Liu Jun, the Economic and Commercial Counselor of the Embassy of the PRC in Ukraine, told LDaily about the firm long-term friendship between China and Ukraine, the peculiarities of trade and economic relations, as well as about large investment projects and prospects of the Chinese market for Ukrainian enterprises.
LDaily: Tell us about the activity of the trade department in Ukraine. Why was it created? How do you help the business?
Liu Jun: The full name of our unit is ‘Economic and Commercial Counselor’s Office of the Embassy of the People’s Republic of China’ in Ukraine. Similar chancelleries are located in almost every Embassy of China in other countries. Our main task is communicating with Ukrainian state economic establishments, developing bilateral trade, and helping Chinese enterprises when they enter the Ukrainian market, as well as helping Ukrainian companies promote in the Chinese market. Besides, we monitor the economic situation in Ukraine and are responsible for organizing intergovernmental trade and establishing an economic subcommittee of Ukraine and China, as well as an agricultural subcommittee. We also pay attention to the development of economic policy and business cooperation.
LDaily: What is about the commercial relationship between China and Ukraine? What benefits do you see in doing business in Ukraine?
Liu Jun: Since the proclamation of Ukraine’s independence, Chinese and Ukrainian trade has become more active, especially in the past six years – China remains the second largest partner of Ukraine. These rapid growth tendencies are possible due to a high level of trade complementarity. According to the theory of international trade, there is a high complementarity in trading relations between Ukraine and China. A positive development vector of trade and investment between our countries lays in resources, especially human resources, which relates to the population. There is a significant population size in Ukraine and people are well-educated. Except for human resources, Ukraine is rich in natural resources – fertile soil, minerals, and water resources. One more benefit is the country’s geographical location – it is situated between Europe and Asia, so it is a kind of a trade corridor. Ukraine is also washed by the sea, which is a great advantage for international trade. Moreover, during the last five years, we have noticed improvements in the business climate driven by profound reforms. Indeed, Chinese entrepreneurs have long been interested in the Ukrainian market, however, only thanks to the reforms conducted, they can actively trade and implement their investment projects.
LDaily: Which services does the Chinese trade representation provide to the business? What questions are addressed to you?
Liu Jun: Firstly, we provide information services. During the last five years, we have timely informed Chinese enterprises about the latest changes in the Ukrainian economic policy and economic reform. I can proudly assure that the website of our trade office is quite informative in comparison with others – it informs about the Ukrainian economy, the latest changes in the Ukrainian legislation and creates a full picture of the trade and investment climate in the country. Secondly, we help Chinese enterprises organize exhibitions in Ukraine, so they could have a chance to present their goods and services. We also help Chinese enterprises investing in Ukraine solve problems. We also offer enterprises from the PRC some trading and investment projects to create direct channels for communication between Chinese and Ukrainian enterprises.
LDaily: How do you assess the potential of further developing trade and economic relations between China and Ukraine?
Liu Jun: China and Ukraine have always been strategic partners, since we have friendly and long-term relations, and we have never had any conflicts or contradictions. I think that this is a great basis for our further long-term cooperation, and I would say we have a strong foundation for economic development. As an economist, I can assure that with the improvement of bilateral relations, this foundation will become even stronger.
LDaily: Are there some forward-looking projects the Chinese are currently developing in Ukraine? Which of them have already been implemented?
Liu Jun: According to the official statistics, the volume of Chinese investments to Ukraine is 300 million USD. However, this is not exact – the amount is essentially bigger because a lot of investments come from third-party countries. One of the biggest investment projects is ‘COFCO Ukraine’ – this enterprise has its own ports, sunflower oil processing plants, and grain elevators. There is also the CNBM company working with construction materials and the construction itself. They have invested in 10 solar power station plants in Ukraine. A lot of projects are being implemented in the agriculture sphere in Kharkiv, Odesa and Chernihiv. In these regions, companies lease land for cultivating grain crops and cattle grazing. Their investments have overcome 10 million USD. There are also enterprises engaged in wood processing, producing paint and synthetic materials. There are also scientific and technical enterprises, for example, Huawei which is not only developing products here but also has its own research institute. In general, there are many Chinese enterprises in the Ukrainian market, and they invest a lot. However, there are certain peculiarities – they do not want to disclose their activity, as they are afraid to deal with corruption. All this active economic activity takes place thanks to the economic market reform which provides entrepreneurs with confidence.
LDaily: China is actively investing in alternative energy projects and this industry in general. Why is this particular branch so interesting?
Liu Jun: As for cooperation in the industry of alternative energy, it often becomes an object for investment. Frequently, Chinese companies act as contractors in such projects. Over the past five years, the Ukrainian government has made a lot for the development of alternative energy – it provides companies with good conditions and even benefits, which helps Chinese enterprises. We call this industrial cooperation.
LDaily: A positive development dynamics of the Chinese business in Ukraine is obvious. What could you tell us about the Ukrainian business in China?
Liu Jun: I don’t feel comfortable to comment on this. In my personal opinion, in the aspect of export, China is keen on importing Ukrainian products, especially in the agricultural, industrial or IT sectors. Here’s an example – Ukrainian honey is of quite high quality, but it is almost absent on the Chinese market. Maybe, Ukraine should do more emphasis on active honey presentation in China? One more example is from the sector of Ukrainian tourism – in my opinion, it has only begun to develop over the past two years, but in China, not many people are aware of the opportunity of trips here so far, as well as about local sightseeing. China is a huge market, and I am convinced that Ukraine should present its potential to Chinese people more actively. Some Ukrainian companies ask us to demonstrate their products and services from time to time. We suggest them to participate in special exhibitions and recommend these enterprises to Chinese partners with pleasure.
LDaily: You mentioned tourism. Is there some statistics on how many Ukrainians visit China for business purposes?
Liu Jun: I do not have exact figures, but as far as I know, there are about 30-40 thousand annual inquiries on a visa to China. There are also some regions (such as Hainan province), for arriving to which one doesn’t need a visa. That is why many visit China this way, so it is difficult to talk about precise figures.
LDaily: What is the amount of trade between Ukraine and China?
Liu Jun: According to the PRC statistics, the trade was 9.6 billion USD last year, which is by 31% more than in 2018. According to Ukrainian statistics, it is 9.8 billion USD. Still, I consider this a very small result – China is Ukraine’s second largest trade partner, while Ukraine is the 56th trade partner of China, and in my opinion, we can aim 20 billion USD, which is achievable in the coming years.
LDaily: Are there some issues the Chinese business faces while operating in Ukraine?
Liu Jun: In general, Chinese enterprises face problems which occur in the process of the market forming and its transformation. For example, this is the instability of the political situation and corruption, although the latter has now decreased. Moreover, Chinese enterprises do not know enough about the Ukrainian market. If Ukraine develops a real market reform, these issues will surely be resolved. There are two sayings in Ukraine: ‘Money likes silence’ and ‘Enterprises like stability’, so I hope that in the future, the way of development of the Ukrainian economy will be more stable and well-thought. In this case, the trade turnover and investments will grow rapidly.
LDaily: Do large Chinese companies plan to enter the Ukrainian market in the nearest three years?
Liu Jun: Four years ago, I could not even imagine that so many Chinese companies would come to the Ukrainian market.
I can’t tell you something for sure. However, I can state that if Ukraine continues the market reform, there will be lots of great opportunities in the future.
Please read: Doing business in Ukraine during the period of political instability: what to focus on
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