Ireneusz Derek in 1998 was one of the first Polish businessmen to take the plunge and start a business in Ukraine. Fifteen years on, the gamble proved to be worth it.
His Plastics Ukraine has since transformed from a small enterprise that employed four people into the country’s leading polymeric materials company. It imports and distributes polymeric materials that are widely used in advertising, digital print, interior design and other industries. Everything from a plastic cake box, a billboard to a roof can come from Plastics Ukraine.
Owing to his expertise, Derek was elected as head of the International Organization of Polish Entrepreneurs in Ukraine. In an interview with the Kyiv Post, Derek shared what it takes to be a successful business in Ukraine.
Kyiv Post: What does Plastics Ukraine do?
Ireneusz Derek: Plastics Ukraine is an importer and supplier of polymeric materials that come as semi-finished goods, sheets or tape. They are used in at least five segments of Ukraine’s economy: outdoor advertising, construction, packaging, industrial materials and interior design. We work in the business-to-business sector… It’s a 100 percent Polish company. We are present in 16 eastern and central European countries.
KP: When and why did you decide to come to Ukraine and how did your company change over this period?
ID: We came in 1998 because it was a natural way for developing a middle-sized business, which started in Poland 23 years ago. It was a territorial expansion into neighboring countries. Everything changed during those 15 years. From a company of four people, it grew to 220. We started in Kyiv, now we’re present in more than 20 cities throughout Ukraine with offices and warehouses. The difference is very big.
KP: How much did you invest in Ukraine and have the investments paid off?
ID: I think in total our investments (in Ukraine) are at around $5 million… During this time they have long paid off. Today we’re not talking any more about investment, but we’ve created the kind of capital (to open) businesses in Georgia, Moldova and will now open in other countries … But there is always a question at what cost of effort, health and nerves that money comes at. After some time you ask yourself if it was worth it all…
KP: But what are the figures of Plastics’ performance in Ukraine?
ID: In the past three years we have had 30 percent annual growth. Therefore, we doubled in the past three years. Our turnover in 2012 was Hr 300 million ($37.5 million). We are still counting the profits, but I think it should be around $1 million (for 2012) in Ukraine.
KP: Do you think you would get similar growth in other countries?
ID: From my example and other members of MSPPU (International Organization of Polish Entrepreneurs in Ukraine), the situation can be very different. Indeed, it’s not so hard to be successful in Ukraine, to build a successful business, but ironically it’s very hard to keep it afterwards. The general economic situation for investors in Ukraine is not very good. I would say that, 15 years ago, when I started my business, I had much more optimism about doing business in Ukraine than today. But nevertheless I already have a certain amount of clients, employees, a business model (that is) working and I cannot stop this machine.
KP: What is the trend for Polish investments in Ukraine?
ID: The last two years, unfortunately, Polish direct investments in Ukraine have been decreasing… As far as I know (by) 15-20 percent over the past few years — it’s a lot. Because Polish investments, unlike Cypriot, Bahamas and other islands, are real direct investments … Their decrease is a very serious signal for Ukrainian authorities that not everything is as good as they might think.
KP: What caused the drop in Polish investments?
ID: Unfortunately today’s leadership of Ukraine, who two years ago promised investors that doing business in Ukraine would be much easier – well, I can say that I haven’t seen that happen. We, as Polish entrepreneurs, who lead a transparent big business in Ukraine, we supported the new tax and criminal code and ideas they contained regarding ease of doing business. They did come into effect, but I don’t feel like something changed for my business. I don’t feel those slogans that it would be easier to import goods, go through customs clearance and communicate with customs.
KP: How badly did the world financial crisis affect Polish business in Ukraine and did it recover in 2012?
ID: The 2008 crisis affected Polish companies very seriously. Judging by MSPPU, before the crisis we had 130 members and, after the crisis, 60 of us are left … half of our members closed their companies during 2009 and 2010, completely leaving the Ukrainian market. Most of them were middle and small-sized businesses. The big ones (stayed because) it’s understandable that they want to be in Ukraine, because it’s one of the countries where business is done.
KP: How do Polish and Ukrainian mentalities work together when it comes to doing business and investing?
ID: Polish and Ukrainian mentalities are compatible. We are indeed very close, that’s why I know enough Polish-Ukrainian companies. Our mentalities are indeed so close that making investment decisions with those people that I meet is based mostly not on calculations as it is with Germans, while with Poles and Ukrainians it’s more with the heart. If they liked the partners, saw the platform and opportunities, they make the decision, invest and develop it.
Kyiv Post staff writer Maryna Irkliyenko can be reached at [email protected].
