What risks need to be protected against in investments?

Před jakými riziky je potřeba chránit investice?

text LUKÁŠ VOJÁČEK / E15 magazin / prosinec 2023

Original article in Czech Language Download

Michaela Macharik, a Czech entrepreneur operating in Ukraine, has contended with the consequences of the devastating Russian invasion since last February. She’s grappling with energy issues, the conscription of employees into the army, and work disruptions due to air raid alerts. Despite these challenges, she has no intention of leaving the country and continues to support her business. Her story exemplifies the high geopolitical risks investors must confront. But what other challenges do Europe and the world face? Major concerns include migration, climate change, and unfavorable developments in democracy.

"Together with my partner Markus, we decided to stay. We built our business here from scratch. It took us about eight years; we don't want to just give up on it,”

says Michaela Macharik, welcoming us to her company Time & Space’s factory in Stryi, western Ukraine, on an exceptionally sunny autumn afternoon.

Despite the grim experiences she describes, this elegant 43-year-old woman appears incredibly composed and responds openly to even the most uncomfortable questions. While there is no physical fighting in western Ukraine, air raids occasionally threaten the residents here.

“I'm not afraid; otherwise, I couldn't function normally here,” Michaela emphasizes as she continues her story.

In Ukraine, she operates two companies – the aforementioned Time & Space, which manufactures cable harnesses for cars and home appliances, and Top People, an agency that facilitated work in the Czech Republic for Ukrainians, mainly in industrial companies like Continental or Trelleborg.

Initially, Micheala was attracted to Ukraine mainly by the low labour costs.

“Before the war, locals had even lower wage demands than, say, Serbians or Macedonians. Ukraine, with over forty million inhabitants, is a huge market. Plus, it's culturally closer to us than Turkey, China, India, and other major countries with low labour costs,” Michaela explains.

Manual labour wages in Ukraine are about seventy percent lower than in the Czech Republic, with significantly cheaper energy costs as well.

When the war started, Ukrainian men aged 18 to 60 were suddenly prohibited from leaving the country. “The previously very successful company Top People was essentially forced to halt its operations,” recalls Michaela, her expression turning more serious. Time & Space also faced unprecedented challenges.

“Last winter, it was mainly about frequent power outages. We addressed this by purchasing our own generator. Our work was further complicated by constant sirens, which required production to be interrupted and employees to run to shelters. This caused us to lose hours of production time,” the entrepreneur laments.

Later, she allowed the workers to vote, and they chose to continue working during air raids. Recently, Time & Space has been particularly troubled by high employee turnover.

“Many of our people fled to Western countries, and men are being conscripted into the Ukrainian army. We must constantly adapt to keep the factory operational,” says Michaela.

In response to the war’s challenges, she decided to launch a “counteroffensive.” “I’m now thinking on two levels: what’s good for business and what’s good for Ukraine.

That’s why we’re starting a new project, SynergiFactory, through which we aim to attract more Czech companies to Stryi.

We can provide them with production spaces and our knowledge and experience of the local market, ensuring they are successful from the start,” she explains.

“The best thing Western companies can do for this country right now is to create new jobs here, so Ukrainians don't flee abroad, and the local economy can recover,” adds the entrepreneur.

Michaela Macharik’s story is likely to become more common in the future. Economists and security experts agree that Europe will face a range of risks in the coming years.

text LUKÁŠ VOJÁČEK / E15 magazin / December Issue 2023

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