Erik Liljengren, a Swedish entrepreneur in Ukraine and chief financial officer of Oium, an outsourcing consultancy, found it odd when Ukrainian businesspeople approached him with a proposal to build a monument to a long-dead Swedish monarch.
“They came from a region in southern Ukraine where local Cossacks had helped King Charles XII cross the river after fleeing the Battle of Poltava in 1709,” Liljengren remembers. The businessmen said they wanted his help getting in touch with Swedish entrepreneurs to raise money for the monument.
He politely explained that Swedish companies did not engage in such projects, and anyway, they were unlikely to sponsor a commemoration of one of the biggest military defeats in their country’s history.
Liljengren was equally surprised when he and a business compatriot attended a boisterous, vodka-fueled business lunch at which they found themselves being asked to sing their national anthem, along with a litany of drinking songs.
Despite these curious events, Liljengren says that he has observed Ukraine’s business climate gradually aligning with what he’s used to in Sweden.
He first visited Ukraine for the UEFA Euro 2012 football champions, and immediately became interested in the country.
He had previously studied and worked in Russia, but Kyiv captured his imagination and he decided to apply for a job here at Business Sweden, a commerce promotion agency co-owned by the Swedish government and businesses from the country.
Liljengren says that the championship changed not just his, but also many other Swedes’ perception of Ukraine, which they began to see as much more distinct from Russia.
Over 20,000 Swedish fans attended the tournament, which Liljengren says went a long way to change opinions in a small country of 10 million people.
“Thanks to football, many Swedes finally got to learn about Ukraine, and they now have a positive image of the country.”
Liljengren says that many Swedish companies become interested in sourcing raw materials from Ukraine when their Polish and Baltic suppliers start pushing up prices.
However, when firms want to source manufactured components from Ukrainian suppliers, they are put off by high prices and poor industrial standards in the old, unreformed industries.
“The bosses of these factories, they have sometimes been there since the ‘80s or ‘90s. They have never studied abroad or even visited a French or German factory, so they don’t push for reforms internally.”
Even so, he feels that Swedish businesses will often unfairly dismiss Ukraine as an investment option due to the country’s lack of European Union membership.
“For some people, being part of the EU is seen as a mark of quality, which I don’t really understand because Ukraine has partly come further than (countries such as) Romania or Bulgaria.”
Room for growth
Despite the recent entry of Swedish giants IKEA, H&M and Spotify onto the Ukrainian business landscape, the country still punches below its weight in doing business with its Scandinavian partner.
Trade between Ukraine and Sweden is hardly prodigious. According to the Ukrainian Ministry of Foreign Affairs, the figure stands at $648 million.
The Swedish Department for Trade however, puts the number at $520 million. Of this, $429 million flows from Sweden to Ukraine; only $91 million goes the other way.
Nonetheless, both data sets agree on the fact that trade in 2020 saw a decline as a result of the COVID-19 pandemic. The Ministry of Foreign Affairs estimates the drop at 8.5%.
Ukraine’s primary imports from Sweden are nuclear reactor parts (from US company Westinghouse’s Swedish plant), cars, trucks, pharmaceuticals, and heavy machinery. Its main exports to the Scandinavian country are wood products, ferrous metals, furniture, clothing and plastics.
Before the global shutdown, the countries’ trade had only just recovered to the levels of 2013, before Russia invaded Ukraine. It has never returned to the peak of 2008, when it stood at $801 million.
Sweden and Ukraine are not major trading partners and the trade that exists is lopsidedly in favor of Swedish exports to Ukraine. (Kyiv Post)
The Ministry of Foreign Affairs puts the total volume of Swedish investments into Ukraine at $563 million, but the Swedish Business Association in Ukraine says that the vast majority of this came in before 2014, with relatively little coming since.
Bohdan Senchuk, the association’s president, points out that there is still a great deal of room for growth. He says that while Poland and Ukraine are more or less the same size by territory and population, the number of Swedish companies in Poland is around 500, whereas in Ukraine, it’s around 100.
“Taking this into account, we can assume that room for a big presence on the Ukrainian market still exists,” Senchuk said.
The association president points to music streaming service Spotify as a recent example of a Swedish business successfully entering Ukraine, but maintains that in order to make progress in attracting Swedish investors, Ukraine needs to fix its problems around rule of law.
He also highlights Ukraine’s public sector as an area where Swedish companies struggle to sell their goods, due to their high-quality, high-price business models.
“When price is the most important factor, then Swedish solutions don’t really fit. Swedish solutions are not the cheapest, but they are much better than those which are initially cheap but whose operating and maintenance costs over five years will lead to higher expenditure.”
Old friends, new tech
Some Swedish companies have been around a long time and show no signs of slowing down business in Ukraine.
The telecommunications provider Ericsson, whose equipment currently services roughly 50% of all phone calls in Ukraine, likely has the best claim to being the longest-established Swedish firm here.
Ericsson, a company with a 145-year history, built the first ever telephone switchboard in Kyiv in 1893. It left after the October Revolution in 1917, but returned in 1996.
Ericsson’s reach spans almost 100 countries across the globe. Its General Manager for Ukraine, Yaroslav Nitsak, boasts that the company “is the only supplier present simultaneously in the U.S. and China.”
He believes that the firm’s Swedish roots facilitate a free-flowing and respectful approach to its work.
“What is unique for Ericsson as a Swedish company is its transparency, as well as a collaborative and consensus-based corporate culture. It fosters innovation and creativity because there are no borders in the company. Every day, we talk with our colleagues all over the world.”
The company is at the forefront of modernizing Ukraine’s telecommunications, and is currently pushing for the development of a 5G network in the country.
They recently built the first 5G demo center in Ukraine and signed a memorandum in February 2020 with the Ministry of Digital Transformation, which Nitsak says was partly focused on developing strategies “to evolve organically to 5G.”
