Interview with Bohdan Kulchyckyj for "Weekly ua"
2010-09-07Is Bohdan Kulchyckyj Ukrainian? If so, are you planning to obtain Ukrainian citizenship and a Ukrainian passport?
Bohdan Kulchyckyj:
My father raised me as a Ukrainian. In the US we were Americans of Ukrainian origin. My father has always paid our attention that we had had to leave our country because of occupation. And my American passport serves me first of all to travel without any problems. Why do I have to ask somebody to let me in this or that country? They should be proud that I am coming to them. If the Ukrainian passport could give me the opportunity to travel freely, I would obtain Ukrainian citizenship. And the essential in this situation is that I have a right to choose and live where I want. If I take a decision to live in America, I decide not to live in Ukraine. But I live, work and raise my children in Ukraine. And to my mind, it proves that I am Ukrainian.
They say that you represent the so-called American Dream careerists. Where did you work before Winner?
Bohdan Kulchyckyj:
At first I worked in a pizzeria and McDonald’s, sold women’s shoes, filled car tanks at a gasoline station. Since my childhood I tried to do every work if I could find a working place, salary and a friendly team. After graduating from the university, just before going to Ukraine, I worked for Raytheon, a big multinational company, for some years.
Your CV has no other positions at least somehow connected to car industry, before Winner. Not speaking about filling car tanks at a gasoline station.
Bohdan Kulchyckyj:
I do not believe that specialisation in a certain field can be a success guarantee. Everything is a little bit different in business. One of the most important roles is played by the practical experience in the field where you work. But it is yet not all. If you work two times faster and more productively than a man with experience, you will leave him behind.
The year of 1992 has become a year of a big change for you. You worked at a civilised market in the USA, and not in the car industry and suddenly – relocation and start of your own business in the country where the car market was in its first stages. Which did you have more – problems or satisfaction from solving them?
Bohdan Kulchyckyj:
If I say that it was difficult, I will colour the truth. In those times I even could not call to the United States easily. I had to dial some number, and then order a conversation. And all that passed through Moscow. So, the communication with the founder was if not absent at all, but at a primary level. If to talk about human resources, it was even more problematic. I did not know anybody in Ukraine, and, all the more, nobody in the car industry. I was obliged to find employees with the help of just-made acquaintances. And I could only dream about qualified professionals. It was very hard indeed to find people who wanted to work, and which is more, who wanted to learn something new.
Did the American Embassy in Ukraine help to develop of your business?
Bohdan Kulchyckyj:
Absolutely not.
What was to remember about your first delivery of cars to Ukraine?
Bohdan Kulchyckyj:
I did all the customs clearance myself. The first car that I have imported and cleared was my Ford Scorpio. I was sure that it would be given to me at the border, just after I sign certain papers. But everything proved to be much more complicated. I think it was one of the first foreign cars officially imported to Ukraine. The DAI officers used to stop me at every corner just to look at this car.
In 1990s Ukraine was not a country with the best conditions to lead honest American business. We had racket, arbitrary behaviour of functionaries, and imperfect legislation. Did you come across any unlawful actions from the part of the government? Or can you say that our country has already begun to play according to the civilised rules?
Bohdan Kulchyckyj:
There is a very fine line here. One has to understand what the civilised rules are. When the authorities demand to pay taxes that you do not have to pay - is it a regular procedure or a bandit one? We paid taxes of $180 million for one year and they want even more from us. Yes, maybe now nobody comes to the office and puts a gun to your head, but if they demand to pay more only because the state budget is empty… To my mind, it is an uncivilised approach, at least.
Has the Ukrainian mentality changed compared with the time when you were just starting to do business here?
Bohdan Kulchyckyj:
Yes, very much! But I have changed, too. At that time I did not understand all that corrupted system.
And now?
Bohdan Kulchyckyj:
Now I do understand it but I do not accept it.
You position your company as open and transparent. What is the secret of doing legal business in our country?
Bohdan Kulchyckyj:
I have no special secret. Based on my example, I can tell you the following: first, we maintain warm and friendly relations with the authorities. We know a lot of people but I do not accept relationship in the form of “a protection racket”. I do not like it when I am asked “Who is your “protection”?” Second, it is hard work that should be done every day. Is it easy? No! But it is possible. Even in Ukraine.
Did Winner Imports Ukraine, as a company with foreign investment, support the Orange movement and the revolution of 2004 in Ukraine? If yes, did this support influence your further business?
Bohdan Kulchyckyj:
The Orange Revolution was undoubtedly a crucial event in the Ukrainian history. Winner, as a company, never supported any political force. Our business is neutral – we sell cars. It is all the same to us whichever flag a person is under. However, if you look at the pictures of the Orange Revolution, you would see much more our cars under the flags of Yanukovych. The only thing that we supported at that time was the right of our employees to show freely their support to this or that candidate.
We do support the Ukrainian state in whole. For example, when Ukraine has just gained its independence, its government did not have resources to organise its consulate in the United States. Our founder bought out a building in New-York and let it to the consulate of Ukraine at zero profit until the Ukrainian government could buy it and own it. But after this we did not receive any privileges in Ukraine. "You give something to me, and I will give something to you” is not our approach, not our mentality.
Does your American passport help you in Ukraine?
Bohdan Kulchyckyj:
If to be honest, during the 18 years of living here nobody ever asked me to show my passport. However, there have been situations when my American citizenship helped me – somebody did not want a scandal with a foreigner, and all the more with a representative of a big multinational company.
How did you survive the crisis of a world car industry and how do you plan to overcome it?
Bohdan Kulchyckyj:
When the crisis happened, our priority was to settle accounts with banks in time and in compliance with contracts that is to organise the right cash management. Before the crisis, we owed more than EUR 100 million to the banks and we paid back everything and in time. To be able to do this, we had to sell our stock correctly and continuously and manage the next requests skilfully. Then, we tried to cut as much of the company's expenses as we could. For example, we cut 80% of our personnel's business trips and, unfortunately, dismissed 40% of our personnel. Also, we had to lower the salary of the remaining employees.
How do you make financial, market and other planning in the country where the rules of the game, laws, standards and other factors are changing faster and more often than in other countries?
Bohdan Kulchyckyj:
The less stable the situation, the more decisions are taken in the process. If we take the pre-crisis period, all meetings to plan something were hold according to the schedule approved in advance. In the crisis conditions people work more.
A lot of professionals that used to work for Winner left the company and now occupy top positions in other car companies.
Bohdan Kulchyckyj:
The fact that many Winner ex-employees now occupy the high positions in Ukrainian companies first of all indicates the highest level of our company. And changes are always to the best.
To tell the truth a lot of things have changed since hryvnia devaluation and car market crisis.
Earlier an employee could easily find a high-paying job and “Winner” was considered to be school for car experts, today the situation is intricate and employees are afraid to change anything: they appreciate their current salary and decent working conditions.
What can you say analyzing all Ukrainian car business: what negative or positive changes happened with it after “Orange Revolution” and how Yanukovych coming to power affected on it?
Bohdan Kulchyckyj:
It is hard to compare. When Yuschenko ascended to the presidency, there was no financial crisis. Foreign investments came to Ukraine, solvency of citizens was much higher and, in fact, we sold more cars. Today the situation is different. Yanukovych controls the country during this hard period – both in Ukraine and in the whole world. A lot of things have changed on car Olympia: Jaguar and Land Rover are under control of Indian “Tata”, Volvo will soon become part of Geely, and many brands have simply disappeared Hummer, Saturn, Pontiac). These are two different stages and it is too early to make particular comparison.
Verkhovna Rada considers draft legislation, providing increase of excise duties to 2 Euro per 1 cm3 of engine for cars with price higher than 50 thousand Euro and volume of more than 3000 cm3. Almost half of models you sell belong to this category (Range Rover, Cayenne, XC90 etc.). What do you think about it?
Bohdan Kulchyckyj:
This situation is two-sided. Being citizen of Ukraine, and irrespective of US passport I consider myself to be Ukrainian, I approve this legislation. If a person has 100 thousand Euro for a car, he/she will find another 20 thousand. The other thing is the purpose of use of such money. If they will be spent for construction of roads, universities, for social sphere etc. – I agree. However, if they will be put into somebody pocket – it is not fair. As a businessman selling such cars – I disagree. By the way due to the latest data, this legislation can be not approved by the Parliament.
How did decline in Euro to UAH influenced on price of your premium-brands?
Bohdan Kulchyckyj:
It is natural that they cheapened. We sell in hryvnias at the NBU rate. Earlier it was 12,5, today – 9,7. Difference is substantial.
Many owners of your cars complain about very high price for maintenance.
Bohdan Kulchyckyj:
Unfortunately, it is true. The main reason is that we pay more taxes, including duties. In fact, the problem is much more serious. Ukraine is an expensive country for business. Regardless decrease in value of working hours, price for the same parts has been increased together with the rate. One thing is to import and sell spare parts at the rate 5 UAH / $, and the other – 8 UAH/ $. Thus, import and selling of spare parts in official and transparent way, paying all certification duties, excise duties, taxes is very expensive. One should also remember such notion as “brand value”. For Volvo spare part the buyer pays naturally more than for similar Ford spare part. Besides, instability of economy also has its impact. Why, for example, banking credits are so expensive? This is because UAH is unstable, and as a result – rate in the amount of 20 % is common for us.
Has attitude of Ukrainian customers changed regarding Volvo brand after its acquisition by Chinese company?
Bohdan Kulchyckyj:
I suppose that Geely has no and hardly will have impact on this Swedish brand in the nearest future. Here an analogy can be made between Land Rover English brand that was together with Jaguar sold to Indian “Tata”. Despite such global changes the very models become more interesting and we year after year more often sell “British”. As for Volvo, I think, Ford thoroughly chose customer for its Swedish brand.
In Ukraine, particularly before crisis, we could observe queue for many car models. It is our peculiarity or common situation for other countries, particularly for Europe?
Bohdan Kulchyckyj:
Global car market before and after crisis are two different markets. Before the crisis car companies simply produced and sold cars. Very often demand exceeded supply and there were no problems with selling. Today the situation is different: first of all demand appears and then car is produced. Thus, despite post crisis period there were queues for many models over the world as well as in Ukraine. We can make analogy with air carriage: despite decrease in solvency of citizens, airplanes were full. The main reason – severe reduction in the amount of flights.
Can we call exclusively Ukrainian trend the thing that our compatriots buy many expensive cars and with the fullest package?
Bohdan Kulchyckyj:
One tendency is traced: Ukrainian people who have money, want to buy the best and the most expensive. At first sight, there are in fact a lot of very expensive cars of premium-segment on our streets. It seems that there are much more Cayenne and Range Rover cars in Kyiv than in, for example, New York. However, if we look at figures, the situation is changing significantly. Even before the crisis volume of sales in the most expensive segment was at the level of 4,5 thousand cars per year.
After onset of crisis this segment was reduced to 450-600 cars per year in consideration the fact that the population of Ukraine is 47 mln. In comparison to other countries it is very small volume of sales.
What specialties from Winner Company will we see in the nearest future?
Bohdan Kulchyckyj:
Porsche presents new Cayenne that is already popular all over the world. Jaguar starts production of brand new XJ. Mentioning Ford this brand has recently presented brand new Fiesta, now we are waiting for new Focus (other models undergo minor restyling). New Volvo S60 will appear in Ukraine in three months.
Tell us about your Ukrainian roots – who were your parents, where did they live, what were engaged in?
Bohdan Kulchyckyj:
Father was born in Kultchytsi settlement (Western Ukraine). Mother – in Lviv. My grandfather was professor of Lviv University, and grandmother played at Opera Theatre. Thus, I am for 100 % from Western Ukraine, together from settlement and district center. Mother keeps all grandfathers works (he was also a writer) as well as program from Lviv Opera Theatre with Surname of my grandmother. And on father’s side there is family emblem, which father brought from Kultchytsi settlement during emigration. When I returned to Ukraine I went to village and found my relatives and house where my grandmother was born.
You are father of three children. Whom do they consider you to be regarding nationality?
Bohdan Kulchyckyj:
They are owners of US passport as well as me. They were all born in Ukraine. Who do they consider themselves to be? It complicated issue. They were speaking Ukrainian since childhood. Later they went to international school where everyone speaks English. For example, when Victoria was six she went to school, she did not know English – she spoke Ukrainian and French.
What will your children remember about you?
Bohdan Kulchyckyj:
Frankly speaking, I practically do not separate business and family relations. I love my wife and children and feel happy with my family. We have a rule – I bring children to school alone. We travel together and I spent Saturdays and Sundays at home. And they feel that I am part of their life.
Your wife works in Ukraine?
Bohdan Kulchyckyj:
It is controversial question. If I say that mother of my three children does not work it would be disrespect. Bringing up children is a complicated work.
Do you have real friends among Ukrainians?
Bohdan Kulchyckyj:
I have a very good friend – Oleksandr Tymofeev – General Director of AVT Bavaria (official importer of BMW, Mini and Rolls Royce in Ukraine – Weekly.ua). He was the first of employees of our company. Now our families have good relations. In USA all Americans who have Ukrainian roots are also my friends.
Once Bohdan Kulchyckyj changed his life, having moved to Ukraine and started new business. Will be there similar changes in your professional life in future?
Bohdan Kulchyckyj:
I think yes. It would be interesting to engage in politics. However, I have not decided on how and where. I do not want to engage in politics in Ukraine for protection of my business. It is also hard to start career in USA, where I did not live for 18 years. Today this is the main dilemma for me.