The unprecedented disruptive impact of Russia’s ongoing invasion is prompting Ukrainian businesses to enter foreign markets in record numbers. This expansion is no longer limited to neighboring European Union member states on Ukraine’s western border, and has now become a much more global phenomenon. Growing numbers of Ukrainian companies are seeking to establish a presence in markets beyond Europe, including the United States.
In more and more cities around the world, Ukrainian brands are becoming increasingly visible. It is now possible to sample the delights of Ukraine’s iconic cherry liqueur bar franchise Piana Vyshnia in the center of London, for example, while Ukrainian courier service Nova Poshta currently accepts parcels in countries across Europe from Moldova to Spain. Meanwhile, Ukraine’s largest privately owned energy company, DTEK, is developing plans for green power plants and energy storage facilities in a range of different European locations.
For some Ukrainian business owners, the decision to enter new international markets is a matter of practical necessity due to wartime conditions in Ukraine. For others, the goal is expanding the geographical reach of their business and increasing the scale of operations. In addition to issues related directly to physical safety, many business owners are driven by a desire to spread risk and reach new categories of consumers with increased purchasing power. In multiple cases, the shocks of war have provided a new impetus to business plans and fueled a boldness that was not necessarily evident during peacetime.
Poland and Beyond
About 80 percent of Ukrainian businesses looking to expand internationally take their first step in nearby Poland. This should come as no surprise: the Polish market is closest geographically to Ukraine, and is widely viewed as being both safe and easily navigable for Ukrainians. Poland is also home to Europe’s largest Ukrainian diaspora community. This multi-million strong Ukrainian population serves as a ready customer base while also often acting as brand ambassadors.
Since the start of the Russian invasion, many of Ukraine’s biggest brands have entered the Polish market. This influx has been led by giants such as Monobank and Rozetka, Ukraine’s version of Amazon. Ukrainian streaming service Megogo also opened an office in Poland last year, while Ukrainian ice cream brand Three Bears has gone further and established a Polish production facility. These headline-grabbing developments have been accompanied by a far larger wave of small and medium-sized Ukrainian businesses establishing themselves in Poland, ranging from coffee shops to handmade goods. This wave of SME expansion has often involved family-owned businesses.
Poland is only one of many countries to witness an expanding Ukrainian business presence since 2022. Baltic countries Estonia, Lithuania, and Latvia have proven popular destinations, as have Romania and Germany. Increasingly, Ukrainian brands are also crossing the Atlantic and seeking to enter North American markets. At SP Management, we help Ukrainian companies register and establish their business in the United States. Over the past two years, the number of companies seeking our services has almost doubled.
US Market Appeal
What draws Ukrainians to the US market? America is, on the one hand, a highly competitive market. On the other hand, a presence in the United States opens up a range of opportunities for doing business in what remains the largest consumer market in the world. Despite regular headlines about the relatively poor state of the US economy, American consumer spending remains remarkably robust and actually increased in 2023.
With the right approach, opening a business in the US can be much easier than anywhere in Europe. For example, the state of Wyoming allows you to register a company in a single day. Wyoming offers businesses asset protection and competitive taxation that is sometimes no less profitable than in offshore zones.
Brand Ukraine
The presence of a growing Ukrainian diaspora in the United States has helped many Ukrainian companies establish themselves in the country. Russia’s full-scale invasion of Ukraine created millions of refugees, with large numbers of Ukrainians moving to America within the framework of the United for Ukraine program. Many continued working for their Ukrainian employers remotely, often seeking to establish a presence in their new locations. This has led to a surge in representative offices and branches of Ukrainian companies opening up across the United States.
While there are certainly fewer Ukrainians on the streets on Wyoming than in Krakow, for example, visitors from Ukraine will still see a range of familiar items like Kyiv cake and Ukrainian kefir brands for sale in local stores. Some Americans have also developed a growing appetite for all things Ukrainian in recent years, thanks in part to the country’s rising profile. Many have been introduced to Ukraine through news coverage, and have gone on to discover a variety of Ukrainian brands for themselves.
Ukrainians operating a business in the United States can expect to receive strong support from both the state sector and financial institutions. While working with clients, we have repeatedly witnessed how a Ukrainian passport has helped company owners obtain loans from even the most demanding American banks at an accelerated pace.
Finding a Niche
For many Ukrainian business owners, expanding abroad is all about finding the right niche. At the beginning of 2024, the Galya Baluvana frozen food chain entered the US market under the MultiCook brand name, opening its first two American outlets in Chicago and Philadelphia using a franchising model. By the end of the year, there are plans to expand this network to more than 100 venues.
One Ukrainian seeking to enter the American construction sector was able to find a niche by focusing on Florida communities that are subject to frequent hurricanes. Others achieved success by identifying niche sectors like roofing, working with European partners to secure exclusive distribution rights in the US for imported building materials. Meanwhile, soon after it was founded by Ukrainians, Spotless Agency was able to establish itself as a marketing solutions leader in New York’s notoriously competitive real estate market.
Ukrainian IT Startups
The international expansion of Ukrainian IT companies in recent years has been particularly striking. This should come as no surprise. Over the past decade or so, there have been numerous examples of hugely successful IT startups with Ukrainian roots. For example, Grammarly is a cloud-based typing assistant headquartered in San Francisco that was founded in Ukraine back in 2009 and continues to serve as a source of particular pride for Ukrainians.
There many other similar success stories, including multiple Ukrainian IT startups that have established themselves in the EU and US. Calmerry, a marketplace for finding a therapist, was named one of Wyoming’s top ten technology companies in 2023. Other Ukrainian-led IT trailblazers based in Wyoming include the Translate.com translation service and the WOW24-7 customer support outsourcing service.
Growth Opportunities
Entering a new market in a foreign country is a complex and in many ways intimidating proposition. However, as a company engaged in support for Ukrainian businesses looking to establish a presence in the United States, we have observed that many of those who do take the plunge go on to be successful. In numerous cases, annual growth of 50 percent is not unusual.
Understandably, word is now spreading about the kinds of growth opportunities available to Ukrainian companies in the US. It is therefore reasonable to assume that the current trend of Ukrainian expansion into the American market is here to stay, and will likely become a long-term feature well into the postwar era.