June 13 fo­rum in Rome high­lights grow­ing bi­lat­eral busi­ness ties,

Kyiv Post - - Front Page - BY NATALIA DATSKEVYCH [email protected]

Al­ready a ma­jor trade part­ner to Ukraine, Italy’s busi­ness am­bi­tions mean it will al­ways see more un­tapped po­ten­tial. Both coun­tries still have plenty to of­fer each other.

Ukraine-Italy bi­lat­eral re­la­tions have been more or less con­stant at roughly $5 bil­lion through the past decade. In 2018, Italy was Ukraine’s third-largest trad­ing part­ner in the Eu­ro­pean Union af­ter Poland and Ger­many.

Among those three, Ukraine had a pos­i­tive trade bal­ance only with Italy, ac­cord­ing to the Ukrainian Em­bassy in Rome.

Over­all, bi­lat­eral trade last year grew by 13 per­cent com­pared to 2017 and reached $4.7 bil­lion, or an 11 per­cent share of Ukraine’s trade with the whole EU bloc. Al­to­gether,, there are around 15o Ital­ian com­pa­nies do­ing busi­ness in Ukraine.

“Fol­low­ing the adop­tion by the EU and Ukraine of the free trade area, and in par­al­lel with Rus­sia’s im­po­si­tion of a se­ries of trade re­stric­tions, the EU re­placed Rus­sia (for) Ukraine as the main trad­ing part­ner,” Marco To­son, hon­orary con­sul of Ukraine in Italy, told the Kyiv Post by email.

“Ukraine is con­sid­ered to be an at­trac­tive coun­try for in­vest­ments and busi­ness de­vel­op­ment,” said To­son.

For ex­am­ple, among the top twenty re­tail­ers that en­tered the Ukrainian mar­ket in 2018, four were Ital­ian — Emporio Armani, Trus­sardi, San­toni and Pen­ny­black — ac­cord­ing to the Ukrainian Re­tail As­so­ci­a­tion.

“This is a pos­i­tive sig­nal when big brands en­ter Ukraine,” said Oleh Beres­niev, CEO at B2Ukraine, a con­sult­ing com­pany that helps mainly Ital­ian busi­nesses to op­er­ate in Ukraine.

In ad­di­tion, in Italy there is a grow­ing de­mand for Ukrainian al­co­holic beverages, es­pe­cially vodka, as well as hand-made prod­ucts.

Italy’s busi­ness ap­petite

Beres­niev, who has been strongly in­volved in Ukraine-Italy busi­ness re­la­tions dur­ing the past decade, says that Italy’s in­ter­est in Ukraine is start­ing to gain mo­men­tum and re­turn to the pre-cri­sis lev­els of 2013–2014 when the EuroMaidan Rev­o­lu­tion that ousted pro-Krem­lin Pres­i­dent Viktor Yanukovych and Rus­sia’s war against Ukraine hit the econ­omy.

“Af­ter the rev­o­lu­tion, much was not clear for busi­ness, but in 2016– 2017 the mood more or less re­turned to nor­mal,” Beres­niev said.

This year there have been a num­ber of Ital­ian en­trepreneur­s who came to Ukraine to de­velop their busi­nesses, he said.

For ex­am­ple, more Ital­ian food and wine pro­duc­ers are en­ter­ing Ukraine’s mar­ket, which has de­vel­oped a rav­en­ous ap­petite for Ukrainian cui­sine. Wine pro­ducer Motes­pada en­tered the Ukrainian mar­ket in 2018 while lux­ury wa­ter brand Acqua Morelli en­tered this year.

“Last year, sev­eral Ital­ian com­pa­nies signed con­tracts for the sup­ply of arugula and other tra­di­tional Ital­ian herbs with the EcoMar­ket

su­per­mar­ket chain,” he said.

Ac­cord­ing to To­son, who has been work­ing on Ukraine-Italy trade re­la­tions for more than 20 years, there is a lot of in­ter­est from Ital­ian com­pa­nies in agri­cul­ture, con­struc­tion, and re­new­able en­ergy as well.

Out of all Ital­ian re­gions, the south­ern is­land of Si­cily shows the most in­ter­est in do­ing busi­ness with Ukraine, ac­cord­ing to Beres­niev.

“Si­cily shows great in­ter­est in dif­fer­ent ar­eas, mainly in the agro sec­tor (pro­duc­tion of seedlings) as well as cloth­ing pro­duc­tion (in Ukraine, then shipped to Italy),” he said.

Ernest Air­lines

But it’s not only food, agri­cul­ture and cloth­ing that Ital­ians are in­ter­ested in.

Ital­ian low-cost air­line Ernest en­tered the Ukrainian mar­ket in Oc­to­ber 2017, shortly af­ter the Eu­ro­pean Union’s visa-free regime with Ukraine came into force in June of that year.

Ilza Xh­elo, chief com­mer­cial of­fi­cer at Ernest Air­lines, is happy with the re­sults of the air­line’s op­er­a­tions in Ukraine so far.

In 2017, the air­lines had only five routes be­tween Ukraine and Italy, whereas now it serves 13 di­rect flights.

“We feel that it’s a very im­por­tant mar­ket for us and we’re happy that we’re giv­ing dis­count ser­vice to Ukraini­ans, that now they can fly to more des­ti­na­tions in Italy such as Naples, Venice, Genoa, and not only to Rome or Mi­lan,” said Xh­elo.

Ernest Air­lines is cur­rently fly­ing from Kharkiv, Kyiv, Lviv, and Odesa, with Odesa be­ing the lat­est ad­di­tion.

To ad­vance and lo­cal­ize their ser­vices, Ernest Air­lines is be­gin­ning to hire peo­ple who speak Ukrainian.

“We’re hir­ing a Ukrainian-speak­ing cabin crew who are Ital­ian res­i­dents. We’re also think­ing to have an of­fi­cial base in Ukraine so we can hire lo­cal peo­ple,” she said.

But the Ital­ian air­line in Ukraine is fac­ing some dif­fi­cul­ties. The com­pany ac­cepts pay­ments only in eu­ros and not in Ukraine’s lo­cal cur­rency.

“We’re col­lab­o­rat­ing with dif­fer­ent tour op­er­a­tors and smaller travel agen­cies to buy tick­ets in hryv­nias, and then they can pay us in eu­ros,” said Xh­elo.

Ac­cord­ing to Ernest Air­lines Mar­ket­ing Direc­tor Va­le­ria Bec­cari, the air­line has car­ried more than 400,000 pas­sen­gers since Oc­to­ber 2017 be­tween Ukraine and Italy for a to­tal of 116 flights in 2017, 2,100 flights in 2018 and 1,155 in 2019 (up to May).

“We see huge growth,” Xh­elo said.

Overcoming ob­sta­cles

Though much progress has been made, there are key prob­lems that still keep in­vestors from bet­ting on Ukraine. Most in­vestors are afraid of Rus­sia’s on­go­ing war in Ukraine’s Don­bas re­gion.

“Ev­ery­one is wait­ing for the end of the war, although in most re­gions of the coun­try every­thing is calm. There, in Italy, peo­ple don’t get the right in­for­ma­tion,” said Beres­niev, in ref­er­ence to Ital­ian me­dia cov­er­age of the sit­u­a­tion in Ukraine.

More­over, the 30-day pe­riod of lim­ited mar­tial law in Ukraine that was im­posed across 10 Ukrainian oblasts back in Novem­ber cre­ated even more fear.

“Many in­vestors sim­ply (left). I knew peo­ple that were ready to in­vest mil­lions of eu­ros into Ukraine, but af­ter the mar­tial law they said that they will wait un­til every­thing gets right,” said Beres­niev.

But an­other prob­lem is sim­ply the lack of knowl­edge about Ukraine among Ital­ian busi­ness­peo­ple, ac­cord­ing to Beres­niev.

“They start to learn the sit­u­a­tion about Ukraine right at the air­port, some­times when they just ask taxi driv­ers what is hap­pen­ing in the coun­try. They sim­ply do not an­a­lyze the coun­try they’re fly­ing to and want to do busi­ness with,” he added. ■

A gen­eral view shows peo­ple walk­ing across Gae Au­lenti square in the Porta Garibaldi - Porta Nuova dis­trict of north­ern Mi­lan on March 24, 2019. (AFP)

Parme­san cheese is shown in stor­age at a ware­house on April 5, 2019 in Mot­teggiana, Italy. Only a few re­gions in the north of Italy are able to pro­duce the fa­mous, dry cheese that is glob­ally pop­u­lar. (AFP)

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