Traces of France’s industry and strong economic power can be found almost everywhere in Ukraine — from cars on the roads to helicopters in the skies, food on the shelves of supermarkets and luxury clothing brands in fancy boutiques.
In 2019, the trade turnover between Ukraine and France reached almost $2.6 billion, according to the State Statistics Service of Ukraine. With Ukraine’s imports from France worth $1.8 billion, the country ranks eighth among Ukrainian trading partners in Europe and ninth among foreign investors.
Despite Russia’s war on Ukraine in the eastern Donbas region and constant political upheaval in the country, French businesses still see reasons why to stay and do business in a country of nearly 40 million people.
“The potential of Ukraine is enormous,” said Bertrand Barrier, president of the French-Ukrainian Chamber of Commerce and Industry, echoing the words of many businesspeople during the past decade. “And (French) companies still all believe in the future of Ukraine.”
According to Barrier, currently there are 180 French companies operating in Ukraine, employing 30,000 people, which cumulatively makes them the “largest employer among all foreign businesses.”
For the past few years, French investors were mainly interested in three sectors of Ukraine’s economy — renewables, IT and infrastructure.
And even despite the negative trend which Ukraine’s economy has entered due to the COVID‑19 pandemic and quarantine measures, French companies in other sectors such as banking, food retail and automotive, are still doing well.
“Ukraine is a young and very promising market, we plan to continue developing our business here,” said Viktoria Lucenko, CEO at French multinational retail group Auchan in Ukraine.
In other cases, supported by the French government, foreign companies have entered into large multimillion-dollar contracts to help Ukraine’s government solve urgent social problems. For example, Ukraine’s state signed a $660-million contract in 2018 to purchase 55 French Airbus helicopters for Ukraine’s civil needs, a $162-million contract for 20 OCEA patrol boats.
The Ukrainian government is also building a $72-million water purification plant in the eastern Ukrainian city of Mariupol located 30 kilometers from the war zone and 780 kilometers southeast of Kyiv.
“There is political will and good relations between the countries,” said Barrier, who believes that French infrastructure companies will be very interested in bringing new technologies to Ukraine if the Ukrainian government creates concession or public-private partnership projects on road management and construction.
French helicopters
Unlike in many Western countries, where modern helicopters are used widely in different emergency situations or to patrol state borders, Ukraine’s modest civil helicopter fleet is largely made up of outdated Mi‑8 Soviet helicopters made in the 1970s and 1980s.
They all need repairs, while spare parts are mainly made in Russia.
In order to fix this problem, the Ukrainian government signed a contract worth over half a billion dollars with leading French aerospace company Airbus in 2018 for 55 helicopters.
Eighty-five percent of the contract is financed through a 10-year, low-interest French Treasury loan, while the rest is paid in full from Ukraine’s state budget.
According to Deputy Minister of Internal Affairs Serhiy Goncharov, Ukraine already received six H‑225 helicopters for the National Guard and the State Emergency Service and two smaller H‑125 helicopters for the state border service.
Ukraine will receive the other 47 helicopters within the next three years.
“We have a huge length (around 6,000 kilometers) of state borders, including with the aggressor state (Russia) which need to be monitored,” said Goncharov. He added that future helicopters will also be equipped with photo and video fixation devices, as well as with thermal sensors to detect people and machines for many kilometers regardless of the weather.
Currently, two H‑125 helicopters are used to monitor the situation on Ukraine’s borders. They mainly cover the country’s northern borders with Belarus, with a special focus on the territory near the Chornobyl Nuclear Plant, which is covered with dense forests and swamps.
But these helicopters were also used for assignments in Odesa, Kharkiv and Kyiv oblasts.
“Their mobility and efficiency allows them to be used easily in all corners of Ukraine,” said Goncharov.
For example, such helicopters are crucial for Ukraine during forest fires, which have been one of Ukraine’s top problems for the past few years, or during floods in the country’s western regions, when only helicopters can reach people trapped by the natural disaster.
“In some cases, our H125 pilots even delivered drinking water, since all the water wells were polluted,” said Goncharov. “The situation was on the verge of a humanitarian catastrophe.”
Ukrainian Ministry of Interior receives first first two H225s Airbus Helicopters in Kyiv on Dec.21, 2018. Within $660 million contract, the Ministry will renew its helicopter fleet with 55 helicopters made by French leading aerospace company Airbus by 2023. (Airbus)
In addition, starting in 2019, there are ongoing training programs for Ukrainian pilots taking place in both France and Ukraine.
Currently, 40–50 Ukrainian pilots have gained new skills and knowledge through the partnership.
“For our pilots, this is a huge change of ideology compared to the Soviet technologies they used to work with,” said Goncharov.
At the same time, Goncharov hopes that Ukrainian enterprises, such as Zaporizhia-based Motor Sich, will be able to produce spare parts like rotor blades for Mi‑8 helicopters.
Power of food retailers
While Ukraine-France relations have increased on the state level, the private sector is also developing.
After 12 years of operating in Ukraine, French food retailer Auchan is one of the largest players on the market.
With 6,000 employees and 26 stores in nine cities, it is currently the largest employer among French companies operating in Ukraine. It is also among the top three food retailers after Fozzy Group and ATB in terms of market share in the country, according to Lucenko.
In order to reach a strong position on Ukraine’s market, in 2017 Auchan bought the Karavan market chain, which helped to double the retailer’s market share with nine additional new stores and “strengthen the brand’s image and popularity across Ukraine.” Lucenko did not specify what market share Auchan currently has.
“Our main achievement is that we were able to unite teams and introduce the Auchan culture in new stores,” said Lucenko.
Last year, Auchan paid around $30 million in taxes to Ukraine’s state budget and was ranked seventh after such retailers as Silpo and Metro Cash&Carry.
“This year we will also be among top companies in terms of paid taxes,” said Lucenko.
When it comes to social programs, she said that nearly 6% of Auchan employees have special needs, including people with Down syndrome. Lucenko said that “equal employment opportunities for everyone is the norm for us.”
A cashier with hearing problems serves a client in one of the Auchan stores in Kyiv on Sept. 14, 2020. French food retailer Auchan is one of the largest players on the Ukrainian market employing some 6,000 workers in 26 stores, 6% them have special needs. (Volodymyr Petrov)
It is a part of the Auchan mission to “set an example for other companies and bring basic values of equality and tolerance” into Ukrainian business culture.
At the same time, among the major challenges for the French food retailer in Ukraine, Lucenko named aggressive competition caused by many “young brands and startups,” the lack of necessary legal regulation for the innovation and digital spheres and the strong influence of politics on economic processes.
“Nevertheless, Ukraine is developing very fast and moving in the right direction, following the experience of European countries,” said Lucenko.
Conquering car market
Despite the anti-COVID‑19 measures and the country’s lockdown, Damien Martin-Cocher, managing director at Peugeot Citroen Ukraine, doesn’t see any reasons to be sad.
While in western European countries car sales fell by a colossal 53%, according to research conducted by market analytical company LMC Automotive, in Ukraine it decreased only slightly — a little more than 4% compared to the previous year.
In this Ukrainian reality, the French manufacturer of automobiles surprisingly had more sales and was able to increase its market share from 6% to 8.7% for the past year. Since the beginning of the year, nearly 4,300 of Peugeot and Citroen models were sold in Ukraine through 52 official dealers.
“We managed to reinforce the position of our brand,” said Martin-Cocher, who plans that this year’s result will reach 8,200 cars sold.
This year, the company presented new models on the Ukrainian market, like the Peugeot 2008 crossover.
“With this car, we attract a lot of customers,” said Martin-Cocher. “We did not stop our activities during this period.”
At the same time, the company plans to introduce its electric vehicles to Ukraine, despite the country’s outdated pollution standards.
“We will start sales of electrical cars next year,” he said.
