Leaving the market or waiting it out: how foreign suppliers reacted to the outbreak of a full-scale war

Foreign suppliers reacted very differently to the beginning of the full-scale invasion, some of them even left the Ukrainian market, seeing no possibility of continuing their business. This was reported in an exclusive comment to UNN by the Retailers Association of Ukraine (RAU).

As noted, some supplier companies have temporarily suspended their operations in Ukraine due to security risks and uncertainty over logistics and financial transactions, pending stabilization of the situation.

"Some companies also faced problems with transportation of goods due to the closure of ports and blocking of transportation routes. This was especially true for suppliers of machinery and electronics. Due to the hostilities, many of them could not ensure an uninterrupted supply chain, which led to a certain, but not long-term, shortage of goods in Ukraine," the EBA said.

At the same time, some companies even withdrew from the Ukrainian market, seeing no possibility of continuing business in the war. Although later, most of them returned to Ukrainian shelves relatively quickly. 

The reaction of foreign businesses to the full-scale invasion can be explained by the desire to minimize risks and protect their interests in the face of high uncertainty and security threats.

However, Ukrainian retailers also had a tough time, as they faced other challenges in addition to the lack of supply.

"Supply chains were interrupted, shelling, shops, distribution centers, warehouses, etc. were destroyed. And, probably, no one will argue that Ukrainian consumers (except for those territories where hostilities were directly conducted) have minimally felt the effects of these challenges," the Association emphasized.

Context

The onset of the full-scale invasion had a profound impact on Ukraine's economy, and businesses faced a number of problems that needed to be addressed quickly. The retail sector, which was heavily dependent on imported goods, was no exception.

Business is business and, of course, everyone is fighting for their own good first and foremost. Foreign companies were no exception, and some of them did not plan to make concessions to their Ukrainian partners and set rather strict conditions for further cooperation. This, in turn, increased the financial costs of Ukrainian retailers, and some of them were unable to overcome these challenges without attracting additional financing, loans and installment plans.

Some Ukrainian companies had to resort to forced solutions in order to keep their business alive. For example, Eldorado, a hardware and electronics retailer, initiated an out-of-court reorganization procedure to settle debts to suppliers incurred as a result of the hostilities in Ukraine. At the end of April, the Kyiv Commercial Court approved a pre-trial rehabilitation plan, according to which Eldorado is guaranteed to repay 30% of the debt within five years, 30% is subject to write-off and the remaining 40% will be received by the creditors after compensation for the damage caused by Russia.