Ukraine is missing out on billions worth of export deals in the Arab world simply because the two sides don’t understand what the other has to offer, Yuriy Sydorov, ambassador of Ukraine’s International Chamber of Commerce to the United Arab Emirates.
Sydorov is also manager at Yudex Group, an advertising firm based in Dubai, and will speak at the Kyiv Post’s Capturing New Markets Conference on March 29 in the Kyiv Hilton Hotel.
Potential for export
It’s a simple case of supply and demand: Ukraine is rich in agriculture, metals and wood, while Arab countries are rich in oil and sand, which can only produce a limited number of crops.
It’s no secret that Ukraine wants to trade more with its European neighbors, but it might take a long time to get over the European Union’s bureaucratic and regulatory hurdles. Meanwhile the Middle East and North African markets are less regulated.
The United States has demonstrated what is possible in the Arab world.
Total U.S. exports to the 22 Middle East/Northern Africa countries were $67.4 billion in 2015, according to U.S. government data analyzed by the National US-Arab Chamber of Commerce. The largest recipients were the Persian Gulf countries of Saudi Arabia and the UAE, who account for around 60 percent of exports.
There are only 200 Ukrainian companies exporting to the Arab world, according to Sydorov. The main purchaser of Ukrainian goods in UAE, where he is based, is supermarkets: Ukrainian ice cream, dairy products, buckwheat, vegetables, flour. Other significant Ukrainian imports include metal, wood (specifically oak) and furniture.
Ukraine not a player
Ukraine isn’t on the map in the Arab world, Sydorov told Kyiv Post. Sydorov credits himself with working hard to promote his homeland and says he has achieved much through bringing delegations to Ukraine from countries such as the UAE, or even Libya, over the last few years to show them the country’s resources, production levels and labor market.
“The people who came were very surprised by the level of development. These are far off countries, they don’t understand what it’s like in Ukraine at all.”
Unfortunately the Ukrainian government funds no trade or educational programs about Ukraine in the Arab states.
“There is Global Village, (a shopping and cultural center), in Dubai which takes place over a number of months every year. Each country builds a pavilion in theme of their country, so the Australian pavilion is the form of the Sydney opera, Russia is the Kremlin, and so on. Ukraine hasn’t participated once in the entire 20 years it has been open.”
Every pavilion is funded from either the respective country’s trade ministries or embassies.
“This year even Palestine is participating,” said Sydorov.
Sydorov sounds exasperated by the lack of trade relations between Ukraine and the Arab world as he reels off the reasons why Ukraine needs to get involved in this market:
“It’s the fastest developing region in the world. There is so much construction, and so many global events taking place in the next few years: the 2020 Expo, the Asian Football Cup, the World Cup in Qatar. Everyone knows Qatar can’t host that many people, so people will also be visiting the UAE. Japan, China, US – they are all involved.”
Cultural differences
Though Sydorov argues there is huge potential for Ukrainian businesses to export to the Arab states, there are a few cultural differences which Ukrainians need to grasp in order to be successful.
“Business here is about building personal relationships. You have to have dinners together, really get to know and trust each other. You can’t do business at a distance. You must actually travel to the country. This part of the world is all about trade, historically speaking and it is all based on trust, not contracts.”
As far as women are concerned, Sydorov told the Kyiv Post that the image of women in the Arab states is a stereotype: “Maybe it was the case 20 or 25 years ago but now everyone is very educated. There are lots of women managing businesses. Foreign and Arab women.”
Arab investors unlikely
Recently, Ukrainian media reported that Saudi Arabia plans to invest $10 billion in Ukraine but Sydorov is skeptical anything will come of it.
“I don’t believe that news…It’s not my opinion, it’s just fact. People come to invest in Ukraine but all the discussions end in the same way. They do an analysis of the country’s situation and realize it’s too unstable.”
Sydorov explains that this is all part of the reason he left Ukraine: “It was a personal decision. I was a young businessman who for many years tried to create a business in Ukraine and it was always destroyed by some third party factor – war, a change in government. You can’t build a long-term business there… I chose the fastest-developing region.”
For investment to happen, or even for him to advice people to invest, it comes back to the same thing: Ukraine needs to drastically improve its international image.
“People need to know where Ukraine is on the map and they should associate it with a brand or product. Like in the US it’s Microsoft and Ford.”
In short, it is unlikely Ukraine will soon receive any direct investment from the Arab states.
“Arabs don’t understand customs taxes or tax systems in general, let alone in Ukraine, where Ukrainians don’t even understand the system. There is also no stability.”
An increasing export from Ukraine to the Arab world, sadly, is labor, according to Sydorov. Young Ukrainians are leaving their homeland because salaries are so low.
“It really is unfortunate but they understand they can’t do anything in Ukraine… Around 1,000 Ukrainians arrive every month in Dubai. They work mainly in the hospitality industry, as waiters or hostesses.”
