Achievements in the export of consumer goods produced in Ukraine are still quite modest. Nevertheless, the increasing demand for Ukrainian products among exigent European customers is the indicator of their competitiveness.
Ukrainian consumer goods industry which remained in crisis for quite a long period of time seems to be resurrecting from ashes. This trend was induced by the rise of patriotic aspirations which encouraged many Ukrainians to switch to local brands. The depreciation of national currency also contributed to this trend, as a lot of consumers had to stop purchasing costly American and European brands. The increased demand and the vacated market niche provoked the increase in a number of clothing and shoe brands, as well as improvement of their products’ quality.
Export statistics confirm that Ukrainian consumer goods industry gradually recovers from the crisis: in 2016 Ukrainian products were available at the market of 92 countries around the globe. The major achievement was the reorientation of Ukrainian export from CIS to the European market. During 11 months of 2016, the volume of Ukrainian export to European market increased by 10%, amounting to 594.2 million USD, which is roughly 90% of the total export volume of consumer goods for this period. Besides Europe, Ukrainian products are also available in USA, Afghanistan, and Canada.
Ukraine Investment and Trade Facilitation Center drafted a practical guide on clothing and shoe export.
This step-by-step business guide was created by the Ukraine Investment and Trade Facilitation Center on the request of Ministry of Economic Development and Trade of Ukraine and the Export Promotion Office with the support of the Embassy of the Netherlands in Ukraine. This guide contains detailed instructions on access to the EU market, success stories of Ukrainian companies as well as valuable references. The data presented in the report would be of great interest not only for consumer goods manufacturers but for other companies as well, as the general rules of entering EU countries’ markets are similar for a number of business spheres.
Main stages of entrance to the EU market
1. Establish the level of company’s preparedness for export activities
This process includes the verification of products’ and production processes’ compatibility with European standards. Access to the European market is feasible only if your company has established a stable presence in the national market which can ensure long-term investments in the development of its export capacities. It’s crucial to understand which resources you have and which you still lack in order to achieve your goals. You also have to compare your sales structure with current market tendencies, as well as identify advantages and gaps of your business model.
2. Pay attention to the most promising export niches
It’s important to conduct comprehensive market research in order to omit fails during the expansion process. You need to identify your target audience, the capacity of your product to meet demands of local consumers as well as a market access strategy you are planning to implement. A thorough assessment of the market situation is a key factor defining the success of your export activities.
3. Collect and analyze all available data about export rules and regulations
Legislation and regulations related to manufacturing and sales of products are constantly improving, so you have to be always updated about the latest changes. For example, many export fees were canceled on 1 January 2016 after the temporary implementation of the Ukraine-EU Association agreement was initiated. At the same time for some categories of shoes imported to the EU, the import fees will be gradually decreasing within next 3-5 years. Certification standards are also something very important to be aware of.
In September 2016 Ukraine applied for accession to the Regional Convention on pan-Euro- Mediterranean Preferential Rules («Pan-Euro-Med»). The Convention establishes unified rules of origin for the trade of goods produced in countries which concluded preferential trade agreements with EU. Pan-Euro-Med convention establishes strict rules of origin for clothing manufacturers. The availability of documents certifying the Ukrainian origin of products is also obligatory if you are planning to engage in export activities.
4. Find a partner at the market where you are planning to establish presence and elaborate a products promotion strategy
If you want to have a smooth start at the foreign market, it’s better to find a reliable partner and sales channels. It’s also advised to hire local staff who is more aware of local market peculiarities and specific needs of consumers. Work with locals will make it easier for you to answer such questions as: where to find information about thematic trade shows? How to promote products better? Finding these answers is quite important as the majority of marketing and trade approaches which work well in Ukraine prove to be useless in foreign markets. That’s why you have to be ready to create new promotion and sales methods for your products.
5. Choose suitable business model
Depends on your business goals and strategic plans for your company’s development, you can conduct your business activities using franchising, retail or agency contract model. In order to cut expenses and facilitate the process of entry to the new market use contemporary technologies, such as e-commerce for example. It provides you with all the perks of online banking while lifting the burden of investing in physical infrastructure and dealing with many organizational challenges. At the same time, it enables you to place your products on popular trade platforms and export them under preferential customs regime without any additional certificates and customs clearances.
You can access information about EU governmental tenders at TED (Tenders Electronic Daily).
According to the EU legislation, all EU countries’ governmental and local authorities are obliged to announce tenders in case the total amount of purchase exceeds certain limits.
What should a beginner know about export?
First of all ensure that you have legal support in the selected country, as its legislation may differ a lot from Ukrainian one. Rules and regulations related to international business contracts: key requirements, country’s currency policy, as well as the existence of any special sanctions, are also worth considering.
Good quality, appealing design and competitive prices help Ukrainian clothing manufacturers to attract customers overseas. Though, in order to establish a solid presence in the market, you have to be persistent, flexible and adaptive. It’s crucial to have an elaborate step-by-step plan of the entrance to the market which will enable you to use your resources effectively and will keep you prepared to face potential challenges.