Ruslan Lenivsky: "My goal is to attract as much Chinese investment as possible to help Ukraine improve its economic situation and give China a sense of political stability here"

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This year, China became Ukraine's main trading partner. In the first quarter of 2019 alone, trade between the two countries increased by 35.1% (to $ 2.6 billion), and China's total foreign trade share of Ukraine reached 10.6% in early 2019. Thus, in the ranking of the countries with which Ukraine has the highest volumes of trade, China first outstripped Russia and took first place.

Today, the PRC continues to increase its investment projects in Ukraine. In particular, as of the beginning of the year, China made more than $ 18 million in total investments in Ukraine's economy.

What does the Chinese investor in Ukraine look for, and what is he afraid of, what legal partners does he trust and what should Ukraine do to increase its investment attractiveness?  - we discussed with Honored Lawyer of Ukraine, representative of the Chinese Embassy in Ukraine on legal issues and president of the Ukrainian-Chinese group of companies «Ty i pravo» by Ruslan Lenivsky.

- Lenivskyi Group "Ty i pravo" has been working in the Ukrainian market for over 11 years and has won a reputation as a reliable legal partner for leading Chinese companies. What is the secret of your company's success? How does it differ from others?

- The experience and competencies in customer-interested practices are of great importance in dealing with clients. "Ty i pravo" is a full-service, all-inclusive law firm focusing on the interests and needs of Chinese investors.

What does it mean? The fact is that "Ty i pravo" does not only provide legal services and legal advice. We have made various kinds of solutions available to our clients - we provide accounting, auditing, notary, real estate, valuation and more. The company has many associate partners working under our leadership. Therefore, when a Chinese investor comes to us with any problem, he can be sure that we will help him accurately.

And they are dealing with completely different issues - from divorce of an individual to buying a real estate, from opening a company in Ukraine to comprehensive business support in our country - that is, any issues that may arise for a natural or legal person in everyday life.

Our specificity and at the same time another advantage is, of course, our long experience working with Chinese companies. During the period of our activity in this direction, among our clients there were dozens of the largest corporations from the Middle Kingdom, many companies with innovative technologies, many representatives of small and medium-sized businesses in China.

"Ty i pravo" Lenivskyi group is constantly developing: active in sharing legal experience, organizing and participating in joint seminars, forums with China. We have more than 10 partner law firms in China - in different parts of the country. We have also signed a Memorandum of Understanding with the Beijing Legal Exchange Center service organization.

Currently, 90% of our customers are Chinese citizens and legal entities. We understand the mentality and philosophy of our Chinese clients, we are able to anticipate all the possible risks during their operations in Ukraine, we understand their approach to doing business. As a result, we help make business in Ukraine successful and secure.

- Please tell us how it started. When did the idea of ​​starting a business come?

- True happiness when passion grows into the cause of life. Yes, you can say that happened to me. It all started many years ago - from a meeting with a person who was closely related to China. It was then that I first became acquainted, and later became genuinely fascinated with the philosophy and ideology of this country. My worldview, principles are firmly intertwined with the cornerstones of the Confucian lifestyle - its main principles - wisdom, humanity, fidelity and courage.

At one time our company cooperated extensively with the Federation of Trade Unions of Ukraine, providing legal assistance to its members. At the time, I was in charge of the All-Ukrainian Independent Trade Union of Transport Workers. We have implemented a large-scale project in Ukraine - a free hotline for legal aid members to receive. Thousands of citizens have consulted on the phone and online. We had a young team of inspirational and dedicated lawyers, but my aspirations and interest in China did not diminish. Never.

So at some point I turned the company back 180 degrees and focused on working with the PRC. The first was Huawei Ukraine. At one of the legal forums I met the CFO of the Ukrainian representative office. I remember, at first, we had a long conversation about the prospects, the new technologies, the introduction of 3G in Ukraine. I was very curious. This is where our collaboration has lasted for over 9 years.

Since Chinese businesses were not so active in our country at the time, usually they were single companies, so communication with new Chinese partners gave me a chance to more and more dig into Ukrainian-Chinese opportunities, to study and look for directions for their development.

So I had a friendly relationship with China's diplomatic corps, with various Chinese NGOs and business organizations. At present, the number of customers of the "Ty i pravo" Group from People's Republic of p of China has exceeded to one hundred.

- From your experience: what is the Chinese investor looking for in Ukraine, which sectors of our country's economy are most needed for Chinese investment and bilateral cooperation?

- The Chinese market, in comparison with most countries of the world, including the leading states of Western civilization, is bottomless, and the prospects that are open in cooperation with China to the Ukrainian government and business are truly limitless.

Today, China is introducing the latest advances in industry and science, most notably in any Western country, especially in the fields of IT, energy and others. At the same time, it should be recognized that the electricity, infrastructure, coal, and agricultural sectors in Ukraine are in a state of decline. China as a country of advanced technology could help Ukraine to modernize its technology and increase its capacity. Knowing this perfectly, I wanted to change the situation and create the conditions for mutually beneficial Ukrainian-Chinese cooperation.

Therefore, for example, as an adviser to the Minister of Energy and Coal Industry of Ukraine, I worked for a long period to attract Chinese investment to the Ukrainian market at the government level. In particular, with my assistance, a number of memorandums of cooperation were signed between the Ministry of Energy of Ukraine and major Chinese companies such as Huawei Technologies Co. LTD, Sany Heavy Equipment Co., LTD. LTD, China Atomic Energy Agency (SAEA), and China Electric Power Equipment and Technology Co., Ltd.

One of the promising areas for attracting Chinese investment today is the restoration and capacity building. It is no secret that after the collapse of the Soviet Union, many dilapidated factories and empty premises remained in Ukraine. A private investor who could open up production facilities, create jobs, work in the foreign market and export, thus attracting foreign currency, foreign trade contracts and securing budget revenues should now be one of the priorities for regional development.

The third area for the development of cooperation between the countries is the possibility of implementation not only in the theoretical but also in the practical plane of those treaties and agreements signed by Ukraine. These include changes in work with customs, law enforcement, tax authorities of these countries, exchange of information on investors, creation of favorable conditions for the yuan turnover in Ukraine, weakening of dependence on the US currency. For example, in the first half of 2019 alone, more than $ 4 billion worth of goods were imported from China to Ukraine, nearly 900 million more than in the same period of 2018. Ukraine's export to the PRC also increased, amounting to $ 1.6 billion in the first half of 2019. Just imagine, if the exports and imports between Ukraine and China were not pegged to the dollar and were going hryvnia-yuan, it would reduce the losses of the companies and increase their profitability.

- What are the main safety rules for a Chinese investor in Ukraine? How can he protect himself from potential risks?

- A Chinese investor is very sensitive to the other party's default and always cares about his interests.

One of the areas of work on attracting foreign investment for Ukraine should be the adoption of draft laws to protect investors. Yes, the economic war between China and the US has a natural effect on the flow of investment from China. Instead, Ukraine's task should be to create an investment climate in which a foreign investor would feel protected against all international political problems and could develop Ukraine's economy.

I cooperate with many businessmen from different countries, but nowhere have I encountered such systematic, business-mindedness, involvement in business and corporate loyalty, as well as the desire to act in the interests of my country, for the benefit of its economy, as for its Chinese counterparts and partners . And this is a valuable argument for joint business.

At the same time, Chinese businessmen are wary by the mentality, especially with regard to finance. It takes a lot of effort to attract and attract such an investor.

In fact, the risks for a Chinese investor are the same as for a Ukrainian investor, first and foremost, the lack of political stability. The Chinese investor is also worried about currency fluctuations, lack of a single judicial position, free competition, frequent changes to tax and customs legislation.

Nevertheless, there are now a number of reforms, so it will be too early to tell what Ukraine will become in the near future.

- Do the problems of subsidiaries opened in Ukraine affect the parent companies? And how can the risks of the parent company here in Ukraine be protected?

- Contact "Ty i pravo" (smiles). In my opinion, reputational risks will still affect the parent company. Although the Ukrainian company is a separate independent legal entity, but the company policy is determined by the parent company, so any actions, actions or situations will directly affect the latter.

How to protect yourself? To follow the law, not to be afraid to assert their rights, to speak about gross violations on the part of administrative bodies, to come out with public statements. If the company has nothing to fear and it does not violate Ukrainian law, then being open to the public and others will help to protect itself from the pressure of unscrupulous officials.

- What legislative changes has Ukraine introduced recently to improve the investment climate?

- This year, our country implemented several important changes to improve business conduct in Ukraine.

First of all, foreign investors were able to withdraw dividends abroad. Previously, there was a limit of EUR 12 million a month for foreign-backed businesses for one legal entity to transfer dividends abroad or to non-resident accounts in Ukraine. Due to the currency easing approved by the National Bank on July 10, 2019, all restrictions on dividend repatriation, as foreseen in the currency liberalization roadmap, have been lifted.

Also this year, the National Bank lifted the requirement for the mandatory sale of foreign exchange earnings.

It is particularly noteworthy the Law “On Amendments to Certain Legislative Acts of Ukraine on Encouraging Investment Activity in Ukraine” approved by the Verkhovna Rada (Project No. 1059). It is a comprehensive document which provides for elimination of legal loopholes, introduction of innovative legal instruments into the legal system of Ukraine. In particular, the law made the following changes:

in the field of protection of shareholders' rights - liability of the persons with interest and officials of the joint-stock company is established for the losses caused by the transaction with interest, concluded on non-market terms, the consent of which was given by the majority shareholder or their appointed persons;
in the field of justice, the introduction of a "higher probability" standard of proof in economic matters;
in the area of ​​contractual obligations, the debtors are provided with certain guarantees that reduce the risk of abuse by the creditors (trust owners) of their rights;
in the field of construction - the obligation of investors to pay a share contribution to the development of the infrastructure of the settlement was abolished;
in the field of pledge agreements - the obligation to conduct expert monetary valuation of privately owned land plots has been abolished;
in the sphere of activity of limited liability companies - the rules of creation and activity of limited liability companies acting on the basis of model charter are fixed.

In addition, on October 20, 2019, the Law on Concession came into force, which provides for the possibility of effective attraction of domestic and foreign investments in the economy of Ukraine under the conditions of international practice. I will explain that the concession is like a super-progressive lease. Important property (airports, hospitals, port infrastructure) is transferred to the concession, which cannot be managed effectively by the state in order for the private investor to improve it and provide better quality services on its basis. By the way, the Ministry of Infrastructure has announced the launch of a tender for the concession of 6 infrastructure projects in Ukraine, including the seaports of Olvia (Mykolaiv), Kherson, Mariupol, Berdyansk, Odessa and the ferry complex in the port of Chernomorsk.

As a result, due to the changes introduced this year, Ukraine has risen in the Doing business-2020 investment attractiveness rating by 7 points and reached the 64th position. In 6 indicators out of 10 indicators taken into account when compiling this rating, Ukraine has made positive changes this year. And this is a good signal for foreign investors.

- What else does Ukraine need to do to increase its investments?

- It seems to me that, first of all, there should be an official meeting between the two heads of state, where the main goal should be that Ukraine is open to the Chinese investor, Ukraine is interested in developing our mutual political and economic relations, and that Ukraine is now actively making reforms to improve the investment climate and improve the safety of investors' business activities.

In order for China to invest, for example, in the capital of Ukrainian companies, it is necessary to provide for simple administration of taxes, which at the same time must be competitive in comparison with other countries. First of all, we need a transparent and objective system of protection of creditors' rights and property rights, an effective regulatory system.

Simply put, it is necessary to create conditions in Ukraine that would be competitive for investment compared to other countries. As it is more profitable and safer to invest in other jurisdictions, Chinese investors will do so.

- What are your plans for the near future?

- The goal is to attract as much Chinese investment in Ukraine as possible to enable Ukraine to improve its economic situation and China to feel political stability in Ukraine. For this purpose it is necessary to promote the Ukrainian-Chinese business, to join various kinds of projects, forums. With considerable experience in working with China and being aware of the peculiarities of the Chinese people's mentality, - to participate actively in establishing relations at the domestic and intergovernmental levels jointly with the authorities.

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Interview was published in the journal Ukraine-China n18(4) 2019.

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