Interview Ukrainian macroeconomics

Cooperation in the Swedish market depends primarily on the quality of Ukrainian goods and services and the ability of companies to promote competitive solutions

Bohdan Senchuk, President of the Swedish Business Association (SBA), told us about the successful and ambitious start of activities, the Swedish quality, responsibility and insistence.

: When was the Association founded and what is the purpose of the SBA in relations between countries?

B. Senchuk: The Swedish Business Association was established at the end of summer 2017. The Association is a public union registered with the Ministry of Justice of Ukraine, which unites Swedish companies operating in the Ukrainian market and Ukrainian companies working with Swedish companies in Ukraine that are interested in Sweden as a market for export and promotion of its solutions and services.

: How did you come up with the idea of creating an Association?

B. Senchuk: The idea is a natural extension of the past activity in Ukraine through Business Sweden — the Swedish Trade and Investment Council — owned both by the Swedish government and the Swedish industry. Unfortunately, it was decided to close the office in Kyiv at the end of 2016. Long negotiations were held with Business Sweden in order to continue all our activities. The Business Sweden team in Ukraine created the 52A Consulting company, and we now offer a range of consulting solutions exclusively to Swedish companies. However, a large empty niche for promoting Swedish solutions in Ukraine has emerged. It was natural to propose the formation of the Swedish Business Association in Ukraine. Why was it so long — from January 2017 to the end of summer 2017? For a long time we were involved in registration issues, because there are a lot of requirements for the formation of a supervisory board. We have asked more than 30 companies to delegate their representatives. In the end of summer we have received candidates for the supervisory board. Per Magnusson from Magnusson Law headed the supervisory board, and this gave us grounds for obtaining registration at the Ministry of Justice.

: How many members are currently in the Association?

B. Senchuk: Today, there are 14 members. We have received confirmation from the 14th company recently. We have a very pragmatic goal: 100 member companies in the SBA for 10 years. We will be glad if we reach this goal earlier.

: Who can become a member of the Association?

B. Senchuk: Companies which share the values of Swedish business, respect corporate and social responsibility, are interested in issues related to innovation, environmental thinking, companies which see the prospects of development in the Ukrainian market, as well as Ukrainian companies seeking to develop in the Swedish market.

: What are the benefits for a company cooperating with the Association?

B. Senchuk: The Swedish Business Association in Ukraine is essentially an elite business club for those who want to intensify trade between Ukraine and Sweden. We are now promoting only Swedish solutions to the Ukrainian market. So, the future of cooperation in the Swedish market remains open and depends on Ukrainian companies, on their ability to promote their own solutions competitive in the Swedish market. For that, we have to go the hard way. Also, I can say that quality understanding is not yet the key for many Ukrainian manufacturers, except for IT companies, the creative industry, top-class designers, architects, etc. We are now lagging behind on quality issues. For the Swedish market, quality is the most important thing.

: Are there any achievements in the Association for such a short period? What can you boast about?

B. Senchuk: We are currently implementing several platforms. The first one is implemented with the support of the Embassy of Sweden in Ukraine — Sweden-Ukraine Cleantech Initiative. It includes solutions related to the use of renewable energy sources, waste management issues — both domestic and industrial, including hazardous ones. This initiative partly concerns the supply of heat and cold, the issue of water purification, sewage and air. All this includes the concept of Cleantech, which has been used in Europe and throughout the world for a long time. By promoting this platform, we want to help Ukrainians to become such consumers so that their country would be more energy independent. For example, there is no natural gas and no coal in Sweden, but it is a completely non-energy-dependent country since more than 50% of energy is produced from renewable sources.

: How do you inform the local population about the need to save energy?

B. Senchuk: I forgot to note that the issue of energy efficiency is derived from Cleantech. This approach, of course, is foreseen. We work together with Swedish companies and Ukrainian customers in order to have a complete understanding of the benefits of using Swedish solutions. For example, the use of heat pumps. There are Swedish companies which offer turnkey solutions for residential buildings, social institutions, even for apartments in high-rise buildings. I personally took advantage of this offer and I am now planning to install a heat pump which will generate heat, cold and hot water. I became interested in this question, because there is no supply of hot water in my high-rise building. This solution is quite economical in the long run.

: What plans does the Association have for 2019?

B. Senchuk: In addition to the Sweden-Ukraine Cleantech Initiative, Medtech Initiative, ICT Connection, we started the Sweden-Ukraine Road Safety Initiative in late April. This initiative will serve to reduce the number of fatal accidents on the roads. The prototype is the Swedish initiative Vision Zero, which has been implemented since 1997. So, in the next year, it is supposed that fatal accidents should be close to 0. To this initiative, we have involved Swedish companies of the Association, first of all, Scania and Volvo, which are partner companies of this initiative, and also SweRoad. We also invited the Ministry of Infrastructure, Ukravtodor, the National Police, Ukrainian public organizations to participate. We are also open to cooperation with other market players willing to join this platform.

: At whose expense do you implement these projects?

B. Senchuk: These platforms are implemented with the participation of Swedish companies which are joined by Ukrainian companies, as well as state institutions and local communities, if they see the interest. For example, we held Cleantech in Khmelnitsky, Medtech — in Kherson, ICT Connection will be held in Kiev. The Road Safety Initiative was also announced in the capital, and then, we will be happy to cooperate with all the regions and all interested organizations. Our idea is to launch the program, provide expert support, and in the future to attract Swedish experts to share their experience on how it works. In general, we are going to involve the maximum number of companies so that they can apply their own solutions. When we hold business events, we attract partners who want to support the chosen initiative. We are open to cooperation and always provide an opportunity for companies in business communication.

: Do these programs receive investments from the government of Sweden?

B. Senchuk: Currently, the Government of Sweden finances a large number of various projects through a Swedish International Development Cooperation Agency – Sida. One of the areas corresponding to Cleantech is energy and environmental protection. As for the latter, even a small, but very important beginning was the fact that on April 6, 2019, during the Days of Sweden in Ukraine, occurred an event that is called plogging. This word means that when the Swedes go for a run, they take a trash bag with them, and while running along the road, collect garbage they see. The event was organized by the Embassy of Sweden in Ukraine and UNDP. A new initiative of plogging in Ukraine has already been launched. In our opinion and in the opinion of the Association, this is a small part of the Cleantech initiative.

: What are your own principles or values that you always follow both in work and in life?

B. Senchuk: The first principle in work is openness. It is no secret that we have some discussions about competition. I can frankly say why Sweden is a successful country: it is highly competitive. It is very difficult to find a kind of business that is not competitive or has a certain monopoly position. For example, we have two members of the Association which produce identical products — trucks: these are Scania and Volvo. They are international players, their production is located in Sweden and other countries. Both companies are successfully selling products in Ukraine. Despite the fact that these companies are competitors, they cooperate in joint platforms of the Swedish Business Association. These companies have a different approach to activities and a different vision. However, due to the fact that we are open, we can offer opportunities for cooperation to all. Since their solutions are unique and necessary for the Sweden-Ukraine Road Safety Initiative, these companies complement each other and shape the overall picture like puzzles.

The second principle is honesty. Honesty implies responsibility. I had a great opportunity to work in a Swedish company for almost 10 years, and my valuable asset was such a great thing as an achievement. In Swedish companies, the achievement is considered one of the main indicators. The Swedish company creates all the conditions for these achievements to be a priority. In addition to these, the principles of sharing experience, trust and taking care are also important for me.

: What business areas were developed by Swedish companies in Ukraine in 2018?

B. Senchuk: In 2018, Swedish companies have traditionally observed a gradual growth in all sectors where they are present: IT — Sigma Software, agribusiness — Grain Alliance, renewable energy sources — Nibe. The solutions in the field of telecommunications were also indicative: it was Ericsson, and it was one of the most successful years of their activity. It is also a Väderstad company which provides solutions for agroholdings. This is both Scania and Volvo, which firmly hold their positions and increase sales in the Ukrainian market. I am pleased that Ukrainian companies understand the benefits of Swedish solutions. For example, when buying a garbage truck, they choose the one that is on the Scania chassis, because they consider its advantages that the truck can work without shutting down: you just have to change drivers, refuel and carry out technical inspection. Particularly noteworthy is the activity of SKF located in Lutsk and is one of the leading exporters of bearings. The company is an example of modernization of production, improvement of working conditions and the use of renewable energy sources for production needs.

: Were there such companies which have left the market?

B. Senchuk: Unfortunately, this is the case: one Swedish company entered the market last year, but this year hasn’t started active operations and left the market.

: Why did this happen?

B. Senchuk: I think the reasons will be analyzed later. Obviously, this is a management decision in Stockholm. There are examples of Swedish companies which have been working here for some time, and one of them is in the construction of a woodworking plant in Kostopil. It was invested €20 million, but the Swedish representatives, unfortunately, left the complex. The reason is simple — there is no legal access to industrial wood for the purpose of its further processing. This is a disastrous example, because job opportunities were created… But it was this complexity of the legal purchase of wood at auctions turned out to be an obstacle in attracting investment in the wood processing sector in general. Ukraine thereby sent a bad signal. Sweden is a relatively large country by area, but the population does not exceed 10 million, so information is spreading as fast as in any Ukrainian village. Unfortunately, such negative signals differentiate Ukraine from the state desirable to invest in. Our task is also to inform the government about such phenomena, to work with the civil society, to inform at the local and central levels, so that such cases do not recur, because nothing costs as much as the image.

: What Swedish companies are planning to enter soon?

B. Senchuk: We were very happy last year when H&M came to Ukraine and, of course, we are waiting for IKEA to open this year. These are long-awaited decisions, unfortunately, these will not be a full-fledged business, as it is in Europe. The process was delayed: there are many obstacles in Ukraine that prevent this business from turning to its full potential. Ukraine does not demonstrate the best practices of openness in holding tenders: there is a distressing experience when Swedish companies merged in the water purification and wastewater treatment sectors, but nothing happened. Ukraine is not ready for two reasons: the first one is that there are not enough resources, there is a significant decline in incomes; the second, there is no clear understanding of what Swedish quality is.

: Is Ukraine not an investment-attractive country yet?

B. Senchuk: There is another problem: a lack of skilled workforce in the country. It is something that earlier, perhaps, was declared as an advantage, but is no longer the case today. Successfully developing sectors in Ukraine are the IT sector, the agribusiness sector and agro-processing. However, to my mind, this is not a sufficient level for the development of the country. Sweden can be a great example: it has innovative centers working together with universities where education is not isolated from reality (when inventions made in Sweden are being implemented by companies in practice), it has business incubators, business accelerators etc. However, Sweden, despite these achievements and developments, is an export-oriented state, and therefore substantially depends on the economic situation of the countries to which products are exported, including Ukraine. So everything is very interconnected. Still, Ukraine can become a profitable trading partner for Sweden as well as an investment attractive country in future, there are a lot of prerequisites for this.

: Can you name Ukrainian companies which are currently operating successfully in the Swedish market?

B. Senchuk: Ukrainian export is growing, and this fact is very good. First of all, this is the IT sector. Also, Ukrainian products appear on the shelves of Swedish supermarkets: this is honey, although it tastes significantly different from Swedish; these are Ukrainian apples, tomatoes, watermelons (the latter were imported through the Baltic States and Poland). The possibility of establishing direct contracts exists and the fruit and vegetable sector will continue to grow. One of the most important factors is compliance with all European standards of product safety, quality, etc. And there are already Swedish programs that are ready to provide assistance to Ukrainian companies that want to be represented on the shelves of Swedish supermarkets. This process is accelerated step-by-step. By the way, the charcoal for barbecue in Sweden is Ukrainian: the packaging is Polish, but the raw materials are from Ukraine. We are working to establish direct contracts, but Ukrainian companies sometimes fail to fulfill their obligations. The phenomena of non-commitment, lack of responsibility are incomprehensible to the Swedes, this is of great concern to them. Therefore, the role of the Swedish Business Association is precisely to develop the business community, prevent mistakes and generally create a positive image of Ukraine in Sweden. It should also be taken into account that the image depends on the extent to which Ukrainian companies and government officials at all levels adhere to their commitments.

: How does the SBA promote Sweden and the market in Ukraine and what opportunities does it offer to Ukrainian entrepreneurs and companies?

B. Senchuk: Within the framework of the Swedish Business Association we are open to any requests from Ukrainian companies and united territorial communities. We will soon have a meeting with representatives of one such community who have found us and want to discuss opportunities for future cooperation. This may include issues of water supply, heat supply, the energy efficiency of social infrastructure and the creation of sites for industrial needs. We are glad we receive such requests. No one can guarantee that everything will happen very quickly: it is important to understand that a lot of time may pass from an idea to its implementation, therefore, it is necessary to take into account not only capital costs in the beginning, but also the cost of service and the cost of the viability of these solutions in the future. When calculating the total cost over 10 years, Swedish solutions are among the best in the world.

: What questions can the Ukrainian business address to you and what kind of qualified assistance can the Association provide to companies?

B. Senchuk: First of all, everything we can do is to give contacts to the members of the Association so that they communicate with each other and look for cooperation options. Today, not all sectors are represented yet, but we are working to ensure that a person who addresses us can at least get a business partner who has been in the Ukrainian market for a long time.

: What other sectors do you want to develop?

B. Senchuk: We want to work in the creative industry sector. This is an area of design, tailoring, accessories, household goods. We have not mastered this sector and are trying to attract the relevant Swedish companies to cooperate.

: Are there any statistics of Swedish companies already present in Ukraine?

B. Senchuk: More than 100 companies have registered their presence in Ukraine. These may be affiliated Swedish companies, partners of Swedish companies which implement their solutions in the Ukrainian market. These could be agents selling Swedish goods, or companies from Sweden but of Ukrainian origin.

To draw a bottom line, I want to thank you for coming to us, to thank Diana Shcherbinina, who actively supports all the initiatives of the Swedish Business Association, communicates with all Swedish companies, organizes all the events which take place here, and is an example of how Swedish companies work. The Business Association has a large-scale goal — 100 members in 8 years! Compared to that, there are more than 500 Swedish companies working in Poland, and only 100 in Ukraine. The potential is huge, but there are many challenges: the lack of workers, and it is clear why people can not find decent work in Ukraine. Everything we can do is try to do the best, involve Swedish companies, invite them to expand business activities in Ukraine. The first and foremost task for us is to make Swedish companies which work in Ukraine know each other well. We want to introduce the following principle “From our people to our people about ours”.

: We hope that your plans for 100 companies will be realized much faster than in eight years!

Please read: The most important recommendations on business protection in Ukraine for 2019

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