French business in Ukraine: Developments and prospects

Author : Marie de Vergès

Ukraine establishes international cooperation:160 French companies are now operating in our country
11:36, 2 November 2016

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112 Agency

Not a slightest fear. When the Biocodex French pharmaceutical company decided to settle in Ukraine in October 2014, there was a bloody armed conflict with separatists in Donbas and the strongest economic crisis raging in the country. GDP rolled down; the national currency - hryvnia - has lost two-thirds of its cost, while inflation increased sharply. "It was a very risky move with no guarantee of success" - recognizes now the director of Biocodex development in Ukraine Aude Boclet.

The beginning was "difficult", but now things are going "better than expected". In 2016, turnover increased by 70%. In the next year the company, which has 23 employees in Kyiv intends to double sales. "This is a great market, despite territorial losses, a country for which it is not easy to change, but wants to get closer to Europe. And people there appreciate the French production".

Biocodex’ success is very advantageous for Ukraine, which is desperately seeking investors. The national economy is beginning to rise, but there is still a long way for that. To improve its image in the foreign investors’ eyes, Kyiv conducts many new international forums. In 2015, they were held in Washington and Berlin and on 28 October in Paris will take place the economic conference, which will present the prospects of Ukrainian market.

The French companies already have a strong position there. Companies of all sizes engaged in the retail chains, the banking sector and, of course, the agricultural industry, which is the hallmark of our country. France is the fifth largest foreign investor in Ukraine and directly created there about 25 000 jobs.

Related: Unbearable lightness of exports: What hinders Ukraine in Doing Business ranking?

The crisis has not forced the 160 companies operating in the country to leave, but, of course, left its mark. "Consumption has fallen sharply, country has lost Crimea and Donbas: over the past two years, our companies have lost at least 15% of the turnover", - said the president of Franco-Ukrainian Chamber of Commerce Tom Moreau.

In 2015, the war in the east forced to abandon the use of Auchan hypermarket in Donetsk, the largest in the region. The situation is also uneasy is for Air Liquide, which two years ago built a plant for the production of oxygen. It continues to work, but the company has taken additional measures to ensure the security of its 27 employees.

Although the military conflict did not directly create difficulties in the rest of Ukraine, the sharp drop in purchasing power affected all enterprises. Then why they should stay?

"The country still has a lot of potential: the market of 44 million consumers, one-third of the world chernozem sols, not operating at its full capacity agriculture, - lists Tom Moreau. - We're not going to leave, to return three years later, when it becomes easier."

For some companies crisis opens up some new possibilities. Once Ukraine stopped buying Russian gas, the French Engie has become the main supplier for it, and now provides 10% of the total consumption.

The sales of Atlantic company, which is engaged in electric heaters and has been working in Ukraine since 2007, also went uphill. The company's products perceived as "effective alternative", - said David Loffredo from its international department. Atlantic has hired 180 people in Odessa and emphasizes the competence and involvement of employees.

"The local population is well educated, - confirms Francis Malige, Director for Central Europe and the Caucasus European Bank for Reconstruction and Development. – And this country has another advantages: wages level close to the Chinese, and the location in Europe, just a day's drive from Germany.

Related: Doing Business 2017 rating: Ukraine rises to 80th position

In the west of the country industrial chain begins to form. The French manufacturer of wiring Nexans already has two plants there, and now it is building the third.

However, the foreign companies are still afraid of making investments in Ukraine. And not just because of the economy safety concerns. Slow and long procedures, bureaucracy, unequal application of the law ... "Maybe some progress has been made there, but corruption and insecurity are still deterring potential investors," - recognizes Francis Malige.

"The attractiveness of the country is based partly on the initiated reforms and partly on promises - adds the economic adviser to the French embassy in Kyiv Vincent Prengo. For many more years Ukraine can remain a country with great potential, but without realizing it. But this period of country’s transformation opens up the possibility, which you need to hold on to. "

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