Ukraine

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6:39 AM Wednesday, August 22, 2018
Industry
Made in Ukraine: Small Businesses Make a Big Impact
Much of the Ukrainian economy's recovery is being driven by the hard work and innovation of small and medium-sized business owners.
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By Antonina Tsymbaliuk

KYIV – On a sunny Saturday afternoon in Kyiv's central and trendy Podilskyi district, 75,000 visitors and 400 vendors have overtaken the central square and main high street.

Colorful stalls and exhibition stands stretch as far as the eye can see. But this isn't a typical weekend market.

All the vendors are owners of small and medium-sized businesses – most of whom craft or create their own products – and they're brought together by Made in Ukraine: an organization that unites, promotes and champions Ukrainian manufacturing and production.

According to official statistics here in Ukraine, business-owners like these are driving the country's economic recovery.

What's more, is that the volume of goods produced by small and medium-sized enterprises in Ukraine is much larger than the combined output of all the big companies.

At this “In Search of Made in Ukraine” market in Podil, a vast selection of Ukrainian product is on sale: clothes, shoes, accessories, modern furniture, decor items, cosmetics and even unique jewelry.

"The habit of buying Ukrainian goods is definitely being shaped,” said Darcia Kaplia, one of the Made in Ukraine event organizers. “Ukrainian consumers are becoming more Internet-savvy and happy to make purchases from manufacturers on the Internet," she added. “but these events are important too.”

Indeed, a large number of sellers here at the market don't maintain a physical presence with their daily business activity, unless they're attending a festival to promote their goods. Instead, they're embracing the digital shop like never before.

Physical Market & Digital Marketplace

If resurgent Ukrainian patriotism and the high quality of Ukrainian craftsmanship and production is helping these business-people, the Internet is certainly pushing things along too.

Ukrainians are increasingly using creative marketing and easier access to the internet to drive their business and reach their target audience. It's on the Internet that young creators have the easiest way to find their buyers.

Many make their product at home or in a small workshop, then cash in on platforms like Facebook, Instagram and Etsy to sell their wares.

"We have been on the market for a few years now,” says Natalka Kuntsevska, a fashion designer. “We regularly take part in festivals like this but sell lots of our accessories through Facebook.”

Festivals like this are changing people's minds about buying Ukrainian. What's more, is they're stirring up patriotic feelings within consumers.

“If I hadn't attended a festival like this, I wouldn't have known how many wonderful producers we have here in Ukraine,” said Olga, a customer.

Olga remarked that every time she visits a Made in Ukraine marketplace, she discovers some new Ukrainian brands for herself. This time, it was Embroidery Embassy: accessory-makers that use traditional embroidery as they hand-make unique earrings, bracelets, pendants, rings, brooches and even bow ties.

SMEs Drive the Economy

More than a quarter of all small and medium-sized enterprises, or SMEs, around the country are selling goods made in Ukraine. This means that Ukrainian goods are filling markets, competing fiercely with cheap imports from Asia.

Despite severe economic and political challenges recently, official data shows that the volume of goods made in Ukraine is steadily growing: and so is the demand for stuff that's Made in Ukraine.

For this reason, “In Search of Made in Ukraine” was launched five years ago by Ukrainian journalist and blogger, Julia Savostina. She aimed to prove that Ukrainian goods can easily replace the majority of imported goods, and she's having some noticeable successes.

It has become a nationwide movement, supporting Ukrainian producers. Before, it was a common complaint that Ukrainians didn't even know where to buy Ukrainian.

But the Made in Ukraine festivals are playing an important role in changing this situation, introducing hundreds of new producers to the market and establishing the habit of buying Ukrainian goods.

The organization also helps manufacturers, especially from the younger generation, to modernise and digitalise their business.

“No one else in Ukraine does this,” says Svitlana Tawalinska, CEO of Ivon Jeweler, as she demonstrated her 3-D printed jewelry. “With this computer technology, we can take the designer's idea and materialize it down to the finest detail,” she added.

Tawalinska says that SMEs are more innovative, and in her sector the big Ukrainian jewelry manufacturers are lagging behind modern trends.

“The mass market jewelry-makers are very weak in the sense of creativity,” she said. “Large manufacturers aren't cultivating a good sense of taste for the buyer.”

“Our unique product is gold, light-weight jewelry items that resemble the legendary Scythian gold in modern design,” said Tawalinska.

The lazer-cut specimens are indeed impressive and with growing sales and ambitions to move retail operations into the European Union, her innovative and tech-driven jewelry company is a prime example of a Ukrainian SME making waves.

In other areas too, small brands are competing robustly with foreign imports and mass-production.

Ukrainian footwear manufacturers, for example, produced 25 million pairs of shoes in 2017 – a 5.2% increase over 2016. During the same period official numbers show that imports decreased by 2% to 48 million pairs.

Some retailers explain that they almost always prefer to deal with local factories: the products are often cheaper, it's more convenient, there are no currency risks and no contact with customs or border officials.

Customers and businesses are waking up to the idea that while bilateral trade with neighboring countries is important, they also need to protect their own small businesses.

The Future of Ukraine's SMEs

Ukraine's small and medium-sized enterprises have a brighter future. Made in Ukraine and the government have more plans to better support and protect them. But that's not to say there aren't obstacles on the road ahead.

Small companies find it hard to get credit, especially at reasonable interest rates. Rents for factories, workshops and commercial premises are on the rise – hence the pivot to Internet shops. Additionally, many small and medium-sized enterprises are lost when it comes to the idea of looking for an investor.

Currently, most small and medium-sized businesses are also concentrated in inner cities, especially in the capital. Kyiv ranks first in the number of registered and working SMEs, home to 25 percent of the country's total.

Observers say that this situation needs to be changed so that each region can provide its entrepreneurs with a favorable business climate.

Despite the challenges ahead, small and medium-sized enterprises are currently having the biggest impact on the country's economy – 300 percent more people are employed by SMEs than by large companies.

In Ukraine, plenty of crafters, producers and retailers are becoming standard-bearers for the idea that in business it doesn't mater how big you are: it matters how smart you are.

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