Interview Ukrainian macroeconomics

Ukraine is an undervalued asset: a market with more than 40 million people cannot be unattractive

Vitalii Bulda, CEO of Robert Bosch Ltd, Vice President of Bosch Thermotechnik GmbH in the Baltic States and the CIS (except the Russian Federation), Representative of the Bosch Group in Ukraine, shared his thoughts on changes in consumer needs in society, on digital innovations in business and about the future of Ukraine.

: Bosch is the largest provider of technology and services for several industries. How does the development of information technology change the industry? What are the most dynamic areas of Bosch business?

V. Bulda: Traditional business is important for Bosch, we remain the leading supplier of components and solutions in the spare partsindustry, Bosch Rexroth hydraulic industrial systems, security systems, energy-saving equipment for heat and steam generation, power tools and household appliances.

However, over the past ten years, Bosch has become the world’s leading IoT (Internet of Things) system, which fundamentally changes not only production processes and technologies, but also our lives.

From this perspective, Bosch is a unique company that has both developments in artificial intelligence and its own production of MEMS sensors that connect directly to the Internet, as well as various services, such as BigData or IoT Cloud.

This uniqueness of the company allows us to open new markets and develop new business directions, such as Industrie 4.0, mobility, Smart House, Smart City, agriculture.

The number of above-mentioned MEMS sensors that are already connected to the Internet, reached 8.5 million and is growing rapidly now.

Here in the IoT sector, we have the greatest dynamics. For ten years, every Bosch electronic product will either use artificial intelligence itself or it will be developed and manufactured with it.

: So driverless  driving and elements of artificial intelligence in familiar to us things – is it the near future? Or is it only in the process of experimental development? How will these trends affect business development and the capabilities of companies?

V. Bulda: Bosch Company develops several areas in driverless driving. The first is driver assistance systems that partially automate driving in private cars (2nd and 3rd automation levels). The second is the development of unmanned vehicles in cities, the implementation of which will begin in the beginning of the next decade (4th and 5th automation levels). The third is the development of the Bosch ecosystem in the mobility, which already combines various solutions and services. Namely: booking, payment, parking, recharging, administration, maintenance, information and entertainment services.

As for artificial intelligence, it is one of the elements of the development and future growth of the Internet of Things. As I said, this is one of the strategic directions for our company. The Bosch Center staff are now working on 150 projects studying artificial intelligence. Artificial intelligence will be part of all our technology and will be used in the production process.

One of the examples of innovation in this area is fire detectors with video function, which analyze images and are can detect a fire in seconds – even before security sensors detect heat or smoke. Thus, a fire can be detected much faster, which saves priceless moments that will save lives.

We are now living in a very interesting time when these changes gradually and imperceptibly enter our lives. However, we do not feel them and can not always understand what this means for us. Therefore, the key question is how to perceive these changes – as a threat or as an opportunity? I hope that humanity will be able to see an opportunity.

: What has changed digitalization in the Bosch’s life and work? What innovations have been introduced and removed? What are you planning for the next 3-5 years?

V. Bulda: The dilemma of digitalization is that digital technologies are developing exponentially, and our habits are developing linear with changes that are quite painful. Also, you should add to this the expectations of customers that are also growing rapidly, and then you will see digitalization in new colors. From a technological point of view, Bosch Ukraine is gradually going through the process of digitalization both inside the company and in work with partners. Our goal is an office that can process orders around the clock and throughout the week, including weekends and holidays. We must meet the market requirements and work effectively in the online sales channel. Not everything goes fast, because there are certain limitations in terms of information security and the necessary resources, but we are sure that we are on the right path. However, the most important changes are happening in the company culture and in everyone of us. This task is much more harder, but we see gradual changes in this area as well.

: Why have you said “Bosch Ukraine”? Maybe in Ukraine, there is something that Ukrainian entrepreneurs should promote more to European markets?

V. Bulda: Bosch Ukraine is a rather small company compared to other European subsidiaries which, moreover, operate in stable markets. Yes, we are somewhat behind in the level of implemented digital technologies, but mentally, we have gone much further, which allows us to be faster and more proactive. Even in recent years, we are confidently demonstrating high sales growth ahead of many countries.

There are many things in Ukraine that we have learned in recent years, and there is an experience that we could share with our neighbors. Entrepreneurs who were able to develop their business deserve a detailed analysis of how they succeeded.

We make decisions much faster even when we don’t have complete information, we are better prepared for risks, we can concentrate quickly, create short chains of decision-making and in general, we are simply more agile.

: Are there any services that Bosch offers in Europe, but not in Ukraine?

V. Bulda: Yes, of course, but it depends not only on us, but also on the level of market development. New technologies come faster through private users who use them, for example, in cars or in Smart House, but gradually we see the development of Smart City when each of us can use electric scooter sharing or a range of services related to autonomous driving or parking administration.

It is interesting to observe how we are changing. Five years ago, in Ukraine, the company’s innovations were almost not interesting to anyone, but now we see a lot of positive feedback on our social media posts about a variety of new solutions – from automatic stabilization of motorcycles while cornering to SoundSee technology which allows us to identify a car damage using a sound analyzer.

Only thanks to information technology, the world has become open, and the geographical distance to innovative solutions is no longer an obstacle.

: How did the crisis affect the Bosch business in Ukraine? What has it changed for you?

V. Bulda: If we mean the events of 2014, then after Chernobyl in 1986 it was the greatest shock in my life. The uncertainty of the business environment grew very quickly, besides, a part of the family remained in the Donbass, and all this had to be solved at once.

The Head Quarter supported us, but it was clear that nobody cancelled the profitability.

Therefore, along with purely business tasks such as customer support, cost reduction, compensation for currency fluctuations, pricing, cash flow control and the stock balancebalances, it was extremely important to keep the team and keep fighting spirit.

We helped colleagues move with their families to Dnipro, Kramatorsk and Odessa, paid rent, found a solution to repay loans and simply supported morally.

I want to thank once again to everyone who was there and has done their work professionally.

At that time, the issue of cost reduction was the most painful, and we had to choose between staff cuts and looking for other reserves.

The crisis had to end once, so the most important, as in other companies selling high-tech products, was to maintain competence in each of us. Therefore, we chose a way to reduce other expenses and solved the problem together.

We were able to save the team, which gave us the opportunity to rise in 2015, when the market revived, while most of the competitors were still suffering from staff cuts.

Our company is financially stable, profitable, dynamically developing. In 2017, we moved to the new office which is one of the best in the Bosch group .

A very important factor in our success was also a number of social projects that we have begun to implement since 2014. These projects aimed at helping those whose life is much harder, strengthen the team and contribute to personal development.

: How have your customers changed? What has changed in the needs of society over the past five years?

V. Bulda: Customer preferences are changing all the time, but the challenge is how to adapt and shape the demand for your products.

First of all, this is the beginning of the online trading dominance. I did a survey in the company, and it turned out that employees under the age of 25 years buy almost everything on the Internet. Questions immediately arise: “How do customers of this age group find us in the virtual space? How to adapt logistics, support and other business processes to this category of customers?”

Another example is the sale of spare parts and garage equipment, where we are also confidently developing, offering our partners additional information support and a franchise for Bosch Service. The demand for a reliable and high-tech supplier is growing and we always provide support in the conditions where the fleet of vehicles is constantly changing and new technologies are being introduced.

Another interesting example is changes in relation to energy saving. Consumers are beginning to consider not only the price of the boiler on the shelf, but also operating costs. This is a very big step in consciousness and we are pleased that, together with the EBRD, we took part in the implementation of the iQ Energy financing program, which makes it possible for private individuals to install energy-efficient equipment.

: What risks does the company face while working in Ukraine?

V. Bulda: The greatest risk for every business, including for us, is market and financial instability. Regarding only Ukrainian risks, I can say that during the 26 years of the company’s existence, we have not had any critical situations related to state authorities. The principle of business legality is important for us, we are always open, we conduct our business in accordance with the current legislation and the code of business conduct. Of course, discussions arise from time to time, but we always find understanding and legal solution and continue to develop the reputation of a conscientious taxpayer.

We are convinced that the legality of doing business also benefits in the long run.

: There are many statements that our market has significant potential for business development, so foreign companies can come here. At the same time, our entrepreneurs are not actively promoting themselves in the German and European markets. What is the most promising area for business in Ukraine? What should Ukrainians offer in Europe?

V. Bulda: Ukraine is one of the countries where you can invest money, so each investor calculates his risks and profitability return.

Over the past five years, not only more than two hundred factories have been opened and a lot of investments had come in the energy sector, we also see positive changes in many other areas that increase the country’s investment attractiveness. However, we still have a lot to do, including communication with our Head Quarters to expand their presence in Ukraine. I’m not sure that the new Bosch plant for the production of components or finished products will be located, but it would be appropriate to use the Ukrainian potential in IT and agriculture.

No one will come to us unless we actively invite and demonstrate our competitive advantages. Ukraine is now an undervalued asset. A market where more than 40 million people cannot be unattractive.

: What are your plans for Bosch Ukraine for the next five years?

V. Bulda: Continue to develop dynamically and profitably.

If you ask about my personal wishes and hopes, I dream that the R&D centre of artificial intelligence will be openedin Ukraine. This is not fiction, especially in Ukraine which is among the leaders in the IT industry and has highly qualified specialists in this field.

In addition it all about the dreams that drive everything in this world.

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

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