This article, an observation of the US market and Ukraine’s opportunities, was researched and written by Tony Freeman upon request of the UCCI Representative in the USA (East Coast), Misha Migdal.
Tony Freeman is the President of A.S. Freeman Advisors, LLC, a business consultancy based in New York City. He can be reached at [email protected]
No nation offers the breadth of opportunity to Ukrainian exporters as the United States. Ukraine’s breadth of capabilities and low labor costs relative to the US offer opportunities to any Ukrainian company looking to build its international presence. Selling successfully to American firms requires concentration on the expectations and conventions of US buyers. Mastering these points opens the door to the world’s richest market.
The Opportunity and Ukrainian Advantages
Any Ukrainian company looking to do business internationally should consider selling into the American market. With the world’s largest economy and a business-friendly environment the USA remains the crossroads of global commerce. Success in the American market is a near-guarantee of the ability to sell in other large economies.
Ukrainian companies offer American companies one significant advantage over domestic US suppliers. Ukrainian labor costs are three to seven times lower than wages paid in the United States. For manufacturing companies, Ukrainian labor rates compare favorably to China, Mexico, India, and Korea – traditional international suppliers to the USA.
Ukrainian companies have advantages over many of America’s foreign suppliers. Ukraine has an educated workforce. Your country has established infrastructure for manufacturing and transportation. The Ukrainian government continues to look to the West for economic ties. Together these advantages for the basis for strong commercial relationships with USA companies.
Advantages Yes, But Challenges as Well
Given these advantages is why trade between Ukraine and the USA is so modest? Ukraine is only the USA’s 67th largest trade partner with the United enjoying a small trade surplus. The answer is that few Ukrainian firms have tried to enter the American market. The reasons for this situation are clear. Ukraine has, reasonably, focused on selling to nearby nations. While the USA may be attractive, more immediate opportunities have been available in Western Europe, Russia, Turkey, and China.
On the American side of the equation Ukrainian companies have found little help. Since the end of World War II, American companies are accustomed to foreign suppliers seeking them out. Rarely do we go looking for suppliers. Also, most American business people have little awareness of Ukraine. They think of “the Ukraine” as a region formerly part of Russia, not an independent country building ties to the West.
Other countries with cost advantages have faced similar challenges in selling to the USA. From the stumbles and successes of Japanese, Korean, Chinese, Indian, Mexican, and Brazilian companies Ukrainian businesspeople can plan and make their first steps in the American market.
Plan Carefully for Success – Start Narrow
Lead with strength. Select only those few products or services you think will succeed in the American markets. Your company’s first successes in the USA, as in any new market, will take time, be subject to missteps, and consume valuable time and money. Only enter the US with your strongest offering. Your company will have the opportunity to sell a broader range of items later once its reputation is successfully established.
Explain Why Your Offering Is Unique
American businesspeople are trained to listen for your company’s unique selling proposition (USP). What is it that makes your product or service superior the broad range of alternatives they can purchase with ease from their established providers? In many cases, the principal attraction of a Ukrainian product will be a superior price. It is essential that the benefit can be explained briefly and clearly. If the benefit cannot be explained in a few simple sentences, American audiences will rapidly lose interest.
Consistent Quality Is Essential
In the past, American companies learned hard lessons buying low-cost products from certain foreign suppliers. Often, initial purchases met their expectations but subsequent shipments lacked attention to quality. As a result Americans view new suppliers with skepticism. Any Ukrainian company’s pitch must include an explanation as to how the US buyer can count on quality shipments for years to come.
One tactic for convincing American buyers is to obtain the relevant ISO certification for your company’s business. These certifications are taken seriously by American purchasers.
Speak American English
English remains the international language of business and few Americans are multi-lingual. Not only do Americans insist on English they prefer American English with its unique turns of phrase and expressions. Failure to speak good English will sharply reduce any chance for success.
Embrace American Business Culture
USA business culture tends to be informal, friendly, and direct. While pleasant, Americans expect to get to the heart of a discussion promptly. Additionally, US companies tend to move quickly and expect suppliers to match the pace of their activity and communication.