Udma digest 11th issue

11th
ISSUE
December 2012
CROSS-BORDER
DISTANCE SELLING
IN UKRAINE: INFO DIGEST
DEAR COLLEAGUES,
Ukrainian Direct Marketing Association, Marketing group OS-Direct and Financial-
Industrial Group «ROSAN» wish You Merry Christmas and Happy New Year!
Celebrate your holidays in a good mood inspired by the results of your work in 2012 and with
a clear vision of all the opportunities open to us next year!
Let this time of transition and new perspectives be accompanied by expansion of partners and
customers on investment market of Ukraine, who are always ready for fruitful cooperation.
Valentyn Kalashnyk, Ukrainian Direct Marketing Association and Marketing group OS-Direct, President
Viktor Kuchma, Financial-Industrial Group ROSAN, Director General

RESULTS OF THE 2012 AND EXPECTATIONS FOR THE 2013
In order to summarize this year and find out the future pros- 2. Which factors do you think have been the crucial to the
pects of Ukrainian market from the professionals, we have put development of the Ukrainian DS market in 2012? What bar-
three questions: riers (legal, technical, mental) should be overcome to en-
courage development of this area of trade in the coming
1. How do you assess the development of distance selling in years?
Ukraine in 2012, the market in general and in particular in your
segment? Have you fulfilled your expectations / plans? 3. Your predictions for 2013? Name Top trends next year.

CROSS-BORDER DISTANCE SELLING IN UKRAINE: INFO DIGEST December 2012

VALENTYN KALASHNYK,
UDMA PRESIDENT
2012 for DS companies was tough, especially for the reason The main deterrent to companies that work on consignment,
that the solvency of the population has seriously deteriorated. is the uncertainty of the national currency. Companies have to
But it was a good opportunity for companies to optimize their err and to budget a higher exchange rate. And if the rate does
operations. Many companies instead of chasing volumes have not change, it will cause a decrease in volume of orders, i.e.
to take care of improving the efficiency of their operations, consumers will buy less.
both in terms of working with databases, and by the optimi-
zation of all processes. However, some consumer segments Another constraint is the lack of well-functioning online pay-
«flunk.» For example, it refers to the direction of «seeds.» ment systems. Because of this, users have confidence in such a
process of mutual settlements. But it is good for development
In the middle of the year the market was abandoned by some of new formats of Internet projects, such as Marketplace, club
big players. But it was not a question of the Ukrainian market, systems, and comparing prices. At the moment, 10% of all In-
it was within the companies themselves. ternet users in Europe are Ukrainians.

Of course, there have been some prons this year. It mainly refers More and more companies are showing interest in Ukraine,
to the segment of «clothes» which quite efficiently and quickly but if the mid-2012 plans to launch postponed, then in the
began to develop. I am glad that in the future due to changes spring of 2013 UDMA forecasts output of at least three new
in the law «On the Protection of Personal Data» the activity of players from Europe. Major trends will be the development of
mail-order business will be greatly simplified in terms of their on-line payment systems, the use of online platforms, includ-
work with databases. And, of course, the positive aspect is the ing offline tools reallocation of advertising budgets towards
ever increasing number of consumers - Internet users. online promotion.

ANASTASIA GAVURA,
HEAD OF MARKETING-DISTANCE SERVICES,
OS-DIRECT MARKETING GROUP
Despite the fact that some companies have left the market, DS the region, the availability of different options, reducing the
in Ukraine continues to grow at the expense of increasing the time of delivery will keep encouraging consumers to order on-
volume of already present players and launch of new foreign in- line. As Ukrainians have the opportunity to order goods from
vestment projects. It must be noted as increasing the number of the U.S. sites through an intermediary (which gives access to
market operators of logistics services, so companies have more better prices for similar product categories), DS companies
possibilities in organizing the delivery of orders, including the working in Ukraine, should pay attention to customer service
delivery of international shipments for cross-border trade. improvement and work with databases of existing customers
for their reactivation.
In 2012, the market has developed in the first place, thanks
to the penetration of the Internet and the development of lo- In 2013, I see a different perspective of the e-Commerce mod-
gistics infrastructure. Owing to the development of the mar- els in clothing, grocery segments and in household goods,
ket postal logistics, and new services delivering orders to the including the Marketplace and the development of Amazon
door: the possibility of fitting, the return of goods that do not models. There will also be given sufficient attention to the im-
come through a courier. The growth of Internet penetration in plementation of online payment and bank cards.

VLADISLAV FLAX,
OWOX DIRECTOR
In our opinion there will be the following trends in the next and the efforts of retailers to increase repeated sales, as well
year: development of services for monetizing mobile audience as expanding the range of medium and large online stores.

FRESH DISTANCE SELLING NEWS FOLLOW OUR PAGE ON
2


UKRAINIAN POSTAL LOGISTICS
MARKET PROSPECTS
On December 4th, in the UNIAN press centre press-con- Main objectives of the research, conducted for the second
ference dedicated to results of an independent research of time, were to determine the market size and its structure,
Ukrainian postal logistics market was held. The study was con- key players and the market prospects for the nearest future.
ducted by the Ukrainian Direct Marketing Association (UADM), Talking about postal logistics complex of services on deliv-
together with the consulting company «NSBC» supported by ery of letters parcels and packages weighing up to 30 kg is
“Ukrposhta” and “Nova Poshta”. meant.

OVERVIEW OF UKRAINIAN POSTAL LOGISTICS MARKET

In Ukraine postal logistics market shows a stable growth. In 2011 As well as all over the world services of letters and parcels de-
it has increased by 12.3% in terms of money and amounted to livery are gradually losing their social significance and becom-
$2,447 mill. In real terms in 2011 the segment of parcel deliveries ing a key factor in development of “the new economy” – e-
has increased by 14.2% and the letters – by 12.1%. The market commerce, trading by catalogues, tvshopping.
growth is much higher than the GDP growth rate of the country
and this positive trend will be typical in the next two years. Today, the postal logistics market is represented by national
operator “Ukrposhta” and more than 120 private companies.
Efficient logistics infrastructure formation is both a required Share of the national postal operator decreases, despite of
condition and a consequence of the e-commerce market de- increased volume of delivered letters and parcels in 2011. The
velopment, which is growing by 30% per year. At the same time market is growing rapidly and new customers require more
there is a qualitative change in customers’ structure (senders of flexible pricing policy and approach to services, which can’t
parcels and letters). The share of deliveries ordered by indi- be provided by the national operator due to bureaucratic
viduals is reducing (so-called “C2C-deliveries”) and the share of government limitations. If this situation could be changed by
letters and parcels sent by companies is actively growing (B2B a new team that came to the “Ukrposhta” in spring 2012 will
and B2C deliveries). be cleared in a year.

Letters Parcels

2010 2011 2010 2011

mill. unit % mill. unit % mill. unit % mill. unit %

Ukrposhta* 290,44 78,98 317,67 76,74 20,92 45,19 23,01 43,15

Private companies ** 77,31 21,02 96,28 23,26 25,37 54,81 30,32 56,85

Total: 367,75 100,0 413,95 100,0 46,29 100,0 53,33 100,0
* Letters and parcels except С2С segment; ** In research delivery of utility charging bills performed by Of-
fice of Housing Operations’ employees wasn’t included

MARKET DIVISION: MAILINGS STRUCTURE DEPENDING ON TYPE OF SENDER
AND RECIPIENT В2В/В2С

mill. hrn. mill. unit
Year 2011
В2В В2С В2В В2С

Letters 222,99 852,60 9,74 404,20

Parcels 472,12 508,66 23,83 29,50

Total 695,11 1361,27 33,57 433,71

mill. hrn. mill. unit
Year 2010
В2В В2С В2В В2С

Letters 197,15 761,92 9,54 358,21

Parcels 444,06 400,47 22,10 24,19

Total 641,20 1162,39 453,60 758,68

B2B segment of written correspondence increased by 13.08%, ket was in the segment of B2C parcel deliveries – about 27%.
B2C segment – by 11.9%. But the most rapid growth of the mar- The main driver of parcel deliveries growth was e-commerce.

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RATINGS OF UKRAINIAN POSTAL LOGISTICS MARKET OPERATORS

The companies’ rating includes “Ukrposhta” in general volume of services provided (letters and parcels except international
deliveries)

Share of the company*
Change
year2010, % year2011, %

Ukrposhta 49,46 47,9 -1,60

Nova Poshta 8,66 9,3 0,64

Meest Express 5,24 5,3 0,07

Nichnyy Express 2,80 3,6 0,78

Autolux 4,75 3,4 -1,31

Ukrcourier 2,3 2,44 0,14

SAT 1,70 2,4 0,65

In-Time 1,50 1,7 0,24

Euro Express 1,11 1,7 0,59

TNT 1,42 1,5 0,11

DPD Ukraine 2,22 0,8 -1,45

Others 18,72 20,1 1,42

*market volumes in money terms

Companies’ market positions in segments “door-to-door” and “warehouse-to-warehouse” deliveries, “Ukrposhta” services excl.

MARKET SHARE CHANGES IN “WAREHOUSE-TO-WAREHOUSE” DELIVERY SEGMENT

4


MARKET SHARE CHANGES IN “DOOR-TO-DOOR” DELIVERY SEGMENT

Cash on delivery (COD) is widely used in the segment of B2C Not more than 80% of parcels in the B2C segment are sent on
parcel deliveries. On average COD percentage is from 1.5% COD terms. Thus, the COD service amount is on average 7-10
to 2%. Contribution to this segment is specified by catalogue million UAH. per year.
selling companies, online retailers and direct sales companies.

MAIN TRENDS OF POSTAL LOGISTICS MARKET OPERATORS’ DEVELOPMENT IN UKRAINE

Tendencies which outlined in 2011 are going to be essential Competition at the market will continue to grow, and in case
in 2012-2013. The main growth will be in the segment of B2C of deterioration of economic indicators companies tradition-
parcel deliveries. This segment will grow on average by 10- ally working in the B2B segment will reorient to B2C segment.
15%. Catalogue selling companies will provide an increase of However, COD service availability continues to be a major de-
about 10% per year, on-line sales – of 20%, direct sales – of terrent to B2C segment entering. A number of companies be-
10-15% in volume terms. In the B2B segment the growth will gan to offer this service unofficially. There is some redistribu-
not exceed 5% in natural units. tion of customers and cargo flows in the market. Thus, in the
segment of companies which deal with transportation and of-
The main factors influencing the B2C segment in the next 5 fer the service of “warehouse-to-warehouse” delivery, a clear
years will be: distinction appeared.

• broadband Internet penetration; Further details are available via contacting with the Ukrainian
• household incomes; Direct Marketing Association by phone +38 044 90 90 88 or
• population size. pavlenko@uadm.com.ua

The main factors influencing the B2B segment will be:

• business activity growth;
• fuel prices dynamics;
• National currency stability.

5


JANUARY FEBRUARY
Experts say the economy of Ukraine has emerged from the crisis. According to the forecast of British
One of the factors which can prove their opinion is the growth of economists from HSBC, the largest
car sales for the Ukrainians. In January 2012 the Ukrainians bought world bank, by 2050 Ukraine will have
12281 motor cars which is 24% more than over the previous year become the most fast-developing
(only new cars are taken into consideration), as it has been reported market of Europe.
by the press-service of Ukravtoprom Association.

MARCH APRIL
New large retail facilities are springing up in Kiev and other Ukraine ranked higher than any other
Ukrainian cities. Developers have promised to double their of- Eastern European country in the Na-
fers of sales areas in the nearest couple of years. tion Higher Education Systems rat-
ing developed by Universitas 21, the
MAY international research network of 24
universities and colleges.
In preparations for EURO 2012 Ukraine leaped forward
30 years in its development, said UEFA President Michel Ukraine occupied the 25th position
Platini. Ukraine have achieved a high level of readiness out of 48 evaluated countries. Czech
for the EURO 2012. And during the continental champi Republic, Poland, Slovenia, Russia and
onship in June millions of European fans discovered Slovakia placed at positions 26, 27, 28,
new, attractive Ukraine for themselves – with new infra- 32, and 35, respectively.
structure, airports and stadiums.

JUNE
From the 1st of June 2012 new Customs Code entered into force. Due to it cost of goods which
could be imported to Ukrainian customs territory without paying taxes trough land and sea
entry points is 500 Euro, air traffic – up to 1 000 Euro, and by post – up to 300 Euro (previously
the limit was 200 Euro, products delivery cost excl.).

JULY
iSince July 1, 2012 fines and other penalties provided by law to strengthen accountability
for violations in the field of protection of personal data have become effective. This law
brought the Ukrainian personal data legislation to European standards. It has its own
characteristics: under this law, companies with a database (of clients / customers and
employees) are obliged to register them in the Protection of Personal Data State Service.
Changes to the Code of Administrative Offences will allow the state to penalize violators
of the law “On protection of personal data.”

AUGUST SEPTEMBER
State Tax Service plans to force Big leap in world ranking logistics efficien-
all online retailers to introduce cy of the World Bank (Logistics Perfor-
cash registers, and couriers mance Index) Ukraine has implemented
are obliged to issue the client over the past two years. The country shift-
checks. That is how tax person- ed from 102 place in 2010 to 66 – in 2012.
nel want to increase the tax li- At the same time, the nearest neighbours
ability of shops to those selling of Ukraine, Belarus and Russia fell in the
legal products. rankings and occupied 91 and 95 places.

OCTOBER
In October the President signed the Law on the functioning of payment
systems and non-cash transactions. According to the law, the Electronic
money is defined as a cost units that are stored on an electronic device,
as a means of payment accepted by other persons different from the per-
son producing them and are its financial obligations (in cash or non-cash).
Electronic money can be issued only by bank. Individuals and legal entities
can use the electronic money. Legal entities can receive electronic money
in exchange for non-cash resources only. Such money can be nominated
only in the national currency. NBU has an obligation to keep a register of
payment systems and commercial agents of banks.

NOVEMBER
In the end of November the new Law has entered into
force, that provides that in advertising prices can be used
only in the local currency. Due to the Law, the informa-
tion about prices and tariffs for services listed in the ad-
vertisement, which is placed or distributed in Ukraine,
must be set in the local currency only.

YEAR 2012 IN ELEVEN NEWS

6


MARKET NEWS
IAB STUDY: TYPICAL UKRAINIAN ONLINE
BUYER PROFILE
For half a year Ukrainian users on average buy about 7 prod- in Europe), 38% - in the download of mobile applications (41%
ucts online (in Europe, the figure is 13), and spend about 264 in Europe), 19% - in the QR-codes use (32% in Europe). “The
euros - including the Christmas holidays (European users spend field of online shopping via mobile phones is undeveloped yet
twice as much - about 544 euros). These and other character- in Ukraine, but it is already a potential niche” - said the expert
istics of the behavior of the Ukrainian audience at the confer- IAB.
ence “Business Internet Shop” voiced Ionel Naftanaila, training
and projects manager in the non-profit Interactive Advertising Popular activities with a mobile phone (Ukraine vs Europe):
Bureau (IAB Europe).

These data of Mediascope Europe research, which is conduct-
ed in 28 countries (based on 50 thousand interviews). Most
figures are weekly figures, the study involved people 16 years
and older.

Thus, according to the study, 42% of the Ukrainians are con-
nected to the Internet (which is less than the European fig-
ure - in Northern Europe, the figure is 87%, 61% - in southern
Europe, 81% - in the West and 55% - in Central and Eastern
Europe). But Ukrainians are spending more time online - on
average - 20 hours a week, compared with 15 hours of the
European average. Ukrainians are generally more involved in
the interaction with the sites of companies, brands, than Euro-
peans, said Ionel.

The penetration of the Internet in Ukraine is ahead of maga-
zines but still far behind the newspapers, radio and television
(TV penetration is 96%, and the Internet - 42%, radio - 43%,
newspapers - 59%, magazines - 41%), but in terms of time,
spent by users interacting with each of the channels, the In-
ternet takes second place after TV (in the slides the following
abbreviations are used - WE - Western Europe, NE - North-
ern Europe, SE - Southern Europe, CEE - Central and Eastern
Europe):

(Activities in the table - distance-selling (watch ads on the site
/ in the application, buy through the browser, buy through
the application; Communication (receive and send emails, use
social networks, use professional social networks); Entertain-
ment (viewing sites through a browser, download / listen to
music, use mobile search, upload / use applications, download
/ play games, watch movies, shows, videos, download movies,
shows, clips).

The top five most popular types of sites, which Ukrainian users
visit at least once a day, include social networks, news portals,
video portals, sites of the banking and financial services, as
well as sites related to hobbies. If you look at the statistics of
monthly visits, the top five will include mapping sites, surpass-
ing sites on hobbies.

How can the Internet users benefit from using then Internet ? It is very important for the Ukrainian business to know that
80% of Ukrainian users say the Internet helps them to identify 54% of the Ukrainian people share the opinion of the impor-
their lifestyle, 33% of users believe that it helps to manage tance of the communication between brand and its customers
finances, 11% use it to order tickets, search and organize trips, online. Further Ionel presented interesting statistics on how
83% - to stay in touch with family and friends. These figures an UAnet users interact with brands pages in social networks:
average are less than in Europe, but it means an upward trend
of the market, in particular - to reach the European average, The following table summarizes such types of interactions
ensures Ionel. (from top to bottom in the left column): liked or became a fan
of the brand page, unfriended the brand page, complained
The expert also voiced interesting data about the Ukrainian about the brand / product, complained directly to the com-
owners of smartphones. Thus, 25% of smartphone owners are pany, created a group for a favourite brand, created a group
interested in coupons and discounts tied to their position (48% to boycott brand.

7


(Types of products, from top to bottom: electronics, financial
products, health care products, travel tickets, home furnish-
ings, goods, cars, mobile handsets / contracts, toiletries/ cos-
metics, perfumes, clothes and accessories, holiday sales, insur-
ance).

Products with the highest conversion:

“As you can see, this is a double edged sword - if 75% liked
or became fans of the brand, 44% - complained directly to the
company,” - said the expert.

How the Internet affects the buying decision? 64% of Ukrain-
ian users want to find more information about the products
that are advertised online. And 50% of users visit the sites of
brands, 49% of users would buy the product brand, which
they keep tracking of in social networks (in Europe this fig-
ure was only 30%), according to the study. In general, 58%
of UAnet users claim that the Internet helps them to choose
the products or services. 100% of Ukrainian users search for
product information online, and 83% - bought online at least
once.

Internet is important when deciding to purchase the following Types of goods, from the top to bottom: electronics, books,
types of items: DVDs, movie tickets, toys, toiletries/cosmetics, clothing and
accessories, CD-ROMs, tickets for concerts, festivals, tickets for
travel, food / groceries.

Several conclusions can be drawn from the Mediascope study
findings in Ukraine:

• Search for information about the product often turns into a
purchase, although users does not yet have enough trust to
online transactions;

• Internet affects the perception of brands and products, al-
though there is still room for growth;

• Ukrainians believe that the Internet is a good communication
tool, spend a lot of time on searching for data on the interest
of their goods and services.

Source: AIN.UA

THE GLOBAL VOLUME OF DISTANCE-SELLING
WILL REACH $ 1.25 TRILLION IN 2013
According to the SLI Systems study, the volume of the world 20% of the mobile sites owners will improve the customer ex-
distance-selling will exceed $ 1.25 trillion in 2013. perience and increase sales by expanding the search capabili-
ties of their mobile resource.
SLI Systems research has also found that due to the compo-
nents of commercial success in 2013, the representatives of Another 20% of online marketers are planning to launch mo-
the distance-selling see update or replace of the software bile application for e-commerce in the new year.
platform (18%), the functionality of the site improvement(18%)
and search engine optimization (17%). To facilitate the search for information and products online,
online stores are going to focus on improving or adding a test
40% of Internet marketers are planning to integrate the mo- (52%), specification (48%) and actions for the sale of goods
bile strategy since the new year. And 15% of online retailers (39%).
are going to strengthen existing mobile commerce strategy.

8


Adding data not related to the goods will provide consumers
with the information, enabling them to make purchasing deci-
sions, according to online seller respondents.

57% use Twitter for buyers information, 56% use articles and
press releases. More than a half of marketers (53%) use such
means of communication as blogs and video.

Poll participants were representatives of 500 international
companies engaged in distance-selling.

Source: ALLRETAIL.UA

SEVERAL BRANDS APPEARED ON THE UKRAINIAN
MARKET OVER THE LAST YEAR AND IN 2013
THEIR NUMBER WILL INCREASE AND NETWORKS
WILL BE EXPANDED
In the first quarter of 2012, the Ukrainian market was occupied company MTI has announced its intent to open brand
by Russian chain clothing stores lady & gentleman CITY, and shops in Ocean Plaza shopping mall such as Napapijri, At-
the brand’s flagship store was opened in the Kyiv shopping elier de Courcelles and Lee Wrangler. There are also to
centre “Caravan”. After Peacocks left Ukraine, the company open shops of several luxury brands, including Weekend
“Maratex” introduced a new fashion brand OVS (part of Grup- Max Mara and Marina Rinaldi (Max Mara Fashion Group),
po Coin), and its stores already operate across the country. as well as fashion brands such as Pepe Jeans London, Mi-
chael Kors, Rebeca Sanver, BCBG Max Azria, Bebe and
In June 2012, in the shopping center Dream Town in Kyiv Por- Longchamp.
tuguese brand W52 Jeans opened its first store in Ukraine. In
Odessa trading network “Argo” opened first brand store Pi- In the segment of high fashion in the first half of 2012 in the
azza Italia in the mall “City Centre”. central districts of Kyiv mono-brand stores Valentino and Pra-
da were opened.
In 2012, the Ukrainian company MTI has received the right to
represent under the franchise agreement the fashion brand Trading network Inditex Group, which earlier in Ukraine was
Mango on the Ukrainian market. focused exclusively on cities with a population of over a mil-
lion inhabitants, is now considering the possibility of opening
In early 2012, the Polish shoe store chain Wojas opened its first stores of its brands (except Zara and Massimo Dutti) even in
store in Ukraine in Ivano-Frankivsk and plans further develop- smaller towns.
ment in the country.
In the segment of fashion-retail major operators were most
In the Ocean Plaza mall several brands are to appear, new rapidly developing represented by brands of international net-
to the Kiev market, and as well as for the whole Ukraine. works (Inditex Group and LPP SA Group), and Russian (“Sports-
The first in the capital hypermarket REAL also opened there. master”, “TsentrObuv”) and national networks (MTI, ARGO),
Along with the already present fashion brands, a trading the press service of the of CBRE informed.

9


In addition, the first half-year of 2012 was marked by the Reda Ukraine.” Now under control of Redan domestic repre-
Ukrainian market of new brands in the segment of luxury sentative there are 38 stores, 28 of which operate on a fran-
goods such as Prada and Valentino. The first stores of aver- chise base.
age price segment were opened: such as Italian apparel brand
OVS, Portuguese W52 Jeans, as well as Russian footwear net- The arrival of the first chain outlets of H&M, C&A, Deichmann,
work operators Kari and department store lady & gentlemen Peek & Cloppenburg and Debenhams have been announced
CITY, and Polish shoe retailer Wojas. to appear the following season in Ukraine.

At the same time, some operators, particularly the world-fa- “Melon Fashion Group” has announced its intention to open at
mous network of fast-food Subway, Burger King, a network of least 100 new sales points in Ukraine and Russia in 2013.
natural cosmetics L’Oreal Body Shop, etc., have not reached
the market in Kiev. First of all, this is due to the complexity for In each store company is going to invest about $ 100 thou-
potential franchisees to meet the exacting requirements of the sand. How many will be allotted in Ukraine is yet unknown.
parent company by the number of stores opened each year
due to lack of quality retail space, and in addition, the limited The “Melon Fashion Group” comprise such famous brands as
financial resources of potential local partners. Befree, Love Republic, Zarina, Co & Beauty, Springfield, Wom-
en `Secret and Ci Mi.
Top Secret is to expand Ukrainian network up to 40 stores. By
the end of the year, the company plans to expand the network Today, the network operates 530 stores. 498 of which are work-
up to 40 Ukrainian outlets. ing in Russia (393 its own,105 franchised) and 32 in Ukraine.

Network of retail outlets GC Redan has already 500 stores op- Kari shoe network is going to open 300 stores in Ukraine, Rus-
erating under the brands of Top Secret, Top Secret & Friends, sia, Poland and Kazakhstan. By the end of 2013 Kari plans to
Troll and Textilmarket. expand its network from 280 to 600 stores in four markets:
Russia, Poland, Ukraine and Kazakhstan.
At the end of the last year, the Group Redan sold its clothing
in 463 retail outlets. During the last year the company closed Retail network of household goods Jysk has decided to open
unprofitable stores. in Ukraine its own, not franchise stores, and plans to open at
least 200 commercial properties in all regions of the country in
The official representative of Top Secret in Ukraine is “Beta- the nearest 10-15 years.

UKRAINE HAS CLIMBED BY 9 POSITIONS
IN THE GLOBAL COMPETITIVENESS
OF THE ECONOMY RANKING
Ukraine has climbed nine positions and reached 73rd
in the Global Competitiveness Index (GCI) among 144
countries, with Kyiv being a leader among the coun-
try’s regions, while the country is at the bottom of the
index in efficiency of state institutions.

The data are stipulated in the report on the compe-
tiveness of Ukraine ‘s regions in 2012 drawn up by the
Foundation for Effective Governance (FEG) with sup-
port of the World Economic Forum.

“We believe that there are factors of competitiveness
that hinder its [development in Ukraine ]. These are
primarily its weak [state] institutions,” Senior Manager
of FEG projects and the co-author of the report, Vi-
taliy Kovalenko, said during the report’s presentation
in Kyiv.

He said that Kyiv is on the 27th (last) position in efficiency of the development of competitiveness not only for such pillars
state institutions. as innovation capacity, but for all of them,” said Kovalenko.

Among the factors that positively influence the development The FEG said that the poll, which covered over 2,000 company
of competiveness in the regions and in Ukraine as a whole is heads in all of the economic sectors, showed that the most
the high level of capacity for innovation and introduction of problematic factors for doing business in Ukraine is instability
innovation technologies, and Kyiv is first among 27 regions. in state policy and the inefficiency of government policymak-
ing, as well as corruption. Company heads also said that tax
According to the FEG, the largest number of industrial enterpris- regulation is a burden in the country.
es which introduce innovation technologies in the country are
located in Kyiv (98) and the smallest number in Sevastopol (9). Kovalenko added that the bad assessments of the efficiency
of state institutions, which Kyiv has been given for the second
“We believe that the introduction and development of the e- year in a row, are given to other economically developed re-
government in Ukraine could be a very important factor for gions in Ukraine.

10


He said that experts linked the trend with higher requirements Kherson regions.
of business representatives from state institutions in the re-
gions, as in terms of innovation capacity and market develop- The FEG said that there is neither a well-defined leader in the
ment, the regions are leaders in the regional GCI rating. country in all pillars of the index nor a well-defined loser.

“We also think that with the economic growth and the applica- The experts said that all of the regions have assessments high-
tion of innovations by business in Ukraine , requirements from er than average ones in the world in labour market efficiency,
institutions will only toughen and, of course, the problem has higher and primary education, and healthcare.
to be settled. If the problem is not settled, it will continue pull-
ing down Ukraine ‘s competitiveness,” said Kovalenko. Thierry Geiger, Associate Director Economist, Global Competi-
tiveness Network, Global Leadership Fellow World Economic
The FEG said that Kharkiv region was the second in the com- Forum said at the presentation of the report, Ukraine is 73rd in
petitiveness index in Ukraine, Dnipropetrovsk region was the the GCI 2012 report among 144 countries, climbing nine posi-
third, Donetsk region was the fourth and Kyiv region was the tions up compared to 2011.
fifth. The ones at the bottom include the agricultural regions,
like in 2011 - Zhytomyr, Ternopil, Chernihiv, Kirovohrad and Based on for-ua.com report

LEGISLATION NEWS
“ELECTRONIC TAX ACCOUNT” IS PROMISED
TO START IN JANUARY
The Cabinet of Ministers of Ukraine has approved the introduc-
tion of the service “Electronic office of the taxpayer”, reports
«proIT». According to the order of the Government, the State
Tax Service (STS) of Ukraine is to start the service in January
2013. By means of electronic office taxpayers can work with
tax department online.

In the first phase of the project entrepreneurs will be able to
provide the Declaration of digital signatures through the Inter-
net, as well as access to their personal account, in particular,
to the tax debts and dues. In the second phase, which will be
implemented in 2014, the calculation of the components of
interest, forming and filling in the payment documents, as well
as their payment will be added.

Taxpayers through their “electronic office” can also have of- law on electronic passports. The law will come into effect on
ficial correspondence with the STS on taxation, to obtain ap- January 1 next year. Then Ukraine will start switching to elec-
propriate advice and related information. tronic passports.

Earlier, the President of Ukraine Viktor Yanukovych signed a Source: proit.com.ua

UKRAINE WENT 18 POSITIONS UP
IN THE RANKING OF TAX SYSTEMS
Ukraine, compared to last year improved its performance by
18 positions in the ranking of tax systems Pricewaterhouse-
Coopers.

Governments around the world continue to reform its tax sys-
tem, despite the instability of the global economy, according
to the official report of the World Bank, IFC, and PwC Paying
Taxes 2013. For example, since June last year to May 2012, 31
countries had their tax payment procedures for small and me-
dium businesses simplified.

Paying Taxes 2013 measures all mandatory taxes and fees,
medium-sized companies have to pay during the year. These
include the corporate income tax, social contributions and la-
bor taxes paid by the employer, property taxes, taxes on the
transfer of ownership, the tax on dividends, taxes on capital
income, the tax on financial transactions, environmental taxes,
taxes on car owners funds, tolls and other minor taxes.

Based on delo.ua report

11


INTERNET NEWS
NUMBER OF REGULAR INTERNET USERS
IN UKRAINE GREW BY 32%
In Ukraine number of regular Internet users over 16 years old
grew by 32% in the third quarter of 2012 compared to the third
quarter of 2011 and amounted to 15.09 million people. This is
stated in the results of research conducted by GfK Ukraine.

Meanwhile 82% of computers in the country were connected
to the Internet in the third quarter of 2012, and in 2011 the
figure was 70%.

10% of all users in the 3rd quarter of 2012 used mobile Inter-
net. 80% of them used a phone’s screen to get to the mobile
Internet, 15% – a laptop with USB, 3% – a laptop connected via
a mobile phone as a modem, 3% – a tablet.

In the 3rd quarter of 2012 60% of users spent at least 10 hours
per week on the Internet, 16% – up to 20 hours, 9% – up to
30 hours, 3% – up to 50 hours, 3% – more than 50 hours, 9% –
failed to recall the time spent in the Internet.
At the same time, despite the low growth rates compared
According to the study, the most rapid subscribers growth is to other age groups, youth in Ukraine still represent almost
visible in towns with population up to 50 thousand people – an a half of Internet audience – people aged 16-29 years have
increase by 210% in the 3rd quarter of 2012 compared to the 44% share of Internet users in Ukraine, 23% of users are in
same period in 2011, in villages – 163% growth, in cities with the age group of 30-39 years. To users older than 40 years
up to 500 thousand inhabitants – 111%, in cities with a popu- correspond more than 30% of the total number of regular
lation up to 100 thousand people – 95% and in cities with a Internet users in Ukraine, more than a half of them are users
population of over 500 thousand – 83%. under the age of 49 years.

However, the largest number of regular Internet users is con- Users division by age is almost equal – among regular Internet
centrated in cities with population of over 500 thousand peo- users there are 50.9% of men and 49.1% of women.
ple – 28% of the total number of Internet users in Ukraine,
share of people in cities of 101-500 thousand is 25%, in cities Main objectives of Internet usage in the 3rd quarter of 2012
with population less than 50 thousand – 23%, in rural areas – were: social networks – 56%, e-mails – 52%, downloading of
19%, up to 100 thousand – 6%. movies and music – 41%, search for information – 36%, news
sites, reading newspapers – 29%, Online video – 23%, etc.
The fastest growing age category among Internet users in the
3rd quarter of 2012 was represented by people aged over 60 GFK Ukraine is a Ukrainian research company, which con-
years – an increase by 410% ducts surveys and market studies in Ukraine, Moldova and
Belarus. It is a part of an international research network GFK
Number of Internet users aged 50-59 years increased by 199%, Group. In 2010, GFK Group sales amounted to 1.29 billion
at the age of 30-39 years – by 149%, at the age of 20-29 years – euros.
by 131%, at the age of 40-49 years – by 121%, at age of 16-19
years – by 41%. Source: finance.ua

UKRAINIANS WANT TO BE ONLINE ALWAYS
AND EVERYWHERE
Ericsson ConsumerLab announced the results of the annual
survey of the consumption of telecommunication services and
products preferences of Ukrainians.

According to research by Ericsson ConsumerLab, now 70% of
the Ukrainian population has access to the Internet. Interest-
ingly, the Ukrainian users share different information online 10-
20% more than users in Western Europe and the U.S. Accord-
ing to Ericsson ConsumerLab, 60% of Ukrainian users actively
share photos and messages on the network.

Senior Consultant Ericsson ConsumerLab in Northern Europe
and Central Asia Erik Johannisson stressed that Ukraine com-
pared to last year reduced the use of desktop PCs to access
the Internet. At the same time, increased the total number of
people who go online with a laptop or smartphone. Most in-

12


ternet users are young people due to whom the market de- communication.
velops.
As for the total number of smartphones – the number has in-
Despite the increased Internet penetration, the Ukrainians in creased from 11% to 14%. Along with smartphones in Ukraine
the coming year do not plan to buy either a new smartphone in 2012 increased the number of tablet computers.
or a tablet, because most likely, already own it. The company
noted that this situation could be changed with the reduced The report was compiled based on 505 interviews with re-
prices for portable devices. spondents 15-69 years old. Additionally 1526 people have
been surveyed who enter the network at least once a week.
Also, studies have shown that in Ukraine falls relevance of mo-
bile internet in the regions. Adversely affected is no 3G-and Source: DELO.UA
4G-network. Users often remain dissatisfied with the quality of

ANNOUNCE
TRADE MISSION KNOWS NO LIMITS
If you are interested in the Kazakhstan market, Trade Mission in Europe and Asia for cooperation in the b2bpost field. Trade
to Kazakhstan 2013 is greatly recommended: Europe-Asia-Ka- Mission participants will have the opportunity to run individual
zakhstan. Yet it is still the only event on the Kazakhstan market workshops to explore and establish business relationships with
for postal logistics and distance selling. participating companies.

Place and date: February 7-8, 2013. in Almaty (Almaty as a ven- Intensive leisure - skiing on the ski sport base “Shymbulak”
ue for the Mission of course, has not chosen at random. This
is the most international city in Kazakhstan, which surprisingly The detailed program is still in process of development, but
combines both work and leisure). Hotel «Royal Tulip Almaty», some milestones have already been clearly defined:
located on the foothills of the Tien Shan, and ski resort “Shym-
bulak”, located in a picturesque valley Zailisky Tau, 25 km away • Business Opportunities for distance-selling companies in
from the center of Almaty. Kazakhstan
• “Kazpost” as a window into a Customs Union and the
The format of the event: A judicious combination of business Common Economic Space
with pleasure - quality news reports from practitioners of the • Transit mail to Asia and Europe through “Kazpost”
market, least of the theory, the maximum of the communica-
tion and exchange of practical experience. And within the For more information please contact the Ukrainian Association
Trade mission “Kazpost” conducts a number of activities that of Direct Marketing +38 (044) 490-90-88; pavlenko@uadm.
aim at optimizing the interaction of representatives of business com.ua

Almaty at night

If you want to decline or recommend digest Hot Line +380 (44) 495 7885
CONTACT

to your colleagues, please feel free to contact us by
US

distance_selling_in_UA@uadm.com.ua © UDMA, 2012

Follow us on Twitter: @DistanceSell_ua Follow us on Facebook: DistanceSellingInUA

13

Udma digest 11th issue

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