Ukraine-China business ties are stagnant, with trade dropping in 2014. For Ukraine's economy to get back on track, many believe a stronger relationship with China is essential.
China is Ukraine’s second largest trading partner, a relationship worth $8.1 billion in 2014. But the numbers pale in comparison to other countries – in 2013, $90 billion for Russia, $160 billion for Germany, for instance.
Oleh Dyomin, Ukraine’s ambassador in China, is hoping Ukrainian entrepreneurs will become more active. Meanwhile, Chinese businesses in Ukraine are concerned about corruption and the safety of their investments.
China is weighing whether Ukraine is part of its strategic “silk road economic belt” along with ex-Soviet republics Russia, Belarus and Kazakhstan, said Alexander Gabuev, an expert on Russia-China relations.
Jeff Schubert, a China-Russia specialist, said that China is more interested in English-speaking Western nations and less interested in Russia and Ukraine. “They are unfamiliar with these countries. These countries are strange to the Chinese,” Schubert said.
Lenovo Ukraine’s 33-year-old general manager Weijian Zhou, however, said that cultural differences are no obstacle.
“I have very good communication with our local employees. I understand them, and they understand me.” More importantly, he said, the language of business is universal: honesty and clear long-term goals. Though Lenovo in Ukraine was hit by a crisis in 2014, Ukraine remains for them “a very important market even on the global level.”
China does not only export smartphones and computers to Ukraine, but metal, textile, plastic and rubber products as well. In turn, Ukraine’s mineral products and machinery equipment such as airplane engines are shipped to China.
But the main interest for China is the agriculture sector.
Deutsche Welle’s Frank Sieren, a China expert, says that China loaned $3 billion to Ukraine in 2012 to advance its agricultural sector. The loan is to be paid back in grain supplies during a 15-year period with about four million tons of grain per year. In turn, Ukraine leased three million hectares of its land to China over a 50-year period.
Deputy Minister of Agrarian Policy and Food of Ukraine Vladyslava Rutytska says that Ukraine is very interested in exporting agriculture products to China. “In 2014 the export volume of Ukraine’s agriculture production to China was $767 million, which was $281 million more than in 2013.”
Chinese “are buying agriculture assets and are very concerned about food security,” said Gabuev.
But Ukraine still has a long way to go in luring investment.
Brian Best, investment banking director at Dragon Capital in Kyiv, said that while China invested about $200 billion in Africa in 2013, Ukraine is not on its priority list. “We hope that the tides are changing in Ukraine’s favor and that China will see Ukraine as a unique opportunity for investment trade,” Best said.
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
