The bi-weekly business report by Bonnier UKRAINE Investors need an established network to ”operate in Ukraine. | No 8 | 6 January 2010 | Creating transparency in emerging markets since 1991 | www.news2biz.com | Lars Vestbjerg of Danish Business Association PAGE 14 MANUFACTURING Norwegian IT consultancy Sofa manufacturer Ambiente: successful Itera to open new centers sales from East to West PAGE 3 Itera will open two new operation FINANCE centers in Ukraine and expand the one Piraeus Bank strengthens its positions at in Kyiv. Kyiv will remain the front office, PAGE 4 home and Ukraine while other locations must provide cost FOOD & AGRICULTURE efficiency that clients are so keenly loo- Pig producer Halychyna Zahid invests, king for these days. PAGE 9 looks to buy another farm PAGE 6 PROPERTY & CONSTRUCTION Komodor logistics park Lviv, one of the hosts of UEFA Euro 2012, nearly full now enjoys construction boom PAGE 7 Here to stay: Lviv is the place where Danish business community has Komodor logistics park near Kyiv is RETAIL & SERVICE planted its flag in the ground. Picture: news2biz COVERAGE ON LVIV: PAGES 2,3,6,7,10,13,14 about to sign up two new tenants, Burger King eyeing Ukrainian market, which will bring the park's occupancy new fast food chain welcome PAGE 10 Where have all the Danish businesses gone? rate to 90%. Successfully expanding IT & MEDIA tenants are also expected to bring joy to Danish Mita-Teknik finds Ukrainians Gone to Lviv every one. the happy host. PAGE 12 skillful and ambitious PAGE 10 To put together this special publication, news2biz UKRAINE TRANSPORT & LOGISTICS visited Lviv to take a close look at the activities of the local Danish Most important updated Ukraine buys 10 Hyundai trains to give key figures in this issue PAGE 11 business community. The editor met with several of the 43 Danish speed to Euro 2010 visitors PAGE 16 firms now operating in the region and learned what gives them Real estate prices ENERGY & ENVIRONMENT Stocks PAGE 17 PKN Orlen to develop hydrocarbon the competitive edge. Regional data PAGE 18 reserves in Ukraine PAGE 12 SEE ALL KEY FIGURES PAGES 16–18 ECONOMY & POLITICS Money moves via Cyprus Ukraine's key developments in 2010: More to come: cooperative FDI in Ukraine as of 01.10.2010 ALSO IN THIS ISSUE: PAGE 15 from protesters to reforms Others ▶ Shoe manufacturer SIKA intro- Lviv attracts investors Cyprus The Danish Business Assiciation is about to duces new models each year PAGE 3 Sweden ▶ EBRD enters UkrSibbank, brings sign a memorandum of cooperation with France Bonnier Group/Äripäev publishes similar business reports on Po- know-how to the table PAGE 5 UK land, Latvia, Lithuania, Estonia and China. As a subscriber you Lviv governmental and tax authorities. German ▶ Ukraine may soon launch indus- Austria have access to your country report ten years back through our on- y trial shale gas production PAGE 13 DBA is determined to invite more Danish Russia Holland line archives at www.news2biz.com. Multiple user access available investors to the region, but would like to ▶ Forget China, come to Ukraine, - write [email protected] or phone +372667 0251. Source: State Statistics Committee of Ukraine says director of HRT's plant PAGE 14 see the cumbersome red tape go. PAGE 13 2 | No 8 | 6 January 2011 | © Bonnier Group/Äripäev | UKRAINE REGIONS venturesome – and have been MANUFACTURING manufacturing, to start production, turning Lviv into a Danish haven in etc.," Lars Vestbjerg recollects. "In Lviv: Danish haven in Ukraine since then." addition, it was a problem to refund SHOEMAKING Ukraine "Eight years ago, there were just VAT." Some 1,000 years ago, it was the five Danish companies operating in SIKA safety shoes: from Baltic and Black Sea and the Dnieper Lviv. Now, our association unites 43 Jutland to Galicia and… Common problems River that played the pivotal role in firms in the region and is about to As it took him almost a year to the development of international back to Europe expand further to the neighbouring tackle all those problems, he realised trade in Eastern Europe. The so- Lars Vestbjerg came to Lviv back in Ivano-Frankivsk, Ternopil and Volyn that all the locally-based Danish called Trade Route from the March 2003 to manage SIKA regions," says Lars Vestbjerg, businesses had the same problems Varangians to the Greeks allowed Footwear Ltd, a daughter company chairman of the board of the Lviv- and it would be reasonable for them Scandinavian traders to not only of SIKA Footwear A/S, the family- based Danish Business Association to unite and put the consolidated establish a direct prosperous trade owned manufacturer of working and (DBA, see page 13 for more details), pressure on the local authorities. with Kyivan Rus' and Byzantium, but safety shoes founded in the Danish to news2biz. Still, as he was proposed to head also prompted some of them to town of Herning as early as 1870. the Kyiv-based European Business settle in the territory of the present- "SIKA manufactured its footwear Association (EBA), the idea of day Ukraine. Thank you Lars! in Estonia from 1997 to 2006, but in forming DBA was to wait for better Today, it is Trans-European The conversation took place shortly the course of time it turned out to be days. transport corridors and international before Christmas in the Lviv office of too expensive to operate in Estonia air services that connect people SIKA Footwear Ltd (see the story and the company decided to throughout the continent. So it is no below) managed by Lars Vestbjerg. outsource elsewhere," he explains. wonder that Lviv, the largest city of He had kindly invited the Western Ukraine located just 70 km Ukrainian editor to Lviv to meet him Looking for lower costs off the EU border and featuring an and the local Danes and the "To be competitive you are supposed own international airport and well- invitation was gratefully accepted. to have lower production costs, i.e. developed transport and logistics So this issue is mainly about Lviv cheaper labour force and logistics, so infrastructure, has given home to a and its hospitable Danish residents, we acquired the premises of a large Danish business society their successes and problems. former electronic factory in Lviv to throughout the past decade. start production here," the general manager of SIKA Footwear Ltd goes The production of SIKA, moved Danes the Pioneers on. from Estonia to Ukraine in 2002. "Danes were among the first foreign In 2002, when SIKA started Photo: news2biz businessmen, who saw the true relocating its production from Esto- value of our region's geographical nia to Ukraine, the Lviv-based In 2007, SIKA's Lviv production location back in the 1990s," says workshop had only 28 employees facilities reached its historical Nazar Bychyshyn, director of the and was capable of producing just maximum output of 208,000 pairs Lviv-based garment factory of around 25,000 pairs of shoes and and the shoe producer relocated the Danish HRT (see page 15), clogs a year. remaining production orders from its explaining the high number of "At that time, we had to get subcontractors in Estonia to Ukraine. Danish companies operating in the permissions for almost everything: SIKA's strategy for the following region. "They have proved to be true news2biz editor: It was a fruitful to reconstruct our facilities, to use year saw Ukraine as not only the business pioneers – vigorous and trip despite the frost. Photo: news2biz the building for footwear production site, but also a possible 3 | No 8 | 6 January 2011 | © Bonnier Group/Äripäev | UKRAINE sales market. As the limited hotels and restaurants, food "50% of our products are to Actona, the Danish company production area halted the output production and agriculture, building delivered to Europe, mainly to selling more than 2m chairs, growth, the company was going to and construction, metal processing, Scandinavia, through our parent 342,000 dining tables, 475,000 sofas start building a new factory on a transport etc) in Scandinavia, company Actona," says Denis and 260,000 office chairs each year. suitable land plot. However, the Germany, France and Benelux. McNally, general director of global recession started the very Ambiente Furniture, to news2biz. Growing demand same year. If the shoe fits… "On the other hand, we have also Taking advantage of its strong been long cooperating with IKEA, In 2009, SIKA's production Output of footwear in Ukraine, mln pairs financial potential, Actona started volume decreased by approximately who sells our sofas under its brand investing in improving Ambiente's 8% because of the downturn, but the 25 and at very competitive prices in production efficiency and quality. As following year the shoe producer Russia." the factory extended its upholstery, managed to quickly recover and cover and model range and reduced reach the 2008 level. 20 delivery time, it resulted in a "We have succeeded, because our growing demand for its products. down time for developing new So Actona increased Ambiente's models is rather short," Lars 15 production area by 50% to 6,500 2007 2003 2005 2004 Vestbjerg explains. “We introduce 2006 2008 2009 sq.m and doubled its production five-six new models each year and Source: State Statistics Committee of Ukraine capacity to 11,000 seats per month they are very well sold." in just one year. The company's staff grew from 70 employees in 2006 to "In addition, we are pretty "We would also like to see our 280 in 2009. flexible in terms of the production shoes and clogs sold locally, as well quantity and are always ready to as in Russia, one day,” Lars meet our clients' needs," he states.