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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Korean Lobby In Ukraine

19 October, 1999 - 00:00

Ukraine is preparing to introduce car import quotas. A complaint about excessive imports was filed by the AvtoZAZ-Daewoo Joint Venture, which, calling itself a domestic commodity producer, states it is suffering serious losses.

Practically simultaneously with the beginning of a special inquiry, chairman of AvtoZAZ- Daewoo board of directors Oleh Potapov said that the enterprise would resume the production of automobiles in a few days. However, this had not happened even a month after the statement had been made.

Last December's production stop was caused by slow sales of the Ukrainian-Korean vehicles. Last year ended with 13,200 cars unsold, which is more than half of the total annual output (last year this country imported about 220,000 cars, including 50,000 new ones).

Should the restrictions be imposed, car importers and ordinary citizens of Ukraine will face interesting times. The quota regime will practically halt the activities of individual drivers who will be simply unable to go through an extremely complicated procedure of customs clearance, which includes a preliminary declaration, an individual import license to be obtained in Kyiv, etc. But for official importers, life may become even easier than now: they might acquire quotas which exceed the current volumes of imports, for the unorganized individual drivers will not share in the profits.

The level and structure of solvent demand in Ukraine are very specific. The import of expensive new cars from Europe and Japan will hardly feel the consequences of quotas, for it is extremely small and will easily fit within even the narrowest quota framework. However, the market of for Russian, Czech, and Korean cars (except for Daewoo, of course) will suffer most. On the one hand, after the cuts in imports, such vehicles will have no reason to rise in price because of pressure from above from cheap West European makes. On the other hand, Ukrainian buyers, who have usually opted for low-priced cars, are not prepared to pay more for a commodity having the image of a cheap but nice item.

Thus prices on the Ukrainian market are unlikely to shoot up. A different scenario seems more likely. Firstly, nobody prevents the well-known VAZ from following the suit of GAZ and launching the assembly of cars in Ukraine, thus bypassing the emergent obstacles. Secondly, well-known Ukrainian auto-importing companies are quite capable of importing used cars on a broad scale, which they earlier considered beneath their dignity.

The only thing none of the experts we polled forecasts is the increased sales of the Zaporizhzhia-based joint venture's products: Ukrainians hate to be forced to love somebody. This is why the firm, aggressively lobbying for new protective quotas, has made a gross marketing error: too many in Ukraine treat the Daewoo trademark as one foisted by the authorities. Ours is not only people to dislike this.

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