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bne July 2018 Eastern Europe I 45
railway that crosses it uses a European gauge, cancelling the need for time- consuming transhipping at the border. “When it comes to logistics, Eurocar is in a very comfortable position,” Igor Top- chiy, the company’s head of HR, says.
For German companies investing in Ukraine, relations with local authorities is also a key consideration, a Leoni spokesperson told bne IntelliNews. Accord- ing to Eurocar’s general manager, one deciding factor in the decision to set up a plant in the Uzghorod region was the implantation of a special economic zone, which gave the company preferential tax treatment. “However, in 2005, the govern- ment of Yulia Tymoshenko cancelled the law that gave us this preferential treat- ment, though we had been given guaran- tees that the law would not be changed for the next 30 years,” Igor Tsarenko said.
At around the same time, German automobile companies started building factories in Russia, leaving Eurocar with only the Ukrainian market. In 2008,
it was decided that the plant would only make Skoda cars. The 2009 and 2014 economic crises were a big hit too, with German investment in Ukraine dropping from more than €5.5bn in 2011 to €1.6bn today. In that time period, Eurocar was forced to lay off the majority of its workforce.
The move to Central Ukraine
The company is still waiting for the storm to pass, though its general manager expects demand to pick up in the next five years.
This does means that Eurocar is, for now, not affected by one issue that has been worrying many German investors: growing labour shortage. “If I had to hire 1000 more people right now,
I don't know where I would find them,” Tsarenko said. It is not an issue for
him, as the plant currently needs only about 150 people to function, and has held on to an additional 100 people in preparation for an expected future growth.
The situation is different for German investors looking to expand, or to set foot in the country. “We have some projects from new companies but for now most of them are only looking, because the big challenge in Ukraine is the outflow of workforce,” Alexander Markus, chairman of the German- Ukrainian Chamber of Industry & Commerce, told bne IntelliNews. As millions of Ukrainians leave to find work in Poland and neighbouring countries, German investors are finding it more and more difficult to find labour
for plants that could employ several thousand people.
Those already involved in Ukraine keep investing, with both Leoni and Kromberg & Schubert opening new plants after
the 2014 revolution. Leoni’s spokesper- son told bne Intellinews it was planning to expand their facility in Kolymya to reach up to 5000 employees by 2021. With workforce becoming scarcer in the Western part of the country, companies are now moving to Central Ukraine: Kromberg & Schubert’s second plant was opened in 2016 in the Zhytomir region, 400km east of the Polish border.
But German companies not already operating in Ukraine are still hesitant, according to Markus, because of a perceived lingering political risk and fears about corruption: “Ukraine is competing with countries such as Moldova and Macedonia, and it’s not always winning. The country needs to sell a better story to outside investors”.
Find more Eastern Europe content at www.bne.eu/eastern-europe
Selected headlines from past month:
· Kremlin attempts to uproot corruption, clear the field for a spending leap
· MAPLECROFT: Russian Finance Minister Anton Siluanov manoeuvres into position
with oil tax reform
· Putin signs off on a toothless anti-US counter-sanctions law
We have launched a new publication bneTech
bne:Tech
May, 2018 www.intellinews.com @bneintellinews
Avast to enter London bourse in bid to raise up to $1bn Jaroslav Hroch in Prague
Avast, which owns the popular consumer antivirus company AVG, will apply to list its shares on the London Stock Exchange in the hope of raising $200mn (CZK4.1bn) in primary proceeds from an IPO, the Czech-founded company announced on April 12.
See page 2
St Petersburg's start-up scene flourishes on high talent and low costs
Contents
Avast to enter London bourse
in bid to raise up to $1bn 1 Avast to enter London bourse in bid to raise up to $1bn 2 St Petersburg's start-up scene
flourishes on high talent and low costs 3 Romania entrepreneur aims to put home-grown UAV defence technology industry on the map 6
FinTech
Russia's mobile major MTS increases stake in Ozon to 16.7% 9
Blockchain
Romanian startups at the heart
of blockchain energy trading rally 10
Central Europe
Russian-Lithuanian startup Gosu.ai
raises $1.9mn from Russian and
French investors 13
Eurasia
Iran hit by cyber attack that left US
flag on screens 14 Iranian government set to block hugely popular Telegram messaging app 15 Iran's black market phone disconnection drive pushes up legal mobile imports 15
Eastern Europe
Internet catches up with TV on Russian
ad market 17 Sales of connected appliances jump
in Russia 17 Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 18 Russia ranks second in the world
for digital piracy 18 Russian messaging service Telegram raised another $850mn with ICO 19
Southeast Europe
Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 20
The Regions This Month 21
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