With U.S. investment in Ukraine at a standstill, many Ukrainian businesses aren’t paying enough attention to the
opportunities for exporting to the United States.
The U.S.-Ukraine bilateral trade, unfortunately, is shrinking, both in export and imports. In 2014, it totaled
only $2.2 billion, half of what it was in 2008.
But Ukrainians don’t need to wait on American investors to start filling the gap.
Denis Krasnikov, vice president of the Ukrainian League of Industrialists and Entrepreneurs, a business union,
believes that Ukraine’s active perseverance will catalyze bilateral relations.
“Ukraine-U.S. relations will depend on the activity of Ukrainians themselves in order to create new interesting
products and the persistent work on the realization of their business ideas,” Krasnikov, said in a recent U.S.-Ukraine export forum. “Ukrainian producers are not knocking enough on the doors of American distributors, supermarkets.”
It would be naïve to expect U.S. entrepreneurs to invest their money in Ukraine now. Incidents such as
February’s shelling of a Cargill plant in Russian-occupied Donbas do not help. “U.S. investors are still afraid of directly investing into Ukraine,” said Krasnikov.
So, Ukraine will have to work to expand its traditional export base to United States of metals, agriculture products, chemicals and fertilizers.
Veronika Movchan, academic director of the Institute for Economic Research and Policy Consulting, says that the
current trade is very narrowly focused.
“On average, we export more raw materials to (America) than to any other country,” Movchan says.
Ukraine should export finished retail goods and services, instead, experts say, since these are products that
the U.S. is mainly interested. It could be anything from goat leather coats to bottled sunflower oil and information technology services.
Ukraine “is a big European country, and the U.S. basically concentrates from… 30-40 percent of the world’s retail,” Krasnikov says. “These are huge opportunities for selling finished products.”
U.S.’s chain of supermarkets – almost 40,000 nationwide – should be a magnet for Ukrainian businesses,
especially food products.
“Compared to other countries, Ukraine is exporting to the U.S. much less food products,” Movchan says.
“Theoretically, we could export… more.”
Some Ukrainian companies are already exporting to the U.S.
Among the 2,600 Walmart stores in the U.S., Ukrainian sunflower oil producers can be found on the supermarket
shelves. Ukraine’s Ichnya Condensed Milk Company, a dairy producer, sells condensed milk to the U.S. as well, whereas confectionary company Roshen and vodka producer Khortitsya already opened offices in the U.S.
The following photo was posted on Twitter by Ukraine’s Agriculture Minister Oleksiy Pavlenko on Sept. 9. The minister wrote: “Who said that Ukrainian products are not sold in big international chains? Sunflower oil in Walmart!”
In many cases, the product is sold as a sub-brand – a brand name adjusted to the country’s audience. The product
is not necessarily represented as a Ukrainian brand, explains Michael Datsenko who works at the U.S-Ukraine Business Council.
“Is this patriotic? You can look at it at different ways,” he says. “Though Ukraine’s name is not directly
promoted, it creates jobs in Ukraine, brings revenue, foreign currency, and pays taxes.”
In addition to food products, the U.S. consumer is interested in products that are related to services.
There are good reasons for such thinking. Almost 80 percent of U.S.’s economy is made up from the service
sector.
“When we are thinking about what to sell we should think about products that are connected to the service sector,”
Datsenko says. “Sell something that needs to be served.”
One strategy in boosting the bilateral relations is forming Ukrainian distribution centers right in the U.S.
making it easier for the investor and producer to connect, Krasnikov says.
Instead of investing directly into Ukraine, U.S. investors can put their money into the distribution centers that
will be established on U.S. territory. This, in turn, would encourage Ukrainians to invest more themselves if they will have a guaranteed U.S. channel, Krasnikov says.
“U.S. investors don’t lose anything,” Krasnikov says. “They make the same amount that they have been planning to invest into (Ukraine), but on the territory of the U.S.”
Whatever the strategy is, there are greater chances for Ukrainians to export products that are traded in large
amounts, which is why it makes sense for Ukrainian producers to join efforts and export similar products together. This is what store-chains, hotels and restaurants are interested in, Datsenko says.
For example, U.S.’s Florida Natural orange juice producer is a huge agricultural cooperative that sells orange
juice under the same brand name even though it has many different farmers. The only thing that is required is the same quality standards.
Taras Kachka, business ombudsman of the State Fiscal Service of Ukraine, says that the U.S. market is the most
pragmatic one encouraging Ukrainian businesses to enter the U.S. market.
“It doesn’t matter where it was produced, what your status is. If you are competitive and competent, (U.S.
investors) will work with you,” Kachka, former vice president of the American Chamber of Commerce in Ukraine, says. “It’s better to think less about if there are chances or not but rather go ahead and try to achieve it.”
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
