Ukraine in the Baltic and Nordic business conversation: a different set of assumptions

The way a company approaches an unfamiliar market is shaped substantially by where it comes from, and the Baltic and Nordic approach to this region has been distinct enough to be worth describing.

The Baltic approach

Companies from Estonia, Latvia and Lithuania arrive with two advantages that no western European entrant has.

The first is institutional memory of the same starting point. These are economies that were in a comparable position in 1991 and completed the transition. Their managers understand what a Soviet-era enterprise looks like from the inside, why a supply chain built under central planning behaves the way it does, and what actually changes when property rights are rewritten.

The second is scale realism. A company from a country of two or three million people does not expect a market to be easy or itself to be dominant. It arrives looking for a defensible niche rather than a leading position, and that expectation is much better calibrated to what is achievable.

Estonian digital services companies in particular have been effective here, partly because the digital government agenda in Ukraine drew directly on the Estonian experience and partly because the technical model transferred with the people who built it.

The Nordic approach

Different again. Nordic companies tend to arrive with a specific technical specialism, a long time horizon and unusually strict compliance requirements.

The compliance point is worth dwelling on. A Nordic parent company will typically apply group-wide anti-corruption, environmental and labour standards to its Ukrainian operation without local variation, and will withdraw rather than compromise them.

That makes entry slower and the operation more expensive, and it produces a specific competitive position: these companies are the ones a Ukrainian counterparty deals with when they need the relationship to be demonstrably clean, for example because they in turn are selling to an EU customer with supply chain due diligence obligations.

The sectors where Nordic companies have built genuine positions reflect this — energy efficiency, forestry and wood processing, telecommunications, environmental technology and specialist industrial equipment.

What both groups get right

Neither treats the market as a smaller version of a western European one. Both arrive expecting the institutional environment to be difficult and plan for it, rather than discovering it after committing capital.

Both tend to build through partnership rather than through acquisition, which reduces exposure to the legal risks that make acquisition difficult here.

And both take a longer view than the quarterly reporting cycle allows a listed western European mid-cap to take, which matters enormously in a market where the payoff period is long.

What this suggests generally

The most successful entrants into any difficult market are usually those whose home experience calibrated their expectations correctly — not the largest or best-capitalised, but the ones who were not surprised.

A company assessing this market would do better to talk to a Lithuanian or Estonian firm already operating here than to read another consultancy report, because their assessment will be grounded in a comparable operating reality rather than in a comparison with conditions that do not apply.

That is a specific, actionable recommendation and it costs nothing but the time to arrange the conversation.

Related in this archive

• The Turkey–Ukraine free trade agreement: why a decade, and what it changes
• What actually puts a country on an investment committee's agenda
• New air routes as a leading indicator of where trade is going
• Ukraine Annual Review 2018: growth against a rising wage floor

What these two groups have in common is that they do not discuss the market before coming to it. The Balts treat this as nearby and the Nordics build a process; both come and look. What most firms from western Europe do first is read a report — and a report introduces you to nobody. The most reliable indicator I have seen in twenty years is who gets on the plane.