Georgians know how to do business amid war in Ukraine
While Ukraine is facing a business downturn with many of its economic partners, Georgia is showing resiliency to Ukraine’s economic flu.
Trade turnover: $686 million (2014). Exports from Georgia to Ukraine: spirits, wine, mineral water, ferrous metals, train locomotives. Exports from Ukraine to Georgia: agricultural products, cigarettes, metal and steelwork. Georgian investment in Ukraine: $17.2 million (cumulative as of October 2014).
Georgia at a glance
Total area: 69,700 square kilometers. Population: 4.5 million (2014). Government type: Republic Head of state: President Giorgi Margvelashvili. GDP, PPP: $32.1 billion (2013). GDP per capita, PPP: $7,176 (2013) Main exports: scrap metal, wine, fruit.
Business between Georgia and Ukraine remains hopeful, says Alexander Kipiani, the senior counselor at the Embassy of Georgia to Ukraine. Despite Ukraine’s bad economic situation, bilateral trade is “still quite a good number,” says Kipiani.
Ukraine’s trade turnover with Georgia in 2014 was $686 million, down 13 percent from 2013.
Shota Khobelia, the 38-year-old CEO of Teliani Valley, says that his wine business is doing OK, although last year was not as good as 2013.
In 2013, the company sold 1.25 million bottles in Ukraine for about $7 million, or 20 percent of total sales. Ukraine ranks after Poland and Georgia, respectively, among the 25 countries which Teliani Valley exports to.
The wine company entered the Ukrainian market in 2008. It has three offices around Ukraine, with 100 employees altogether.
Russia’s war against Georgia in 2008 enabled the company to be more resilient. “We know how to manage business in crisis situations,” says Khobelia.
Khatia Dekanoidze, former minister of education and science of Georgia and the former head of the Georgian police academy, is eager to be in Ukraine. Dekanoidze just launched the CAP School in mid-December. The school’s aim is to create leaders for a democratic and liberal future for Ukraine.
CAP has 45 students and expects to grow.
The school’s lecturers include former Georgian ministers, the ex-deputy foreign affairs minister Sergi Kapanadze.
CAP students are of various career backgrounds, but all want to participate in the development of Ukraine, says Dekanoidze. Several of CAP’s students are already working with various reform groups in Ukraine’s government.
“Everything we Georgians are doing in Ukraine is really affecting Georgia too,” he says.
Georgia’s dependence on Ukraine can be noticed in the heavy trade imbalance. Ukraine’s $603 million in exports are four times more than its imports from Georgia. Ukraine’s main exports to Georgia are tobacco and agricultural products such as meat, oils and juice, while it imports wine, mineral water, ferrous metals and train locomotives.
But Georgia’s worth for Ukraine is not only measured in trade numbers. Georgia is a role model for Ukraine in its free market and law enforcement reforms. It gained eighth place in the Doing Business ranking in 2014.
Dekanoidze advises Ukraine to learn from other countries besides Georgia. “The role models are free economies with no monopolized structures, with liberation of taxation etc.”
Ukraine’s investments in Georgia are tiny. Out of the $1.27 billion investment inflow to Georgia in 2014, Ukraine had only tens of millions.
But these ties are growing. The number of Ukrainians visiting Georgia is steadily increasking -- from 76,000 in 2012, to 126,000 in 2013 and 143,000 in 2014.
“We hope that our economic relations will go up,” says counselor Kipiani. “These relations are positive, progressing and developing.”
CAP School students are conversing during the school’s opening ceremony on Feb. 6. (Courtesy by CAP School)