Which European countries have the highest demand for goods and services from Ukrainian producers? How can the integration of Ukrainian business into the EU Single Market be accelerated, and what is the role of business associations and clusters in this process?
For the first time in Ukraine, a comprehensive analysis of the export potential of Ukrainian economic sectors has been conducted with a focus on small and medium-sized businesses (SMEs) and their ability to create higher added value.
Experts from Civitta Ukraine and EasyBusiness, within the program EU4Business: SME Competitiveness and Internationalization, which is co-funded by the European Union and the Government of Germany and implemented by GIZ Ukraine, together with partners, implemented the project "Better Market Connectivity of Ukraine to the EU" in Ukraine.
The goal of the program “EU4Business: SME Recovery, Competitiveness, and Internationalization” is Ukraine's economic growth and strengthening of competitiveness, alongside the movement towards internationalization and integration into the Single European Market. The "Better Market Connectivity of Ukraine to the EU" project is one of the tools bringing the achievement of this goal closer.
“A major advantage of this project is that we identified the sectors with the greatest potential and the most capable business associations, which can truly make these sectors drivers of the economy. This project also helped us identify the regions of Ukraine that are most relevant for these sectors. Where we can support local business and the entire ecosystem at the regional level to genuinely contribute to sectoral development,” noted Hagen Ettner, program director of “EU4Business: SME Recovery, Competitiveness, and Internationalization” at GIZ.
The results of the study and the details of the project implementation were presented during an event titled, “Economic Integration of Ukrainian Business into the EU Single Market: Action Plan.”
The event brought together representatives of the government, international partners, representatives of business associations, Ukrainian producers and experts. Nearly 400 participants registered for offline and online participation.
“EU and Ukraine economic cooperation and integration is great to aspire to, but it means big shift for both Ukrainian SMEs and Europe. Ukrainian SMEs need to build new partnerships, understand new markets, cultures, and legislation. And Europe needs to acknowledge and accept new products and services, and partnerships that could benefit both. This project has identified potential EU markets for specific Ukrainian sectors and subsectors for collaboration and provided direct trainings and matchmaking for Ukrainian associations and SMEs to start making this EU-Ukraine integration happen”, said Sander van der Molen, project team lead and partner at Civitta.
The project “Better Market Connectivity of Ukraine to the EU” consisted of four components. The first stage was analytical research that allowed the identification of the most promising sectors for SMEs with export potential and the ability to generate added value. The Civitta and EasyBusiness consulting team studied 29 product and 18 service sectors of Ukraine’s economy. The analysis took into account three key components: domestic market potential, qualitative analysis, and quantitative analysis of demand in the EU.
A total of 20 product categories were identified as the most promising for export to the EU. From these categories, the top five leaders were selected:
- Food products: exports grow annually by +19% – even during wartime;
- Wood processing and furniture: Ukrainian furniture, veneer, and fuelwood are particularly valued in EU countries;
- Electrical equipment: high product complexity and growing demand in Central Europe;
- Textiles: over 1,000 SMEs in the industry, growing demand in Europe for workwear, sports textiles, and handmade elements;
- IT and ICT: $5.5 billion in gross value added (GVA), 300,000 specialists, 40% of all service exports to the EU come from this sector.
To determine the geography of demand in EU markets, the project consultants conducted additional analysis to identify promising markets. The top five partner countries that favored goods from Ukraine were: the Netherlands, Poland, Germany, France, and Italy. Poland — due to geographic proximity; Germany — values IT services and industrial goods; France, Italy, and the Netherlands — diverse products. The latter made it into the top five due to extensive re-export opportunities.
- The following stages of the project after the research were as practical as possible:
- Identification of leading clusters and industry associations in five priority sectors.
- Training for industry associations/business networks to promote Ukrainian goods and services in EU markets.
- Organizing the participation of Ukrainian SMEs in international trade events — trips to Poland, Germany, Sweden, Finland, and France. Assistance in finding clients in the European market.
“We had two key goals. Training and support for industry associations and clusters to create export potential so that they would become multipliers of knowledge and experience. And the second goal — to help SMEs directly sell, establish contacts, build connections, and achieve B2B sales. This was already direct work with SMEs — 53 businesses from all priority sectors,” said Ivanna Didur, associate partner at Civitta Ukraine.
Project results:
- 4 visits to industry exhibitions organized
- 250+ meetings held
- 19 networking partnerships created
- 50+ export connections established for Ukrainian SMEs in priority sectors
The results of the study and the entire project were discussed during a panel discussion titled “The Role of Industry Associations and Clusters in Economic Integration into the EU Single Market,” which took place with the participation of government representatives, international partners, business associations, and experts.
A separate part of the event included group workshops titled “Top 5 most promising sectors of Ukraine: brainstorming of perspective solutions for integration into the EU Single Market.” Participants and experts conducted a SWOT analysis for each of the five priority sectors, which made it possible to identify risks, find solutions to overcome them, and also identify the advantages of each sector that can be used for integration and strengthening the positions of Ukrainian producers and service providers in the Single European Market.
Reference information:
The international cooperation program “EU4Business: SME Recovery, Competitiveness, and Internationalization” is co-financed by the European Union and the German Government and is implemented by the German federal company “Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.” The program aims to support Ukraine’s economic resilience, recovery, and growth, create better conditions for the development of Ukrainian small and medium-sized enterprises (SMEs) as well as support innovation and boost exports.
Read more: www.eu4business.org.ua
The contents of this publication are the sole responsibility of Civitta Ukraine and do not necessarily reflect the position of the European Union, the German Government, GIZ.
Promprylad Foundation
