Ukrainian business lacks empathy. Observations of Polish investors after a trip to Ukraine
This year, I am visiting Ukraine for the third time and returning to Poland for the third time with faith in Ukrainians, admiring how the nation and business are trying to function—as normally as possible—during the war.
On the one hand, there is the war; the destruction of some parts of the country; a huge shortage of human resources caused by mass migration and conscription; regular reports of mines; and a constant sense of uncertainty—because at any time a missile could hit your home or business, and then you could lose everything.
And on the other hand, the enormous efforts of the population to live, act, develop business, and nurture Ukrainian identity and culture.
During my three weeks in Ukraine, I had many meetings with entrepreneurs and representatives of international business organisations such as the EBA [European Business Association] or MSPPU [International Community of Polish Entrepreneurs in Ukraine]. On a regular basis, I try to monitor the trends in certain market segments. And I see several positive trends.
Firstly, foreign investments that were present in Ukraine before the war have remained and, as a rule, keep the jobs. However, the number of employees at these companies is usually reduced, but they continue to work and plan to stay.
Secondly, large exporting companies located near the border with the European Union and not previously using seaports are in a better financial position than other exporters, as they receive payment for their products in foreign currency and are not subject to the high rail transport costs that were particularly painful for, for instance, the metallurgy or agricultural sectors.
On the other hand, there is a growing need for market consolidation in the services sector. Companies offering, for instance, technical real estate services are finding it increasingly difficult to fulfil orders and provide quality customer service.
The main reason is the conscription of men who used to work in the construction and technical sectors. The lack of these professionals in the market is driving up prices for services, while clients continue to look for ways to cut corners.
It seems that consolidation and the use of synergies in the management of such a scarce resource as technical specialists can have a positive impact on the market situation, at least temporarily stabilising prices.
Given the protracted war and the lack of a clear time horizon for its end, another market need is evident. It is the so-called business ‘empathy’, i.e. loyalty and partnership between suppliers and customers. In order for the Ukrainian market to survive as a whole and at the same time lay the foundations for a better future, it must start moving away from the post-Soviet model of treating the supplier of services or goods as a slave here and now.
This model existed before the war in some sectors and was manifested in the fact that large holding companies or capital groups often used suppliers as a source of their own financing, dictating strict non-negotiable contract terms or imposing high penalties, and contractors were forced to accept this if they wanted to work and receive large contracts at all.
Business partnerships, which are standard in Europe and an important element of business culture, allow you to play it straight. The client understands that the supplier also runs the company and has the right to make money from its business, and simply allows it to do so without trying to exploit its advantage too much—for instance, because of its size.
An additional piece of the puzzle, especially in wartime, is loyal payment terms, as well as timely payments. Financing from weaker suppliers can lead to the destruction of certain sectors of the economy.
Fortunately, however, the partnership trend is gradually taking root in the Ukrainian market and I hope it will continue to grow, as I believe it is essential for the economy as a whole.
