During the entry into another country market are often applied: export, licensing, franchising, joint enterprises, direct investment,

To the Clients, who prefer to minimize the entry risk and to evaluate the effectiveness of products on the trial consignment on the new for them market, we recommend the export contracts, where we provide a duly protection of Client’s interests for account of elaboration of the deal’s terms and conditions.

To the Clients, whose trade marks and brand names are well known on the target market, but who are not interested in significant investments on the new markets, we recommend license agreements. According to license agreements created by us, our Clients provide to their partners the sales rights and sometimes right to manufacture products on target markets.

To the Clients, who have created strong retail formats and are focused on fast expansion with small initial expenditures, we assist to build franchising networks. Thorough description of a business format and verified franchising agreement (contract) allows minimizing risks with a fast expansion.

To the Clients, who need to combine expertise and resources, or to create a partnership, which is compulsory for the entry into the market of some countries, we assist to create the joint enterprises. With a qualitatively built cooperation and relations arranged with our help, the joint enterprises turn out to be mutually advantageous, long term and successful.

To the Clients, who possess the efficient amount of resources to build personal production and distribution in a “clear field” we assist to implement complex direct investments, while supporting the investment projects, representing and defending the interests of Clients in any business situations.

Besides using the most popular methods, we assist our Clients in choosing, creating and realization of contractual and project schemes of any degree of complexity.

To purchase a ready business or to build the business from the beginning in Ukraine, we recommend to those companies, who possess considerable financial resources and analogical experience in other countries.

As a general rule, we recommend a consequential entry to the market, which intends: work via distributors, opening of the personal representative, creation of the Ukrainian company.

Work via distributors.

The majority of foreign companies present in Ukraine have started their activity via Ukrainian distributors.

The qualitative foreign economic contract may help to avoid problems during the work with the Ukrainian distributors. The contract is obligatory even during commercial relations between private firms.

Opportunities	Risks
Use of experience and market connections of distributor Use of opportunities of a customs registration during the import Quick penetration into the market	Inaccurate (incorrect) presentation and positioning of the product Non-payments

Representative

A lot of companies, which carry on commercial business via distributors, open personal representative. This allows improving the coordination of promotion and logistics in Ukraine.

Opportunities	Risks
Coordination of the work with a head office. Distributors’ work control. Assistance in products promotion.	Growth of expenditures relating office services. Representative may be considered as a tax agent of the parent company.

Ukrainian company

Ukrainian company may be created in one of the following forms: private enterprise, limited liability company, open or close joint stock company, holding.

While opening the Ukrainian company, it is necessary to take into account the necessity to obtain permissions for work of the company and complexity of Ukrainian tax system and accounting as well.

The obtaining of approximately 1200 different permissions is envisaged in Ukraine. According to data of International financial corporation, approximately 43% of Ukrainian enterprises obtain permission from one till three times a year (fire bodies, sanitary bodies, labour protection and other).

Twenty two national duties and 14 local are in operation in Ukraine. The main national duties are: company income tax (25%), incomes tax (13%), deductions to Pension fund, excise duty.

The complexity of national legislation and accounting system is used for the auditing and for the imposing additional to taxes penalty sanctions.

Opportunities	Risks
Increase of operations’ profitability Increase of operations’ capacity Accounting of national peculiarities and long term development	Personnel financial abuse Intellectual property theft National business climate – checks and penalties

© www.skoforum.com 2006