Nard Elsman reveals how Dutch businesses can work effectively in the Ukrainian market
On April 6, the Netherlands will vote yes or no to a deeper cooperation between Ukraine and the EU.
The destiny of Europe's biggest nation is potentially in the hands of the citizens of the Netherlands. The future of nearly 46 million people now depends on whether the Dutch decide to support Ukraine's association with the European Union.
This is exactly why, Ukraine Today with the cooperation of Euromaidan Press has launched #DUTCHINUA project. Our goal is to gather the views and opinions of the Dutch businessmen and entrepreneurs who work in Ukraine. As well as provide analysis by the experts from the Netherlands who can assess the influence of the referendum on the future of Ukraine and the E.U. as a whole.
Some commentators say little is known about Ukraine in The Netherlands; either that or people are simply not interested - but it's a vote that could derail Ukrainian efforts to forge closer economic ties with Europe. In fact, there are already extensive business links (between the two countries). Joining us right now to tell us more is Nard Elsman from project Doing Dutch Business in Ukraine.
TB: Mr.Elsman, thank you very much for coming to Ukraine Today.
NE: I'm happy to be your guest, thank you very much.
TB: So please, tell us more about these business links between the two countries already. It's something that people in The Netherlands don't really know about so much.
NE: Ukraine and The Netherlands are very connected, especially if you look at the agriculture sphere. Of course The Netherlands are very innovative all over the world but (with) agricultural development, Ukraine is the largest economical agricultural country in Europe itself. There is a lot of innovation here - greenhouses, cattle, etc., etc. So if you look at it from that side, you see Dutch people everywhere in Ukraine.
TB: We've met a lot of Dutch businesses and different entrepreneurs coming up to this referendum and a lot of people involved in this sector. So from the Dutch perspective, what sort of opportunities are there for businesses in The Netherlands to come to Ukraine? What sort of openings (are there)?
NE: The opening is that Ukraine has a very broad and flexible economy but you have to build it from scratch. Dutch people have already built this. In Ukraine, there's huge competition so that means, if you have good ideas (and) you set up your company fundamentally well, there is a real, big opportunity to grow. It's risky and it's difficult.
TB: And what sort of risks are there?
NE: Of course, there is the corruption (and) there is the black money – you don't want to go in these directions. It's (also) very difficult to get connected to the right people. We always compare it to three swimming pools - (this is what) I always tell Ukrainian people, Russian people (and) other people. I see three pools: black water, dirty water and clean water. My colleagues needs to swim in the clean water. Then these people explain to me, that's nice because everybody keeps your pool clean - you understand what we mean!
TB: In Ukraine, there is a lot of political turmoil during these times - for example, recently, there was a vote of no-confidence in the parliament which failed to pass but it (caused) a bit more uncertainty. How do you differentiate between these different (swimming) pools; what is your analysis as a businessman?
NE: As a businessman, you have to study business. That means you have to look forward, analyze what is coming up and what the next steps are, then think about those things, then (the) opportunities ahead in the future. It makes totally no sense. You have to expect what (you) can build this year, next year and the year after. So you have to be (there) and stay in that sphere. From that side, of course, Ukraine had some difficult years but we know, when you have difficulties, you always come out a bit stronger. That's the same (as the) Dutch people do. They try to innovate when there's (a) depression and they come out stronger and they export their knowledge all over the world.
TB: You've been involved in Ukraine for 12 years now, since just after the Orange Revolution in 2004. How have you seen things progress?
NE: I saw that the economics in Ukraine grew 6-7% per year. I was already here in 2005-2006. We thought 'wow', this is really the land of opportunity; everybody went to Ukraine. We went as well; we only did I.T. development here because we found out the smartest people we could work with are in the region of Lvov. We were happy to connect with more than 10 very highly educated and smart colleagues which are now found in our company in Lvov. From there, we developed our software. We are company which developed software for companies and we always connected local processes to banks and daily business. For that, you have to make feasibility studies without any errors. In the Netherlands, we always work with Microsoft and other tools, always (on) the connection between the software. A lot of work is being done in seeking and correcting the failures in such a business plan. We wanted to have one system without any mistakes. We invested a few million euros in the system (from) our own money which went on consultancy. From there, we built it in Lvov.
TB: Are these Dutch companies (you work with)?
NE: No. We work 70% with Dutch companies and 30% with international companies, Austria, Switzerland, Ukraine, Hungarian people, Slovakian, Belarus, Russia…
TB: So there is a lot of international partners.
TB: I wanted to ask you as well about the perception of Ukraine among Dutch businesses. (In) the no-campaign at the moment for this referendum, there is a lot of talk that Dutch businesses might take over Ukrainian land and that wouldn't benefit Ukrainians - there's also an information war going on as well - so, from the partners that you've spoken to, what's their position on Ukraine in The Netherlands?
NE: The position of our partners on Ukraine in The Netherlands is that it wants to cooperate. Dutch people are not in the sphere of taking over because if they take over company, they also take over all of the troubles there. We are more like cooperating, exchanging (and) growing. And synergy is when you work together, when don't need each other actually, so when you can cooperate with steady partners, then you can really make steps forward. Dutch people are always looking for entrepreneurs with the right mentality who are sustainable for cooperation.
TB: And that's one of the good things about Ukraine? We have a lot of entrepreneurs who are ready to work hard, put the money down and to find success. Is that true from what you've experienced?
NE: What I experienced is that the Dutch mentality is very very fast, very very direct and Ukrainian mentality is, in that sphere, much lower. On one side, you want to know exactly what's going on - what's the offer. On that side, the Dutch entrepreneurs first want to build relations and a strong partnership. Ukrainian mentality is the other way around. That's difficult in the first step but once the trust is there and the connection is being built, you can grow very (well) with that connection.
TB: And on a much larger level, what sort of the advantages and disadvantages are there for Ukraine and Europe to seek closer ties?
NE: Of course, the point of the corruption; this is the really big setback. It's unknown (and for the) Dutch people (is) scary. We are on the list of the top five (least) corruption countries in the world; Ukraine is not and that scares people really much and the reference is not good. So if you want to do business with Holland and visa vursa, you have to be sustainable, swimming in the clear water and then you can build up your businesses.
TB: How do you get round this fear then? What sorts of steps would you and your partners like to see to get around this fear of corruption? What concrete result?
NE: They always go to the bank, make sustainable contracts, see that there's clean business, do everything in the contracts and keep it professional.
TB: So professional is the way forward…
NE: Yes, stay professional. That's also what we do with our software 'FMS diamond'. FMS connects the financial system with for example 1S, the system takes up all the accounts and figures, control everything if it's rightly done, and projects it for the future. That means that the flow of processes which is being stated in money- you can really oversee - and activities are always money related. So if your financial forecast is reliable and connected to what you're doing at the moment, and it's connecting also with what you did in the past, you have very good foundation for the future.
TB: But even if you look in the past, does it actually project what is going to happen in the future? I know in economics sometimes they say, what happens in the past doesn't really matter. Because in the future, in Ukraine for example, there is a lot of turmoil sometimes, you to have this no confidence vote, maybe.
NE: Yes, and that's not true. What you see, economy is like seasons. You get spring, you have summer, you have autumn, you have winter. So it's like going like a flow. In nature it's always these flowing movements. If you analyze companies, in flowing move, you can understand when they are in the bad situation, when they are going out with better, when they are really growing. You have to make decision in the real stage of the company this. If you're just recovering, don't go for fast growing. If you're going in the setback, don't go innovating because it will destroy your company. So by analyzing the figures, what you did so far, there is a lot of what you should do in your next year or three years. But in 10 years with the short steps then you work you don't walk, you don't step over there , your set your feet just step by step. You just keep walking and you don't fall.
TB: And what's your forecast for the next 3 years for Ukraine from your analysis that you've done?
NE: I see that because Ukraine has really suffered from the crisis much more that other countries in Europe, they're recovering at the moment, step by step. Their export to Russia totally closed down, that means they have to prepare to the export to Europe. A Lot of companies we talked to did a lot of investments, they have to have a sustainable cost price, and what we see now for our opportunities that they won't have financial systems, we calculated proper cost price that they see to be competitive exporting to European countries.
TB: And are they competitive, these prices?
NE: Companies in Ukraine can be competitive, but there is a lot of inefficiency. What we see is our software calculates and manages the finances into daily usable figures which you can use we do something in one hour what the normal bookkeeper does in two or three days or maybe a week.
TB: So is it just an administration then or are there other sectors, areas where efficiency could be improved? If for example a Ukrainian export wanted to take products to the Netherlands, what sort of areas would they look at?
NE: Work efficiency, don't make mistakes, do it one step right.
TB: What about technology as well? Because I know the Dutch are very well known for exporting that food technology, the green houses, to Ukraine, a specialty. Do you see a lot of this going on? Is it still efficient or not really?
NE: Ukraine is adapting a lot of technology of Holland in the cattle sphere (and) greenhouses. We consult, we are involved in these processes, and we see that what we developed high techno low skill because this is a very small country is being put into practice in the large scale. With large scale companies with a lot of this technics is going to the limits if not with one team but ten teams. That means you have to be very-very professional and very-very skillful. Skillful just means you don't make again, every time the same mistakes.
TB: What are the common mistakes that you see being made by Ukrainian businesses?
NE: The attitude "I'm not responsible for the department of my colleague", the attitude "He did something, it is not my problem", attitude "We do something today, and if it's not good, we do it tomorrow again" – so a lot of inefficiency.
TB: It's more of a personal problem rather than a technological one?
NE: Yes, business is people. So processes are related to people. So when people are smart and know what to do then company rises. Machines are also steered by people. So it's not the machine, it's not the technology, but it's the people around it.
TB: And you work in the private sector mostly, but you also work with the government as well as state agencies for example embassies and there is the project, Doing Dutch Business in Ukraine. Can you tell us a bit more about this?
NE: Yes, we're very strongly involved with the Embassy in the Netherlands and also in Kyiv, what we do is bring our software to the universities. We do this on non-profit scales, that means we gave our software for free. So we're now involved Politechnical University (KNAU University). We're talking about 40-50 thousand students. Economy departments use our software to learn how you run a company financially. Even professors, when they start working with our soft, you see that they are very skillful, there are still "aha" moments: Aha, does it work like this. Yes, it has always been like this.
TB: So what do you hope to gain from taking the software to Ukrainian universities?
NE: What we hope to gain we want to contribute to development. So when you teach young people how to calculate properly, how to run business properly, how to set up step by step, these young people when they leave the university they know how to act. They know how to grow, how to calculate. So there will be more sustainable business in Ukraine from that side.
TB: Do you find there's actually quite a difference between the generations in Ukraine? For example you have the new generation of entrepreneurs. Do they have a different mentality?
NE: Yes, the young entrepreneurs are very aggressive, very eager to learn. When compared to young people in the Netherlands, they are much more far ahead. They have only one problem: they don't know where to start, they don't know where to go to and they don't have money. That's a problem. So if you give them the direction, you give them the tools, and they are professional, money will be followed as well. But you have to do it step by step.
TB: And again back to the government links between the two countries. What sort of projects are there between Ukraine and the Netherlands to help boost these business links?
NE: There is a big project about exchanging the information between agriculture spheres. So we participated in the EEBD  just before Christmas last year. There is a lot of information going around to coordinate over the Embassy, for example there was a problem in Ukraine about the ninth grade nutrition tomatoes, the levels of official statement were too low, and the Embassy did very-very best, the proper level norms were used as it should've been. This way the greenhouse companies in Ukraine could again normal way deliver the tomatoes with all fresh and healthy to the supermarkets. So all these kinds of legal issues which is not practical, which disturb such big companies in common practice which makes them lose a lot of money – these barriers will be taken away by getting in the noise? of the universities, through the Embassy, to the practice, to the government.
TB: Because after all it's about trust in business as well as for example if you had some Ukrainian export you took their products to Europe but they didn't meet the regulations. Then there's a denting trust almost there. So do you think that this trust is building between the two countries in terms of trade, in terms of the people that you're speaking to?
NE: Trust you don't build over incidents and negative things, trust you build about the good things. So we should manage the mistakes but we should direct the spotlights on the big steps we make forward.
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TB: And I just have couple of final questions for you as well. So you can go back to the Netherlands and the referendum is coming up soon. From your business colleagues and your friends, what are the perceptions of Ukraine exactly? Because often there is this negative perception coming up the referendum but actually the vote is not really about Ukraine. What's your view on this?
NE: The European people are not really daily occupied with what is going on in Ukraine. The problem is the airplane shooting, that hurt a lot. We are more assured? with the people coming out of Africa to Holland. The problems in Greece, how economics in Europe are going in, how it develops. That Ukraine wants to be added to the Dutch, European market is for them not such an issue – Europe is growing, Poland is also . You see that the Dutch people always look for the opportunities so I think that orientation from Ukraine that all Dutch people are against Ukraine is not true. They're not daily orientated on Ukraine. So if you position Ukraine in a positive way, of course Dutch people will love it and have a positive attitude.
TB: Then just one final question. In the Dutch media, is there positive perception of Ukraine if the reason what more you think could be done to turn this round, you're businessman in Ukraine, you've been here since…
NE: It's positive that Ukraine's been trying to keep up economics, what the Dutch people love to see – very strong government pushing up the private companies sector to the very high level. If you go that direction, you have the full support of all the Netherlands, I think.
TB: Okay, Mr.Elsman, thank you very much for coming to Ukraine Today.
NE: Thank you very much for hospitality.
TB: That was Nard Elsman from the project Doing Dutch Business in Ukraine.