How are companies responding to the crisis in Ukraine?

1. The chaos of war makes local knowledge and partners even more important

All Swiss companies interested in Ukraine must obtain information and contacts locally. Anyone who relies solely on public discourse in (social) media might imagine Ukraine to be a devastated war zone.

The situation on the ground, by contrast, is nuanced. Normal working conditions remain possible in many regions, and the serious problem of corruption seems to be declining in many areas thanks to reforms and advanced digitalization. At the same time, the situation is constantly changing as the war unfolds. Successful foreign companies therefore work closely with local partners and grant greater autonomy to local management so that it can react flexibly to changing circumstances. 

In particular, Swiss companies are advised to establish relationships with business associations and bilateral chambers of commerce. In the event of corruption or other grievances, the Business Ombudsman Council will offer advice around the situation on the ground, establish political representation, and quickly resolve problems with government agencies. 

2. The everyday reality of war calls for flexible operational adjustments

In the day-to-day lives of most companies, war manifests itself less in direct attacks than in indirect consequences such as staff shortages and power cuts, which require flexible and creative solutions.

This is particularly evident in logistics, for example. Ukrainian airspace is completely closed, along with a number of ports. Transport logistics have therefore largely shifted to the road, which often means waiting times at border crossings are extended by several hours. Some companies therefore rent warehouses in Poland from where they ship their products directly in order to shorten delivery times for their customers. 

Many adaptations of this kind need to be made quickly to avoid high costs. Electricity generators, truck transport and office space in the west of the country quickly became scarce and expensive. Some companies therefore work with several strategic scenarios. If you’ve already worked through a scenario, you can react more quickly in an emergency and thus gain a competitive advantage. 

3. Companies need alternative, long-term financing strategies

Despite repeated promises on the international political stage, financing foreign projects remains difficult. The risk profile prevents many foreign banks from lending money, and financing via Ukrainian banks is associated with high interest rates and a number of regulatory hurdles. 

Swiss companies can apply for programs run by international finance institutions such as the European Bank for Reconstruction and Development, as well as public tenders from other countries such as Switzerland. However, these opportunities are usually only available to large-scale projects and not to small or medium-sized enterprises. The latter must often rely on their own funds or alternative investors. But finding investors is no easy task, as Ukrainian martial law severely limits how much capital can leave Ukraine during the war. Larger profit repatriation abroad can probably only be expected after the end of the war. 

4. Lack of insurance requires operational risk management

In war, companies usually bear risks themselves. War risk insurance is only occasionally available and is expensive. Instead of insuring machinery, buildings and other assets, many companies on the ground focus on minimizing and diversifying risks. 

To minimize risks, companies are relocating factories to the west of the country, building shelters, expanding remote working options or scheduling work shifts at times when there are fewer bombardments. For diversification, they create redundant structures such as backup offices, alternative locations or geographically distributed warehouses. 

However, companies should bear in mind that suppliers and customers also want to minimize their risks. While suppliers often demand advance payments, customers frequently refuse them.

5. Reputation management is becoming more complex

The war has changed the public perception of corporate responsibility. On the one hand, Ukrainian employees appreciate it when foreign companies operate in the country despite the adverse circumstances. Managers report an unprecedented level of productivity and loyalty in their teams. 

At the same time, companies are expected to take an active part in defending the country. While virtually all Ukrainian companies support the military financially and materially, foreign companies often avoid closeness to the military because they fear reputational or compliance risks in their home markets. They therefore tend to focus on humanitarian assistance. 

In addition to humanitarian aid, Swiss companies with an interest in Ukraine should be prepared to end all ties with Russia. Otherwise, they risk reputational damage, customer boycotts and opposition in the workforce.

What does this mean specifically for Swiss companies?

Build local networks, develop operational resilience, find robust financing solutions, manage risks and take on new social roles. Swiss companies that follow these lessons can operate in Ukraine despite the risks. Nonetheless, it is important always to remember: there are no guarantees in war.