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Escape from Russia: How to Make Money in Ukraine

Already half of a year Russia’s ruling elite with maniacal persistence prove sufficiency of Russia in the present-day world, general independence from civilized rules of politics and the civilized world, from the global integration process. From outside such actions are similar to a gradual burning of all existing bridges between Russia and Western countries resulting in greater and greater isolation of the country, the Iron Curtain which slowly but surely are falling on the country. And this situation does not concern only non-governmental organizations in Russia, as in May, 2015 a law about restriction the activity of non-governmental organizations came into force. So each organization, including charities, international educational programs, etc., may be recognized as a non-grata persons, its activities can be banned and the management of such an organization can be prosecuted. Also, these restrictions will be superimposed on businesses with foreign participations, so far in informal way, but knowing the realities of Russia no one will doubt that any moment Russian parliament can support these legislative initiatives in a unanimous impulse. Because of that the withdrawal of businesses, international commercial and noncommercial projects from Russian not only became obvious even to the Russians, but every day the speed of closing all projects increases.
But why such situation may be interesting and useful for Ukraine, which itself is in a difficult economic situation due to the annexation of Crimea and covert military invasion of Russia to the eastern part of Ukraine? Ukraine can elicit a lot of useful things from escaping of foreign capital and projects from Russia, because not only small and medium businesses are leaving the territory of Russia but even offices and productions of large multinational companies.
Ukraine has a good production potential, a sufficient number of qualified workforce, a convenient location and communication with Europe. We just need to propose some projects to leaving Russia projects and capitals, the implementation of which in Ukraine is possible to make quickly and effectively. These are projects in the field of information technologies, agriculture (both production and projects partitioning), food and processing industry, SKD technology products, energy-saving technology, etc. For these projects, as well as the accompanying investment and innovation, we should compete.
So, why should we believe that transaction of projects and capitals from Russia to Ukraine is possible and profitable for western capital? Because it is logical to assume that the majority of industrial companies and offices will move to neighboring with Russia countries and settle their, such a decision they will make due to questions of logistics, transport, the region of services and the features of the mental foundations.
Ukraine is a very attractive for IT-sphere enterprises, even now Ukrainian companies sell to the west a large number of its decisions in the field of information outsourcing, gaming and special software. The cost of services of Ukrainian programmers is quite low. For sure, when IT-companies move to Ukraine from Russia the cost of IT-personnel will inevitably increase due to the scope of increased competition for labor resources, but we think it still remains a very competitive cost.
Ukraine is very attractive country for Automakers leaving Russia, taking into account that over the last year completely or partially such automakers as the WV (its structural units of Skoda, Audi), Volvo, General Motors, Chrysler, SsangYong, Mazda, Peugeot / Citroen and others went from Russia. That’s why Ukrainian producers may well take a significant amount of orders for accessories and SKD. Moreover, it can be interesting for automakers to produce in Ukraine goods or assemble cars for further selling in Europe or other countries, because of the low rate of the national currency of Ukraine the accommodation here is very profitable.
Very promising direction in Ukraine could be projects in the field of military-industrial complex. Due to the introduction of sanctions against Russia, many well-known manufacturers, especially from NATO member countries, are forced to close their projects and look for new possibility to use its technologies and know-how. At the same time Ukraine is experiencing a great interest in military development, especially in the fields of optics, fire control systems, radars, avionics, aircraft, etc., and the scheme of public-private cooperation in the military sphere is becoming more popular. Some orders in the field of aviation, rocket and cryogenic technologies after leaving Russian can be placed at similar Ukrainian enterprises at Dnepropetrovsk, Kharkov and other cities.
Ukrainian market may be interesting for financial capital. Now the cost of industrial sites in Ukraine is very low, although these industrial sites have good logistical location, supply of energy communications, industrial water, etc. With the growth of the economy and the placement of plants in Ukraine by foreign investors, the cost of such sites may increase by several times and a financial investor can earn on this profitably reselling the asset.
In addition to commercial projects which go from Russia, private foundations that carry out projects in the field of culture, the development of civil society and democratic initiatives could be settled at Ukraine. It is the easiest to organize public television and radio broadcasting aimed at an audience of Russia, to create and support the print and electronic media which provide access to alternative information for Russians.
Ukrainian winning from projects and capitals leaving Russia is obvious: it is a civilized step in technology and production, increased integration into the global economy leading industries, the integration into the civilized world finance and new investments, development of post-industrial economy, changes in civil society.
What will get “the fugitives” from Russia? First of all, cheap labor, from low-skilled workers to professionals of the information and technology field, relatively cheap manufacturing and office space, the presence of a large number of production facilities, convenient logistics. Also, foreigners receive fair and transparent rules of game in the civilized market developing according to western criteria and rules that is very different from rudeness, willfulness and unscrupulous Russian rules of game. In addition, the placement of Russian output processes and production in Ukraine will be wise for those foreign investors who believe that the current government in Russia and creating the reality by them will not last long and after some period of time Russian market may again become interesting. Expansion of Russia is the easier to make from Ukraine.
We would be happy to assist interested parties in the transaction of their business or projects in Ukraine. And you can rely on our consultations and pieces of advice.

Author: Kydalov Igor

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Kydalov & Partners
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 2 reviews
by Nicholas on Kydalov & Partners

In this situation, when Russia closed markets for Europe and Ukraine, for European producers, the Ukrainian market is more than attractive. And in Ukraine, perhaps there will be more quality products.

by Alexey on Kydalov & Partners

I think that Ukraine will have enough capital from foreign investors. The Russian market closed to them. Now they need to find new markets in eastern Europe. And Ukraine is the best in such case.

Publication Date: 20.10.2015
Views: 2.1K


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