot, especially in store layout, category management and space allocation, he said. The aim is to adjust to consumers’ needs and to increase sales per square meter.
“One doesn’t need to be a genius to make this happen,” he said. When Klenk came to Foxtrot there were 125 hairdryers in its assortment.
He realized that only 15 of them generated 80 percent of its sales and decided to give up the rest of the items to increase sales per square meter.
Klenk said this business has a huge potential. “In comparison to all other European countries we are still in a very good position with regard to growth opportunities,” he said.
“The consumer electronic market today is roughly $5 billion in Ukraine and the forecast for the next five years is $9 billion. So it’s a very interesting market,” he added.
This latter figure could be the key as to why this lucrative business is the focus of the investigation now.
Kyiv Post staff writer Oksana Faryna can be reached at [email protected].
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