29 August 2012

Back to work in Kyiv city

Traffic jams have returned this week to Kyiv city centre. It would appear that everyone has return from their summer escape at the same time. That great feeling of driving in the summer city centre has gone for another year. Let's hope that the 'great return' will help to inject some life into the economy. Sadly, I'm not so positive as I know full well that the upcoming Parliamentary Elections will cast a shadow on the decision making process in almost every board room and CEO office in Ukraine. Everyone is waiting to see what happens next. But the 28th October is a long way off yet. Lets all hope that at least the election campaign will become interesting and add some interest to life in Ukraine. Right now we all need it.

26 August 2012

Politics and Business in Ukraine

Its well known in Ukraine that the majority of the members of parliament are business people in some form.
It reminds me to a small degree of the Thatcher years in the UK, when almost every Government Minister had a successful track record in business.
As many of the members of parliament here in Ukraine have business 'interests', you would expect to see these people acting like 'professional business people'.  The bad news is..NO, they cannot act like professional business people as they have very little experience in actually managing a business. They just 'own things', which is not the same.

As there is an election campaign currently underway, you would expect to hear much talk about the usual things that elections are all about, e.g. The Economy. Business, Jobs, Education, Healthcare, Social Justice etc etc. But not here in Ukraine. Well maybe not yet. Lets hope that things will get serious before election day on 28th October 2012.

The Government of Ukraine has a very 'hands on' approach when it comes to their approach to businesses in the economy. Sometimes, I think they assume that all the money circulating in the economy belongs to THEM...The Government, or maybe just those 450 members of the VIP club we call Parliament here.

Foreigners and foreign owned businesses here have helped to highlight how out of date government policies are towards business in Ukraine. For Ukrainians who have never worked in a small/medium size business or in fact worked in a business in another country it is difficult for them to understand how BAD the system really is in Ukraine.

An example is the pressure applied to banks by the ever present National Bank of Ukraine, Ministry of Economy and the State Tax Administration.  A business person operating under the 'private entrepreneur' scheme will come up against many barriers from his/her own bank when they are doing business.
An attempt to withdraw money from a business bank account will be met with a request from the bank employees for the business person to prove FIRST that they have paid their due taxes this month!!!.
Unless proof can be provided immediately, funds cannot be withdrawn from the bank.
Banks are still acting as unpaid agents of the government.

It would be interested to hear from some of those politicians up for re-election, how they intend to approach this subject. Will they just support its continuance or suggest alternatives to this overbearing policy.

20 August 2012

Doing Business in Ukraine - The 'obsession' with minutiae

Look for mistakes....look and find. Try to find a problem. We MUST find a problem.

I'm almost convinced that from an early age Ukrainians have been taught how to concentrate on finding something WRONG with something. Particularly when it comes to documents.

Its a well know fact across the foreign community here in Ukraine that doing business here is driven by the obsession with documents, lots of them and making sure they are 100% correct in every small detail.
If a small mistake is found........OH NO........(Or maybe OH YES) we have a BIG PROBLEM now.

Please don't misunderstand me, I know that its important to get documents correct first time to help protect an individual or business from a legal standpoint. But there is clearly a major problem in Ukraine which I can only describe as an OBSESSION WITH MINUTIAE.

A well known obsession is the 'wrongly transliterated' name problem. Usually arises where a Ukrainian company or Ukrainian business owned by a foreign shareholder and/or when doing business with a foreign company and agreements are prepared in dual languages, usually English and Ukrainian.
Names of Directors can be translated in many different ways leading to the major problem of.............
''OH NO.......one letter is wrong in the name''

I recently witnessed a case where a foreign owned Ukrainian company had entered into an agreement with an overseas foreign company. The foreign company ( a very large multinational) had prepared the agreement and sent it to Ukraine for signatures. The Ukrainian company, eager to win the business signed and returned the agreement and prepared a translation of the agreement into Ukrainian language.  Weeks later when the Ukrainian company received payment from the overseas client, the suppliers bank requested to see the agreement to justify why payment had been received.

Shock horror, when some eagle eye bank employee discovered a major error with the agreement.The name of one of the Directors of the Ukrainian supplying company was spelled incorrectly on the original agreement in English and had also been translated the wrong way in Ukrainian. What was this major error?

The name 'Poroshenko' had been written as 'Porsohenko' ( this is an example, not the real name from the company). The bank claimed this was a major problem and the money would have to be sent back to the paying company overseas.

The main shareholder and director of the company explained to the bank that both his company and the client company were already doing business and had no problems. The company had supplied the goods/services and here was the client paying the invoice. Why was the bank trying to cause a problem.
The bank employees replied that they were just doing their job according to rules applied by the National Bank of Ukraine. The fact that the name was spelled correctly on every other document the company produced to the bank was completely ignored.

A clear example of 'obsession with minutiae'.  Maybe the bank employee(s) were looking for a financial reward to take away the problem.

Plus the bank added that old excuse, the foreign client had 'FAILED' to apply the company STAMP to the agreement.
How many times do foreigners have to explain to people in Ukraine that the majority of foreign companies NEVER use any kind of stamp to prove who they are. Just a simple signature, name written in block capitals and a date are enough.

The rest of the world should not be obliged to meet so called Ukraine standards.
Banks in Ukraine should not be expected to continue as unpaid agents for the Tax authorities.
Common sense should become the order of the day instead of poor excuses for holding back everyday business.

Until change is introduced, Ukraine will continue to be known as one of the most difficult places in the world to do business.

14 August 2012

IT Outsourcing in Ukraine 2012

Ukraine is still a very active market for IT outsourcing. Here in Ukraine we have some of the very best local IT development companies in the world. Some are owned and managed by 'western parents' who saw the opportunity to establish a working office in Ukraine. Lower rates of pay compared to the US and UK help to control costs but it's not always about low cost. Skilled IT professionals are in demand in Ukraine and the collective skills in some small companies contributes significantly to the core value of these companies.

During the past 8 years, the volume of software development and IT outsourcing services in Ukraine has increased by over 100%.

A very interesting report has just been published by the Ukrainian Hi-Tech Initiative, leading association of Ukrainian software development and IT outsourcing companies. The report includes useful information about Ukraine, its infrastructure and some specifics on doing business in Ukraine. This information will be useful for those considering Ukraine as an outsourcing provider or setting up their own office here.

The report can be downloaded here:  http://bit.ly/Tc3jQj