Interview: Alternate forms of presence of international companies in Ukraine

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17.04.19

Source: hi-tech.ua

Peculiarities of the international business’ development in Ukraine occur in the context of national economy’s market transformation. Therefore, the general economic factors are the first to affect the localization of the international business.

CHGroup company has existed for a year and a half already and is the only market player with unique solutions for international technology companies which have decided to transform their presence in Ukraine, or appear at this market for the first time without direct presence.

Taras Chabanivsky, CEO of CHGroup, shared his expert opinion on the Ukrainian IT market and the special aspects of entering / returning the international business to the Ukrainian market.

— How would you describe a today’s IT-market in Ukraine?

We live in the period of changes and large-scale transformations. The country’s economy is not at it’s best, and this also directly affects the state of the IT periphery market. Companies keep on changing the worn-out equipment, but in most cases – to low-level and cheap devices, thereby trying to reduce the size of their investment in a stable economy.

Moreover, we are now witnessing the development of such a “new” direction, as the distribution of the “outdated” (second-hand) equipment “from Europe”. This is a perfectly new activity, which has never been was observed before. In addition, companies selling electronics delivered “in bags” from European countries without paying taxes, have become more open to declare themselves, using well-known Internet platforms along with official representatives of the same brands.

Speaking of the positive and actively developing areas, we could mention the print outsourcing or “copy-by-copy” print. In many cases this direction yields positive results, including the security and confidentiality of printing, control and management, optimization of personnel for equipment maintenance.

Of course, there are positive expectations for the market growth in 2019, but in relation to the development of the economy of the country and business in general.

—What are the prospects for the Ukrainian market as for international business?

Speaking of the prospects of international business development in Ukraine, it will mainly be determined by the general level of economic development of the country, the real results of the reforms implemented, a significant renewal of the structure of social production and the development of export potential. The legal framework must be brought to international standards. For all that, it will be years before the country acquires reputation of a safe one for long-term and significant investments.

With all the negative factors, Ukraine is a country, where developing business is potentially interesting (population, geographical location, etc.), and the international business is in a stand-by mode awaiting the positive signals to start active investments. In order for the moment not to be lost, the international business, as I see it, would like to be present in the market when significant investments will be justified.

 

Tell us about the new company in detail, please.

In fact, the CHGroup started out with the contract with OKI Europe Limited (OEL), a subsidiary of OKI Data Corporation, a global manufacturer of professional office business printing, applications and services provided to increase the effectiveness of the business.

In the beginning of 2017, OKI Europe Limited consolidated offices in some countries into the united clusters, refusing to be directly present through representative offices of the company in some countries, including in Ukraine. After a set of negotiations CHGroup was chosen to represent the interests of OKI in Ukraine, being the sole authorized representative of OKI Europe Limited in this market, as well as in Moldova and Georgia. CHGroup has a coordinating role and communicates with distributors, partners and key customers in Ukraine.

Our main task is to provide the most exhaustive information on the potential and optimal distribution channel in our opinion, as well as provide for the necessary marketing campaign for the market entrance and further activity in the form and in the manner which the company will deem acceptable at the given stage.

Which services does CHGroup provide?

First of all, the main product of the company is marketing consulting on primary exit or return of companies to the IT market of Ukraine without their direct presence. This is a fairly complex process of interaction, which, of course, will require weighted, thoughtful, controlled and coordinated investment. CHGroup specializes in comprehensive support services for international companies with technology products which are not ready to be directly in the market through local offices or representation. Consulting consists of both analyzing the market and a full-fledged strategic support of the brand.

We start our projects with a complete “immersion” into the features of client-company’s business, carrying out a comprehensive information gathering and analyzing the information received in accordance with the realities of the market, where the vendor wants to realize the presence of its brand. This can be the market of Ukraine and the neighboring countries, because the experience of CHGroup team covers the introduction of business in the territories of eight countries at a time.

What the client actually gets includes:

  • information about the business environment: where the product will be sold, the intended sales channel, the necessary marketing for product promotion;
  • coordination and implementation of the strategy for the presence on the market(s), the achievement of the goals on the local market(s);
  • organized communication and transparent reporting on the works performed.

Why is CHGroup unique?

First, we have no competitors in this market – this is a perfectly new type of product. The existing partners of a brand do not compete with us even if they have exclusive rights. The task of CHGroup is to support and strengthen the positions of already existing partners of the brand as well as strengthen the support of the existing channel and its expansion.

Secondly, the valuable international experience and a professional team can do the impossible. The CHG team knows the needs, understands the distribution system and the needs of the dealer network and the end user, on the one hand, and understands the needs, approaches, typical processes and approaches of international companies, on the other.

Thirdly, extensive international experience helps integrating the best practices, determine the main benefits of each partner and localize the international programs in the Ukrainian market correctly.

I should also mention that the product segment we work in is corporate. We are undoubtedly one of the market leaders due to cooperation with the national system integrators and the key customers of the IT market (banking sector, telecoms, government agencies and institutions, etc.).

Why can such services be in demand right now?

Many IT companies are minimizing their presence in the market for various reasons. They close their representative offices, reduce the operational activities. They start out with the search for new solutions with cost optimization and risks minimization. For example, the number of offices is reduced, part of the staff is transferred abroad, to the vendors’ headquarters. This leads to the fact that even being in day-to-day communication managers lose contact with their existing and potential customers in Ukraine. In fact, this is a declaration of presence, without the necessary economic result and any direct impact on the market in which the vendor operates. Rather, it is a form of waiting for a moment of positive changes in the market.

The second option is leaving the market with all the subsequent problems on the return value. I think such processes concern not only Ukraine. They are now global, and such examples are numerous. If the company operates in a developing risk market, it will minimize its investment.

Despite all this, Ukraine remains an attractive market in terms of development and presence.

What are the risks for the companies exiting / returning to the market?

Among the most common risks in localizing the brand is the opening a full-fledged office or representative office with all the consequences: these are significant financial investment, temporary and financial costs for selecting qualified personnel, developing a distribution channel and a dealer network etc.

CHGroup comprehensively accompanies international companies with technological products that are not yet ready to be fully represented in the market directly through a local branch or representative office.

—The company already has a first marketing consulting contract. What are your development plans?

International companies creating software and hardware IT products are our priority. In addition, it is also important that our customers do not compete between themselves directly. I believe that it is not quite ethical for one team to have a vested interest in promoting two competitive brands for personal benefit.

To date, we are taking certain steps towards the growth and development of the company; we are negotiating with several international IT companies which have not been previously represented in Ukraine.

I think I will be able to name the new brands among the clients of the CHGroup before long.