Editor's Choice Interview Ukrainian macroeconomics

Because of the complicated control system and longstanding paperwork, we are not able to receive everything on time, and this can stop the production

Han Jianlong, a deputy director and a sales director at Chinese company Eco-Vtor, told about the difficulties foreigners face doing business in Ukraine.

: The plant was built in 2013. Why have you chosen Ukraine?

H. Jianlong: Firstly, Ukraine has a good geographical location – a Western European region is near – it is our main market. Secondly, Ukraine is one of the biggest countries in Europe, both in terms of territory and population. A significant amount of habitats gives evidence of sufficient supply of raw materials – you use much plastic both in everyday life and production processes. Thirdly, there is a significant demand for products. We produce pillows, sofas, and mattresses from fibers… All these goods are in high demand. As a result, our business does not stand still. One more important fact of our presence is that upon arriving here, we saw beautiful nature, and at the same time, it is often full of the used plastic. These and other arguments let us understand that we have to build the plant here, developing our business hereby and cleaning up the environment from the plastic waste.

: What other countries did you consider?

H. Jianlong: We have also been to Lithuania. The market of this country was interesting to us as they already sort waste, there are those who could sell us plastic, and there are already finished buildings for a plant. However, we have not chosen Lithuania because of geographical location and relatively insignificant population size. We doubted that there would be a lack of raw materials for our activity. Besides that, we constantly need to buy spare parts for our equipment, and of course, it is much easier to do from Ukraine than Lithuania.

: What amount of investments did your enterprise receive at the beginning of your activity in Ukraine? Where do the investments come from?

H. Jianlong: All investments come from China. From the beginning, we have invested $10 million. And we do not plan to stop.

: How many people work for the enterprise? How do you stimulate your employees? Social package, high salary? What is the average age of your employees?

H. Jianlong: We have employees of very different age: some of them have just graduated from universities, some people are 30, 40, and 50 years old.

This year, the staff has somewhat grown – we now have about 370 people.
How do we stimulate? The most important thing is that we work according to the legislation. Every employee is entrusted for a vacation, the duration of which is set by law.

We have shifts at the enterprise. As a rule, there are 30-40 people on the shift. Every month, each shift checks the effectiveness of work and evaluates the discipline of the team, etc. Based on the received showings, the bonus is accrued to every conscientious employee. Moreover, our employees receive bonuses for employment years – for their length of work at the enterprise. What about social support – employees receive birthday presents and additional monetary rewards.

: Do you feel the lack of raw materials? If so, what is the reason for that?

H. Jianlong: Lately, we began to feel the lack of raw materials. This is due to the fact we have not gathered plastic.

For example, in Kyiv, there is a waste drop-off station, from which plastic arrives at our plant. What they collect is a minority. The most part still lies in the range.

In Europe, the problem of the plastic gathering was resolved when special separate containers in the yards and in surrounding grounds were placed. In Ukraine, a waste distributing has also started, however, it is not yet at the appropriate level.

: Nowadays, Europe wants to completely refuse from using plastic and it is gradually moving in this direction. Have you thought what will you do if Ukraine refuses?

H. Jianlong: In this case, there is a need to understand the goal of such action. If the goal is just to refuse – that is one case. But if the goal is to stop using plastic to reduce environmental pollution – that is another question. As you can see, plastic is used in absolutely various spheres today. This is a material, with which it’s easy to work. It is used for many purposes, it is chemically resistant, it doesn’t get rusty, and can easily change shape. Everyone is aware of the advantages of this material. If due to new technologies, someone will find some new material which will be equal by properties and range of usage, then you can completely refuse from plastic. Nowadays, it is impossible. In February, I read the news that there is a laboratory in the USA under the Ministry of Energy, which is working on the invention of new material for bottles production, called FPR. It can be used anywhere, for example, for the production of trains, planes, ships, and snowboards… Now, not only America has taken up the question, but China and Germany are also conducting similar researches. It is important to find some material which can be received after plastic recycling and which will be eco-friendly. Besides, the absence of contamination with plastic bottles includes personal responsibility of every person. To avoid doing harm to the environment, everyone can gather empties they used and get them into a recyclable materials drop-off station or sell it to an enterprise which reprocesses plastics.

: So, plastic is not dangerous, if it is used and disposed of in a proper way, right?

H. Jianlong: Everyone uses plastic in everyday life. Beverages are often sold in a plastic package. If it had carried health risks, people wouldn’t use it for food products. Why it is told that water, beer or Coca-Cola is spoiling in plastic bottles? They absolutely do not spoil anything. Dropping packaging for no reason has bad consequences.

: Tell us, please, is your enterprise safe for the environment? Is the plastic processing not harmful to the surrounding areas?

H. Jianlong: Eco-Vtor is an absolutely eco-friendly enterprise. We gather plastic bottles, packaging, and other similar material and break it to pieces. 5-6 years ago, when we arrived here, there were a lot of bottles lying on the streets. They were a lot, but modern people have already got used to bringing everything to us. People can earn money by selling empties.

The existing of our plant, in my opinion, is useful for the environment, as we gather plastic, and don’t leave it in the ground, which is really bad for ecology.

: What goods can be produced from the fibers you manufacture?

H. Jianlong: Pillows, blankets, mattresses, sofas, geotextile, rubberoid and other things from different consumer spheres are produced from this fiber.

: Where do you export the products?

H. Jianlong: Our main export market is the European Union – Poland, Italy, Germany, we even work a little bit with Turkey.

: You entered the market in 2013, and the crisis began in 2014. How did this situation affect the activity of the enterprise?

H. Jianlong: We arrived here in 2013, purchased a building, started to repair and buy equipment. Since mid-2014, we have already launched. The work was perfect for 4-5 months, and then the Revolution started in the winter. From winter 2014 to May 2015, there were revolution events. Next, it was very difficult. Donetsk, Luhansk and Kharkiv were the biggest commodity markets for us – and suddenly, everything stopped. There is a very big percentage of the country’s population, many factories and other production sites. We bought raw materials from them and sold products after processing. So, everything abruptly ended. From 2014 to 2016, we have earned almost nothing, and along with this, we could not influence the situation. Our staff was about 200 employees then, and we were already on the verge of dissolution, however, it would be even more difficult to return them. Since 2016, the situation has begun to improve.

: Thanks to what have you overcome the crisis? How have you gotten out of it?

H. Jianlong: Earlier, Kharkiv, Donetsk and Luhansk provided us with part of the raw materials. After the mentioned events, we were forced to enter new markets. We needed time for this. We traveled to the nearest countries in search of suppliers and clients. We were in Belarus, Russia, Georgia, the EU countries, and now, two years passed and the situation began to improve.

: What difficulties do you face while operating in Ukraine?

H. Jianlong: The first difficulty is Ukrainian legislation. It changes quite often, especially regarding foreign business. Even for Ukrainian entrepreneurs, it is very difficult to puzzle out quickly, to constantly keep an eye on changes and follow new-made norms which are appearing continually.

The second one is currency and control. For example, we have to do business with foreign partners as well, not only with Ukrainian ones – we have to buy and sell something. We constantly have to purchase spare parts absent in Ukraine. We supply them from China; we also buy chemical additives and production materials in Korea, Asia and Europe. However, due to a difficult control system and duration of various investigations and paperwork, we often cannot get everything on time, and such phenomena can stop the production at all. Because of some delayed additives, we cannot get commodity in proper time, as a result of which we are not able to produce the product on time and send it to our customer. We cannot earn. And I guess that we are not the only company which faces these problems. All entrepreneurs in the Ukrainian economic environment face them.

: What is the difference between doing business in Ukraine and China? Where is it easier? Are there some peculiarities?

H. Jianlong: Each country has its own problems.
As for business, the state supports its companies in China.

: You are in the list of sanctions of the Russian Federation. How did this affect your activity?

H. Jianlong: We had bad luck, I do not know why we got into this list. The imposition of sanctions has stimulated us to find new markets and we have got through this challenge.

: What plans does your company have for the next three years?

H. Jianlong: Firstly, we want to receive raw materials of higher quality to produce goods of higher quality. Now, this is market demand. We need higher quality to stay competitive and not lose customers. Secondly, we want to use new equipment and new technology to produce high-quality goods. Thirdly, we plan to help individuals. The help means purchasing equipment, which allows breaking plastic in pieces. Thanks to this technology, people can build their business, and we can buy high-finished products, which is good for us.

: You are a member of the Chinese Chamber of Trade and Commerce. How does it help you?

H. Jianlong: When we have just arrived in Ukraine, there have been already several large Chinese factories. It was difficult for us, so we decided to unite our efforts and organize an association which could help not only Chinese companies, but also Ukrainian companies striving to work with China. Some time passed, and these companies became initiators of the establishment of the Chinese Chamber of Trade and Commerce in Ukraine. The Chamber of Commerce helps us very much by providing us with the necessary contacts or information. In the beginning, when we arrived here, we did not know anything about the peculiarities of doing business in Ukraine. So, it is now easier for new Chinese companies here.

: I asked whether the waste recycling plant pollutes atmosphere on purpose. This is because many people do not know how this happens and how the enterprise operates. How do you convey this information to the public?

H. Jianlong: We often conduct analyses of the soil, air, water and cover this in the mass media. People can see and understand how the operation of the enterprise affects the environment or not. The whole process of plastic recycling is organized so that it doesn’t harm the environment. After recycling material, water goes to our pool, where it is purified from redundant materials. Next, it goes to the water canal where an additional purifying is conducted.

Many people say that waste recycling is a harmful activity and can deteriorate the ecology. Nevertheless, they do not even imagine how much we have already gathered and recycled! If all this waste was not picked, it would be difficult to imagine what could have happened.

: Do you participate in social projects?

H. Jianlong: Yes, we participate in social projects. For example, a local school turns to us from time to time and we are happy to help them with repairs and with small construction. We take participation in many social projects and events, but mainly help those who ask for that.

Please read: Doing business in Ukraine during the period of political instability: what to focus on

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