Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language
The most important sales factors in Ukraine include promotion (localized promotional advertising, TV advertising, direct sales, and online advertising) and sales channels (traditional retail, online sales). Common Ukrainian online advertising channels include: Top Shop TV, Telemedia, and AllBiz.
Ukrainian consumers do not like Western brand name products manufactured in Asia. U.S. goods tend to have strong reputations but are not widely available on the local consumer market, consequently, a tag “made in the USA” increases consumer interest and confidence.
Trade Promotion & Advertising
Despite the continuing political and economic complexities in Ukraine, the advertising and communications industry has begun to rebound.
Ukraine’s Top 5 TV Channels (according to MediaBusiness Review):
• Channel Ukraine
Ukraine’s Top 5 Radio Stations (according to the Independent Association of Broadcasters):
• Hit FM
• Lux FM
• Radio Piatnitsa
• Russkoe Radio
• Retro FM
Ukraine’s Major Newspapers/Journals:
• Fakty i Kommentarii
• Komsomolska Pravda Ukraina
Ukraine’s Major English-language Newspapers/Journals:
• Kyiv Post
• Business Ukraine
Upon request, the U.S. Commercial Service can provide a list of advertising and public relations agencies, as well as print and television media sources operating in Ukraine.
National trade shows and exhibitions continue to be an effective way to introduce products to local buyers. Please contact Foreign Commercial Service in Ukraine to get a full listing of the international, domestic, and regional trade shows.
Major local trade show organizers and trade fair authorities include:
• ACCO International
• International Exhibition Center
Business-to-Consumer: Like most consumers, the most important factor for Ukrainians is price, followed by quality, durability, and after sales service. The type of product also influences the importance that consumers place on the product’s country of origin. The same holds true for Ukrainian businesses representing foreign companies as agents, distributors, or representatives.
When establishing prices it is important to take into consideration the purchasing power of the average Ukrainian consumer. According to the State Statistics Committee of Ukraine, the average monthly salary in Ukraine in 2020 was UAH 10,430 (approximately $393), which represents a 1.6 % year-over-year increase in UAH.
For pricing it is also important to consider the ages of potential end-users and the regions where they live. The demand for higher-priced Western-manufactured products is far greater among the younger generation, with the sharpest contrasts seen between the “under 55” and “over 55” age groups. The widest differences are observed in the purchase of vehicles, personal care products, candy, jewelry, household goods, and electronics.
To review the prices for a wide variety of other products, please refer to hotline.ua (in Ukrainian), Price.ua (in Ukrainian) and AllBiz (in English).
Business-to-Business: The most important factor for Ukrainian companies when purchasing equipment is quality, followed by new technology, efficiency, reliability, training support, and after-sales service. This is especially true in the agriculture, power generation, oil and gas, pharmaceutical, aviation, and information and communications technology sectors.
Ukraine’s price setting regulations are stipulated in the Law of Ukraine on Prices and Price Establishment. Price-regulating authorities in specific industries include:
The National Commission for State Regulation of Communications and Informatization, which regulates fees for telecommunication services
The National Commission for State Energy and Public Utilities Regulation, which is the government regulator of prices for energy and utilities
The Government of Ukraine regulates the prices of medicines to treat cardiovascular diseases, type II diabetes (oral medications), and asthma. For other products and services, Ukrainian companies and individual entrepreneurs are granted liberty to set prices themselves.
Pricing and Value Added Tax (VAT)
Most businesses in Ukraine are organized primarily as individual private entrepreneurs, LLC companies, or joint stock companies. American exporters working with a Ukrainian partner to jointly price goods in Ukraine should be aware that individual private entrepreneurs are exempt from the obligatory 20 % VAT on goods resold to customers. They should also know that the price a customer pays for goods in retail outlets, wholesale, or distribution warehouses already includes 20 % VAT.
LLC companies and joint stock companies should include 20 % VAT into the price of their goods or services. The option of sale through an individual private entrepreneur is limited to sales revenues performed by an individual private entrepreneur over a one year period. For VAT purposes, three groups exist with different limits of annual sales revenues for each group: group I UAH 300,000 (up to approximately $ 12,000), group II UAH 1,500,000 (up to approximately $ 59,000); and Group III UAH 5,000,000 (up to $196,000). LLC companies and joint stock companies are not limited by a ceiling in annual sales revenues since they are required to include 20 % VAT in the price.
Depending on the scope of sales in goods and their nature, one can implement a mandatory ceiling in annual sales revenues by partnering with a team of several entrepreneurs. Businesses that sell their products through dozens of salespeople classified as individual private entrepreneurs use this option widely.
Sales Service/Customer Support
Ukraine’s standards of after-sales service and customer support are lower than in the West. Nonetheless, Ukrainian consumers are increasingly demanding better warranties and after-sale services. These services are typically performed by Ukrainian repair shops, under contract with the distributor of the manufacturer or sales representatives. Ukrainian consumers have high expectations for after-sales services and product warranties. The level and quality of customer support offered can be a determining factor in winning and keeping customers in Ukraine. Legally, Ukraine has strong consumer rights protection laws of which consumers are well aware.
According to Ukrainian legislation, a manufacturer of technically sophisticated products must guarantee a product’s compliance with the specifications described in the product’s manual and offer warranty service for a minimum of six months from the date of purchase. During the warranty period, consumers are entitled to a free-of-charge repair, complete replacement of malfunctioning products within a 14-day period after purchase, or full reimbursement of the purchase price of the product if the product is returned within seven days of purchase. If the consumer has violated the operation manual of the product, all subsequent necessary repair work is at the expense of the consumer. Warranty service starts from the date of purchase.
Technically sophisticated products include:
- Household radio and electronic appliances
- Electric powered household appliances
- Household and computing devices
- Personal communication devices
- Mechanical devices including clocks, watches, and timers or stop watches
- Musical instruments, including electric powered
- Any devices with warranty obligations
- Machining devices for household use
- Medical devices
- Products for physical exercise, and sport or tourism
- Personal regular or rubber bullet firearms, tear gas (PP) guns, carbonate gas (CP) guns, ball bullet (BB) guns, air or spring guns
- Household measuring and rationing devices
The obligatory exchange or reimbursement of goods due to poor performance does not apply to foodstuffs, drugs and pharmaceuticals, personal hygiene products, perfumes and cosmetics, underwear, sprays, books and other printed goods. Such exchanges are done on a goodwill basis and at the discretion of the seller. The after sale support for motor vehicles and other self-propelled devices are regulated by a separate law.