Almost immediately after Russia invaded Ukraine last year, Ukrainian entrepreneur Rostyslav Vovk realized he needed to refocus across the border so his pet food company could continue to grow, Reuters reported in a report obtained by Agerpres.

The ongoing conflict has prompted several Ukrainian companies to refocus on neighboring countries to reduce their dependence on a shrinking domestic market while taking advantage of the millions of Ukrainians who have left the country.

According to the UN Refugee Agency, at the beginning of May, more than five million Ukrainians who left the country because of the war were registered in Europe, and Poland hosts more than 1.5 million Ukrainians.

The Russian invasion turned the Ukrainian economy upside down, so corporate investment and economic growth are rare. In 2022, the Ukrainian economy shrank by about a third, and only moderate growth is forecast for this year. The fall in consumer spending is especially felt in the services and consumer sectors, so the heads of four Ukrainian companies told Reuters that they decided to turn to new markets in Poland and Eastern Europe for business development.

“Regarding our expansion, which began even before the war, the first destination was Poland,” says Vyacheslav Klymov, co-founder of Nova Poshta, Ukraine’s largest private postal operator. “We chose Poland mainly because Poland is home to the largest number of Ukrainians who fled the country because of the war,” Klymov added. He emphasized that Nova Post intends to invest approximately 10 million euros in opening 200 post offices in Europe.

“Entering a new market with an unknown name and, more importantly, for a Ukrainian company is not an easy task”

Andrii Khudo, co-owner and president of the !FEST restaurant group, who has many years of experience working with partners in Central Europe, agrees that the Ukrainian diaspora has helped. “Before the war, we were already present in Poland, Romania and Hungary. Then we started negotiations on attracting new partners and expanding the existing ones,” said Andriy Hudo.

According to the analytical center of the Polish Economic Institute, more than 24,000 companies with Ukrainian capital are registered in Poland, which is 25% of the total number of companies with foreign capital. Last September, 8.5% of all companies founded in Poland had Ukrainian capital, compared to 0.8% in January 2022.

Some Ukrainian companies are interested in further expansion into Europe, and the strategies they follow vary from case to case.

Andrii Hudo and his partners have opened bars in Latvia and are preparing to do the same in the Czech Republic, Lithuania and Estonia, countries that host large numbers of Ukrainian refugees.

Andrii Zdesenko, who for the past 26 years has been part of Biosphere Corporation, Ukraine’s largest manufacturer of personal care and home care products, was interested in expanding even before the war, and the opportunity arose because of the conflict at home. “We bought the Austrian brand “Alufix”. This is known not only in Austria, but also in Hungary, Slovakia, the Czech Republic, Romania and Slovenia,” says Zdesenko, who also bought a plant in Romania and other assets. “Entering a new market with an unknown name and, more importantly, for a Ukrainian company is not an easy task,” says Zdesenko.

Ukrainian entrepreneurs benefited from the support of public opinion in many countries

Before the Russian invasion, the Ukrainian corporate sector had a mixed reputation abroad, with corruption scandals and questions about transparency tarnishing its image. Consequently, most Ukrainian companies focused on the local market and on the markets of Russia and other post-Soviet states. But the war changed this landscape. From the very beginning of the conflict, Ukrainian entrepreneurs enjoyed the support of public opinion in many countries.

Rostyslav Vovk, CEO and founder of Kormotekh, says that Ukraine’s largest pet food manufacturer has started selling its products in the Baltic countries as retailers have started to crowd out Russian products. “The main goal is to develop abroad faster than we predicted before the war,” Vovk says.

At the beginning of 2023, “Kormotekh” expanded sales to 39 countries, and five years ago – to 19 countries. Rostislav Vovk expects exports to grow from 22% of total sales in 2022 to 30% this year and somewhere between 60% and 70% in 2028.

For his part, Andriy Zdesenko predicts that Biosphere Corporation’s revenue this year will reach $150 million against $102 million in 2022 and expects that Ukrainian business will account for about 60% of total sales, if during the next three years foreign operations generate sales of approximately 100 million euros.

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