Теги: Canada
Building trust is the most important thing in cooperation with Canadian partners

Vitalina Darnopykh, Director, Lviv branch of Taurus Quadra, spoke about the major challenges for the Ukrainian IT-businesses in the Canadian market

The Canadian market is rather conservative, until recently, not so many companies have been seeking partners for outsourcing services. However, the situation is changing now. Canadian businesses develop rapidly and the need for qualified professionals and quality services is growing faster than the domestic market potential. Therefore, a growing number of companies are now ready to strengthen their business by engaging an outside pool of talented and experienced people through outsourcing. Canada and Ukraine have good relations in the political sphere, besides Canada has a large Ukrainian diaspora. This may play into the hands of Ukrainian hi-tech industry opening good opportunities for it.

Meanwhile, operating in the Canadian market also holds a number of challenges.

Ukrainian companies often have to overcome a stereotypical view of Ukraine as a third world country. Businesses have to prove that, despite the corruption of the government machine, they can become reliable partners.

Also, we have to prove that tomorrow we will not disappear as a company due to a hostile business environment, including external aggression, legislative novelties or changing political course.

Building trust is the most important thing in cooperation with Canadian partners. And this cannot be accomplished at one meeting. The main thing is to identify your role and place in the Canadian market and understand the needs and expectations of Canadian companies. It is also of utmost importance to rationally evaluate your own capabilities and offer potential partners what is important to them and what they need.

Don’t be afraid to offer your services if you are confident in their quality and market demand for them. It would be helpful to demonstrate that your company not only wants to take something from the Canadian market, but is ready to strengthen the Canadian partner with its own experience and professional level of its specialists, and contribute to developing customer portfolio.

Experience in the US market would also be a significant advantage. At the same time, you shouldn’t forget that the Canadian market is not the American market. If your product has been designed for the American market, it will not necessarily be in demand in the more conservative Canadian market.

This year, our company, Taurus Quadra, has become a member of the ICT mission to Canada organized by the CUTIS project. We received invaluable support and a wealth of new information: from specific tips on developing a marketing strategy and articulating your competitive advantages to actual advice on how to behave and communicate with potential partners.

During the mission, we learnt that much more attention needs to be paid to the formal signs of success, i.e. certifying experts, describing and publishing completed projects, etc.

We need to build a system of relationships with partners, who will be able to trust us because we gained other people’s trust.

Huge assistance on the part of consultants was the arrangement of B2B meetings with companies that could potentially become our partners in Canada. It would be extremely difficult to do it on our own, without a project supported by the Government of Canada.

It is important that we’ve acquired a set of new tools for carrying out market research, developing an export plan, and searching for potential customers and a target segment. Consultants’ tips for providing content for our corporate website and formulating key messages targeted at potential customers were particularly useful.

Such a systematic approach helped us focus on the most important issues and develop a future action plan within a short span of time.

Canada is shaping up to become the “Silicon Valley North” – Ukrainian IT-company MindK

12 leading Ukrainian IT companies visited Canada as a part of the ICT business mission organized by the CUTIS project. The five-day event includes a series of B2B meetings with Canadian business, seminars and panel discussions.

Oleg Nesterov, founder and CEO of Ukrainian IT company MindK, and Sergiy Kyrylyuk, head of business development and sales MindK, explained the specifics of the Canadian IT market and shared impressions from the ICT mission to Toronto

For five days we immersed ourselves in the country’s booming tech sector. After attending a number of B2B meetings, workshops, and panel discussions, we traveled deep into Canada’s industrial heartland. In Hamilton, we’ve met representatives from local authorities, research organizations, and businesses, to discuss Canada’s innovation sector.

With a decline in oil prices, the country is rapidly transitioning to an innovation-driven economy.

Canada has the highest number of AI researchers per capita and the third largest AI talent pool in the world. Supported by government initiatives, incubators and advanced R&D centres, the ICT sector produces a great number of innovative startups. Shopify, HootSuite, and Kik Messenger are just a few examples of successful tech companies born in Canada.

Low bureaucracy along with favorable economic conditions and tax policies drive massive investments into the country’s innovation sector.

Multiple US companies including IBM, Amazon, AMD, DELL, CityBank, and OpenText are moving into Canada. In 2016, Google opened a new headquarters in Kitchener, Waterloo. Two years later, Microsoft intends to build a new headquarters in downtown Toronto and invest $570+ million over the next three years.

Toronto-Waterloo Corridor is shaping up to become the “Silicon Valley North” along with other tech hubs that sprout around major cities. Since 2016, the region’s tech sector grows faster than that of New York City and San Francisco combined. In two years, Toronto is predicted to overtake Silicon Valley as the place with the highest number of tech jobs in North America.

This rapid expansion of the ICT sector and a radical business digitalization has increased the need for highly skilled tech workers.

According to a recent report by Information and Communications Technology Council (ICTC), Canada will need to fill 216,000 new positions in the tech sector by 2021.

Even as the government welcomes talented immigrants, some experts fear that Canada will only be able to satisfy 30% of its need for tech personnel.

This shortage is made worse by the continuing brain drain to the USA. Each year, hundreds of talented graduates leave Canada to seek fame in Silicon Valley. Another problem comes from the aging workforce with only 4.4% represented by people between 15-24 years old vs 12.7% for the pre-retirement group (55-65 y.o.).

One of the ways Canadian business can deal with this shortage is by looking for skilled tech professionals in other countries, e.g. Ukraine.

Global Sourcing Association (GSA) named Ukraine the “Offshoring Destination of the Year” in 2017. With more than 38 thousand people graduating annually from Ukrainian tech universities, the country is expected to have 200,000+ ICT workers by next year.

Relatively cheap labour is often cited as the top reason for working with Ukrainian companies. After all, a software developer in Ukraine earns about $20,000-30,000 per year vs. $77,600 in Canada.

Yet, Ukraine’s biggest advantage is expertise and the sheer number of skilled tech personnel.

2018 Global Innovation Index ranks Ukraine as the world’s 27th country by knowledge and technology outputs. It also holds 8th position in SkillValue developer ranking.

Angel.co lists over 1900 Ukrainian tech startups with an average value of $2.5 million. Numerous world-famous companies like Grammarly, People.ai, CleanMyMac, GitLab, DepositPhotos, Petcube, and Looksery (acquired by Snapchat for $150 million) originate from Ukraine.

The country houses 110+ R&D offices of large tech companies including Apple, Microsoft, IBM, Oracle, Samsung Electronics, Boeing, Skype, Siemens, Magento, and Ring (acquired by Amazon for $1 billion).

Despite Ukraine being relatively unknown in Canada as an outsourcing destination, projects like CUTIS can move mountains and create thousands of win-win relationships.

Investor looks for a project on top of trends

Beehive is a leading Ukrainian producer and exporter of honey. The geography of the company’s sales is very broad and includes such advanced markets as the USA, Germany, Denmark and Canada. In November last year, Beehive took part in the first investment forum – CUTIS Investment Roadshow

Ihor Liski, co-founder of the Ukrainian Institute for the Future (UIF), chairman of the board of directors of the Effective Investments Holding (of which Beehive is a part) explained why Canadians are cautious about implementing investment projects in Ukraine

Currently, all challenges create more opportunities for us than during all previous years of independence. Like never before, we need to prove our ability to work within the international business community.

Professional teams, ambitious projects and bold decisions spring up in Ukraine but nowadays this is rather an exception. The country is changing, people are looking where to apply their talents, and many think that the system of rating has not changed. If we want to compete with the rest of the world, we do not have to be afraid to surprise it with our knowledge, skills and ideas.

At least, some reforms have helped to intensify work with investors in Ukraine. There are investment forums at the regional level and legislative drafts to increase the country’s investment attractiveness. I’m sure that investors see this. That is why we are witnessing a new wave of interest in domestic projects. The main thing, however, is that Ukrainian entrepreneurs can realize their own ambitions. Still, you have to understand whether you have them. Successful projects do exist, but they are created mainly by young entrepreneurs oriented to exports and international trends.

The main thing has changed: investors are looking for a project that follows the calls of time. Thus, when creating a modern honey plant, we understood that it was in demand. High-quality food from environmentally friendly regions is a global trend, and we follow it. When Beehive understands its own significance for the whole industry and the country in general, the entire company moves forward. Only a combination of technology, teamwork and long-term trend analysis can provide solutions for narrow-focused tasks and make investors interested.

If we talk about the interest of international investors 10 years ago, one could say that money would flow like a river.

However, investors are changing, they are interested in new areas and become much more demanding, while Ukrainians in the meantime may have little to offer. Canadian investors know and understand our country very well. Having experience of work with domestic projects and knowing all the risks of such cooperation they invest with caution.

It’s hard to find a worthwhile project with real efficiency rather than drawn up in a business plan. I myself reject a lot of such projects almost every day. Ukrainian businesspeople should be more courageous and aggressive, learn to do international business. We must satisfy our hunger for knowledge, find new production technologies, learn to present our achievements. In addition to this, the world is changing, trendy global solutions become promising: green energy, circular economy projects, creative industry will be getting investments from now on.

Investors are now very demanding about Ukrainian projects because there are high risk factors: war, corruption and slow reforms.

A mere lack of trust in both the country and the principles of doing business in it. Entrepreneurs can change this attitude only with their own example and honest projects. In our company, we have been doing this for many years. Only the desire to live and work in Ukraine forces us to return to this endless work again and again. To create investment attractive business, to implement ideas that are crazy at first glance – this is the task of my company. No one can convince me that it is impossible to make a successful project now and attract investors from all over the world to Ukraine.

Footwear manufacturer KaDar: We have successfully fulfilled our first order for the Canadian market

The history of KaDar, the largest footwear manufacturer in Western Ukraine, began back in 1999. At the moment, the production capacity enables the company to produce about 500 pairs of shoes per day. KaDar is actively entering new markets including the Canadian market. Halyna Panas, KaDar Export Development Manager, tells about the company’s preparation for the international exhibition – Toronto Shoe Show and its first results.    

KaDar has been successfully operating in the Ukrainian market for over 20 years and exporting its products to EU countries for more than 5 years.

The Free Trade Agreement between Canada and Ukraine gave us an excellent opportunity to supply footwear to Canadian consumers at zero import duty rate.

Due to our cooperation with the CUTIS project, we were able to participate in the Toronto Shoe Show, as it is a good opportunity to showcase our products to key players in the Canadian market. The first exhibition was held in late August 2018, the next one – on 20-22 February this year.

When preparing for the first exhibition, we did not understand exactly what shoes should be shown to Canadian clients. After all, Ukraine and Canada have their own specific tastes, preferences, and trends. Not always trendy models of footwear in Ukraine will be in demand in Canada, and vice versa. Therefore, it was not easy for us to prepare for the August exhibition and decide on the product mix.

We are now much better aware of what Canadian consumers need. The first exhibition and meeting with potential customers, talks with importers helped us understand the needs and requirements of the Canadian market.

That is why, when preparing for the second exhibition (February 2019), we were quite savvy in terms of mix, requirements and product quality. We brought exactly the products that might be of interest to potential consumers in Canada.

We see good prospects of exporting KaDar shoes to Canada as we got positive feedback on our products. Expectations are positive, we want to find a good business partner for long-term and mutually beneficial cooperation.

We already have our first order that we successfully completed. We work on further orders, prepare a collection in accordance with the requirements of the Canadian market.

We hope for successful exports to Canada. We want Canadian consumers to appreciate the high quality of shoes by the Ukrainian manufacturer and believe in the potential successful cooperation with our company. The most important reward for us will be the customer’s appreciation and recognition of the company as a reliable business partner.

Find out more about the success of Ukrainian producers at Toronto Shoe Show by following the link

Stepan Kubiv: Ukraine and Canada’s extraordinary business relationship is just getting started

Stepan Kubiv, First Vice Prime Minister and Minister of Economic Development and Trade for Ukraine, special for Financial Post (Canada) 

Ukraine is a trusted friend and partner for Canada. Our relationship spans more than a century of shared family, cultural and political connections. The next step in our ongoing journey together is in expanding our business relationships.

While Ukraine gained its formal independence in 1991, our country is just three years into the rebirth that resulted from the Revolution of Dignity in 2014. Since the Euromaidan, we have set out to build a new European state. We signed a Deep and Comprehensive Free Trade Area agreement with the European Union in 2016, and the Canada-Ukraine Free Trade Agreement (CUFTA) last year — deals that effectively create an uninterrupted duty-free trade zone comprising almost 600 million consumers.

Starting in 2016, our economy has rebounded with 10 consecutive quarters of positive economic growth, including growth of up to 3.8 per cent in the second quarter of 2018.

Even though CUFTA took effect only in August 2017, total Canada-Ukraine goods trade in 2017 grew by 42 per cent to US$349.6 million. A further year-over-year increase of 2.7 per cent was recorded in the first seven months of 2018.

Our trade strategy is combined with an ambitious economic reform program to make Ukraine more attractive to western investment. Since 2014, we have achieved more reforms than at any time since independence. We have deregulated sectors of the economy, streamlined business regulations and undertaken privatization of state-owned enterprises. Reforms are underway to improve creditors’ rights and intellectual property rights. As of July 1, 2018, the total volume of direct foreign investment amounted to US$40.7 billion.

Ukraine is committed to fighting corruption through new legislation, government systems and institutions. The centrepiece of our commitment is the High Anti-Corruption Court, which began in June. International bodies, such as the G7 and the International Monetary Fund, have endorsed the court as a significant step in achieving our anti-corruption objectives.

The next step is expanding our business relationships

These initiatives to improve the investment climate are paying off. Canadian investment in Ukraine increased 20.9 per cent in 2017, and was up 21.6 per cent in the first half of 2018 compared to the same period one year earlier. We are focusing on four sectors: agro-industry, information technology, infrastructure and natural resources. Canadian firms have expertise in each of these sectors and opportunities are opening in Ukraine for potentially lucrative investments. Our trade and investment promotion efforts are therefore concentrated in these business sectors.

Ukraine’s IT industry has transformed rapidly from a fringe economic player to to the country’s third-largest export sector in only five years. In 2017, IT services grew by 20 per cent and exports are estimated to double in the next five years. The IT sector comprised about 61 per cent of Ukraine’s services exports to Canada in 2017.

Our geographic location gives us the potential to be a trade and transportation hub for Europe, the Middle East and Asia. Our road, rail, aviation and marine infrastructure is well developed, but much of it needs renovation, upgrades and modernization, creating opportunities for Canadian investors.

Ukraine is pursuing a goal of energy independence by 2020, opening up opportunities for Canadian companies to help by investing and building infrastructure in both traditional energy segments and for renewables, such as solar, wind and bioenergy. In June, Canada and Ukraine signed a letter of intent on energy co-operation with the International Centre of Regulatory Excellence (ICORE), a not-for-profit organization founded by the Alberta Energy Regulator, to bolster transparency and regulatory excellence.

While it is still early days for new investments, the shovels already in the ground provide an indication that opportunities abound. TIU Canada is constructing a new solar power plant near the village of Kalinovka in the Mykolaiv region. Brookfield Asset Management is a backer of the Innovation District IT Park now under construction in Lviv. Fairfax Financial Holdings Ltd. is a significant investor in Astarta Holding, an agroindustrial holding company. And investment is flowing the other direction as well: Ukrainian investors broke ground in September for the Canada Meat Group Inc. meat-processing plant and cold storage facility in North Bay, Ont.

Ukraine greatly values the support that Canada provides — as a partner for peace, a provider of development assistance through the Canada-Ukraine Trade & Investment Support Project, and shared deep cultural connections. Canada has graciously offered to host the annual Ukraine Reform Conference in June 2019 , and we will welcome the opportunity to describe additional positive momentum.

Ukrainians want a democratic, reliable, and economically strong country. With Canada’s help, we will continue our efforts to deliver it for our mutual benefit.

Source: Financial Post

BUSINESS TRAVELER TIPS: HOW TO START EXPORTING TO CANADA

The free trade regime between Ukraine and Canada has been in operation for over a year and has already attracted Canadian buyers to Ukrainian goods. In turn, this heightens the interest of Ukrainian suppliers in the Canadian markets.

The Canada-Ukraine Trade and Investment Support Project (CUTIS) conducted a two-week training program “How to Export to Canada” for representatives of the regional chambers of commerce and trainers from the leading business schools. The program included a more theoretical Ukrainian part in Kyiv and a Canadian one in Toronto and Ottawa. During the latter, program participants had an opportunity to communicate with Canadian government officials and representatives of non-governmental organizations responsible for various aspects of Canadian export of goods.

Dmytro Shvets, Director of Start Global, a lecturer at Kyiv-Mohyla Business School, shared with Mind the interesting insights he had received during the course.

Country Profile. Canada is a North American country with the area of 9.9 million square kilometres (16 times larger than Ukraine) and the population of just over 36 million. It is a federation of 10 provinces and three territories, each having unique “tastes” in the issues of import, customs, taxes, legislative regulation, etc. For example, to register a company in Canada, you need a local director, but not in British Columbia.

61% of Canada’s total population lives in two provinces: Ontario and Quebec. Canadians prefer to live in cities, of which the largest is Toronto.

In a multicultural and multilingual country (there are two official languages – English and French – at the federal level), a large number of different nations retain their culture and traditions. In recent years, the flow of immigrants from Asia to Canada has increased. This makes it necessary to take into account when positioning a product and negotiating it that your client may have the habits and traditions not inherent in North America.

Indigenous people (First nations) account for almost 5% of the total population – about 1.7 million people. Interestingly, the average age of the indigenous part is 32 years old (ten years younger than the rest of the population). But in general, Canadians are an aging nation: it is expected that a quarter of the country’s population will be over 65 years old in 2031. This should also be taken into account when determining the target clientele for your products when preparing for their export.

Who do Canadians trade with? Canada imports goods and services from most countries of the globe. It is one of top ten trade leaders and accounts for 2.2% of world imports. Mostly, it imports from the USA, China, Mexico and Germany, and exports to the above countries, as well as the UK and Japan.

Canada is one of the world’s leading importers, and this is a good reason for the most responsible attitude and high requirements for everything coming from outside. Canadian importers are responsible to the State for the quality of products and will require the same from the supplying exporters.

What are the requirements for foreign goods? It is prohibited to import products to Canada that could harm human health or life. Such goods are either destroyed or sent back at the expense of the supplier. Canadian Food Inspection Agency has been created, among other things, for checking imported food products; more than 7,000 of its employees are concerned to reject the products that do not meet the standards.

Almost everything you need to know about standards and requirements for food and medicine can be found on the Ask CFIA web resource.

Another useful tool is AIRS CFIA: Here you can easily find out about the requirements for different products.

Standardization of goods and Canadian customs is a complex but well-balanced mechanism with the components working in concert and complementing each other. Almost all authorities and agencies have comprehensive information on their websites and patiently answer telephone requests.

Canadian import/export information is freely available. In particular, the CBSA website has a Step By Step Guide, which describes the process of import to the country in detail. At the same site, you can get a list of products and requirements (including goods that are not allowed to be imported).

Keep in mind that the goods to be imported can be delayed indefinitely until clarification (at the expense of the importer), so this should be taken into account in planning your time and budget. In addition, when determining the origin of goods, the cost and origin of the materials from which it is made are taken into account.

The logistics component of export to Canada should not be a problem provided careful preparation – the customs clearance of goods in the country of maple leaf is simplified and can be carried out remotely. You will be able to calculate the shipping rates at the website searates.com.

How to sell? With regard to Canadian sales channels, it is worth considering a few issues. One of the most interesting channels can be Public Services and Procurement Canada, which annually makes purchases for $18 billion Canadian dollars including a large number of imported items. At the web-portal buyassell.gc.ca, you can get registered for participation in the public tenter, and if you have questions, you may call +18008111148 and, as we are assured, get a detailed answer to the relevant questions. Civil servants feel morally obliged to respond the questions of interested exporters. It would be wise to use this.

In Canada, industry associations that advise trade missions are also very professional and help their members in international affairs. Contacts of those associations can be found on the Canadian Chamber of Commerce website.

Another interesting organization that deals with the development of trade relations with countries such as Ukraine is TFO Canada. You can find many tips on exports to Canada and register your company in the directory at its web page in order to promote your product among buyers.

Canada has one of the largest Ukrainian diasporas in the world – 1.3 million people. Although it is unlikely that it can be used as a sales channel, a significant number of Ukrainian-born specialists can be found in almost every sector of the country. These acquaintances would be good to use to get alternative contacts for industry and market information.

An additional channel for promotion in Canada can be annual festivals of Ukrainian culture.

Legal features of export to Canada. Special attention should be paid to legal aspects. For example, there is a case-law applied in many cases that takes into account the large number of cases for the century. At the same time, lawyers are highly specialized – both in the branches of law and geographically (in specific provinces).

Another very important issue is the protection of intellectual property. Canada has a large number of lawyers specializing in lawsuits against brands that violate someone’s intellectual property rights. Therefore, it is worth thoroughly checking the names of your brands before going to the country’s markets.

In general, Canadians are quite conservative. All serious statements should be made with reference to a reliable source. However, this also has a significant positive effect: they are all inclined to comply strictly with established rules and arrangements. There is a culture of follow-ups and taking notes of the meeting.

How can Canada perceive all Ukrainian? Unlike southern neighbours, almost everyone in Canada knows about Ukraine. The image of the country is improving, although not very fast. Ukrainian goods are sold mainly in supermarket chains specializing in Eastern European products.

The Free Trade Agreement between Ukraine and Canada (CUFTA), which is in force since August 1, 2017, has opened up 98% of its goods market to Ukrainian exporters. In general, CUFTA is expected to support Ukrainian companies in entering new markets and strengthen trade relations between the two countries.

Thus, despite all the regulations, rules and standards, with proper preparation Canadian market may be of interest to Ukrainian companies that build a long-term strategy of international expansion. After all, as you have set your product or service in Canada and adapted the brand to local ethnic groups, markets in many countries, including the neighbouring US, will become easier for further advancement.

Information contained in this publication will partly be included into Global Market Access Strategy course, which will be held at kmbs on November 26, 2018.

4 leading Ukrainian industries to invest – webinars
  1. Agriculture industry

Agriculture is one of the leading sectors of the Ukrainian economy. In 2016, the sector’s share amounted to 13.7% of the GDP of the country and 14.2% in 2015. Its share along with the food industry is more than 18% of the gross domestic product of Ukraine.

Participants:

  1. Olga Trofimtseva, Deputy Minister of Agrarian Policy and Food of Ukraine
  2. Bohdan Leshchyshen, CUTIS Canadian Project Director

Moderator: Mark Markevych, President of Crossways MK Consulting

  1. Energy industry

The energy industry is composed of oil, natural gas, coal, nuclear and hydropower, wind and solar. The basis of the energy industry is electricity. The power generating capacity of wholesale electricity market in Ukraine is nuclear, thermal, hydro and alternative energy with an installed capacity of about 52,730 MW. The average annual production of electricity is about 195.5 billion kWh. In 2016, Ukraine exported 520,600 tons of coal with a total value of $44.8 million. In 2016, Ukraine exported 233,587 tons of petroleum products with a total value of $86.5 billion.

Participants:

  1. Nataliya Boyko, Deputy Minister of Energy and Coal Industry of Ukraine
  2. Bohdan Leshchyshen, CUTIS Canadian Project Director

Moderator: Mark Markevych, President of Crossways MK Consulting

  1. Infrastructure and Logistics industry

The Infrastructure and Logistics industry is dependent on a strong transport sector. The Ukrainian transport sector has five transport modes: road rail, maritime, inland waterway and air transport. The transport sector of Ukraine includes: 22,000 km of railway routes, 170,000 km of automobile roads, 2,200 km of navigable waterways, 13 seaports, 4 fishing ports, 11 rivers terminals, and 21 airports. Transport, storage, postal and courier activity represents 6.6% of Ukraine’s GDP and employs 1 million people. In 2015, transport industry had estimated revenues of US$11.5 billion (5.1% of the business revenues in Ukraine).

Participants:

  1. Viktor Dovgan, Deputy Minister of Infrastructure of Ukraine
  2. Bohdan Leshchyshen, CUTIS Canadian Project Director

Moderator: Mark Markevych, President of Crossways MK Consulting

  1. IT & Telecom industry

IT segments (software development + computer hardware) and Telecom (communications services, including the Internet) had estimated revenues of US3.6 billion and grew by 22% in 2016. The major revenue components of the IT segment are computer equipment – 83%, IT services – 19% and packaged software – 7%.

Participants:

  1. Mikhail Titarchuk, Deputy Minister of Economic Development and Trade of Ukraine
  2. Bohdan Leshchyshen, CUTIS Canadian Project Director

Moderator: Mark Markevych, President of Crossways MK Consulting

Canada-Ukraine Free Trade Zone: Half a year of agricultural exports – where are we now?

In summer 2017 Canada and Ukraine agreed on free trade area relations. What has changed in agricultural trade since that time?

Surely, free trade agreement between two countries reveals huge opportunities for Ukrainian agricultural producers. Finally, they have got access to vast and diverse Canadian consumer market.

Canada has agreed to reduce a majority of duty rates all the way down to 0% for Ukrainian agricultural entrepreneurs. But tariff-rate quotas, which were applied earlier to 108 goods and products, are still in force. In its turn, Ukraine, seeking to protect domestically-produced products from highly competitive imports, will incrementally abolish custom fees for Canadian companies in the next 3-5 and 7 years. These measures are taken to help domestic producers stay in business.

Free trade deal signing brings major changes for Ukrainian agricultural sector. On one hand, they are able to freely import their goods to Canada, but on the other, the product quality must be high and they should meet strict requirements in multiple stage quality control procedure. Despite this, far from everyone will take advantage that is offered by such cooperation.

Immigrants create a demand

With its hidden pitfalls Canada consumer market is really hard area to bring exported food products to. Over the last few years increase in Canadian population is drastically low. This is the reason of tightening food quality regulations. In Canada the most widely consumed products are meat, processed meat products, wheat, and processed wheat products. These products are produced in abundance by Canadian agricultural entrepreneurs – the mentioned niche is already full and there is hardly any place for Ukrainian grain crop exporters there.

“In spite of such complicated background there is always a way out,” says Paul Darby, CUTIS Project Manager and Executive Director International Partnerships at The Conference Board of Canada. Immigrants from various countries, including Ukraine, represent a significant part of the Canadian population and create strong demand for food product diversity. Niche product export is thought to be a high-potential growth area.

“In Canada supermarket food product offerings include frozen vareniki, but they are imported from USA. Why would not Ukrainian entrepreneurs take this niche?” says Paul Darby. As he explains, supermarket shelves are rich with variety of traditional food products.

Taking into account the fact, that in Canada live more than 1.5 million of Ukrainians, national agricultural producer products will be in great demand with this ethnic group. Zenon Poticzny, President at Canada-Ukraine Chamber of Commerce, believes that the majority of such products can be labeled organic. “For example, birch water for export is justly considered organic, and large retailer chains willingly sell such products,” points Zenon Poticzny.

Ukrainian entrepreneurs activities shall comply with a number of import and export regulatory requirements, which makes go-to-market a bit complicated but there are niches that Ukrainian products will fit well. It should be noted that premium segment is expending rapidly. This trend should not be underrated while choosing products for export. It means that in the coming years demand on fresh and frozen vegetables, fruits, organic and natural products, juices and preserved food will grow among Canadian consumers. Single-serving buys as well are getting more popular. This is another point to consider attentively.

Not everybody can succeed

Despite free trade agreement and huge food market, exporting goods to Canada is a challenge. Canadian Border Service Agency has some similar functions as the State Committee of Ukraine for Technical Regulation and Consumer Policy renders. It is responsible for various imported food, plant and animal (FPA) products checking. If any sanitary and phytosanitary issue arises, it can cause damage to country image.

Let’s say Ukrainian products are certified by the state control agencies. At this point it is worth noting that supply to retailer chains is another question to solve. Most of the food products (up to 60%) are offered by supermarkets, so independent shops and smaller retail chain share gets lower. Producers should focus on trade relations establishment. Only this way their products can be seen and chosen by Canadian consumers. Canadian multinational retail companies do not spend much time on discussions; they tend to work directly with the agricultural producers, avoiding any third party involvement. Clients are interested not just in required certificates availability, but as well company reputation, social responsibility actions and business plan for future development. Local entrepreneurs must be ready to comply with them all.

Dmitriy Kozonak, Canada-Ukraine Chamber of Commerce member, is sure that Ukrainian agricultural producers success with foreign partners mainly depends on mere interest and genuine involvement. “Entrepreneurs should constantly actively communicate with partners, provide complete business information and express development vision,” explains Dmitriy Kozonak. As the expert sees current situation, the way of thinking prevents Ukrainian producers from confidently taking considerable Canada market share. “The majority of producers shows poor engagement strategy, they are self-assured and simply do not know what goods are in demand. Here is the problem,” adds up the expert.

Huge opportunities

Official figures show that in 2017 Ukraine agri-food exports were valued at $5.8 million, and processed vegetables (canned goods and juices) exports amounted from $83,000 to $2.5 million. Analysts forecast that Canada-Ukraine cooperation will induce agricultural export growth for another 3.5% each year. By various estimates almost 31% of Canadian consumer are willing to pay more for healthy food. It means that food processing entrepreneurs are in fortunate position that opens bigger opportunities for them.

Effective business cooperation with Canadian companies rely on some simple and easy-to-understand rules. Your company must comply with all the norms and regulations and have good reputation among foreign partners. By the way, these requirements are as well easy to fulfill since government agencies and trade associations are ready to give a helping hand. Moreover, all the necessary information can be found in the correspondent web resources.

The experts of CUTIS Project, which has been established under terms of the free trade zone agreement, provide substantial assistance to companies that are planning to export products to Canada. Canada Trade Facilitation Office is a provider of information and advice for small exporters in developing and emerging countries. This organization helps small business to come with their products to Canadian market.

Source: Agroportal.ua

Ihor Sanzharovskyi: Ukrainian producers should find their place on the Canadian market

Market analysis, certification, finding a partner in Canada and fluency in English are just a few of the key “must-haves” for the Ukrainian exporters to Canada. CUTIS project director Ihor Sanzharovskyi talked to UA TV about the crucial aspects of exporting to Canada.

The interview covers the structure of the Ukrainian exports to Canada, the main obstacles exporters face, free trade with Canada, and the prospects of bringing Canadian investments to Ukraine.

“The Canadian market is not empty, it does not simply wait for Ukrainian goods. Ukrainian producers need to find their place on the Canadian market and, let’s be honest, fight for the Canadian shelves,” said Mr Sanzharovsky.

Watch the full interview below:

Roman Waschuk: CUFTA isn’t grants or cash loans – it is opportunities to earn money on Canadian market

Every tenth glass of apple juice, drunk by Canadians, is made of Ukrainian concentrate. Delo.ua has asked the Ambassador of Canada in Ukraine, Roman Waschuk, what else Ukrainian businesses could need in order to find the path to Canadians’ hearts.

– How soon, after the Free Trade zone (FTZ) between our countries is in effect, can we talk about wide mutual investments and access of Ukrainian goods to Canadian market?

Ukrainian party has already done the part of its job – it has ratified the Agreement for FTZ by the Parliament. Two formal steps remain to be done by ourselves: the third ballot in the Senate and signature by the Governor General of Canada, David Lloyd Johnston. Then comes the exchange of notes on ratification and in a month the FTZ between our countries becomes effective. Thus, it should all happen during the summer. Since that moment, 99% of all quotas and duties will be eliminated and 0% rate will be applied to the exports of Ukrainian goods to Canada.

However, the question is, to what extent and how prepared the Ukrainian businesses are to use these opportunities. I would like to stress, though, that our attempts to propagate this agreement and Canada-Ukraine business forum, that was held last June, have already increased the interest in Canadian market in Ukraine and Ukrainian market in Canada. That is why we experience certain revival of our commercial relations – before the FTZ Agreement takes effect.

– Are you sure, that the FTZ between our countries will work in summer already? What if life brings nasty surprise, such as the Senate’s countervote or the Governor’s General non-signing the document?

I can assure you that no surprise is envisaged, because, when both upper and lower house make the unanimous decision, there can be no doubts.

– I agree. When can we see the first practical results of the FTZ though?

This is impossible to forecast, because it all depends on the entrepreneurs and companies from both sides, that should enjoy the privileges of the FTZ Agreement. However, I am certain, that both Canadian and Ukrainian businesses are prepared to use new trade opportunities. And, as an evidence of my words, a visit of 14 Ukrainian companies, representatives of food industry, to Canada has already been scheduled for early April. This trip is arranged within the Ukrainian Export Support Program.

Ukrainian delegation will meet Canadian importers, supermarkets’ owners, etc. And this can be considered as a preparatory step, which aims at increasing our trading volume.

– You emphasized a key point while talking about the FTZ launch: “if Ukrainian businesses are ready”. What do you think Ukrainian businesses have to do in order to increase demand for our goods? How to reach out to Canadians? Will Ukrainian goods be popular with Canadian customers?

Ukrainian businesses have to study Canadian market in the first place. For that very purpose we have launched the Canada-Ukraine Trade and Investment Support project. It has got an office in Kyiv. It also cooperates with Canada-Ukraine Chamber of Trade and Canada-Ukraine Trade and Investment Support (analytical entity of Canadian businesses). They are the ones who provide consultations to the interested companies. I.e., there is a whole structure that can orient Ukrainian businesses whether their goods have a perspective on Canadian market, what should be changed in order to attract Canadians.

By now, 9 priority groups of goods have been identified (clothing, textiles and confectionaries, machine building – milling equipment, that are in demand in Canada, dish-washers) and one service sector – the IT, which has been successfully operating between ourselves.

– This is what Canada is interested in obtaining from Ukraine. What is it Canadians have to offer to us?

By the results of the year 2016, the basis of Canadian exports to Ukraine is formed of coal and metallurgy. And the beginning of this year also shows revival of this sectors. Supplies of fish and shrimp are top second (we’re close to the ocean, after all). Then come aircrafts and aircraft components (to replace Russian parts). And this segment is very perspective, because our jointly manufactured high tech goods can be sold on the third markets. A big portion of our exports accounts for pharmaceuticals and soya (mostly seed). I have recently visited Kharkiv oblast and I was told that local specialists prefer Canadian seeds for they are cold resistant and fit good to continental climate.

A big portion of Canadian exports (almost $3.5 million) accounts for pets’ food (cats and dogs) and materials for cattle artificial insemination. By the way, a big part of Ukrainian dairy herd are Canadian descendants.

Thus, the range of exports to Ukraine is large, but we work on its extension.

– This is great that our countries plan to extend our commercial horizons. However, plans do not always coincide with reality. Who can guarantee that Canadians need Ukrainian goods? What goods from Ukraine are currently being sold in Canadian stores? Are they popular?

A Ukrainian company, before entering Canadian market, does promotional launch with engagement of certain PR-companies. I know that a Ukrainian birch sap producer is being entering Canadian market right now. They will sell their goods through one of the biggest chains of our supermarkets. And, if Canadians are going to like it, the supplies will grow.

For instance, in 2016 our country bought concentrated apple juice from a Ukrainian producer for the amount of CAD 9.5 million and your country became top second external supplier of this product. On top of that, every tenth glass of apple juice, drunk by Canadians – is made of Ukrainian concentrate.

I would like to mention honey. Ukraine can occupy this niche, because Ukrainian honey supplies to the EU are subject to quotas, while being unlimited to Canada.

– We have to be honest, though. I presume that Canadian customers got used to, for instance, American quality of goods, while our products are hardly competitive…

You are excessively humble, because there is a fair amount of Ukrainian companies, especially those who have bought modern production facilities, that can produce goods of the world’s top level. A lot of Ukrainian manufacturers also develop partnerships with Canadian distribution networks and our embassy helps with this.

– FTZ is often perceived by Ukrainian businesses as another opportunity to sell their goods. However, some experts with more strategic vision say that the Agreement should be treated as a partnership and we also have to think, how our countries can help each other. How do you think the commercial partnership between Ukraine and Canada should look like?

Canada-Ukraine Trade and Investment Support’s findings indicate that after FTZ agreements with other countries are signed, investments in both directions have doubled. The wider commercial opportunities are, the more the countries learn about the investment potential of each other.

As far as Ukraine is concerned, on the verge of 2016-2017 an investment in food industry was made – a Canadian investment fund bought 30% of shares of one of the biggest local agricultural holdings “Astarta”.

We can also see that Canadian capital comes to Ukraine through acquisition of large international entities that operate here. When I have recently visited Kharkiv, I learned that 50% of a big local outsourcing company had been purchased by the National Pension Fund of Canada. Thus, Canadian capital flows to Ukraine through many channels including indirect ones.

Currently we see the increase of project and investment interests. Talking about projects, there is a rocket project being prepared on the East Coast of Canada, with the plans to build a small space launch complex, from which Ukrainian rockets “Cyclon-4” are to be launched. The rockets are manufactured by “Pivdenmash” holding. The plan is to launch medium sized satellites to the orbit.

– But, honestly, what is Canada’s interest to the FTZ with Ukraine? What, in your opinion, the agreement gives to highly developed Canadian economy and Canadian businesses?

Indeed, we are interested in selling our goods in Ukraine. Even though Ukrainians love to cry poor, they buy a lot of luxury goods. Of course, Canadians don’t want to miss this profitable opportunity.

Apart from that, the FTZ between our countries is a gesture of economic support for Ukraine. And these are neither any grants, nor financial loans, but a real opportunity for Ukrainians to earn their living by trade with Canadian market. It is profitable for both, Canada and Ukraine.

For example, Ukrainian canned apricots could be of enormous demand in Canada, if they are cheaper than Austrian ones, because only 1% of Canadian territory harvests apricots (due to special climate conditions).
In general, the part of Ukrainian production facilities, that used to work for Russian Federation, can find their markets in Canada.

On the market of services, this exchange between our countries is being going on for a while, because it is less regulated, specifically in IT. It is hard to make precise calculations but I believe it is over $40 million on the annual basis. Canadian employers highly value knowledge and talents of Ukrainian programmers, because they don’t only support the existing systems, but also create new ones.

– In numerical terms, what is the current place of Ukraine in Canadian trade volume?

70% of Canadian commodity turnover accounts for USA, with the rest of the countries comprising 30%. As far as Ukraine is concerned, the current number is very modest – less than 1%. However, thanks to FTZ, we can reach much higher indicators, considering that every additional million wouldn’t go amiss for your country. So, we will make money step by step.

– Is such a readiness by Canada to launch FTZ with the EU and Ukraine connected with the complicated situation around Trans-pacific partnership and USA’s statements of the need to reconsider North American Free Trade Agreement?

Not at all. As far as Ukraine and the EU are concerned, the FTZ negotiations are under way for almost 6 years, while Trans-pacific partnership problems had started long before. Apart from that, both Canada and other countries understand that diversification of trade flows is a positive thing for national economy.

Of course, various processes are going on in the world, including political issues that need to be adjusted to, i.e. the Ukrainian situation with coal and metallurgical complex. Back in January 2016 Ukraine didn’t buy Canadian coal at all, whereas in a year Canada sold coal for the amount of $48 205 062. Therefore, when forecasting the future we cannot rely on the last year’s statistics.

The Canadian party doesn’t want to promise to Ukraine any sky-high results. However, if any Ukrainian company finds its market niche in Canada, it can make very quick progress, because Canadian market grows continuously and our population has substantial buying power. Canadians are especially attracted by high quality and cheap goods. So, when there is a will, there is a way.

– You mentioned a rocket project that is being done by Canada jointly with “Pivdenmash” holding. Are the investments coming from both parties?

Ukraine is a supplier of rockets and investments come from the North America. They are provided by the group of American space program engineers. This is purely commercial project to launch the satellites by the means of Ukrainian rockets, which is assisted by Canadian government and the Ministry of Transport of Canada, as this is from the shore of Canada that safe launches are possible.

– What is the term of the contract with Pivdenmash and when is the launch of the project?

You should get this information from Pivdenmash, but I think this is going to be a long term project. As for the project start is concerned, the beginning of construction of a space site is scheduled for early next year. New launches start in late 2018 – early 2019.

– And how’s our cooperation in defense and military technical sector going on?

As far as the contracts in space and aircraft industry are concerned, the first flight on AN-132 was on March, 31. The aircraft was engineered by Antonov plant for Saudi Arabia and it has got Canadian engines.

The Minister of Defense of Ukraine, Mr. Poltorak, comes to Canada in mid-April. He will sign a military cooperation agreement, which facilitates our dialog in this sector. I won’t go into details so as not to rush ahead of things.