Overview of Ukraine

Ukraine: a large country in Eastern Europe yet to be developed

Overview of the country and its major industries, economic development

Ukraine is located in the transportation hub of Eurasia, located in the eastern part of Europe, the north neighboring Belarus, northeast of Russia, west of Poland, the Czech Republic, Slovakia, Hungary, south of Romania and Moldova border, across the Black Sea and Turkey. Ukraine covers an area of 60,3700 square kilometers and has a population of 47.95 million. The official language is Ukrainian. The currency of Ukraine is the hryvnia (Гривня), and on September 5, 2003 the exchange rate was 5.33 hryvnias per US dollar. Temperate continental climate prevails in most of the country, with a Mediterranean climate on the southern coast of the Crimean Peninsula. All modes of transportation are widely used in Ukraine, and rail, road, sea, river, air and pipeline transportation is relatively convenient.

Ukraine's industrial sector is complete, and ferrous metallurgy is one of the pillar industries, with the output of its products ranking among the world's top. 80-90% of Ukraine's metallurgical products for export, is Ukraine's most important source of foreign exchange earnings. 2002 Ukraine's total industrial output value of 171.2 billion hryvnias, an increase of 7% over the previous year, accounting for 85% of GDP. The light industry production increased by 0.4% and the textile industry by 1.4%.

Ukraine's foreign trade focuses on the CIS, the European Union, China, etc. In 2002, Ukraine's foreign trade imports totaled 16.976 billion U.S. dollars, an increase of 9 percent from the previous year. Of which exports 17.957 billion U.S. dollars, an increase of 10.4%. The main exporting countries of Ukraine are Russia (17.8%), Turkey (6.9%), Italy (4.6%), Germany (4.2%), etc.; the main importing countries are Russia (37.2%), Turkmenistan (11.1%), Germany (9.8%), Poland (3.2%), the U.S.A. (2.8%) and so on. According to the State Statistics Committee of Ukraine, the total import and export of foreign merchandise trade of Ukraine in January-April 2003 amounted to 13.251 billion US dollars, of which 6.829 billion US dollars were exported, an increase of 27.8% over the same period of last year. The European Union is one of the most important trading partners of Ukraine, and the trade volume between Ukraine and the EU amounted to 7,567.6 million US dollars in 2002, an increase of 18.3% compared with 2001, and accounted for 21.7% of Ukraine's annual foreign trade volume. Among them, Ukraine exported 3.53 billion dollars to the EU and imported 4.0376 billion dollars, up 18.6% and 18% respectively from 2001.

Ukraine is known as the "Barn of Europe" and the industrial center of the former Soviet Union. In recent years, Ukraine has been encouraging the development of the private sector and improving the business environment for the private sector, with plans to revamp both privatized and new private enterprises. The Government of Ukraine allows the development of small and private enterprises and allows small enterprises to engage in foreign trade. The World Bank is providing the government with a loan of $82 million to accelerate the privatization process in Ukraine.

Ukraine's economy has continued to grow since 2002, the currency has remained stable, and the population's well-being has gradually improved. 2002 GDP was 220,556 million hryvnias, with a GDP growth rate of 4.1 percent. GDP per capita was 4,598 hryvnias.

In early 2003, Standard & Poor's upgraded Ukraine's economic outlook from negative to stable, and still maintained Ukraine's long-term and short-term hard currency and hryvnia bonds at a B credit rating.

As of the end of July 2003, Ukraine had not formally joined the World Trade Organization, but had signed agreements on market access for goods and services with 13 countries and economies, including the European Union and Canada. Ukraine is in the process of intensifying the accession process by conducting relevant negotiations with 21 countries. Ukraine has concluded bilateral negotiations with Bulgaria and initialled a protocol on market access for goods and services. The Government of Ukraine expects to join the World Trade Organization by July 2004.

Ukraine's Law on Contract Processing provides for preferential policies for contract processing: i.e., the import of raw materials under Ukraine as contract processing is exempted from import tariffs and value-added tax, and promissory notes are issued on import, such as processing of finished products and then exporting all of them free of tariffs and so on.

Uganda is a foreign exchange control countries, the territory of the ban on the circulation of foreign exchange as a means of payment. Enterprises importing foreign exchange requirements through the commercial banks with the right to operate foreign exchange in the U.S. inter-bank foreign exchange exchange purchases. Exports should be settled within 90 days by banks in Ukraine. Foreign investors may remit their income, profits and other legally earned currency abroad after paying taxes and other necessary fees in accordance with the law. There are 11 special economic zones, 9 priority development zones and 3 technology parks in Ukraine. Foreign enterprises in the zones enjoy tax incentives. The creation of special economic zones on the development of Ukraine's textile and garment industry is of great significance to ensure the flow of foreign capital and domestic capital to the state's priority industries and regions, promote the restructuring of the economy, the introduction and attraction of advanced technologies and techniques, and the effective use of the strengths of the various industries in Ukraine's various regions to expand exports.

Ukraine's industrial infrastructure is relatively good and water should be sufficient. As a result of the impact of the tight fuel supply situation, U daily power cuts of about 2 million kilowatt hours, has formed a power gap of 5 billion kilowatts, but generally can guarantee the textile and garment enterprises daily power needs. U mobile communications developed, computer penetration rate is high.

Generally speaking, land in Ukraine can only be leased, but the cost of leasing must be determined by the investor in consultation with the local authorities. Currently, per capita consumption in Ukraine is low, with an average monthly salary of $70-80. In January 2003, the state minimum wage in Ukraine will be raised to 185 hryvnias, and by the end of 2003 it will be 273 hryvnias.

VII. Status of Bilateral Trade and Investment (Economic Cooperation)

1. Status of Bilateral Trade

Since the establishment of diplomatic relations between China and Ukraine on January 4, 1992, the friendly and mutually beneficial relations between the two countries in various fields have developed rapidly. At present, Ukraine is the third largest trading partner between us and the former Soviet Union countries. According to Chinese customs statistics, the total trade volume between China and Ukraine amounted to only 590 million dollars in 2000, and reached 1,233.98 million dollars in 2002, an increase of 43.9% year-on-year. Among them, Chinese imports amounted to 706.32 million U.S. dollars and exports to 527.66 million U.S. dollars, a year-on-year growth of 15.7 percent and 113.4 percent, respectively.From January to May 2003, China-Ukraine bilateral trade amounted to 730 million U.S. dollars, of which China exported to the country of 318 million U.S. dollars, a jump of 103 percent year-on-year.

In recent years, my exports to Ukraine have been growing rapidly, the trade deficit has been gradually narrowed, the commodity structure has been improved, the proportion of electromechanical products has begun to rise; Ukraine's large-scale telecommunications and electronic products suppliers have started to take China as their new electronic products purchasing base. Ukrainian wholesale and retail traders began to actively participate in the Canton Fair, East China Commodity Fair and Yiwu Small Commodity Fair and a number of representative exhibitions; some of the large supermarket chains in the U.S. have participated in the Canton Fair as the first choice for cross-border purchasing, and opened up a new channel to enter the Ukrainian market.

2, bilateral investment (economic cooperation) status

In recent years, my investment in Ukraine set off a new round of boom, the scope of investment continues to expand. At present, the two sides in the field of technology trade has shown an active atmosphere of cooperation, with the Chinese technology trade promotion mission to visit the U.S. in 2002 and the U.S. President Kuchma's visit to China to attend the opening ceremony of the China-Ukraine Science and Technology Cooperation Park in Jinan, the two sides of the technology trade in the field of cooperation is gradually coming into the right track. The Chinese and Ukrainian business communities are actively working to find opportunities for cooperation.

Ukraine attaches importance to trade with China, China is included in the list of countries enjoying preferential tariffs, Chinese goods as long as they are imported directly from China, the producer in Ukraine for the enterprises registered in China, you can enjoy preferential tariffs. In this way, Chinese textile and garment enterprises investing in Ukraine can directly import raw materials needed for the textile and garment industry from China for further processing, and then re-exported to other countries and regions, thus promoting the import and export of Ukraine's textile and garment industry.

Helongjiang Linen Group and the Ukrainian government in January 2003 has formally signed a cooperation agreement, the two sides to establish a joint venture production base for linen textile raw materials, the production of long flax fibers will be fully supplied to the Heilongjiang Linen Group, the two sides of the shares accounted for 51% and 49%. As the Heilongjiang Provincial Linen Group's flax textile production accounted for nearly 40% of China's annual need for flax long fiber textile raw materials of about 30,000 tons, two-thirds of which need to be imported from the international market, the production of flax textiles are also mainly exported to the international market, this joint venture project will promote the two sides of the Sino-Ukrainian cooperation in the field of the textile industry and expand the export of flax textile.

VIII, trade and investment analysis and recommendations

1, to carry out trade analysis and recommendations

Ukraine's domestic market should be full of business opportunities in the market. The Ukrainian market has a close connection with the markets of neighboring countries. My enterprise can occupy the Ukrainian market, my products radiate to the neighboring Russia, Belarus, Moldova and other CIS countries, and even Ukraine as a bridgehead, in the near future, with Ukraine's accession to the European Union, my products into a more market size of the European market.

In order to avoid the risk of my business can be registered in Ukraine wholly owned companies, their own delivery, their own receiving, the whole supervision; or into the bonded warehouse, small wholesale distribution to the user, thus reducing the risk of accelerating the recovery of funds, and gradually to the specialty stores and chain stores sales mode development. In recent years, the taste of U.S. consumers for autumn and winter clothing has changed, some consumers prefer to buy relatively good chemical fiber clothing, rather than spend the same amount of money to buy low-grade leather clothing, it is recommended that Chinese enterprises to play the advantages of raw materials and labor costs, and increase the number of exports of chemical fiber clothing to the U.S.

Chinese companies with strength to go to Ukraine to organize exhibitions, make full use of the platform of professional exhibitions to Ukrainian consumers a wide range of real Chinese electronic communication products, fully demonstrate the domestic electronic information products, make friends with customers, and further develop the market potential. It is recommended that enterprises should seize the opportunity of Ukraine's accession to the WTO, reduce tariffs, improve the investment and market environment, under the premise of a good market research, to find a good fit into the Ukrainian market, give full play to the advantages of my company's products are beautiful and inexpensive, to overcome the idea of quick success and short-term profits, increase the initial investment, enhance brand awareness, and vigorously develop the Ukrainian textile and apparel market.