Doing Business in Ukraine
When you travel to Ukraine, you enter the country, full of paradoxes. Ukrainians are proud of their roots and reticent about their recent past; the country participates in international space programs and produces the world's largest aircraft, but still lives in the universe of superstitions.
Recently Ukraine has added another paradox to the list. Though the state originated over a thousand years ago in Kyivan, Rus many Ukrainian newspapers declared December 2004 as "the birth of a nation." The Ukrainian 'Orange revolution' burst onto the world's TV screens and newspaper pages. A new civil society was born in the demonstrators' tent camp in freezing winter temperatures and in the overheated rooms of the Supreme Court. The world was having a lightning geography lesson about the country in the south of Europe, sandwiched between Russia and European Union.
The Ukrainian business scene is a blend of the Soviet legacy and Ukrainian adventurous, entrepreneurial spirit, encased in a complex tax and regulatory framework. Despite the challenges, business in Ukraine does go on and in many cases presents unprecedented opportunities.
The country has a well-developed industrial base, rich agricultural resources and proximity to existing and untapped markets in Europe, Russia and Asia. The majority of the Soviet high-tech military plants were in Ukraine, which resulted in a highly skilled engineering workforce and large manufacturing capacities.
Doing business here is not always easy, but guaranteed to be exciting. Socializing and friendliness outside the office will more than compensate for the setbacks.
The process of business negotiation can be quite long-winded. Ukrainians will start the dialogue with a long "warm-up" session about the journey, the family or proposed entertainment for the evening. Don't get impatient: any attempt to rush straight into business is considered rude. For Ukrainians the beginning of the meeting is a time for evaluating the individual with whom one is conducting business. Ukrainians expect friendships to extend to business. Strong family ties and friendships have been a survival mechanism in Ukraine for centuries, be it in farming, when several families were pooling resources, or in times of hardship and crisis. A network of good personal contacts is the most valued asset in getting something done.
While Western negotiators prefer sequential approach and tackle every issue separately, Ukrainians tend to come to an understanding on the global picture first, before getting into the details of a proposition or a contract. Sometimes a Ukrainian host may start negotiations with: "Well, this is how we see it and this is the result we would like to get. And what is your proposal?" The Western counterparts are not always prepared for such an abrupt beginning. Consider your answer carefully, as your initial statement will be perceived as the backbone of your proposal.
The Ukrainian approach to negotiation can be emotional and direct. Ukrainian managers will consider early compromise to be a sign of weakness and will give minimal or no concession. Recent sociological research by the Institute of Sociology in Kyiv showed that Ukrainians say the word "No" in negotiations nine times more often than their Western counterparts! Though used frequently, it does not necessarily put the end to the discussion. Try to approach the matter in a different way. You should continue to talk about the details, deliveries and so on. Save any final price concession for the last meeting, even up to half an hour before you leave for the airport. You will be respected for tenacity and professionalism in your negotiating stance.
If you have discussed the entire plan with your counterparts and agreed upon every possible combination of events that could occur, you will probably be invited to sign "A Protocol of Intent." This is effectively a memorandum of the meeting, which is considered by Ukrainians as the first landmark on the long route to a business relationship and a contract. Often at this stage of the contract signature you will be required to put your "Company stamp" as the official confirmation of your signature, so don't forget to bring a self-inking rubber company seal with you.
Finally, however tiring the day (or, more likely, the week) of negotiations has been, don't refuse an invitation to dinner. As Ukrainians love to entertain, toasting at the dinner table is just as important as the work achieved in the morning negotiations, if not more so. It is a part of building the relationship of trust and loyalty. You can impress your hosts with the shortest and most common Ukrainian toast: "Budmo!"
If you understand and the local customs and are open, direct and professional, you will be respected in Ukraine. And remember: "Budmo!" means "Let us be..."
Anna Shevchenko is Kwintessential's senior Russia and Ukraine cross cultural trainer. The article first appeared in Pharmaceutical Marketing Europe, Vol. 03, Number 01, Spring 2006.
If you need cultural awareness training or consultancy on The Ukraine, please contact us to discuss your needs.