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Chasing the dream
Landlord, Kyiv, Ukraine
Nov 13, 2017
Published by USUBC, Dec 12, 2017
Jason Gheissari is a former managing director of trade finance at John Deere Financial for the CIS Region. His ambition is to develop a successful preowned/used agricultural equipment supply company, supplying equipment to Ukraine. He has established American Preowned Equipment Export, APEEXPORT for that reason. We had a discussion with him about agricultural equipment business.
Most people who have worked as top managers in large companies, for almost four decades and then retire, do quite common activities like playing golf, leisure travel or sitting on a deckchair by the pool in their country house. «I could also sit on the lawn of my house in Virginia, but a quiet life is not for me» says Jason Gheissari.
Now his life is going on between the two countries: almost every month Mr. Gheissari flies from the US (Washington DC) to Ukraine for a 2-3 weeks at a time period. In his opinion, he has always been an entrepreneur deep inside until he finally made up his mind to do “his own” business. Of course, that decision was preceded by decades of huge experience and knowledge of the market.
During his life, Mr. Gheissari managed to work in four large American companies and went from sales and business development manager to managing director for of trade finance financial department of John Deere for Eastern Europe.
In his interview with Landlord Mr. Gheissari gave his reasons why he decided to give up his quiet life and do business in our country, his vision of the development of the Ukrainian market and explained expectations of foreign investors.
What opportunities do you see for your company in the Ukrainian market? Are you going to work in other post-Soviet countries?
The Ukrainian agro sector has a huge potential. Of course, you still have problems such as lack of transparency, and a lot of bureaucracy that prevents business from developing well. But I really like the Ukrainian market. I believe in the success and future of Ukrainian agriculture. If one wants to succeed in Ukraine they need to make a lot of efforts. If I manage to realize all my plans here, then, maybe, I can use this experience in other countries. But it is important to note that Ukraine is a unique country, therefore, the Ukrainian experience may or may not be fully applicable in other countries; but Ukraine teaches people like me a lot.
Russia has a much bigger the market. Have you considered it as a platform for your company’s work?
The Russian market is not only bigger, but also much more complicated. For my company, for a start-up company with limited resources Ukraine presents great opportunities.
Also, in Ukraine there is a culture of buying used agricultural machinery which is absolutely needed, which is not practiced in some countries. For example, if the combine harvester is five years old with less than 2000 hours on it, and functions well, why not buy it and increase production?
Can you estimate the volume of the Ukrainian agricultural machinery market?
2016 was a very good year for sellers of agricultural machinery in Ukraine, for both used and new.
In calendar year 2016, some $1.3 billion of agricultural equipment were sold and delivered to Ukraine. The current estimate for 12 months of 2017 is about $1.7 billion.
What turnover do you plan to have in Ukraine?
Every businessman who invests in Ukraine expects a certain profit. But I would like to emphasize that I am going to stay here for the long term, I am focused on building relationships with people, customers. But first let’s develop a solid company. I see profit in the long run and it is going to be good for both sides of each transaction.
How many units of machinery have your company sold this year?
We have sold over twenty units of equipment. the year is not over yet. It is a good result for a company that has been operating on the market for only 11 months.
In addition, it must be considered that there is a difference between the sale of new and used machinery. People who buy new machinery generally do not buy used machinery, and vice versa. But smaller agribusinesses should also have access to high-quality and highly productive machinery. APEEXPORT provides them this opportunity.
Buyers of new equipment always have a guarantee and assistance of the manufacturer. But buying used machinery, everything you can count on is a good reputation of the seller. So, when we sell a unit we view it as an indicator of our reputation. For us, success lies precisely in winning a good reputation in the Ukrainian market.
What brands are your main competitors in the Ukrainian market?
These are such large manufacturers as John Deere, New Holland, Case, Claas, and several others. Cumulatively, they account for about 90% of the market of large agricultural machinery in Ukraine.
As for the used machinery, most agrarians, generally prefer John Deere equipment. John Deere has always been a pioneer in the field of innovations in agricultural equipment. It started supplying machinery to Ukraine in the early 1990’s, and the equipment has proven to be of high performance and quality and Jd has gained the reputation of quality equipment.
What used agricultural machinery is most in demand in the Ukrainian market now?
All sorts of agricultural equipment are in high demand here, as Ukraine pushes towards more productivity and bigger global market share.
Generally, the demand is high for Self-propelled sprayers, high capacity combines and all sorts of tractors. Of course demand for each equipment varies with the season.
Your main customers are medium and small farmers, whose access to credit is limited. Does your company have any financial programs for them?
Apeeхport is too young and its financial capabilities do not yet allow us to provide financial support to farmers. Assistance to small farmers, as a rule, is provided by dealers of agricultural machinery. Our company also works with dealers and customers. There is also a certain culture of buying used machinery: usually buyers immediately pay its cost.
You worked for about 17 years at John Deere in Eastern Europe and the CIS countries. What are your rules of doing business?
In Ukraine it is very important to understand your buyer. For example, if we speak about production of computers, the computer company can produce computers throughout the year. In agriculture the following factors must be considered: seasonality, cyclicality, a long process of production. The main rule is to be loyal to the client and competently build a communication process with him in order to find solutions that suit a particular client. Just yesterday I had a meeting with the client and it lasted for an hour and a half. During the dialogue we were able to find the solutions which would be more profitable for him.
How difficult is it to win the trust of Ukrainian farmers?
They must know the seller, they must understand what the seller is able to do. There is one key principle of gaining customer confidence. It consists in the fact the seller has to deliver the client exactly what he promised. In Ukraine, business is often about building personal relationships and on preferring one brand to the rest.
How did you build your relationships with dealers? How do you provide maintenance of used machinery?
I know most of the dealers, I already had a good reputation. This greatly helps me in the development of my business in Ukraine. I also work customers directly The dealers here in Ukraine have a good expertise in terms of technicality, evaluation, working with customers and in understanding the needs of the market. Technical support of any machinery, including used machinery, is always handled by the dealers.
Major manufactures do a great job developing their dealers in many ways. For every equipment dealer support is critical.
What major difficulties did you encounter in Ukraine as a businessman?
The major difficulty that I have encountered and still must deal with relates to obtaining loans in banks for Ukrainian farmers and customers. Interest rates are still very high while Agri products now account for 40% of Ukrainian exports and up to 20% of the country’s GDP.
I think that Ukraine needs a special, an agricultural bank that would finance and possibly provide some smart subsidies to the agricultural sector. It should have tools for assessing customers in terms of risks and reliable mechanisms to reduce those risks. Equally important, such a bank can train customers and farmers how build their credit record. It will also create competence about the sector and customers in foreign investors and exporters.
For large investors from the US, Europe or Asia, who want to invest tens of millions of dollars in the Ukrainian economy, transparency and stability are important. 80% most of companies, regardless of the sphere in which they work, from agriculture to metallurgy, face the same problems which are as follows: bureaucracy and the inability to predict the result of their investments.
The rapid fluctuations in currency and lack of legal transparency and continued changing of the rules prevent potential investors to invest in Ukraine.
Those foreign companies that continue to build business in Ukraine have been working here for many years and are aware of the potential of your country, they understand that Ukraine is not so dangerous from the point of view of investing. The are more comfortable. Look at me, as an example!
The niche of high performance agricultural machinery remains almost empty in Ukraine. Which machinery will be most in demand among Ukrainian farmers in the coming years?
This year will be good for all high performing manufacturers of farm machinery. In the last couple of years sales increased by 30-35% per year.
Perhaps, due to lower yield this season, the increase in sales of medium-sized equipment will be flat or slightly less in 2018.
There are other factors that will affect sales of machinery in Ukraine. For example, if land reform is finalized soon, it will positively affect the market of agricultural machinery. High-tech agricultural machines will be in demand, because the productivity of agro-companies largely depends on them. high performance equipment will
Finally, I would like to emphasize that I received invaluable assistance from the staff of the American Embassy in Ukraine. They do a lot for the development of American business in Ukraine and for the development of Ukrainian business. They never refuse to help and are always ready to provide commercial and market information.
USUBC Note: APEEXPORT is a member of U.S.-Ukraine Business Council (USUBC)