Business in Lviv: Lars Vestbjerg about the investment climate, the local government and the war

Lars Vestbjerg is the president of the Danish Business Association in Ukraine and the Charter President at Lviv International Rotary Club. He is also primarily engaged in footwear manufacturing as General Manager at Sika Footwear A/S with production facilities located in Lviv, Ukraine. Mr Vestbjerg shared with us his thoughts about the atmosphere and the investment climate in Lviv, about how to start a business here and also about how the local government and the situation in Ukraine influence this.

Investment climate in Lviv

I've been living in Lviv since March 2003. I came here because we started production company making footwear for the working industry and now we're still here after 14 years. There have been many changes in this city during this time.

If we are talking about the investment climate, it is getting better and better. When we just started here you would sometimes have to pay extra. But now it's different and the business climate is already normal. Now you don't have to worry about people coming and asking for money - it's not happening now, but at that time it did. Some companies had to pay to be able to do business here.

We always had a strategy - we should be a white company. It means that we are paying all official salaries, taxes for the people and pensions. But also we want our company to be profitable.

For the labor market it was easier to find people in the beginning and very difficult now. We have a lot of recruiting companies coming from Europe who want to hire Ukrainians to work for other countries. It’s a problem for us now, because it makes the competition on the labour market. And it can be a problem in the future, because if people are moving out, the companies will stop coming.

Working with ukrainians:

Approach to business

I think that some Ukrainian companies are living by the soviet rules especially with the management but also with paying taxes. There are a lot of black companies in Lviv. They are partly our competitors, because they are stealing our people. They are not paying taxes so they can pay higher salaries and people go there for the money. And if you have to follow the black company it’s not possible. The only thing we can do is to sell the idea that we are paying your pensions, your taxes, your social security if something happens. That is something black market can't offer.

Language barrier

There is no language barrier, because the young generation is far more international. They have good teachers at school and learn very fast. Many people at my company and most of my management team are quite good with English. And it’s also one of the things we are putting higher attention to, that we have people who can communicate, not just through a translator, it’s not the same. Because when you have to build up a team for example, it’s very important that you have good sense of humor and you can express it. Translator will not translate the humour.

Local government

They help foreign companies to start business here. It is profitable to do business in Lviv right now. We have the governor’s office and the mayor’s office. They can also block it but that’s not happening today. Today we have a normal business climate. It means that a company can come to my association and we will say “okay, you are working in this sphere, I will connect you to city hall, to oblast administration and then I will help you however I can”. And we don’t have problems any more.

The war

War is not affecting business. As soon as you come to Lviv you see it’s normal here. We don’t have any shooting and bombing at all. And if you are thinking about the war area - it’s 1000 kilometers from here. It’s the same as we have in Iraq - the distance is big. In one part they live normally, having a sunbath, in the other area they are bombing.

But I know that most of the companies that start here are making a risk analysis of the country. It's not about whether they are bombing, it's about the risk of losing our people and losing our investments.

What do they do today in a military? They are hiring or recruiting people who work on the white company. And I think, why they do not take unemployed people? Because unemployed people are working in black companies. And they are not giving them salaries. They have the black salaries. It’s not a fair system. I don’t think that war affects a lot of companies, of course if they go to the East, that’s a probability.

Living in Lviv

Lviv is a lovely city. It’s very beautiful, very convenient for us. It’s like living in Vienna or Prague, this kind of architecture. And you never get bored. When you walk out the door you have a restaurant on the right side and on the left side. There are a lot of things to do, but what we need here is a golf course.

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