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LONG-TERM PARTNERS
The business community is not satisfied with the pace of the reforms in Croatia, and it is necessary to expedite them reforms at all levels
INTERVIEW
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RALF BLOMBERG
For years, Germany has been Croatia's most important foreign trade partner and officially the fourth biggest foreign investor in Croatia after the Netherlands, Austria and Italy, with a total of 3.2 billion EUR in direct investments since 1993, reminds
Ralf Blomberg, President of the Ger man-Croatian Chamber of Industry and
Commerce.
A while ago, at the time when reforms in Croatia were moving at a slow pace, you sent to the Croatian govern ment a strategic document that you drafted together with the embassies of Germany, Austria and Switzerland, business organizations and the Croa tian Chamber of Economy. How many of these initiatives have been adopted and which ones are still awaiting im plementation? — There have been some improvements as well as discernible efforts to improve the business climate in the country, one cannot deny this, such as the tax reform, some new e-business services, changes to the law on investment promotion or the new law on the promotion of research and development. But given not only the general public sentiment, but also the hard facts, the key reforms are still missing. How else would one account for the fact that there has been a big percent age decline of companies willing to reinvest in Croatia, from around 80 per cent in the past several years to 68 per cent in the last economic survey my Chamber conducted? Why is it that when compa nies in Croatia are talking detriments to doing business they are always talking tax burden, tax system, bureaucracy, legal security or public administration? Is there any need for a new document of this type, or are Croatia's reforms going at a rate and in a direction that
you consider good for the economy? — As indicated in the previous question, we are not, the business community is not satisfied with the pace of the reforms in Croatia. I am not certain whether there is truly a need for another document of this type. Perhaps there is. Perhaps what we and the other cham bers active in Croatia have been incessantly repeating over the years needs to be said again. The Chamber indeed does provide huge support and a pleth ora of services that can make an entry into Croatian market seem like a walk in the park. But we can by no stretch of the imagination convince a company to invest here if it percieves the environ ment for doing business in this country as complicated, instable and riddled with pointless and sluggish bureaucratic pro cedures. It is simply less likely to opt for Croatia as a business location if it esti mates that the outcome of its operations is rather uncertain or doomed to failure because, for instance, it will be discrim inated against when participating in a public tender. Things are pretty simple here – this country has excellent prereq uisites to be an attractive business location and a prosperous economy, but so do many other countries, and if Croatia fails to attract investments, they will go elsewhere. And Croatia could miss a really important boat here.
How much did the consequences of the financial crisis, which have been strongly felt in Croatia, affect the Chamber's work and do you see any visible progress now in the volume of work of the companies here and in the arrival of new ones? — Well, we have always been a very busy and active chamber, regardless
of the economic circumstances, so the crisis accordingly didn’t have that much of an impact on our work. The interest of German companies in the Croatian market has been growing continuously and the crisis was no exception. It was always a challenge for my Chamber to provide services and information to this ever rising number of businesses seeking to enter the Croatian market, especial ly after Croatia's accession to the European Union. It is also interesting that during the recession most of the com panies which participated in our yearly economic survey evaluated their own business operations as succesful and that, just until last year, eight out of ten of them were ready to reinvest in Croatia – despite the crisis! In the last two years there has been a big increase of German companies' activities in several sectors, we're talking here some twenty to fifty per cent export growth of motor vehi cles and their parts, machines, food and feed as well as chemical products. Since my Chamber was founded in 2003 the number of its member companies has been rising each year and today, at the end of 2018 we are bigger than ever and are still the biggest bilateral economic or ganization in Croatia with 415 members. The only exception was a slight drop in the number of members at the beginning of 2012, but this had been immediate ly preceeded by Croatia's repeated slip back into recession in the last quarter of 2011. But then at the beginning of 2013 we then registered a big increase in new members.
Given the strong technological development of German companies, are you able to find partners in Croatia, or new interesting investment areas to coincide with the needs of the digital revolution? — Certainly. German road vehicle manufacturers, agricultural machinery manufacturers or construction machinery and equipment manufacturers have been present here for years. They make up the bulk of Croatia’s imports from Germany. And, of course, they cooper ate here with their local partners, representatives, importers, retailers, wholesalers and so on. EU funds and projects have played an important role for some of the cooperations. For example, our member Siemens has just recently signed an agreement with the Croatian Trans mission System Operator, the HOPS, within a smart grid investment project of European importance in the territory of Slovenia and Croatia. Many German producers of cooling and heating tech nology like our members Viessmann and Bosch have been, among others, sup plying the Croatian tourism sector with products and solutions required for in creasing the energy efficiency of buildings. A very interesting, important and big investment area in Croatia which is also inseparable from the digital revo lution are without a doubt the so called smart cities. There will be a big demand for 21st century technology in the near future if Croatian cities and municipalities are to implement electromobility, smart waste management and communal ser vices or smart grids and other aspects of smart urban development. One also shouldn’t forget that Croatia has an in teresting and vibrant start-up scene. Look at Rimac or the logistics and mobil ity start-ups Gideon Brothers and Orqa. FPV. My Chamber sent the latter two to a big international start-up competition in Germany last month and they domi nated their category winning 1st and 2nd place, respectively. We have recognized this potential and have introduced new event formats to promote start-ups, give them some form of boost and connect them with established companies.
In what areas do you think German companies have made a special con tribution to the development of the
WITH THEIR INVESTMENTS, GERMAN COMPANIES HAVE MADE A NOTABLE CONTRIBUTION TO CROATIA'S INDUSTRY AND PRODUCTION
Croatian economy? In which way are you present in the green energy and energy efficiency segments? — It is known that Germany has for years been Croatia's most important foreign trade partner and officially the fourth biggest foreign investor in Croatia behind the Netherlands, Austria and Italy, with a total of 3.2 billion EUR in direct invest ments since 1993. Here we must also note that Germany is in reality possi bly the number one foreign investor in Croatia, because many large German companies have their headquarters in the Netherlands. This is unfortunate ly not visible in the official statistics. German companies have with their in vestments made notable contributions to Croatia's industry and production. Croa tia's economy is still highly dependent on imports, and German road vehicles, ma chines, food and drinks, feed or chemical products play an important role in sup plying the domestic demand Croatia is unable to cover because of insufficient production capacities.
As for the green energy and energy efficiency, we are here most notably a partner of two respective initiatives of the German government. The first one is mainly intended for small and medi um-sized enterprises offering energy solutions in the fields of renewable energy, energy efficiency, smart grids and storage technologies. We thus help companies enter the Croatian market with the aim to spread German energy technologies. We offer them matchmak ing services and consultancy on export and project financing. The second one is about environmental technologies in areas related related to public services, such as water supply and wastewater and waste management. In this context we also support the projects of German businesses and institutions with the goal of disseminating environmental knowl edge, awareness and technical knowhow in Croatia.
MANUFACTURERS
GERMAN MANUFACTURERS OF ROAD
EQUIPMENT HAVE BEEN PRESENT HERE FOR YEARS
INTERVIEW
SVEN THORSTEN POTTHOFF
WE GREW TOGETHER
In the past 15 years, not only have Germany’s exports to Croatia almost doubled but Croatia’s exports to Germany rose from 0.7 billion euro in 2002 to over 1.7 billion in 2017. Nevertheless, we think that there is still a lot of potential that needs to be unlocked. We are looking forward to working on these opportunities
This year, the German-Croatian Chamber of Industry and Com merce celebrates 15 years of operations. The history behind these endeavours is certainly success ful, but the road was sometimes a bit rocky. We spoke with Sven Thorsten Pot thoff, Director of the German-Croatian Chamber of Industry and Commerce, about the work of his predecessors and his own, in making the Chamber strong, successful and ever evolving.
Three goals were singled out following the establishment of the German-Croatian Chamber of Industry and Commerce in 2003. Could you tell us to what extent have these goals been accomplished in the last 15 years, and how many German busi ness people in Croatia are linked via the Chamber? — A German chamber of commerce abroad has three main functions, or goals, at its location. It is an official rep resentation of the German economy, a membership organization and a provider of services for companies. Since 2003, the German-Croatian Chamber of In dustry and Commerce has assisted hundreds of German businesses in entering the Croatian market, or expanding their already existing business relationships. But it is important to note that we have also acted conversely – we have promot ed and still promote Germany as a business location and help Croatian companies to gain a foothold, or expand their existing businesses there. Our network of member companies is today bigger than it has ever been, and comprises of 415 members. This also makes us the biggest bilateral economic association in Croatia. This is a unique network that facilitates a quick market access and sus tainable and reliable business relations. As providers of services to companies we have, in the past decade and a half, as sisted many companies in expanding and maximizing their activities in Croatia and Germany. I would thus conclude that all of these goals have been accomplished.
How many German companies do business in Croatia compared to the time when the Chamber was estab lished? How much do they contribute to Croatia's economy in terms of export, GDP share and employment? — Well, it is pretty difficult to speak in exact numbers here, since many com panies are technically more international than German per se, although they may be of German origin or are consid ered German. But I think it is safe to say that the number of German companies doing business in Croatia has without a doubt increased significantly in the past decade and a half. According to our esti mates, there are around 150 „German“ companies active in Croatia today, but, as already indicated, this number may vary depending on how one defines what a German company is. The two countries have always had close cul
THERE ARE NUMEROUS PARTNERSHIPS BETWEEN GERMAN AND CROATIAN COMPANIES, NOT ONLY AMONG OUR MEMBERS
tural and economic ties, and many big companies have been here for many years. Croatia’s accession to the EU led to a huge increase of the German com panies’ interest in the Croatian market, to the extent that our Chamber had a tough time satisfying their information requirements. German companies play a crucial role in the bilateral trade between Croatia and Germany, which reached a new record high in 2017, standing at around 5 billion euro. It is worth noting that not only have Germany’s exports to Croatia almost doubled in the past 15 years, but also that Croatia’s exports to Germany rose from 0.7 billion euro in 2002 to over 1.7 billion in 2017. Since the founding of our Chamber in 2003, German firms and individuals have di rectly invested roughly 1.5 billion euro in Croatia. As I have already indicated, we do not know exactly how many people „German“ companies in Croatia employ – but we know that the members of the Chamber provide work for approximate ly 80,000 people in this country.
