What It's Like to Do Business in Ukraine Right Now
Updated on March 14 to include comments from Readdle marketing director Denys Zhadanov.
With the ongoing crisis in Ukraine, now seems like an inopportune time to have business operations in the eastern European nation. But Eugene Grayfer, the cofounder and chief operating officer of Plano, Texas-based Russian Spirits Inc., who invested more than $5 million this year in a distillery and distribution system in the city of Luhansk, says he isn't fazed by the political turmoil. "Everything we do is produced in the Ukraine," he tells Inc. "We know the people and have done a lot of research."
Of course, well-researched plans can go awry. Grayfer and company president Roman Talis were set to launch Kruto vodka in Dallas on March 17, but learned last week that officials from Luhansk's province had petitioned the Russian government to take over the region and offer protection. That prompted a meeting between Talis and Luhansk mayor Sergei Kravchenko, who ended up backing off the request for help from Russia after a public outcry resulted, The Dallas Morning News reports.
Now Grayfer says his biggest challenge, next to watching the news every hour, is convincing employees in the country they're not pulling out. "Because of the turmoil over there, they're very concerned," he says of the 250 employees in Luhansk and around Kiev. "[Talis] flew out last week to assure them we're not pulling out, that we're doubling down on the country. We recalled orders from Germany and Italy and redirected them to be produced in Ukraine."
Grayfer also has experienced disruptions in telephone and Internet communications, and learned his workers were unable to withdraw more than $90 a day from ATMs. "It's not an announced policy," he says, but it goes to show "the uncertainty is huge."
Denys Zhadanov, the marketing director of Readdle, an Odes'ka, Ukraine-based startup that makes productivity apps such as Documents 5, agrees. "Since we are in the tech sphere, it's slightly better because we have businesses around the world and Apple's App Store is an amazing tool for distribution," he says. "For friends with businesses in the Ukraine, let's say retail or production, they've said it's been very hard. The currency is weaker than ever before, which makes it hard to trade with other partners."
The uncertainty of what will happen has affected workers' productivity. "They're focused on watching the news, listening to the news, connecting with family and friends in Russia, Crimea, or western regions of Ukraine," Grayfer says. "We want to support the people working in our plant, so we've been ramping up orders and marketing and distribution in the U.S. in order to provide them with additional capital that they need over there."
Still, Grayfer admits "everybody who is conscious, our lawyers and our accountants, say you guys are a little bit crazy to do this." But the serial entrepreneur stands by his decision. "We believe all of our success has been because of the people that we work with," he says. "They're passionate about their product and its history."
The company also has what Grayfer calls "eyes on the ground," trusted employees and partners who have been tasked with providing information as it unfolds. And like any smart entrepereneur, Grayfer has put a contingency plan in place. He says he's been working with Russian lawyers to prepare a package of licensing and trademark applications that would be needed if Russia were to take over control of the regions where the company operates. "And we told our staff that," he adds. "In the worst-case scenario, we shouldn't be down too long--maybe two months maximum."
JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.