The recent developments on Ukraine's political scene have drawn the attention of everyone working in this country. In fact, they have received more exposure than they would have in any country with a developed political system, open economy and civil society.
But Ukrainian reality remains what it used to be. Most – if not all – businesses are linked to state bodies.
That raises the question of the state authorities' influence on the business sphere and the need for legislative changes to improve the situation.
The EBRD's 1999 Transition Report said that one of the main reasons for economic failures in the former Soviet bloc countries is corruption. According to the report, the share of bribes companies in Ukraine pay in relation to their annual revenues (6.1 percent) is higher than the average for the CIS (5.7 percent) and the Balcans, Baltic countries and Central Europe (3.3 percent).
Creation of business associations may be effective in helping deal with the problem and from the point of view of working out long-term strategies. The role of business associations in Ukraine increasingly grows every year. Many local producers – even quite profitable – strive to form a union to lobby state bodies. The association of food and beverage producers, Gordist Ukrainy (The Pride of Ukraine) is a good example.
Multinational companies also have begun to realize the importance of forming associations in Ukraine to influence the process of lawmaking and defend their market positions.
But a lack of stable communication between multinationals and government officials and lawmakers is a serious problem. Managers are, first of all, people of business, not of government relations. So, this is where public relations/government relations (PR/GR) firms can be attracted to help deal with the matter.
Sometimes, attempts by companies to establish independent communications with local officials might look funny, like in the Kyiv Post's 'Business Bob' cartoons, provided they have a happy end. Usually they don't.
Multinationals' experience in Ukraine shows that they face similar problems in PR/GR all across Eastern Europe. Despite the regional peculiarities, a number of approaches has been worked out that can be applied in Eastern European transition markets in dealing with state regulation and the legislative process.
It should be noted that very few international network consulting companies operating in Ukraine have special operation networks for emerging Central European markets.
To overcome this difficulty, a successful client-oriented PR/GR firm must possess two main qualities.
First, it has to be familiar with both Western and local business and political cultures. Automatic application of Western methods to local conditions is hardly possible in PR/GR affairs, unlike what the Big 5 auditors or some information technology consultants usually do.
Secondly, the problem many consulting firms face in serving large multinationals in the emerging markets – and that applies to multinational companies themselves – is that they often divide countries into work sectors using the old views and methods worked out for former Soviet republics.
As a result, a company's operation in such different markets as Ukraine and Uzbekistan, for example, may be conducted under the same network management.
Alexander Lengauer is the director of CEC Government Relations Ukraine, which is part of the CEC Government Relations network of public affairs and governmental relations consulting companies with the main office in London.
