Several big Swedish companies are, for the first time, closely looking at opportunities in Ukraine. This is becoming evident as the 6th Sweden-Ukraine Business Forum, organized by the Embassy of Sweden in Ukraine in Kyiv, approaches on June 15.
The companies that will visit the forum for the first time are Assistanspoolen, C5 Gruppen AB, Mindmancer AB, SWEDAERO, Guang Sweden and IKEA.
They represent a wide range of industries: construction and property management, clothing, security camera systems, personal assistance services and aviation industries.
Swedish companies that already work in Ukraine, like Ericsson and Atlas Copco, will attend the business forum too. Some high-profile guests are expected, including Swedish Foreign Minister Margot Wallström and Lithuanian Foreign Minister Linas Linkevičius.
Bohdan Senchuk, co-founder of the Kyiv-based 52A Consulting firm, says the increased interest in Ukraine is clear. However, he says, there’s also a lack of up-to-date information about Ukraine in Sweden. This makes such business forums even more essential.
“We see many new names on the forum’s participants list this year,” Senchuk said. “It’s a good sign.”
The business forum comes as the European Union political and trade Association Agreement with Ukraine has been fully ratified and is in force, with the Netherlands becoming on May 30 the last of the 28 nations to sign on to the deal.
Also new this year, the business forum organizers will present Open Trade Gate Sweden, a one-stop information center for exporters in developing countries. Ukrainian exporters will be able to learn more about Swedish market, the EU regulations, certifications and procedures.
More than 100 Swedish companies are doing business in Ukraine, including these major ones in food processing, wood processing, home appliances, bearing and seal manufacturing, and energy.
Sweden, with more than four times fewer people than Ukraine yet more than five times the annual economic output, is particularly interested in Ukrainian light manufacturing and food production.
The June 15 forum is organized in partnership with government agencies – Export Promotion Office to the Ministry of Economic Development and Trade of Ukraine and the Swedish National Board of Trade, as well as with Swedish business community in Ukraine.
IKEA factor
IKEA, furniture and home accessories manufacturer with nearly 400 stores around the world, has been one of the most anticipated brands in Ukraine.
At the end of May, CEO of Mandarin Plaza LLC Oleksandr Chernitskyi said in an interview with Interfax-Ukraine that IKEA was considering renting a space in a new shopping center, Yuzhnyi, that is under construction in southern Kyiv.
An IKEA representative told the Kyiv Post that Ukraine was “one of the markets that IKEA is exploring for expansion opportunities.” However, the details on location of the future store and the opening date weren’t disclosed.
But IKEA representatives will attend the Sweden-Ukraine business forum in Kyiv in June.
“IKEA will be represented by its sourcing department and is interested in contacts with Ukrainian suppliers,” Oleksandr Mashynets Commercial and Trade Officer of the Embassy of Sweden in Ukraine said.
Trade’s up
Sweden is a longstanding business partner of Ukraine. Currently, there are more than 100 Swedish companies with offices in Ukraine operating in a wide range of sectors.
But despite the presence of big names such as SEB, Westinghouse, or Sigma Software on the Ukrainian market, the amount of investment from Sweden is still rather low.
The contribution of Sweden accounts for only 1 percent in the total flow of foreign direct investment in Ukraine, according to the State Statistics Service of Ukraine.
According to the National Board of Trade of Sweden, the year 2016 saw growth in trade turnover between the two countries.
The total value of Swedish exports to Ukraine amounted to $397 million last year, up 60 percent and the highest since 2011. Most of it came from chemicals, paper and machinery.
Ukrainian exports to Sweden also increased by 21 percent, to reach $77 million, the highest level since 2008.
One troubling sign may be that Business Sweden, a Swedish government-backed organization that promotes business abroad, closed its Kyiv office in January. According to Senchuk, who used to work there as senior consultant, the closing came as the organization optimized its resources.
Now, all inquiries for Ukraine are handled by the Business Sweden’s manager for Eastern Europe in Stockholm and, if necessary, by nearby offices in Warsaw or Vilnius.
Business Sweden in Stockholm didn’t respond to a request for comment by the time this edition went to press.
New investment
According to the Embassy of Sweden in Ukraine, sawn redwood goods producer in north western Ukraine.
Wind power development and investment company Vindkraft Ukraina, which currently has 10 wind turbines in operation, plans to launch 12 additional turbines by 2018.
Under a seven-year assistance program that ends in 2020, the Swedish government commits between $22 million to $28 million to Ukraine each year. The Nordic nation of 10 million people is one of the few in the world to spend 1 percent of annual economic output to foreign assistance.
Sources: openaid.se, sida.se
Andrew Shomakhia, newly appointed CEO of Ericsson’s Ukrainian office, told the Kyiv Post that the company is planning to increase investment into its R&D unit, although he didn’t disclose any financial figures.
The telecom company opened a R&D center in Lviv in February upon integration with software development company Ericpol. It currently employs 160 people.
Ericsson and Intellecom held the first LTE live demo in Ukraine in June 2016. However, the introduction of 4G LTE technology has been delayed in Ukraine.
Shomakhia said that the spectrum auction for LTE should take place by the end of this year.
