Udma digest 11th issue

CROSS-BORDER DISTANCE SELLING IN UKRAINE: INFO DIGEST

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

DEAR COLLEAGUES,

RESULTS OF THE 2012 AND EXPECTATIONS FOR THE 2013 In order to summarize this year and find out the future pros-pects of Ukrainian market from the professionals, we have put three questions:

1. How do you assess the development of distance selling in Ukraine in 2012, the market in general and in particular in your segment? Have you fulfilled your expectations / plans?

2. Which factors do you think have been the crucial to the development of the Ukrainian DS market in 2012? What bar-riers (legal, technical, mental) should be overcome to en-courage development of this area of trade in the coming years?

3. Your predictions for 2013? Name Top trends next year.

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

FRESH DISTANCE SELLING NEWS FOLLOW OUR PAGE ON

VALENTYN KALASHNYK, UDMA PRESIDENT2012 for DS companies was tough, especially for the reason that the solvency of the population has seriously deteriorated. But it was a good opportunity for companies to optimize their operations. Many companies instead of chasing volumes have to take care of improving the efficiency of their operations, both in terms of working with databases, and by the optimi-zation of all processes. However, some consumer segments «flunk.» For example, it refers to the direction of «seeds.»

In the middle of the year the market was abandoned by some big players. But it was not a question of the Ukrainian market, it was within the companies themselves.

Of course, there have been some prons this year. It mainly refers to the segment of «clothes» which quite efficiently and quickly began to develop. I am glad that in the future due to changes in the law «On the Protection of Personal Data» the activity of mail-order business will be greatly simplified in terms of their work with databases. And, of course, the positive aspect is the ever increasing number of consumers - Internet users.

The main deterrent to companies that work on consignment, is the uncertainty of the national currency. Companies have to err and to budget a higher exchange rate. And if the rate does not change, it will cause a decrease in volume of orders, i.e. consumers will buy less.

Another constraint is the lack of well-functioning online pay-ment systems. Because of this, users have confidence in such a process of mutual settlements. But it is good for development of new formats of Internet projects, such as Marketplace, club systems, and comparing prices. At the moment, 10% of all In-ternet users in Europe are Ukrainians.

More and more companies are showing interest in Ukraine, but if the mid-2012 plans to launch postponed, then in the spring of 2013 UDMA forecasts output of at least three new players from Europe. Major trends will be the development of on-line payment systems, the use of online platforms, includ-ing offline tools reallocation of advertising budgets towards online promotion.

ANASTASIA GAVURA, HEAD OF MARKETING-DISTANCE SERVICES, OS-DIRECT MARKETING GROUPDespite the fact that some companies have left the market, DS in Ukraine continues to grow at the expense of increasing the volume of already present players and launch of new foreign in-vestment projects. It must be noted as increasing the number of market operators of logistics services, so companies have more possibilities in organizing the delivery of orders, including the delivery of international shipments for cross-border trade.

In 2012, the market has developed in the first place, thanks to the penetration of the Internet and the development of lo-gistics infrastructure. Owing to the development of the mar-ket postal logistics, and new services delivering orders to the door: the possibility of fitting, the return of goods that do not come through a courier. The growth of Internet penetration in

the region, the availability of different options, reducing the time of delivery will keep encouraging consumers to order on-line. As Ukrainians have the opportunity to order goods from the U.S. sites through an intermediary (which gives access to better prices for similar product categories), DS companies working in Ukraine, should pay attention to customer service improvement and work with databases of existing customers for their reactivation.

In 2013, I see a different perspective of the e-Commerce mod-els in clothing, grocery segments and in household goods, including the Marketplace and the development of Amazon models. There will also be given sufficient attention to the im-plementation of online payment and bank cards.

VLADISLAV FLAX, OWOX DIRECTOR In our opinion there will be the following trends in the next year: development of services for monetizing mobile audience

and the efforts of retailers to increase repeated sales, as well as expanding the range of medium and large online stores.

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UKRAINIAN POSTAL LOGISTICS MARKET PROSPECTSOn December 4th, in the UNIAN press centre press-con-ference dedicated to results of an independent research of Ukrainian postal logistics market was held. The study was con-ducted by the Ukrainian Direct Marketing Association (UADM), together with the consulting company «NSBC» supported by “Ukrposhta” and “Nova Poshta”.

Main objectives of the research, conducted for the second time, were to determine the market size and its structure, key players and the market prospects for the nearest future. Talking about postal logistics complex of services on deliv-ery of letters parcels and packages weighing up to 30 kg is meant.

OVERVIEW OF UKRAINIAN POSTAL LOGISTICS MARKET

In Ukraine postal logistics market shows a stable growth. In 2011 it has increased by 12.3% in terms of money and amounted to $2,447 mill. In real terms in 2011 the segment of parcel deliveries has increased by 14.2% and the letters – by 12.1%. The market growth is much higher than the GDP growth rate of the country and this positive trend will be typical in the next two years.

Efficient logistics infrastructure formation is both a required condition and a consequence of the e-commerce market de-velopment, which is growing by 30% per year. At the same time there is a qualitative change in customers’ structure (senders of parcels and letters). The share of deliveries ordered by indi-viduals is reducing (so-called “C2C-deliveries”) and the share of letters and parcels sent by companies is actively growing (B2B and B2C deliveries).

As well as all over the world services of letters and parcels de-livery are gradually losing their social significance and becom-ing a key factor in development of “the new economy” – e-commerce, trading by catalogues, tvshopping.

Today, the postal logistics market is represented by national operator “Ukrposhta” and more than 120 private companies. Share of the national postal operator decreases, despite of increased volume of delivered letters and parcels in 2011. The market is growing rapidly and new customers require more flexible pricing policy and approach to services, which can’t be provided by the national operator due to bureaucratic government limitations. If this situation could be changed by a new team that came to the “Ukrposhta” in spring 2012 will 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

Year 2011mill. hrn. mill. unit

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

Year 2010mill. hrn. mill. unit

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%, B2C segment – by 11.9%. But the most rapid growth of the mar-

ket was in the segment of B2C parcel deliveries – about 27%. 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*

Changeyear2010, % 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

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

Cash on delivery (COD) is widely used in the segment of B2C parcel deliveries. On average COD percentage is from 1.5% to 2%. Contribution to this segment is specified by catalogue selling companies, online retailers and direct sales companies.

Not more than 80% of parcels in the B2C segment are sent on COD terms. Thus, the COD service amount is on average 7-10 million UAH. per year.

MAIN TRENDS OF POSTAL LOGISTICS MARKET OPERATORS’ DEVELOPMENT IN UKRAINE

Tendencies which outlined in 2011 are going to be essential in 2012-2013. The main growth will be in the segment of B2C parcel deliveries. This segment will grow on average by 10-15%. Catalogue selling companies will provide an increase of about 10% per year, on-line sales – of 20%, direct sales – of 10-15% in volume terms. In the B2B segment the growth will not exceed 5% in natural units.

The main factors influencing the B2C segment in the next 5 years will be:

• broadband Internet penetration; • household incomes; • population size.

The main factors influencing the B2B segment will be:

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

Competition at the market will continue to grow, and in case of deterioration of economic indicators companies tradition-ally working in the B2B segment will reorient to B2C segment. However, COD service availability continues to be a major de-terrent to B2C segment entering. A number of companies be-gan to offer this service unofficially. There is some redistribu-tion of customers and cargo flows in the market. Thus, in the segment of companies which deal with transportation and of-fer the service of “warehouse-to-warehouse” delivery, a clear distinction appeared.

Further details are available via contacting with the Ukrainian Direct Marketing Association by phone +38 044 90 90 88 or [email protected]

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YEAR 2012 IN ELEVEN NEWS

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.

JANUARY

Experts say the economy of Ukraine has emerged from the crisis. One of the factors which can prove their opinion is the growth of car sales for the Ukrainians. In January 2012 the Ukrainians bought 12281 motor cars which is 24% more than over the previous year (only new cars are taken into consideration), as it has been reported by the press-service of Ukravtoprom Association.

FEBRUARY

According to the forecast of British economists from HSBC, the largest world bank, by 2050 Ukraine will have become the most fast-developing market of Europe.

MARCH

New large retail facilities are springing up in Kiev and other Ukrainian cities. Developers have promised to double their of-fers of sales areas in the nearest couple of years.

APRIL

Ukraine ranked higher than any other Eastern European country in the Na-tion Higher Education Systems rat-ing developed by Universitas 21, the international research network of 24 universities and colleges.

Ukraine occupied the 25th position out of 48 evaluated countries. Czech Republic, Poland, Slovenia, Russia and Slovakia placed at positions 26, 27, 28, 32, and 35, respectively.

MAY

In preparations for EURO 2012 Ukraine leaped forward 30 years in its development, said UEFA President Michel Platini. Ukraine have achieved a high level of readiness for the EURO 2012. And during the continental champi-onship in June millions of European fans discovered new, attractive Ukraine for themselves – with new infra-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

State Tax Service plans to force all online retailers to introduce cash registers, and couriers are obliged to issue the client checks. That is how tax person-nel want to increase the tax li-ability of shops to those selling legal products.

SEPTEMBER

Big leap in world ranking logistics efficien-cy of the World Bank (Logistics Perfor-mance Index) Ukraine has implemented over the past two years. The country shift-ed from 102 place in 2010 to 66 – in 2012. At the same time, the nearest neighbours of Ukraine, Belarus and Russia fell in the 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.

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MARKET NEWSIAB STUDY: TYPICAL UKRAINIAN ONLINE BUYER PROFILEFor half a year Ukrainian users on average buy about 7 prod-ucts online (in Europe, the figure is 13), and spend about 264 euros - including the Christmas holidays (European users spend twice as much - about 544 euros). These and other character-istics of the behavior of the Ukrainian audience at the confer-ence “Business Internet Shop” voiced Ionel Naftanaila, training and projects manager in the non-profit Interactive Advertising 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):

How can the Internet users benefit from using then Internet ? 80% of Ukrainian users say the Internet helps them to identify their lifestyle, 33% of users believe that it helps to manage finances, 11% use it to order tickets, search and organize trips, 83% - to stay in touch with family and friends. These figures an average are less than in Europe, but it means an upward trend of the market, in particular - to reach the European average, ensures Ionel.

The expert also voiced interesting data about the Ukrainian owners of smartphones. Thus, 25% of smartphone owners are interested in coupons and discounts tied to their position (48%

in Europe), 38% - in the download of mobile applications (41% in Europe), 19% - in the QR-codes use (32% in Europe). “The field of online shopping via mobile phones is undeveloped yet in Ukraine, but it is already a potential niche” - said the expert IAB.

Popular activities with a mobile phone (Ukraine vs 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.

It is very important for the Ukrainian business to know that 54% of the Ukrainian people share the opinion of the impor-tance of the communication between brand and its customers online. Further Ionel presented interesting statistics on how UAnet users interact with brands pages in social networks:

The following table summarizes such types of interactions (from top to bottom in the left column): liked or became a fan of the brand page, unfriended the brand page, complained about the brand / product, complained directly to the com-pany, created a group for a favourite brand, created a group to boycott brand.

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“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 items:

(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:

Types of goods, from the top to bottom: electronics, books, 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 2013According to the SLI Systems study, the volume of the world distance-selling will exceed $ 1.25 trillion in 2013.

SLI Systems research has also found that due to the compo-nents of commercial success in 2013, the representatives of the distance-selling see update or replace of the software platform (18%), the functionality of the site improvement(18%) and search engine optimization (17%).

40% of Internet marketers are planning to integrate the mo-bile strategy since the new year. And 15% of online retailers are going to strengthen existing mobile commerce strategy.

20% of the mobile sites owners will improve the customer ex-perience and increase sales by expanding the search capabili-ties of their mobile resource.

Another 20% of online marketers are planning to launch mo-bile application for e-commerce in the new year.

To facilitate the search for information and products online, online stores are going to focus on improving or adding a test (52%), specification (48%) and actions for the sale of goods (39%).

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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 EXPANDEDIn the first quarter of 2012, the Ukrainian market was occupied by Russian chain clothing stores lady & gentleman CITY, and the brand’s flagship store was opened in the Kyiv shopping centre “Caravan”. After Peacocks left Ukraine, the company “Maratex” introduced a new fashion brand OVS (part of Grup-po Coin), and its stores already operate across the country.

In June 2012, in the shopping center Dream Town in Kyiv Por-tuguese brand W52 Jeans opened its first store in Ukraine. In Odessa trading network “Argo” opened first brand store Pi-azza Italia in the mall “City Centre”.

In 2012, the Ukrainian company MTI has received the right to represent under the franchise agreement the fashion brand Mango on the Ukrainian market.

In early 2012, the Polish shoe store chain Wojas opened its first store in Ukraine in Ivano-Frankivsk and plans further develop-ment in the country.

In the Ocean Plaza mall several brands are to appear, new to the Kiev market, and as well as for the whole Ukraine. The first in the capital hypermarket REAL also opened there. Along with the already present fashion brands, a trading

company MTI has announced its intent to open brand shops in Ocean Plaza shopping mall such as Napapijri, At-elier de Courcelles and Lee Wrangler. There are also to open shops of several luxury brands, including Weekend Max Mara and Marina Rinaldi (Max Mara Fashion Group), as well as fashion brands such as Pepe Jeans London, Mi-chael Kors, Rebeca Sanver, BCBG Max Azria, Bebe and Longchamp.

In the segment of high fashion in the first half of 2012 in the central districts of Kyiv mono-brand stores Valentino and Pra-da were opened.

Trading network Inditex Group, which earlier in Ukraine was focused exclusively on cities with a population of over a mil-lion inhabitants, is now considering the possibility of opening stores of its brands (except Zara and Massimo Dutti) even in smaller towns.

In the segment of fashion-retail major operators were most rapidly developing represented by brands of international net-works (Inditex Group and LPP SA Group), and Russian (“Sports-master”, “TsentrObuv”) and national networks (MTI, ARGO), the press service of the of CBRE informed.

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In addition, the first half-year of 2012 was marked by the Ukrainian market of new brands in the segment of luxury goods such as Prada and Valentino. The first stores of aver-age price segment were opened: such as Italian apparel brand OVS, Portuguese W52 Jeans, as well as Russian footwear net-work operators Kari and department store lady & gentlemen CITY, and Polish shoe retailer Wojas.

At the same time, some operators, particularly the world-fa-mous network of fast-food Subway, Burger King, a network of natural cosmetics L’Oreal Body Shop, etc., have not reached the market in Kiev. First of all, this is due to the complexity for potential franchisees to meet the exacting requirements of the parent company by the number of stores opened each year due to lack of quality retail space, and in addition, the limited financial resources of potential local partners.

Top Secret is to expand Ukrainian network up to 40 stores. By the end of the year, the company plans to expand the network up to 40 Ukrainian outlets.

Network of retail outlets GC Redan has already 500 stores op-erating under the brands of Top Secret, Top Secret & Friends, Troll and Textilmarket.

At the end of the last year, the Group Redan sold its clothing in 463 retail outlets. During the last year the company closed unprofitable stores.

The official representative of Top Secret in Ukraine is “Beta-

Reda Ukraine.” Now under control of Redan domestic repre-sentative there are 38 stores, 28 of which operate on a fran-chise base.

The arrival of the first chain outlets of H&M, C&A, Deichmann, Peek & Cloppenburg and Debenhams have been announced to appear the following season in Ukraine.

“Melon Fashion Group” has announced its intention to open at least 100 new sales points in Ukraine and Russia in 2013.

In each store company is going to invest about $ 100 thou-sand. How many will be allotted in Ukraine is yet unknown.

The “Melon Fashion Group” comprise such famous brands as Befree, Love Republic, Zarina, Co & Beauty, Springfield, Wom-en `Secret and Ci Mi.

Today, the network operates 530 stores. 498 of which are work-ing in Russia (393 its own,105 franchised) and 32 in Ukraine.

Kari shoe network is going to open 300 stores in Ukraine, Rus-sia, Poland and Kazakhstan. By the end of 2013 Kari plans to expand its network from 280 to 600 stores in four markets: Russia, Poland, Ukraine and Kazakhstan.

Retail network of household goods Jysk has decided to open in Ukraine its own, not franchise stores, and plans to open at least 200 commercial properties in all regions of the country in the nearest 10-15 years.

UKRAINE HAS CLIMBED BY 9 POSITIONS IN THE GLOBAL COMPETITIVENESS OF THE ECONOMY RANKINGUkraine 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 state institutions.

Among the factors that positively influence the development of competiveness in the regions and in Ukraine as a whole is the high level of capacity for innovation and introduction of innovation technologies, and Kyiv is first among 27 regions.

According to the FEG, the largest number of industrial enterpris-es which introduce innovation technologies in the country are located in Kyiv (98) and the smallest number in Sevastopol (9).

“We believe that the introduction and development of the e-government in Ukraine could be a very important factor for

the development of competitiveness not only for such pillars as innovation capacity, but for all of them,” said Kovalenko.

The FEG said that the poll, which covered over 2,000 company heads in all of the economic sectors, showed that the most problematic factors for doing business in Ukraine is instability in state policy and the inefficiency of government policymak-ing, as well as corruption. Company heads also said that tax regulation is a burden in the country.

Kovalenko added that the bad assessments of the efficiency of state institutions, which Kyiv has been given for the second year in a row, are given to other economically developed re-gions in Ukraine.

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He said that experts linked the trend with higher requirements of business representatives from state institutions in the re-gions, as in terms of innovation capacity and market develop-ment, the regions are leaders in the regional GCI rating.

“We also think that with the economic growth and the applica-tion of innovations by business in Ukraine , requirements from institutions will only toughen and, of course, the problem has to be settled. If the problem is not settled, it will continue pull-ing down Ukraine ‘s competitiveness,” said Kovalenko.

The FEG said that Kharkiv region was the second in the com-petitiveness index in Ukraine, Dnipropetrovsk region was the third, Donetsk region was the fourth and Kyiv region was the fifth. The ones at the bottom include the agricultural regions, like in 2011 - Zhytomyr, Ternopil, Chernihiv, Kirovohrad and

Kherson regions.

The FEG said that there is neither a well-defined leader in the country in all pillars of the index nor a well-defined loser.

The experts said that all of the regions have assessments high-er than average ones in the world in labour market efficiency, higher and primary education, and healthcare.

Thierry Geiger, Associate Director Economist, Global Competi-tiveness Network, Global Leadership Fellow World Economic Forum said at the presentation of the report, Ukraine is 73rd in the GCI 2012 report among 144 countries, climbing nine posi-tions up compared to 2011.

Based on for-ua.com report

LEGISLATION NEWS“ELECTRONIC TAX ACCOUNT” IS PROMISED TO START IN JANUARYThe 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-ficial correspondence with the STS on taxation, to obtain ap-propriate advice and related information.

Earlier, the President of Ukraine Viktor Yanukovych signed a

law on electronic passports. The law will come into effect on January 1 next year. Then Ukraine will start switching to elec-tronic passports.

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

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INTERNET NEWSNUMBER 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.

According to the study, the most rapid subscribers growth is visible in towns with population up to 50 thousand people – an increase by 210% in the 3rd quarter of 2012 compared to the same period in 2011, in villages – 163% growth, in cities with up to 500 thousand inhabitants – 111%, in cities with a popu-lation up to 100 thousand people – 95% and in cities with a population of over 500 thousand – 83%.

However, the largest number of regular Internet users is con-centrated in cities with population of over 500 thousand peo-ple – 28% of the total number of Internet users in Ukraine, share of people in cities of 101-500 thousand is 25%, in cities with population less than 50 thousand – 23%, in rural areas – 19%, up to 100 thousand – 6%.

The fastest growing age category among Internet users in the 3rd quarter of 2012 was represented by people aged over 60 years – an increase by 410%

Number of Internet users aged 50-59 years increased by 199%, at the age of 30-39 years – by 149%, at the age of 20-29 years – by 131%, at the age of 40-49 years – by 121%, at age of 16-19 years – by 41%.

At the same time, despite the low growth rates compared to other age groups, youth in Ukraine still represent almost a half of Internet audience – people aged 16-29 years have 44% share of Internet users in Ukraine, 23% of users are in the age group of 30-39 years. To users older than 40 years correspond more than 30% of the total number of regular Internet users in Ukraine, more than a half of them are users under the age of 49 years.

Users division by age is almost equal – among regular Internet users there are 50.9% of men and 49.1% of women.

Main objectives of Internet usage in the 3rd quarter of 2012 were: social networks – 56%, e-mails – 52%, downloading of movies and music – 41%, search for information – 36%, news sites, reading newspapers – 29%, Online video – 23%, etc.

GFK Ukraine is a Ukrainian research company, which con-ducts surveys and market studies in Ukraine, Moldova and Belarus. It is a part of an international research network GFK Group. In 2010, GFK Group sales amounted to 1.29 billion euros.

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-

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ternet users are young people due to whom the market de-velops.

Despite the increased Internet penetration, the Ukrainians in the coming year do not plan to buy either a new smartphone or a tablet, because most likely, already own it. The company noted that this situation could be changed with the reduced prices for portable devices.

Also, studies have shown that in Ukraine falls relevance of mo-bile internet in the regions. Adversely affected is no 3G-and 4G-network. Users often remain dissatisfied with the quality of

communication.

As for the total number of smartphones – the number has in-creased from 11% to 14%. Along with smartphones in Ukraine in 2012 increased the number of tablet computers.

The report was compiled based on 505 interviews with re-spondents 15-69 years old. Additionally 1526 people have been surveyed who enter the network at least once a week.

Source: DELO.UA

ANNOUNCETRADE MISSION KNOWS NO LIMITSIf you are interested in the Kazakhstan market, Trade Mission to Kazakhstan 2013 is greatly recommended: Europe-Asia-Ka-zakhstan. Yet it is still the only event on the Kazakhstan market for postal logistics and distance selling.

Place and date: February 7-8, 2013. in Almaty (Almaty as a ven-ue for the Mission of course, has not chosen at random. This is the most international city in Kazakhstan, which surprisingly combines both work and leisure). Hotel «Royal Tulip Almaty», located on the foothills of the Tien Shan, and ski resort “Shym-bulak”, located in a picturesque valley Zailisky Tau, 25 km away from the center of Almaty.

The format of the event: A judicious combination of business with pleasure - quality news reports from practitioners of the market, least of the theory, the maximum of the communica-tion and exchange of practical experience. And within the Trade mission “Kazpost” conducts a number of activities that aim at optimizing the interaction of representatives of business

in Europe and Asia for cooperation in the b2bpost field. Trade Mission participants will have the opportunity to run individual workshops to explore and establish business relationships with participating companies.

Intensive leisure - skiing on the ski sport base “Shymbulak”

The detailed program is still in process of development, but some milestones have already been clearly defined:

• Business Opportunities for distance-selling companies in Kazakhstan • “Kazpost” as a window into a Customs Union and the Common Economic Space • Transit mail to Asia and Europe through “Kazpost”

For more information please contact the Ukrainian Association of Direct Marketing +38 (044) 490-90-88; [email protected]

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Almaty at night

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Udma digest 11th issue