Ігор Вишневський Weapon 3 September 2025, 09:00

"Anyone can register a company abroad, make a new iteration of the product, and write that it is Germany original." Why the "iron curtain" will not stop the outflow of Ukrainian Miltech to Europe, and what the authorities should do to prevent this

Large Ukrainian manufacturers of drones and other equipment are faced with a dilemma regarding opening their own production facilities in European countries (or joint ventures with international partners). There are actually a lot of reasons for this — the need for scaling, simplified entry into new markets, access to certain technologies, a more stable and predictable business climate, and the main one — overcoming the negatives of closed arms exports, which some manufacturers already call the «iron curtain» or «reinforced concrete wall». And, of course, production safety. This list can probably be continued.

«You are fighting a past war.» What can Ukraine give to Europe?

According to the CEO of FRDM Group Vadym Yunyk, over the past year and a half they have signed about five memorandums with various foreign companies, the main goal of which was the creation of joint products. But, as Yunyk says, Western companies do not have a real understanding of the product that is close to the problems of the front. Instead, Ukrainian companies have such an understanding, which closely interact with the military at all stages and not only receive feedback from them in real time, but also adjust their products depending on their requests.

«Their idea of war is so far removed from what is actually happening that it affects the products they want to produce and invest in. In most cases, what they have in mind and what they invest in will not even be included on the front,» Yunyk expressed his opinion.

The CEO of FRDM Group also said that during his private conversation over dinner with the management of a large European defense concern, he heard an interesting figure.

It was announced that currently 80% of joint projects actually turn out to be unsuccessful. «This is incredible money that is spent, relatively speaking, in vain due to the lack of a correct product vision,» noted Yunyk.

According to the representative of FRDM and part-time president of the Technological Forces of Ukraine, cooperation with European partners is, in fact, saving them money, because Ukrainian companies can provide this «correct product vision.»

Andriy Rymaruk, Deputy General Director of Ukrspecsystems, notes that another thing we can offer European partners in joint projects is testing international equipment in combat conditions. His company already provides service and software technical support for foreign equipment 24/7. «Our service center is already doing this, we are already testing European equipment. We are already starting to conclude the first international contracts and share experience,» Rymaruk noted.

SHARK-D UAS drone manufactured by Ukrspecsystems

According to him, real combat experience is invaluable when testing equipment and training new crews.

«For example, you have a target — the Tor M2. To destroy it, we will give you eight scenarios if you use our equipment and an additional nine scenarios if you use our equipment with a batch of other equipment. That is, this combat experience, which we are ready to relay to the armies of Europe, is invaluable. It is worth hundreds of times more than the product we manufacture,» Rymaruk is sure.

Infozahyst CEO Yaroslav Kalinin criticized European partners not only for delays in weapons production, but also for the general lack of a security vision and specific actions to adapt their own defense industry to the needs of modern warfare.

«We are gradually moving away from the paradigm that we are ready to share knowledge with Europe. No, I am no longer ready to share knowledge if it is free. We can be the ones for Europe who will ensure its security, because it is useless to rely on the USA now. We can be a local supplier for each specific European country. In order for you to be able to defend yourself, the production of FPV drones must be established on your territory in safety,» he said.

As Yaroslav Kalinin noted, Ukrainian companies can give a very significant boost to the entire defense industry of a united Europe.

«We can be competitors to your big own companies that do absolutely nothing to ensure your security. They are trying to sell the products they have been producing for the last 10 years. They basically don’t know what lead time is. We are talking about days, they are talking about years. You are learning from outdated NATO textbooks and fighting the last war. You are not adapting and will not adapt new experience because your local experts tell you that your experience is still relevant…», he claims.

According to him, large European manufacturers do not take into account the combat experience of real war and instead continue to produce equipment that is not in demand on the battlefield.

Deep Tech, sales markets, and preferably an administrative «babysitter.» What Europe can give Ukraine

Founder and CEO of TAF Industries Oleksandr Yakovenko focuses on two things that cooperation with international partners and the potential creation of joint ventures can give us — the first of them is the entry of Ukrainian companies into Western markets and obtaining defense orders from NATO countries, because, one way or another, in the long term they cannot work exclusively on the domestic market, and the second is access to Deep Tech, which large Western companies have.

Founder and CEO of TAF Industries Oleksandr Yakovenko during one of the events. Photo LB.ua

«Whatever you say, Western countries are still one step ahead in terms of high technology… I can give an example of some equipment that is produced in Switzerland. These are machines that are not sold to Ukraine even now,» he explained.

Denis Chumachenko, a service technician at De Viro, believes that Ukrainian and European engineers can complement each other in a mutually beneficial way, because their knowledge and skills are somewhat different.

«We have very good military engineers. We can share with Europe the methodology of rapid development. We know how to do it quickly and from idea to implementation it can take only four to five months. But our engineering lacks very deep scientific knowledge. And we can take it from the European school. Because radio engineers in Ukraine know how to put an antenna on an airplane „with a finger in the sky, or it’s clearly gone“. And in Europe there are radio specialists who can calculate this and give the correct answer in advance,» Chumachenko expressed his opinion.

So, to summarize, according to the De Viro company’s service center, this could be an exchange of knowledge, where Ukraine provides a rapid development methodology, and Europe provides a thorough development methodology.

Yaroslav Kalinin, instead, compiled his short list of problematic issues that the Ukrainian defense industry would seek to resolve when entering European markets.

The first is permanent representatives from the country in the unions, who will provide legal advice on taxation. «I have enough cases without having to study in some local language how to specifically organize a business and not violate any legislation, especially such a fragile business as the production of weapons and ammunition. After all, the regulations are very specific for different countries, although there is a „common umbrella“ of the European Union,» Kalinin noted.

Secondly, it is necessary to ensure a separate export regime for the country where the Ukrainian manufacturer will be located, so that it can supply weapons to Ukraine. «This is a prerequisite for weapons to actually be produced in Europe, and not just on paper… Because, for example, the export legislation of Germany is quite specific,» added the CEO of Infozahyst.

The third thing Yaroslav Kalinin would like to see is grant programs for the localization of Ukrainian manufacturers in Europe. «We need a program aimed at enabling a Ukrainian company, knowing its know-how, to build a production facility, open a back office, production offices in a European country, and receive grant money for this in order to localize under the jurisdiction of this country,» the company’s head summed up.

In this context, Denys Chumachenko also expressed his potential wishes for such cooperation.

«It’s a little scary when you talk about their complex legislation and taxes. That is, if we talk about those who will help, then we need an administrative „babysitter“ from the local authorities who will lead by the hand and tell us how to do everything correctly so that we don’t get screwed,» says the service center of the De Viro company.

For example, he reminded that in the Czech Republic, if a certain standard for lighting in the workshop is not met, the enterprise can be closed for two months. «If they let you in, then give them the right to make a mistake, and this will encourage them not to be afraid to open these factories,» Chumachenko emphasizes the desired loyalty of the legislation.

«Attempting to regulate exports is like putting up a barrier in an open field»

According to Yaroslav Kalinin, the issue of opening up exports remains key for Ukrainian gunsmiths, and without this, stagnation will begin for large Ukrainian enterprises, which, in the absence of permanent domestic orders, are forced to finance R&D on a residual basis.

«Attempting to regulate exports is like putting up a barrier in an open field. Our state really wants to do this. It knows how to do it, it loves it. At the same time, the example of deregulation in procurement does not lead it to the conclusion that deregulation in exports will help, not hinder,» the CEO of Infozahyst critically commented on the realities.

CEO Infozahyst Yaroslav Kalinin during one of the events, photo from the company’s website

Denys Chumachenko first of all focused on the fact that without exports and receiving foreign exchange earnings, it is difficult for Ukrainian companies to offer new products and modernize existing ones, developing the R&D direction.

«R&D is a trinity of expensive things. The money has to come from somewhere. And when a company says: „I have free potential, dear state of Ukraine, buy from me what I can still produce,“ they tell me: „There is no order, sorry, we will not buy.“ So where do you get the money for new products?», — Chumachenko asks a rhetorical question.

According to him, the Ukrainian state should act here according to the principle «If you can’t help, don’t hinder.»

According to Andriy Rymaruk, the authorities must finally understand that relocation or opening a joint venture abroad is not an escape for a domestic defense industry manufacturer, but security, which is the most obvious, but no less important factor.

«There is no need to look for examples, the recent shelling of an American enterprise in Transcarpathia is enough. The enemy, if he wants and knows, can get us anywhere. Therefore, relocation abroad is vital for us,» the deputy general director of Ukrspecsystems is confident.

According to Rymaruk, gunsmiths have been talking about the need for at least regulated exports of products abroad for over two and a half years, but there is still a gap. The relevant legislative norms have not been included in the laws on Defence City, although gunsmiths had hoped for this .

Vadym Yunyk also believes that closed exports are a direct obstacle to the development of products by Ukrainian gunsmiths.

«This is necessary precisely so that we can openly and predictably make products that will help us win this war. It is very important for Ukraine to get out of the post-Soviet era, when we live behind the „iron curtain“ and are afraid of everything. For example, we are afraid that someone will steal our technology. Sorry, I understand when we control the technology for manufacturing nuclear weapons. But controlling the technology of how to solder a drone well is not even funny,» says the CEO of FRDM Group.

Yunyk gave the example of the German Quantum-Systems, which opened production in Ukraine. «Why can a German company bring its technological drone to us without any problems, and not just sell it, but also manufacture it? And I am sure that they did not go through 300 checks from Germany to be allowed to do this,» the CEO of FRDM Group appeals to this example.

«Opening a company in Europe is generally easy»

CEO of TAF Industries Oleksandr Yakovenko assures that no legislative obstacles and prohibitions in Ukraine, as well as no fears about «technology theft» will actually stop those Ukrainian arms manufacturers who want to open production in Europe or joint ventures with partners. Therefore, the Ukrainian authorities are actually «blowing the whistle» when they say that they are restraining the outflow of our technologies abroad.

«I’ll be honest — any manufacturer, if they want, can relatively easily register a company abroad and make the second or third iteration of the product under a new label, under a new name and make it a „Germany original“. Well, can you take any other country? From the point of view of current legislation, proving that this technology is actually Ukrainian will be quite difficult, almost impossible. Unfortunately, those enterprises that currently do not have orders from the Ukrainian state have gone this way,» Yakovenko states.

According to Yakovenko, artificial legislative restrictions in Ukraine on arms exports lead to the opposite effect than intended and force Ukrainian enterprises to leave Ukraine.

«We are losing potential profits, foreign exchange earnings, we are losing technology, we are losing specialists because they are relocating abroad. And unfortunately, there are many such companies. Therefore, every day and every month of postponing market liberalization leads to the fact that we are losing potential benefits for our country,» he believes.

According to Yakovenko, any business is traditionally characterized by creativity, including in how to circumvent prohibitions, so they have only formal weight.

«Okay, even if some minimal percentage of technologies falls to the enemy, it still won’t be massive. It won’t be so bad if we lose these technologies from the country altogether, and these companies will simply have nothing to do with Ukraine over time,» Yakovenko concluded his opinion, calling for finally going beyond the «political risks» of the issue.

Denys Chumachenko emphasizes that technologies in modern defense develop so quickly that they become irrelevant in a year. Under these circumstances, banning exports under the pretext of losing technologies is simply ridiculous.

Leleka-100 UAV drones. Photo by the «Return Alive» fund

«In a year, no one will need your solution at all. Therefore, the export ban will make everyone laugh, because opening a company in Europe is generally easy. Creating a product branch is generally easy when you have your own design bureau. There are designers who will make good documentation, and no one will ever be able to prove that it is the same thing,» assures the De Viro service center.

Chumachenko claims that if someone is so eager to study and steal Ukrainian technology, they will «drive a drone in a truck with cigarettes» or use another shady method.

«The fact that a piece of iron will get to someone and someone will promote it, well, okay. So what does that mean? Especially if this piece of iron will be irrelevant in six months, because if the company has money for R&D, then in six months this product will be new, there will be a new modification of it,» Chumachenko expresses surprise.

According to Oleksandr Yakovenko, starting in 2022, the state took fairly quick steps to deregulate the defense industry sector. «We were able to codify production much faster, removed customs duties and VAT, and in general, the state took the right steps to ensure that manufacturers could quickly start working,» he noted, adding that currently the state’s steps towards arms manufacturers, unfortunately, are taking place too late.

Andriy Rymaruk believes that in the case of creating joint ventures, he would really like to see some synergy on both sides — both at the company level and at the government level.

«There should be teamwork between two embassies, two attaches, two companies, who will jointly break through this reinforced concrete wall before it’s too late. This work needs to be started now, so that later somewhere in the Czech Republic you won’t be fined for having poor lighting in your workshop, and we in Ukraine won’t return to 2022-2023, when we assembled our drones without any light at all,» the representative of Ukrspecsystems summed up.

Who is already represented abroad?

We have already written about a number of examples of Ukrainian defense companies opening production abroad, creating joint ventures, or allowing foreign companies to manufacture products under their license. For example, in September last year, Ukrspecsystems transferred the rights to manufacture its reconnaissance drones to the Polish company ALS Systems, which will now manufacture Ukrainian SHARK drones under license.

Last year, UAC launched mass production of Leleka-LR reconnaissance UAVs and Bulava attack drones in the Czech Republic for the needs of the Ukrainian army (UAC is a branch of the Ukrainian company De Viro).

In turn, the Ukrainian company Skyeton, which produces the ACS-3/Raybird-3 reconnaissance systems, has launched production in Slovakia. It was also reported that the British defense company Prevail Partners and the Ukrainian manufacturer Skyeton have created a joint venture that will ensure the serial production of the Raybird multi-purpose UAV in the UK.

Last year, the head of the «Return Alive» foundation, Taras Chmut, made a statement that at least four market leaders in the production of UAVs in Ukraine had moved production abroad.

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