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Croatian Chamber of Economy → Relying less on membership fees and more on EU funding PAGES 2-3

SUPPORTED BY THE CROATIAN CHAMBER OF ECONOMY

www.privredni.hr

Wine trade → Wine quality control can be performed through equal treatment of all wines in stores PAGES 20-23

Footwear plant → Mala Subotica-based Haix Obuća plant — Croatian footwear sold in China PAGES 24-26

PVinternational C R O A T I A N

B U S I N E S S

F I N A N C E

M O N T H L Y

January 2017, Year X, No 265

CONFERENCE AT CCE

Dual education needs to be introduced gradually

he Croatian market is faced with labour shortage. 50,000 Croatians have migrated to Germany. We are faced with signiﬁcant demographic problems, with migration and ageing of working age population as major issues, as emphasised by President of the Croatian Chamber of Economy, Luka Burilović, during the Dual Education Conference held at CCE The Conference primarily focused on how to address the issue of a labour shortage in Croatia over the medium-term. Entrepreneurs have been claiming higher labour import quotas on an annualised basis. Hence, CCE, supported by the Croatian Chamber of Trades and Crafts, has been promoting the need to introduce dual education for two years. Burilović stressed that in addition to high unemployment rates, 40% of those registered at the Croatian Employment Service lack formal work experience. Consequently, Croatia immediately follows Spain and Greece and is placed at the bottom of the EU ranking in terms of youth unemployment rates. “Dual education has been implemented for years both in Austria and Germany, and their youth unemployment rate ranges between 5% and 10%. Dual education is a proactive solution that provides work experience, knowledge and the required skills and gives students the opportunity to be paid for their work”, noted Burilović. He added that the Chamber advocates the introduction of a pilot pro-

ject and a gradual increase in the number of students within the system, depending on economic requirements. “A student would need to spend over 50% of his time with the employer and be paid for it, which would suggest that when accepting a student for professional development, the employer is entitled to assess their labour requirements and hence the trainee admission quotas would be harmonised with labour market requirements”, explained he. “The German model provides a platform and good practice on which Croatian institutions can develop their own model., stated Srećko Prusina, Chairman of the Croatian Statehood Pledge Foundation. Germany provides a dual system of vocational education and training (VET) for most occupations, which suggests that students acquire professional knowledge and gain practical experience in company, whilst they are simultaneously also provided with theoretical basics of the speciﬁc occupation in several general courses at vocational schools. It imposes up to three days of practical classes weekly and 8 to 12 theory classes

at school or work for several weeks, and after that attending theory classes at school over an equally long period of time. In Germany, trainees are paid by employers depending on the year of study and the time spent doing practical work. Irrespective of the fact that the importance of harmonising the labour market and the educational sector has been emphasised for years in Croatia and the government has included dual education in its programme by 2020, its implementation is currently still uncertain, as well as where it will be implemented and the number of students it will include, which is also still unknown. Dragutin Ranogajec, President of the Croatian Chamber of Trades and Crafts, reiterated the fact that dual education is not a novelty in Croatia and that it was actually implemented from 1995 to 2003, but came to a halt in 2013 after the enforcement of the new Crafts Act. “We only need to adjust the programme and we believe that dual education can be reintroduced within two years”, proposed Ranogajec. (I.G.)

CROATIAN CHAMBER OF ECONOMY DEVELOPMENT STRATEGY FOR CCE

RELYING LESS ON MEMBERSHIP FEES AND MORE ON EU FUNDING Over the forthcoming five year period, the Croatian Chamber of Economy is planning to provide half its budget through its own revenue and EU funds by Krešimir Sočković sockovic@privredni.hr

D From the beginning of next year, new CCE members

will be exempt from paying membership fees for one year. The Chamber has implemented the announced reforms and it currently needs to focus on longterm strategic planning. Luka Burilović, President of CCE

evelopment Strategy of CCE for the period 2017-2022 and activities of the Centre for Industrial Development were presented during the fourth session of the General Assembly of the Croatian Chamber of Economy. “We are aiming to decrease the share of membership fees in total revenue to 50% by 2022, as well as to generate 25% of overall revenue through the provision of commercial services, and finance 25% through EU funding”, announced Luka Burilović, President of the Croatian Chamber of Economy. “Starting from the beginning of next year, new CCE members will be exempt from paying membership fees for one year. The Chamber has implemented the announced reforms and it currently needs to focus on long-term strategic planning, since planning is imperative in all advanced economies”, added Burilović. The President emphasised that the new structure of the Assembly of CCE encompasses all sectors of Croatian economy, channelled the Chamber towards self-financing, reduced the contributions and the number of employees and relieved the economy of €14.7 million, whilst retaining the same level of effectiveness. Moreover, an internal control system has been introduced, as well as performance evaluation measures for specific activities. “The Croatian Chamber of Economy is involved in 156 projects worth €120 million and financed from European Structural Funds, whilst most importantly, we have achieved maximum transparency and intend to pursue that path in the future”, pointed out Burilović. The Development Strategy of the CCE for the period 2017-2022 focuses on digitalisation and internationalisation, the introduction of dual education, taking over the keeping of the court register and sales promotion of Croatian products with county chambers as crucial in-

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stitutions providing local support.

ECONOMIC NETWORK During his presentation of the Development Strategy, Tomislav Radoš, Vice-President for Industry and IT, Energy and Environmental Protection at the CCE, stressed that the Chamber will primarily focus also on the requirements and wishes of its members, a digital communication platform, the development of commercial products and services and the improvement of knowledge and skills of its members against a backdrop of its tradition and its outstanding “institutional memory”, that is far superior to its competitors, its county chamber network, professional human resources, international activities and experience in exercising public authorities. “During the last two years, the Chamber could be compared with a sinking ship. We have thus far made sure she will float, whilst we currently need to provide new and enhance the existing equipment that will improve her task performance”, highlighted Radoš. The project Economic Network, which is an integral part of the Development Strategy, is intended to build a system that will become a central venue for the provision of information to entrepreneurs, whilst its interactive app entitled Help Desk - Export is intended to help with entering new foreign markets for entrepreneurs. Furthermore, CCE will also promote the Dual Vocational Training Programme focused on establishing an effective national model where the economy will participate in defining educational requirements. In addition, the expansion of the online catalogue of Croatian products has been announced, as well as the introduction of the new label entitled “Croatian innovation”. A special emphasis has been placed on corporate financing and intermediation between members and financial institu-

BETWEEN 2017 AND 2022

tions, primarily concerning the Croatian Bank for Reconstruction and Development (HBOR) and the Croatian Agency for SMEs, Innovations and Investments (HAMAG BICRO), full digitalisation of the Commercial Court Registry, preparation of projects aiming to apply for EU tenders throughout the county chambers and both administrative and regulatory simpliﬁcation of operating conditions.

AN INNOVATION FOCAL POINT Vice-President Radoš also presented the activity of the Centre for Industrial Development (CIRAZ), a new CCE sector, created for active participation in the implementation of national strategies – the Industrial Strategy, the Strategy for Innovation Encouragement and the Smart Specialisation Strategy, as well as for stronger co-operation between the scientiﬁc research community, the private sector and the policy creators in the Republic of Croatia.

ONLINE CATALOGUE EXTENSION HAS BEEN ANNOUNCED AND THE INTRODUCTION OF “CROATIAN INNOVATION” LABEL Strategy implementation is performed through two strategic EU projects: the Strategic Project to Support the Establishment of Innovation Network for Industry and Thematic Innovation Platforms and the Strategic Project for Support to Competitiveness Cluster Initiatives. The principal activities of the Centre for Industrial Development (CIRAZ) are those concerning innovations and the strengthening of competitiveness. “We are striving to become the central point for innovation system in Croatia”, emphasised Radoš.

ANALYSIS OF ECONOMIC CONDITIONS

Too static to be competitive During his presentation of the analysis of economic conditions Croatia Surrounded by the Countries of Central and Eastern Europe, Zvonimir Savić, Director of Sector for Financial Institutions, Business Information and Economic Analyses at CCE, stressed the fact that Croatia was faced with the deepest and longest recession following 2008, and the reasons for a sluggish recovery could be found in her inferior structural position. “During a period of six years of declining real GDP, Croatia lost 11% of its real value and ranked seventh among those countries faced with the deepest recession at a global level, whilst the countries faced with even deeper recession were primarily countries from a completely different part of the world, and/or those placed in an entirely different economic and political context. The growth of 1.6% in 2015 and around 2.5% in 2016 achieved by Croatia during

the last two years, according to estimates provided by CCE, is far too low and will result in a further discrepancy from average development in EU-10 and the overall EU-28”, warned Savić. According to him, systematic reform is imperative, as it will impact on the currently static economy and result Zvonimir Savić in gradual positive developments and advancement in competitiveness rankings and the ease of doing business, aiming to approach the average competitiveness levels of those countries in Central and Eastern Europe, attract investment, encourage export and hence exert a positive impact on encouragement of economic growth.

January 2017 | No 265 | PVinternational | 3

INTERVIEW DRAŽEN PEHAR, PRESIDENT, MANAGEMENT BOARD, ASSECO SE

THE VALUE-SYSTEM IN IT HAS BEEN TURNED UPSIDE DOWN Many people have the impression that one merely needs to develop a game, sell it on the market and immediately earn millions. There is another side to IT, with a different type of company, similar to ours, involved in extremely hard work which can never be completed. This is extremely demanding and highly important work and we are aware that stories about quick and easily generated revenues, as well as myths about perfect conditions in other countries will not help us in retaining high quality employees by Miro Soldić soldic@privredni.hr

D We need to compete with companies which can grow and reach multi-million capitalisation status during a period of only a few years, yet they can also fail during that period.

ražen Pehar, President of the Management Board of Asseco SEE Croatia, is a true IT industry veteran in Croatia. Asseco SEE entered the Croatian market through the acquisition and merger of several smaller-size local companies that had operated since the beginning of the 1990’s, and Pehar was the Director of one of them. Hence, a logical continuation of his managerial career was to assume the same role in Asseco SEE Croatia immediately following its creation. The company is mainly involved in banking software development. In Croatia, it currently employs 250 staff and has a market share of 50% in the payment services segment, which is 80% of the banking solutions segment. Pehar expressed his great delight with results for 2016 and during the discussion with Privredni vjesnik, we addressed a wide range of current burning issues in the Croatian IT industry.

 IT and banking have perhaps been least affected by the crisis which is currently slowly drawing to a close, at least according to some indicators. Can this be felt in practice? Since Asseco SEE Croatia is primarily oriented to the ﬁnance industry, we were actually almost not affected at all. Nevertheless, I cannot say that we saw continuous growth, since we faced with some small-scale oscillations, yet they were not linked to the crisis, but related to challenges encountered in the banking market. Similarly, the currently recorded GDP

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growth will not signiﬁcantly affect investment by banks, since they simply need to invest on an on-going basis into new technology in order to be competitive. We are lucky to ﬁnd ourselves in this segment, rather than where expenditure is being constantly reduced.

 Can you compare the Croatian market with other markets in which you operate? What are the specific features and the competitive advantages of the Croatian market and in what segments do we lag behind others? The Croatian banking sector certainly does not lag behind any concerning innovative solutions such as mobile banking and safety. We are on a par with the best not only in this part of Europe, but globally. One of our problems is the fact that the Croatian market is small and so there are few FinTech companies, or rather there is no one who could threaten the banking industry and the established market players. Were the Croatian market any larger, smaller companies would certainly appear and aim to get hold of their own piece of the action. There are several new companies in Croatia with good potential, yet they only have one path to pursue and that is through the US or London, since they need a huge market to be able to take their small share and eventually manage to generate revenue.  What are the benefits of new trends in contactless payment using a mobile phone and digital signature for end users

E CROATIA

If something has been declared to be a strategic sector of the economy, and IT is frequently referred to as one, this should also be implemented in practice.

and to what extent are they actually used? I believe a large number of Croatians currently own a contactless payment card. Those who have used it at least once must have noticed the beneﬁts to such a simple payment method. Contactless payment is soaring at the fastest rate in Great Britain, Poland and the Czech Republic. In Croatia, it is not yet so widespread, although I am convinced it will be, due to its simplicity, since one does not need to enter a PIN number (for amounts up to €13) – one merely needs to place the card close to the POS terminal and that is it. The number of such transactions will certainly increase. Mobile payment is the next step. It is also contactless, yet rather than executing it with a card, one uses a mobile phone equipped with an NFC chip. All new smartphone models are currently equipped with this technology and there is virtually no difference in user experience – one only needs to put the mobile phone close to the POS terminal rather than the card. I believe this is an unstoppable trend which will permeate our market, irrespective of the fact that it is currently only in its start-up

phase here, since there is no reason for anyone to avoid using a mobile phone which is always in your pocket. Many of us will rather forget to take the house keys or car keys with them, than their mobile phone. Another advantage concerning safety is that one is inclined to no-

ONE OF OUR PROBLEMS IS THAT THE CROATIAN MARKET IS SMALL AND SO THERE ARE FEW FINTECH COMPANIES tice a potential loss of a mobile phone sooner compared with the loss of a credit card. In case you have lost a credit card, it can take several days until you notice it’s not there, whilst in the case where your mobile phone is missing, you will become aware of it within minutes.

 What new themes in the payment segment can be expected in the future? Concerning new trends, biometry has been foJanuary 2017 | No 265 | PVinternational | 5

INTERVIEW normally indifferent concerning the method of payment you opt for, as long as a payment has been executed. There is no competition in Croatia concerning market share of mobile payment, since it is currently still in its infancy. On the other hand, on international markets there is ﬁerce competition amongst banks for retail clients. Market shares of the largest banks operating in Croatia have been virtually unchanged over the last decade, with the exception of changes following acquisitions. Consequently, in order to invest, credit card issuers primarily need to identify their interests, and it is highly unlikely they will do so unless they are encouraged by competitors.

There are several new companies in Croatia with high potential, yet they only have one path to pursue and that is through the US or London, since they need to have a huge market to be able to take their small share and eventually manage to generate revenue.

cused on for several years. The fact that technologies enable things that used to be inconceivable, ranging from smartphones unlocked with our ﬁngerprint to cameras that identify our faces, yet it would be wrong to assume that only biometry will be used for payment. That will not happen, since it is likely that any of your biometric ﬁngerprints or data can be stolen and in case only that was used as security, then thieves would have access to everything and they could practically steal your identity. Consequently, it is almost certain, at least concerning online channels, that a second technology will be used in addition to biometrics and a token, PIN or geolocation, will be combined with it.

 How can you encourage the general public to use new services such as mobile payment? Is safety a problem? It appears that both banks and companies are prepared for innovation, as opposed to the general public. How can that be changed? I have to reiterate that simplicity is fundamental for any new technology and in Croatia new technologies have not yet become so widespread and popular since both shop assistants and users lack the comprehensive information and training. Nevertheless, change is inevitable; our only current obstacle is the sluggishness of the system and hence a speciﬁc period of time is required until a critical mass has been created and widespread use begins. Increased marketing activity may help, yet the issue here is that credit card issuers need to be motivated to invest in advertising and they are

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 What is the role of the state concerning the adoption of information technology and how much does Asseco SEE co-operate with it? Compared with a decade ago, it is clear that the number of e-services used by the state that the general public find useful has greatly increased. A major problem is that they are seldom used by the general public, since they do not need their certificate of nationality on a daily basis nor do they file their tax return documentation on a weekly basis. Such issues are normally dealt with once a year and on that occasion one has normally forgotten the procedure or

SIMPLICITY IS IMPERATIVE IN LAUNCHING NEW TECHNOLOGY AND IN CROATIA IT HAS NOT BEEN ACHIEVED SO FAR one’s PIN. Smart cards are issued and a digital identity is provided through the Ministry of Interior, yet no one consciously carries a smart card reader around. Hence, such things simply do not become routine. Moreover, there are issues with a large number of platforms that are not connected, but each of them requires separate authentication. We have simply adopted the wrong approach from the start- e.g. why would I have to print my certiﬁcate of nationality and take it to the civil servant several offices down the corridor if it is evident to the system that I have one? Why do I need to have my health insurance card when the physician can verify directly through my Personal Identiﬁcation Number whether I have health insurance

If one is aiming to enter foreign markets, one needs to provide a finished product, rather than an idea What are the plans for Asseco SEE both in Croatia and at Group level, and are you planning to expand into new markets? Our position in the Croatian market is highly satisfactory, and overcoming Western markets is extremely difficult. Asseco SEE Croatia has references in Italy, as a result of a long and hard period of effort invested, and yet it is uncertain whether we will succeed in achieving significant re-

cover? A unique solution needs to be devised concerning the Personal Identiﬁcation Number and implemented throughout the system without endless public discussion. A decision needs to be reached and implemented, since no solution is still worse than an unsatisfactory one. If you ask anybody about their expectations of information technology adoption, they would say they would like the abolition of red tape – so they could use only their identity card and their Personal Identity Number to tackle any issues with public administration anywhere. This is where the story about information technology adoption begins and ends.

 How difficult is it to retain high quality programmers and high quality staff in general considering the fact that there is high demand for them abroad and Croatian salaries cannot compete with international IT companies due to high contributions? Gross salaries need to be considered ﬁrst, as well as several other factors. Gross salaries in our company are competitive with those internationally, yet nett amounts cannot be compared, since our employees actually receive half the gross amount. The announced tax reform will slightly, yet insufficiently, improve the situation. The IT industry is thriving throughout the world and young people are interested in addressing new challenges, which is not surprising. We need to compete with companies which can grow and reach multimillion Euro or dollar capitalisation across a period of only several years, yet they can also fail during that period. In addition to satisfactory salaries, we also motivate our employees in other ways and, according to practical experience, they are primarily motivated by working in a good team on interesting projects. I can sincerely conﬁrm that few of our employees

sults there. If one is aiming to enter foreign markets, one needs to provide a finished product, rather than an idea. Concerning the growth of Asseco SEE as a Group, it is achieved solely through acquisition and the only thing we might find of interest on our market is the acquisition of a company which is successful in systems integration and operates with the state. We have covered all the remaining segments.

IT IS ALMOST CERTAIN, AT LEAST CONCERNING ONLINE CHANNELS, THAT BIOMETRY WILL BE COMBINED WITH SOME OTHER TECHNOLOGY have left the country, only a handful of them, and some of them have even returned. It has to be said that the value-system in IT has been turned upside down, where engineers with only a few years of experience are better paid compared with surgeons with 30 years of experience. Many people have the impression that one only needs to develop a game, sell it on the market and immediately earn millions. There is another side to IT, with a different type of company, similar to ours, involved in extremely hard work which can never be completed. This is extremely demanding and highly important work and we are aware that stories about quick and easily earned revenues, as well as myths about perfect conditions in other countries will not help us in retaining high quality employees.

 What concrete measures can be implemented by the state to help in solving such problems? The state primarily needs to focus on creating the conditions for our engineers to receive a higher share of their gross salary in order to be competitive internationally. Furthermore, local companies need to be favoured in tenders for large projects, since this is the only way our experts can gain experience and be able to provide references or acquire the knowledge they can subsequently export. If something has been declared as being ‘strategic’ in the economy, and IT is frequently referred to as one, this should also be implemented in practice.

If you ask any individual about their expectations of information technology adoption, they will state they would like the abolition of red tape – so they could use solely their identity card and their PIN to tackle any issues with public administration anywhere.

January 2017 | No 265 | PVinternational | 7

GOLDEN KUNA AWARDS IN ZAGREB AND ZAGREB COUNTY

The best companies in and its surroundings The Golden Kuna plaque was given by CCE – Zagreb Chamber to Kraš, Feroimpex, Span, MM Mesna industrija, Reprint and Ivanićplast. A special recognition award by Zagreb Chamber was given to HAK Hrvatski Autoklub for 110 years of continuously successful performance by Krešimir Sočković

INFORMATION CONCERNING AWARD WINNERS

€119 million revenue generated by Kraš in 2015 €38 million Feroimpex revenue in 2015 over €33 million revenue generated by Span in 2015 10% growth achieved by MM Mesna industrija in 2016 €64.4 million revenue for Reprint in 2015 €2.6 million revenue for Ivanićplast in 2015

olden Kuna plaques were presented to the most successful large, medium and small companies operating both in Zagreb and Zagreb County for business results achieved in 2015 during the formal session of the Economic Council of the Croatian Chamber of Economy – Zagreb Chamber, on 14th December 2016. The selection criteria included ﬁnancial, technological and innovative excellence that can be measured through total income, investment in development, exports, new products, employment and corporate social responsibility. As pointed out by the President of the CCE Zagreb Chamber, Zlatan Fröhlich, the winners have achieved outstanding business results in the use of new technologies and the implementation of investment, excellent export results, as well as remarkable results in employment and innovation. It is particularly important to highlight these outstanding results since the companies were operating against a backdrop of economic crisis with

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which Croatia has been faced for years and hence top quality management skills in business process governance and the channelling of development of economic entities were required. “2016 has ended, permeated with business challenges, yet finally showing significant GDP growth in relation to the previous year, as well as an increase in industrial production, improved export results and a successful tourist season. Nevertheless, a broad range of issues still needs to be tackled in the economic sphere. Entrepreneurs focusing on the market believe a favourable entrepreneurial environment and encouraging legislation would significantly improve their current situation. Zagreb Chamber as an integral part of the system at the Croatian Chamber of Economy will continue pursuing its efforts to help entrepreneurs in their affirmation and business networking through a wide range of supporting services which is an integral part of our activities”, stressed Fröhlich.

GOLDEN KUNA AWARDS FOR LARGE AND MEDIUM-SIZED COMPANIES Golden Kuna plaque for large companies operating in Zagreb was given to Kraš Food Industry. In 2015, Kraš hired 1,551 employees and it saw the end of 2015 recording revenue of €119 million of which €49 million was via exports, as highlighted by the President of the Management Board Damir Bulić. “In 2015, we invested €6.4 million in non-current assets, whilst investment over the last three years has exceeded €13 million. We consider this award as encouragement to continue with our work”, concluded Bulić. Feroimpex Automobilska Tehnika was given a Golden Kuna award as the best large company operating in Zagreb County. The company reached the end of 2015 with revenue of €38 million, €7 million up compared with the previous year. The value of inves-

ESI FUNDING IMPLEMENTED

Zagreb tment was almost €7.5 million and the company is currently hiring 344 staff. Span, a company involved in software development was the best of the medium-sized companies in Zagreb. In 2016, the entire group generated revenue in excess of €33 million, with over a half of it being through exports, making it the largest exporter of software and services in the country. Span hired over 300 staff. The best medium-sized company in Zagreb County is MM Mesna industrija. Whilst expressing his gratitude for the award, the Director, Tomislav Medven, highlighted the fact that this award has huge importance both for him and his company. “The success achieved by our company is mainly the result of committed work and sacriﬁce, and ﬁrst of all I need to express my gratitude to my family that provided support, as well as to all my staff without whom the progress achieved would have been impossible. This award will be an encouragement for us in our future work which we believe will be even more successful. In 2016 we grew at a rate of 10% and we believe we will proceed along this path also in 2017”, pointed out Medven.

THE MOST SUCCESSFUL SMALL COMPANIES The most successful small companies Tiskara Reprint and Ivanićplast. Tiskara Reprint, involved in printing for the packaging industry, is currently hiring 77 staff and in 2015 it generated revenue of €8.6 million of which 46% was through exports, primarily to Germany, Slovenia, Italy, as well as the US and Cuba. The value of investment in 2015 was €0.4 million. Ivanićplast is a company involved in the production and processing of plastic objects, primarily through toilet seat production. Over 70% of the 400,000 toilet seats produced is exported to 28 countries globally. The company is currently hiring 62 staff and in 2015 it had revenue of €2.6 million. HAK Hrvatski Autoklub was awarded special recognition by Zagreb Chamber, for 110 years of continuously successful performance. This non-proﬁt association covers a membership of over 200,000 throughout Croatia and with its 250 employees it guarantees unhindered movement of passengers, vehicles and goods and encourages driver solidarity and provision of roadside assistance to everyone.

Better results expected in 2017 CCE participated in 156 projects worth €120 million financed through European Structural Funds

A review of the work performed in 2016 or the analysis of results achieved thus far on the implementation of the European Structural and Investment Funds were the principal topics of a roundtable discussion entitled ESI Funds Implementation – Experiences and Expectations, organised by the Business Advisors’ Community at the CCE recently held. ESI funds worth €10.676 billion are available to Croatia during the period from 2014 to 2020. Over €8.3 billion is intended for Cohesion Policy objectives, €2 billion for agriculture and rural development and €253 million for ﬁsheries development. During his opening speech, Želimir Kramarić, Vice President of the CCE for International Affairs and the EU, stressed the importance of open communication between public and private sectors concerning EU resources. “The CCE participated in 156 projects worth €120 million, ﬁnanced from European Structural Funds and has

directly absorbed €20 million for its members. Moreover, it is planning to finance projects such as Digital Chamber and Dual Education through EU funds”, stated Kramarić. Croatia was allocated €473 million through Operational Programme Competitiveness and Cohesion by the end of November 2016, of which €85 million was absorbed. “In 2017, we expect to improve the results achieved and are planning amendments to the Operational Programme where resources would be channelled from individual fields towards those areas that provide high quality programmes”, pointed out Dragan Jelić, Assistant Minister at the Ministry of Regional Development and EU Funds. Vjekoslav Jukić, Head of Service at the Ministry of Environmental Protection and Energy, stated that 2017 will see the intensification of energy efficiency programmes, primarily both for private and the services sector, as well as for small, medium-sized and large businesses. (I.G.)

January 2017 | No 265 | PVinternational | 9

ECONOMIC COUNCIL OF THE CCE – VIROVITICA COUNTY CHAMBER

GOLDEN KUNA AWARDS GRANTED TO DEGAL TEHNIKA, AGRODUHAN AND BRANA The Crystal Kuna award was given to Herbarium and Croatian n s Tobacco (Hrvatski duhani) for extraordinary business results achieved in 2015, as well as for being the winners of Golden Kuna award for three consecutive years by Goran Gazdek

olden Kuna and Crystal Kuna recognition awards for 2015 were presented to the most successful companies operating in Virovitica-Podravina County during the formal session of the Economic Council of the Croatian Chamber of Economy – Virovitica County Chamber. In the category of small companies, a Golden Kuna was awarded to the Vinkovci-based Degal Tehnika as the most successful company, owned by Tomislav Denić and Ivica Galić. The company was founded in 2010 and is involved in infrastructure construction, primarily the construction of roads and motorways, and is currently employing 20 staff. Investment in 2015 was €201,500. According to revenue generated, the company ranks 43rd in Virovitica-Podravina County. “We have seen continuous growth since our foundation and are delighted with the fact that our efforts have been recognised and awarded with Golden Kuna, which we consider an extraordinary honour. We will be striving to achieve such results in the future and further enhance our production”, noted the coowner and Director, Tomislav Denić, during the presentation.

TOBACCO INDUSTRY FACED WITH COMPLEX CONDITIONS The Slatina-based Agroduhan was awarded a Golden Kuna in the category of medium-sized companies. In co-operation 10 | PVinternational | January 2017 | No 265

Herbarium

Croatian Tobacco

with individual farms, the company is involved in the production, purchase, processing and sales of tobacco, speciﬁcally Light Virginia and Burley. Investment during 2015 was €37,250, and exports were $3,566,874, and imports reached $98,581. According to generated revenue, the company ranks 25th in Virovitica-Podravina County. “Those involved in tobacco processing in Croatia have been operating in highly complex conditions and we export 100% of our products to the EU, Indonesia and Turkey, amongst others, as well as to Dubai. We have thus far managed to keep abreast with our competitors and I hope we will manage to do so in the future. The company is currently employing 52 staff and between 80 and 90 seasonal workers, depending on the quantity of tobacco purchased. This recognition is an incentive for us to continue with the measures launched

during the last two or three years and to continue striving to comply with standards in order to achieve stability in our business in the future period of 10 to 15 years”, stated the Director Dražen Vujčić. The Virovitica-based company Brana was given a Golden Kuna award in the category of medium-sized companies. The company is involved in water resource management and construction of hydro-technical facilities and recently in the construction of a sewage system, water supply system and other public utility infrastructure facilities. Around ten years ago, the company constructed an ULO cold storage plant for the storage of fruit and vegetables with a total capacity of 2,200 tonnes; the company is also developing its own primary production of fruit and vegetables and has around 100 subcontractors in Virovitica-Podravina County.

ECONOMY NEEDS TO BE GIVEN PRECEDENCE OVER POLITICS AND POLITICS NEEDS TO SERVE THE REQUIREMENTS OF THE ECONOMY, AS STATED AT THE SESSION OF THE ECONOMIC COUNCIL Following the construction of the ULO cold storage plant, as a natural continuation of the investment cycle the company constructed a juice processing plant, co-ﬁnanced through the European Agricultural Fund for Rural Development. Furthermore, using its own expertise the company constructed also a dual axis photovoltaic tracking system PV 10 and three PV 10 systems are located on its property in Business zone 2. In 2015, the company employed 95 staff, and investment reached €580,000, exports were $847,159 and imports $284,370. According to revenue generated, the company ranked 17th in

Virovitica-Podravina County. The Crystal Kuna recognition for extraordinary business results achieved in 2015, as well as for being the winners of a Golden Kuna award for three consecutive years in the category of small companies, was granted to the Pitomača-based Herbarium, and in the category of medium-sized companies it was given to the Virovitica-based Croatian Tobacco (Hrvatski duhani).

INVESTMENT AND EFFORT LEAD TO SUCCESS Herbarium is a family-owned company within the Spider Group, involved in tea

processing and finished product packaging. The company is specialised in the provision of specialised packaging services of all types of tea in a cuttingedge packaging facility aiming to fully meet the requirements and wishes of its business partners. Investment in 2015 was €3,300, exports were $287,721 and imports $327,040. According to generated revenue, the company ranks 32nd in Virovitica-Podravina County. “This recognition is the result of our long-term investment and effort. Herbarium, as a member of the Spider Group, has achieved excellent results this year and we are expecting to see export growth of 20%”, noted the Director Denis Nemčević. Croatian Tobacco (Hrvatski duhani) is involved in the production, processing and sales of tobacco, specifically Light Virginia and Burley and it operates within BAT (British American Tobacco). In 2015, the company employed 181 staff and total revenue generated earns it first place in Virovitica-Podravina County. The value of investment in 2015 stood at €150,000, exports were $8,786,923 and import $552,960. The President of the CCE - Virovitica County Chamber, Ivan Slamić, the President of the Croatian Chamber of Trades and Crafts – Regional Chamber of Trades and Crafts of Virovitica-Podravina County, Ivan Kostelac and Vice-President of the CCE for Agriculture, Forestry and Fisheries, Ivan Škorić congratulated award winners. In their promises, they highlighted the fact that the economy needs to be given precedence over politics and politics needs to serve the requirements of the economy, as is the case in the Scandinavian and other Western European countries of the European Union.

The journal Characteristics of the Economy of Virovitica-Podravina County in 2015 presented The journal Characteristics of the Economy of Virovitica-Podravina County in 2015 was promoted during the formal session of the Economic Council. It was developed by the Macroeconomic Analysis Department of the CCE- Virovitica County Chamber. The jubilee 20th edition of the journal provides 7,592 data points of which 48% is original, as well as 111

tables and 74 graphs. It was edited and prepared by Milan Vanđura, Director of CCE – Virovitica County Chamber, with the Senior Expert Associates Suzana Kolesarić and Andrea Poslek and the Expert Associate Renata Vondra. The reviewer was Zvonimir Savić, Director of the Sector for Financial Institutions, Business Information and Economic Analyses at the CCE.

January 2017 | No 265 | PVinternational | 11

TOP COMPANIES IN VUKOVAR-SRIJEM COUNTY

FESTIVAL OF ENTR Based on strict criteria, the most successful companies in Vukovar-Srijem County in 2015 were Vigus and Spačva from Vinkovci and Triko from Ilok by Svetozar Sarkanjac

President of the Croatian Chamber of Economy – Vukovar County Chamber, Vinka Ivanković and prefect of the Vukovar-Srijem county Božo Galić with award winners

Ivan Marijanović, Director of the CCE Vukovar County Chamber

igus, Triko and Spačva were the top three companies achieving the best results in Vukovar-Srijem County in 2015. According to Vinka Ivanković, President of the Croatian Chamber of Economy – Vukovar County Chamber, the most successful companies were evaluated on 18 criteria and the indicators that were calculated based on business results or financial statements for 2015 provided by the companies. During the formal session of the Economic Council of the CCE- Vukovar County Chamber Vinka Ivanković pointed out that “against a backdrop of the economic environment and the conditions within which we both live and operate under, this can be considered as a splendid festival of entrepreneurship.” “Concrete improvements are noticeable. It has to be highlighted that a new government measure concerning the allocation of €0.3 billion for Slavonia will be a significant incentive for our businesses. The drafting of the Development Strategy for Vukovar-Srijem County is also near to finalisation, and considering the

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resources provided through EU funding and the government plan for Slavonia, we are ﬁnally looking towards a brighter future. 1,510 companies are currently operating in our County which accounts for 1.5% of the Croatian economy”, she emphasised. According to Ivan Marijanović, Director of the CCE Vukovar County Chamber, in 2015 the economy of Vukovar-Srijem County saw total revenues of €1.75 billion, 14.2% up compared with 2014, whilst the number of those employed increased to 16,292 up 10%.

CAKES AND DECORATIONS FROM VIGUS Vinkovci-based Vigus was granted a Golden Kuna award for 2015 against a backdrop of a sluggishly growing economy in the easternmost Croatian county in the category of small companies. The company is involved in confectionery production, premises decoration and rental of pagodas and tents for various events. Two years ago, the company had revenue of €0.2 million and a proﬁt of €2,900. “We appreciate this award greatly,

REPRENEURSHIP as it shows both our efforts and hard work have been noticed. We have been operating for 26 years. Moreover, in our two stores we also provide decorations and strive to meet customer requirements concerning wedding receptions and birthday parties. We employ 13 staff – pastry-cooks, decorators and shop assistants”, noted the co-owner of Vigus Daria Tustonjić.

THE BEST PULLOVERS IN THE WORLD In the category of medium-sized companies, the Golden Kuna award was given to the Ilokbased Triko. The company was founded in 2007 and is involved in knitwear production of identiﬁable colour and quality, for Benetton which has established a strong international reputation. In addition to its Ilok-based plant, Triko owns another plant in Lovas. In 2015 the company employed around 160 staff, generated revenue of €1.25 million and proﬁts of €10,800. “We received the Golden Kuna award for our persistence, hard work and high quality. The pullovers we produce are the best in the world and due to the investment made in 2015 we will appear on the domestic market also, irrespective of the fact that we have been

focused exclusively on international markets thus far”, pointed out Jasna Ivanek, Director of Triko.

A NEW UPSWING BY SPAČVA In the category of large companies, the Golden Kuna award was given to the Vinkovci-based Spačva Timber Industry who, in 2015 hired 705 employees and generated revenue of €22 million, and a profit of €0.9 million. The company was founded in 1956 in Vinkovci and provides wood products (parquet and rustic flooring, doors and veneers) and biofuels (pellets and briquettes). It focuses primarily on exports to European markets. Spačva currently comprises five factories: a sawmill, a parquet flooring factory, a final products factory, a veneer factory and a biofuels factory where substantial investment has recently been implemented. “We are extremely delighted to have received such recognition in our 60th anniversary year. During the last three years, we have been operating extremely well and in 2015 our sales turnover stood at €22 million. We currently employ 760 staff and we have an on-going trend of increasing employment”, emphasised Josip Faletar, President of the Management Board of Spačva.

22 2 million

€

in revenue and €0.9 million profit seen by Spačva in 2015

1.2 2 million

€

in revenue and €11,000 profit for Triko in the same year

0.2 2 million

€

in revenue and profits of €2,900 for Vigus in 2015

JUBILEE RECOGNITION AWARDS

Important anniversaries Recognition was also given to those companies marking important anniversaries (20 years or more). The Vukovar-based Borovo was given recognition for 85 years of continuous operation, the Vinkovci-based Spačva for its 60th anniversary, and the Vinkovci-based Water Supply and Sewage for its 45th anniversary. The Županja-based Brick Factory was awarded to mark its 40th anniversary. Awards for 25 years of continuous operation were granted to: Amazona from Gunja, Cestorad from Vinkovci, Crnov from Gunja, Cvjećarstvo from Vinkovci, Eurco from Vinkovci, Juing from Vinkovci, Klopić from Gradište, Malva from Vinkovci, Nevkoš from Vinkovci, Patričar from Žu-

panja, Pavlović from Županja, Polion from Vinkovci, Svjetlost from Drenovci, Šimun from Vinkovci, Tajči from Vinkovci and Vipes from Vinkovci. Recognition awards for 20 years of continuous operation were given to Zona Driving School from Vinkovci, Kolnik Driving School from Vinkovci, Autowill from Vukovar, Balans from Vinkovci, Banovci from Banovci, Briliant from Vinkovci, Codelect from Vinkovci, Cvat from Vinkovci, Čop from Andrijaševci, Domačinović from Bošnjaci, Erak from Stari Mikanovci, Funkcija 13 from Vinkovci, Gelato from Vinkovci, Grgošević from Vukovar, Grijanje from Vinkovci, Inles from Vinkovci, Kult from Vinkovci, Lavanda from Vinkovci, Lubanj from Županja, Baturina Pharmacies from

Županja, Kalenić Pharmacies from Vinkovci, Magalia from Vinkovci, Mali Kraj from Vukovar, Md-Beki from Gradište, Menđušić from Vinkovci, Metal-Zec from Ilok, Mikro-analiza from Vinkovci, MMcarbo from Vukovar, Mudri from Mikluševci, Pert from Ilok, Premuž from Vinkovci, Puljić from Županja, Quercus from Tordinci, Regulator from Privlaka, Seiler from Vukovar, SenkaTrade from Vinkovci, SMK Jurković from Vukovar, Strunje-Trade from Privlaka, Suton from Nuštar, Šild from Vukovar, ŠonProdukt from Vukovar, Šprem from Cerić, Tišina from Vinkovci, Ura from Vinkovci, Uralan from Vinkovci, Vinkoprom from Vinkovci, Voćarstroj from Vinkovci, Volko from Vinkovci, Sopot Airport from Vinkovci and Živić from Cerna.

January 2017 | No 265 | PVinternational | 13

GOLDEN KUNA AWARDS GIVEN BY THE CCE – RIJEKA COUNTY CHAMBER

AN EXCELLENT YEAR FOR PRIMORJE-GORSKI KOTAR COUNTY Corporate income in Primorje-Gorski Kotar County was up 9.5%, exports rose 20%, and a positive trade balance was achieved to a level of €0.5 billion. The top entrepreneurs and winners of Golden Kuna awards were Viktor Lenac Shipyard, Montelektro and Olivari important activities in the County, showing the advantages of the regional economy, were the processing industry, construction, trade, transportation and warehousing, accommodation and professional, scientiﬁc and technical activities.

EMPLOYMENT INCREASES

We are convinced that decentralisation of the state would positively affect the economy.

Vidoje Vujić, President of the CCE – Rijeka County Chamber

conomic statistics for Croatia has seen GDP growth for eight consecutive quarters, which contributes to the overall increase in optimism and hopes for recovery, stated Vidoje Vujić, President of the CCE Rijeka County Chamber, during the Golden Kuna award presentation ceremony to the top entrepreneurs in Primorje-Gorski Kotar County and Rijeka. “The recovery was primarily due to a significant impact of our regional economy and entrepreneurs. From 2014 to the end of the first half of 2016, Primorje-Gorski Kotar County achieved above-average results, due to which we currently rank among the top three regional economies in Croatia”, stressed Vujić. In 2015, corporate income in PrimorjeGorski Kotar County was up 9.5%, corporate profitability rose, and the profit tax increased by 21%. Moreover, exports increased by 20% and a positive trade balance reached €0.5 billion, 43.2% up in relation to 2014. The most

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2015 saw 9,436 entrepreneurs operating in the County, with the number employed increased by 4.5%, and total profits up by €0.15 billion plus new investment of €0.35 billion. During the presentation ceremony, it was highlighted that if plans concerning the LNG terminal construction, investment into the Rijeka traffic route and in the Clinical Hospital Centre Rijeka are at least partly implemented during 2017, significant opportunities for investment could be provided for the whole country and primarily for economic development of this County. The project in question comprises investment in port infrastructure, as well as investment in missing road and rail infrastructure, both towards the north and south of Croatia, towards both Italy and Slovenia; investment in Rijeka Airport, as well as in business-logistics zones and other regional traffic projects. Notwithstanding the fact that GDP growth prompted expectations concerning the opportunity for a significant reduction in debt principal, that has not occurred to date, due to low oil prices, slightly more favourable borrowing conditions on the European market and the situation in the Mediterranean that has brought Croatian tourism into a more favourable light – the external circumstances that have positively affected both the Croatian national and regional economy. These circumstances vary and cannot be relied upon in the long term. Nevertheless, entrepreneurs have voiced their concern regarding the huge and

BANK TAKEOVER

Golden Kuna award winners: Viktor Lenac Shipyard, Rijeka – for large companies Montelektro, Kastav – for medium-sized companies Olivari, Malinska – for small companies Recognition for significant investment: Jadranka Hotels, Mali Lošinj The most successful exporter: The Port of Rijeka, Rijeka Recognition for contribution to environmental protection: Ind-Eko, Rijeka Recognition for successful operation: Adriatic Gate Container Terminal, Rijeka

Recognition for commercialisation of innovations: Euromodul, Viškovo Recognition for special contribution to waste disposal and management: Metis, Kukuljanovo Recognition to companies for significant improvement in performance indicators (2 companies): Orada Adriatic, Cres Montcommerce, Kukuljanovo Individual Recognition Awards: Katica Hauptfeld –award for the most successful woman entrepreneur Josip Brkić – lifetime achievement award

disconcerting oscillations in professionalism in the administration.

OBSTACLES TO ECONOMY “Non-competitiveness, ignorance and irresponsibility in public administration, as well as adverse political effects are not random occurrences. Policies cannot be successfully implemented without a resilient and professional administration. If one also considers a wide range of regulations and the slowness of the judicial system, the major obstacles to economic development will certainly be more obvious. On the other hand, the current legal framework allocates to both local and regional government an important role in governance, organisation and direct provision of public services both for the general public and entrepreneurs. We are convinced that decentralisation would positively affect the economy”, emphasised Vujić, concluding that the award ceremony organised by the CCE Rijeka County Chamber for both individuals and businesses operating in Primorje-Gorski Kotar County, in addition to showing them recognition, also provides public support to all those who contribute to economic growth in the region through the performance of their daily activities and overall effort invested. (K.S.)

OTP Bank to take over Splitska Banka This takeover could result in an increase of OTP Group market share in Croatia, to about 10%

t the end of last year, the Hungarian OTP Bank announced the acquisition of Splitska Banka, which is 100% owned by Société Générale Group, by OTP Bank Croatia. Société Générale - Splitska Banka is the fifth largest organisation in the Croatian banking sector and operates by providing a wide cross-section of its own products and services. In December 2015, total assets stood at €3.6 billion. The merger of Splitska Banka and OTP Bank in Croatia will result in a significantly larger bank with considerable potential for development within the country. Moreover, this takeover could result in an increase of OTP Group market share in Croatia, to about 10%. “Central and Eastern Europe are regions in which Société Générale has identified ample potential for further growth. The strategy of the Bank for this region is to concentrate its presence on markets where it can be positioned amongst the leading banks with an adequate business volume, striving to make a significant impact on revenue generated within the region. Société Générale will continue its search for opportunities for consolidation in Central and Eastern Europe,” pointed out by sources at Société Générale. The financial transaction is expected to be implemented in the summer of 2017, whilst the integration process is expected to be completed by the summer of 2018. OTP Bank has been present in Croatia since 2005, and has been always operated profitably even through the financial crisis starting in 2008. January 2017 | No 265 | PVinternational | 15

GOLDEN KUNA AWARDS GIVEN TO TOP COMPANIES IN KRAPINA-ZAGOR

GOLDEN KUNA AWARD for B Omco Croatia and ZMH Horva Krapina-Zagorje County is export-oriented and its economy has seen continuous growth, stated Josip Grilec, President of the CCE- Krapina County Chamber

olden Kuna awards to the most successful companies in KrapinaZagorje County were presented during the formal session of the Economic Council of the Croatian Chamber of Economy – Krapina County Chamber.

€2,9 million in revenue and €0.35 million profits generated by Brenta in 2015

€11,2 million in revenue reported by ZMH Horvat in 2015

Mirjana Čagalj, Vice-President at CCE for Construction, Transport and Connections, provided an overview of new CCE activities during the forthcoming period and announced the signing of Co-operation Agreements between CCE and all Ministries. Josip Grilec, President of CCE Krapina County Chamber, stated that 2015 was a good year for the economy and pointed out that growth was seen throughout all economic segments. He added that Krapina-Zagorje County is export-oriented and its economy has shown continuous growth. Željko Kolar, Prefect of Krapina-Zagorje County, stressed that economic growth in Krapina-Zagorje County began earlier compared with other parts of Croatia.

AWARDS – ENCOURAGEMENT FOR FUTURE WORK

€61 milion €12,6 milion in revenue and

profit shown by OMCO Croatia in 2015

The Golden Kuna in the category of small companies, and from amongst 160 companies operating in Zagorje region, was given to the Hum na Sutli-based company, Brenta. It was founded in 2007 on the initiative between Italian and Croatian partners and is currently hiring 19 employees. It is involved in the production of sports water bottles and exports over 95% of its products.

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In 2015 the company generated revenue of €2.9 million, and a profit of €0.4 million. “This is a great honour for our company, and the award is primarily the result of efforts by our employees of whom we are extremely. Our specific objective is continuous investment”, highlighted Pierantonio Parolin, Director of Brenta. In the category of medium-sized companies (47 companies that met all criteria), the Golden Kuna was awarded for the third time to the Konjščina-based ZMH Horvat. The company was founded in 1993 and is involved in the production, processing, storage and distribution of frozen food and catering and currently employs 147 staff. In 2015, the company had revenue of €11.23 million, with a gross profit per employee of €16,200. “This recognition is an encouragement for future work and an additional incentive for new victories”, noted Zoran Horvat, Director of ZMH Horvat.

MIRJANA ČAGALJ ANNOUNCED THE SIGNING OF CO-OPERATION AGREEMENTS BETWEEN CCE AND ALL MINISTRIES Amongst nine companies that met all criteria in the category of large companies, the Golden Kuna was awarded to OMCO Croatia from Hum na Sutli. The company is a member of the Belgian OMCO Group, and is involved in the production of glass container moulds or moulds for the production of glass packaging, with over 90% of its products being exported. OMCO Croatia saw an annual production growth rate of 20%, and is currently employing 536 staff. Total revenue generated in 2015 was €60 million, with a proﬁt of €12.6 million. “Our principal aim is both customer and employee satisfaction, as well as the opportunity for fur-

JE COUNTY

Brenta, t ther development and investment for a better future”, stated Darko Ranogajec, President of the Management Board of OMCO. “KrapinaZagorje County with over 1,000 individuals employed in the glass manufacturing industry, is considered a centre for glass packaging manufacturing and is of international importance. We can provide expertise and skills and have the courage to participate in competition on unfamiliar markets”, he emphasised.

SPECIAL RECOGNITION FOR KRAKOM TO MARK 60TH ANNIVERSARY CCE- Krapina County Chamber granted a special award to mark the 60th anniversary of successful activity of the Krapina-based Krakom for its exceptional contribution to economic development; the award of €10,000 was received by TPK Orometal from Oroslavje which is about to implement large-scale investment of €10 million. “I am extremely delighted with the fact that Krakom has been awarded this recognition to mark its 60th anniversary. We have faced both favourable and adverse circumstances and are currently planning large-scale investment. This year, we have primarily focused on the upgrade of both gas and water supply infrastructure in the city and we have additional plans concerning environmental protection”, noted the Director, Katarina Posilović. The awards and recognition awards to the top Zagorje-based companies were presented by the County Prefect, Željko Kolar, Deputy County Prefect, Anđelko Ferek Jambrek, President of the CCE- Krapina County Chamber, Josip Grilec and Vice-President of the CCE Mirjana Čagalj. The formal session of the Economic Council was also attended by the Deputy KrapinaZagorje County Prefect for Economy, Anđelko Ferek Jambrek, the Mayor of Krapina, Zoran Gregurović, the Mayor of Hum na Sutli, Zvonko Jutriša, Vice-President of the Chamber of Trades and Crafts of Krapina-Zagorje County, Tomica Jurinjak, as well as members of the Economic Council and representatives of institutions, banks and media. (V.A.)

KONČAR

€23 million anticipated profit In 2016 Končar, invested €13.6 million, with its own funding accounting for 60%, with 40% of all investment being intended for development 2016 will see Končar generate consolidated revenue from the sale of products and services of €0.37 billion, as well as consolidated profit before tax of €23 million, as quoted by Darinko Bago, President of the Management Board of Končar during the recently held press conference. “The value of the revenue generated on the local market is estimated at €0.19 billion and the same is expected from exports, which is 8% up over 2015. The share of exports in total sales revenue is 50%”, added the CEO of Končar. Throughout 2016 Končar, invested €13.6 million, with its own funding accounting for 60%, and 40% of all investment being intended for development. “2016 was definitely a challenging year for us. Končar performed a significant amount of work for public companies and the year saw the

formation of two governments which resulted in considerable turmoil within these companies. Nevertheless, Končar succeeded and achieved satisfactory results”, noted Bago. Concerning the most significant achievements by Končar, it is useful to also note the delivery of the first low-floor diesel-electric train to HŽ Passenger Transport, as well as the delivery of new generators and the revitalisation of existing generators in Sweden, Slovenia, Norway and Finland. Moreover, 2016 saw it deliver ventilation equipment to Uljanik Shipyard. The value of contracted work at the end of 2016 is estimated at €0.49 billion, 7% up compared with the beginning of the year. In 2017 Končar Group aims to generate profits before taxation of €29 million, 28% up compared with estimates for 2016. (K.S.)

January 2017 | No 265 | PVinternational | 17

GOLDEN KUNA AWARD PRESENTED TO THE BEST COMPANIES IN SPLIT-

AWARDS GIVEN to Zlatni rat, and Jantar hotels Orientation and additional investment into tourism and the processing industry will result in well-being and a more rapid overall economic recovery, pointed out Vice-President of the CCE Mirjana Čagalj by Jozo Vrdoljak vrdoljak@privredni.hr

€110 million positive financial results achieved by entrepreneurs in Split-Dalmatia County in 2015

3.2 % increase in the number employed in 2015 over 2014

4.5 % rise in average nett salary over the same period

olden Kuna awards to the most successful companies in SplitDalmatia County were presented during the formal session of the Economic Council of the Croatian Chamber of Economy – Split County Chamber held at the end of last year. Zlatni rat from Bol, Naprijed from Glavice and the Split-based Jantar hotels are winners of Zlatna kuna awards in CCESplit County Chamber as the most successful companies in the County in the categories of small, medium-sized and large companies for 2015. A Golden Kuna award for innovation was granted to DTD from Dugi Rat for their Artiﬁcial Fishing Lures of Natural Appearance

ECONOMIC INDICATORS During her welcome speech, the Vice-President of CCE, Mirjana Čagalj, pointed out that the positive developments in the Croatian economy began in 2015 and were also present in Split-Dalmatia County. “In 2015 entrepreneurs operating in this County achieved positive ﬁnancial results of €110 million, 31.6% up in relation to 2014. Compared with 2014, the number of employed individuals increased by 3.2%, and the average monthly nett salary per employee rose by 4.5% over 2014, although unfortunately it still lags 10.8% behind compared

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with the average salary in Croatia. Orientation and additional investment in tourism and the processing industry will result in well-being and a faster overall economic recovery. Moreover, investment in education and lifelong learning are fundamental against a backdrop of current circumstances in contemporary economy, where efficiency in meeting market requirements is imperative. Human capital is the principal source of competitive advantage of companies in a competitive market “, emphasised Mirjana Čagalj.

AWARD-WINNING COMPANIES Zlatni Rat Hotels operate in Bol, a ﬁrst quality tourist destination, and a multiple champion of Croatian tourism. They operate as part of one of the leading national hotel chains that appear on the market under the brand Bluesun Hotels & Resorts, with accommodation capacity of 726 rooms and 1,605 beds, and employing over 450 staff during the peak season. In addition to production of timber and wood packaging, Naprijed is primarily involved in the production of furniture and in the construction joinery. The company employs 75 staff and it has the capacity to complete a production cycle from raw materials to highly ﬁnished products.

-DALMATIA COUNTY FOR 2015

VALAMAR RIVIERA

Naprijed

Jantar School for Foreign Languages has been operating successfully for 25 years, and is ranked amongst the top three schools for foreign languages in Split-Dalmatia County. The School has seen continuous enrolment growth and its students achieve the best results in Croatia in Cambridge International Examinations. Since 2015, it has ranked ﬁrst in the region and has also been amongst the top ﬁve schools in Croatia, awarded with the Croatian Quality label by the Croatian Chamber of Economy.

SPECIAL RECOGNITION AWARDS PRESENTED DTD from Dugi Rat is a family-owned business with 50 employees involved in the production of ﬁshery equipment, and is specialised in the production of squid ﬁshing lures. It is an export-oriented company exporting 75% of its products to over 20 countries. Its increasing sales and the rising number of people employed are primarily due to its focus on continuous innovation.

GOLDEN KUNA AWARD FOR INNOVATION GRANTED TO DTD FOR ARTIFICIAL FISHING LURES OF NATURAL APPEARANCE During the ceremony, special awards were also presented to the companies Končar – Electrical Equipment Prisoje and Auto Hrvatska Split to mark its 70th anniversary, as well as for its successful performance. Ante Zekić, President of the Innovators Association DIATUS Split, won a special award for his longterm co-operation for the selection of best innovations in the County, to provide encouragement to innovation.

Healthy Meal Standard introduced This type of programme is considered a competitive advantage that arouses the interest of new visitors and impacts on season extension

he Poreč-based Valamar Diamant Hotel has introduced a Healthy Meal Standard certification intended for visitors with special dietary needs. In addition to trained staff, the certification guarantees meals prepared in accordance with standards prescribed by EU Regulation 1169, whilst Valamar Riviera has opted for certification focusing on people with gluten intolerance, vegans, vegetarians, sports people and those aiming to lose weight. “It is our delight to be the first in Croatia to have introduced and certified this food standard that is of special importance for tourism. Valamar Riviera provides top quality services to its visitors, whilst continuously keeping abreast with trends and developing a wide range of programmes and striving to meet the requirements of target groups. Hence, we have identified Healthy Meal Standard as a model to inform visitors, and a quality guarantee that

will provide value added to our programmes focused on visitors with special dietary requirements, as well as on other visitors aiming to improve the quality of their lives”, stated Oliver Brajković, Head of the Audit and Standardisation Department at Valamar Riviera. Healthy Meal Standard provides the opportunity to directly address a dozen groups of visitors with special dietary requirements, each of which comprises of at least 100 million members only in Europe. In this context, this programme is considered a competitive advantage that arouses the interest of new visitors and impacts on season extension through unlocking new potential in the ﬁelds of nutrition, health and physical activity. (J.V.)

January 2017 | No 265 | PVinternational | 19

WINE TRADE

INTRODUCING SOME ORDER INTO THE MARKET Wine quality control can be performed through equal treatment of all wines on store shelves, as well as wine lists in hospitality facilities on a regulated wine market, where protection of Croatian wine producers, as well as consumer interests is provided, noted the Minister of Agriculture, adding that wine imports cannot be prevented but imported wine quality control needs to be improved by Jozo Vrdoljak vrdoljak@privredni.hr

C €12,4 million Croatian wine exports in 2015

€29 9 million the value of imported wine during the same year

28.920 tonnes

the annual level of wine imports into Croatia (exports standing at only 4,932 tonnes)

roatian wine exports in 2015 were up by 6% in terms of quantity and 13% up as regards the value of exports, primarily the result of Croatian EU accession and unrestricted sales of Croatian wines to the EU market. The value of Croatian wine exports in 2015 was €12.4 million, and the value of imports exceeded €29 million. The situation is even less satisfactory concerning quantity. Croatia imports 28,920 tonnes of wine annually, but exports only 4,932 tonnes. Concerning imports, 2014 was considered a landmark year, in which imports soared by 47%, whilst in 2015 they rose by 20%. This data shows a negative balance of trade and is considered as the consequence of the free market. Nevertheless, uncontrolled imports of bulk wine which, as opposed to locally-produced wines, are not subject to any control, has been an unpleasant surprise for Croatian wine producers. The Ordinance on the Vineyard Register has been greatly amended in order to introduce at least some order into the wine trade in Croatia, through mandatory statements, supporting documentation, stock records and production potential, as well as new wine laws. The Ordinance has recently been enacted and enforced and, as stated by sources at the Ministry of Agriculture, the new wine law will be referred to due process in 2017.

LOCAL AND IMPORTED WINES ON AN EQUAL FOOTING The recently enacted Regulation on Amendments to the Ordinance on Vineyard Register,

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through mandatory statements, supporting documentation, stock records and production potential stipulates a unique procedure in wine quality control on its sales, whilst the treatment and procedure for sales of local wines is currently on an equal footing with the procedures for bulk wine imports in to Croatia, prior to their sale in pre-packaging. Imported and local wines had previously been treated differently, which was addressed, as stated by the sources at the Ministry of Agriculture, through the Ordinance that was enforced on 8th December 2016. In accordance with its provisions, traders importing bulk wines in pre-packaging in quantities up to 60 litres, need to enter it into records and declare that fact to the agricultural inspection within 2 days from the entry of the shipment to Croatia. The inspection will use several sampling methods within 15 days, and in any case of non-compliance with physical, chemical and sensory parameters required in Croatia for domestic wines, the wine will be denied access to the market. “To date, wine could be imported into Croatia in tanks and re-packaged into bottles by anyone. Consumer interests, wine quality and safety were not taken into account. On the other hand, local wine producers are subject to a broad range of controls and considerable inspection, starting with the vineyard density, the number of vines per hectare, wine sampling prior to selling, and categorisation. This Ordinance places imported wines on an equal footing. Wines imported from third countries, such as Macedonia and Serbia, were considered a major problem, since they were not

subject to any control procedures or analyses. Wine quality control can be performed through the equal treatment of all wines on store shelves, as well as wine lists throughout hospitality facilities in a regulated market where protection of Croatian wine producers, as well as consumer interests are provided”, explained the Minister of Agriculture Tomislav Tolušić, adding that wine imports cannot be prevented and so the quality control of imported wines needs to be improved. “The size of our wine producers is insignificant in relation to the size of international bulk wine producers who have been involved in the business for years, employing cheap labour and we cannot compete with them on these aspects. Yet, we can compete concerning wine quality. I am convinced that in the Croatian wine trade there is immense potential for profit”, emphasised Tolušić. Vlado Krauthaker, President of Graševina Croatica Association, considers the enactment of the Ordinance as a significant breakthrough

WINERIES INVOLVED IN THE BULK WINE IMPORTS FROM THIRD COUNTRIES, WHICH ARE SIMULTANEOUSLY INVOLVED IN THE PRODUCTION OF WINES OF PROTECTED DESIGNATION OF ORIGIN (PDO), NEED TO BE MADE PUBLIC, STRESSED VLADIĆ compared with the situation encountered so far. “I regret the fact that the Ordinance was enacted over such a brief period of time, since we did not manage to submit the comments we had prepared in order to make it both more effective and efficient. Nevertheless, we are currently provided with a control procedure which was certainly required. We, the wine producers who are active in the Association of Croatian Wineries at the CCE, are striving to ensure that all those involved in the wine trade in Croatia, irrespective of their origin – foreign or local – need to pay a speciﬁc contribution for the promotion of Croatian wines. ConsequJanuary 2017 | No 265 | PVinternational | 21

WINE TRADE ently, everyone will be granted a label depending on whether they are involved in local or imported wine, and will therefore allocate resources speciﬁcally for the promotion of Croatian wines. Moreover, we can also rely on EU funds concerning promotion and marketing activities”, explained Krauthaker.

INSPECTION CRUCIAL Marinko Vladić, Head Oenologist at the Agricultural Co-operative Vrbnik, has been pointing out the signiﬁcance of the issue of the non-regulated wine market for a long period. He stated that he believes that Minister Tolušić wishes to assist the wine sector, but believes the enacted Ordinance will not solve the problems encountered by local wine producers. “It is obvious that the Ordinance has failed to address the crucial issue concerning certain Croatian wineries who sell imported wine and simultaneously produce wines with the Protected Designation of Origin (PDO) mark. Consequently, there is a danger they might be selling imported bulk wine as wine with the Protected Designation of Origin mark. It is also highly likely that such wines may be sold on the market under the name of some protected varietal. This is the greatest danger, yet imports cannot and need not

be banned, and Croatian wine producers are also involved in the export of their own wines”, pointed out Vladić. According to him, the Ordinance needs to stipulate that those involved in

VLADO KRAUTHAKER CONSIDERS THE ENACTMENT OF THE ORDINANCE E A SIGNIFICANT BREAKTHROUGH H TH COMPARED WITH THE SITUATION THUS FAR wine importation, as well as in the pro production of wine with the Protected Designation of Origin mark, need to have separate containers and speciﬁcally labelled wines in their cellars in order to avoid confusion and mixing. “The entire process needs to be monitored and controlled by the inspection services.

These activities cannot be performed by the Institute for Viticulture and Wine Production, as it is not certain whether it is authorised to do so. Croatian wines exported to Germany are controlled by German inspection, rather than the Institute. The Croatian Institute is also faced with delays concerning the issuance of licences for sales of our wines. In this case, the Institute would be in charge of additional work and the situation would not be resolved”, noted Vladić, stressing th h those wineries involved in bulk wine that iim imports from third countries, and are sim multaneously involved in the production o of wines with Protected Designation of O Origin (PDO) mark, need to be made pub blic. “There is the possibility of imports o of Graševina wine from Macedonia or Ž Žlahtina from Spain, even though these w wines are not produced there “, he added, p pointing out that he is more concerned aabout wine imports from third countrie es than imports from the EU. He explain ined that it is an open secret that some third countries are involved in wine fraud. “In such cases wines are imported by reputable producers of varietal wine from a protected area, which in addition is labelled with a Protected Designation of Origin mark, we are faced with a major problem. Irrespective of the fact

TOLUŠIĆ KEPT HIS PROMISE

Identical rules for local and imported wines Tomislav Tolušić, Minister of Agriculture, enacted the Regulation on Amendments to the Ordinance on Vineyard Register, through mandatory statements, supporting documentation, stock records and production potential which stipulates a unique procedure in wine quality control on selling. The amendments to the Ordinance resulted in the sales procedure and treatment of local wines being on a par with the procedures in place for imported bulk wine, prior to sale in pre-packaging. “As I had promised local wine producers, starting from this moment all imported wine needs to be analysed and assessed prior to its sale. Consequently, wine traceability will be monitored and wine marked with a reference number label”, explained Tolušić. Moreover, the amendments to the Ordinance also ensure a larger number of

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“voluntary” samples for imported wines (samples in which costs are incurred by the person filling the bottle or the person involved in its sale), which the importer in person can submit to the Institute for Wine Production for assessment in compliance with the VI 1 document (document for imported wine). In addition to “voluntary” samples, a period of time (15 days) is provided within which authorised inspections are entitled to take a sample from the shipment (on standby)

based on risk analysis. Consequently, the costs of sampling techniques will be rationalised to avoid the sampling of the wine for analysis from the same shipment at several points (during its sale). Regulation on Amendments to the Ordinance on Vineyard Register, through mandatory statements, supporting documentation, stock records and production potential has been published in the Official Gazette No. 110/16.

Concerning data provided, he pointed out the discrepancy between the publicly available data released by the Croatian Bureau of Statistics, according to which around 26,000 hectares are vineyards and data provided by the state-owned Paying Agency for Agriculture, Fisheries and Rural Development, according to which vineyards cover around 21,000 hectares. Moreover, there is a huge inconsistency between data provided by the two institutions concerning grape production. According to data released by the Croatian Bureau of Statistics, 153,114 tonnes of grapes were produced in 2015, but according to the Paying Agency for Agriculture, Fisheries and Rural Development, grape production in 2015 stood at 105,366 tonnes. Consequently, the origins of around 30% difference in grape production are uncertain.

BUSINESS ACTIVITY BECOMING MORE FRAUGHT that this type of importation is legal, the fundamental problem is that consumers are being deceived. The most signiﬁcant danger is involved where this is done by large producers of varietal wines and when such wines are only re-packaged” emphasised Vladić, adding that, according to the information he has, million-litre quantities are involved which are sold in the Croatian market in this way. “This severely threatens the Croatian wine sector and adversely affects the image of Croatian wines. Wine importation is legal, yet associations of wine producers need to impose sanctions on producers of wine with Protected Designation of Origin mark who re-package wines imported from these countries. Such producers should not be the members of associations”, he concluded.

GREY MARKET BOOM The Croatian wine market primarily needs to address issues such as large import quantities, uncontrolled imports, insufficient promotional activities, investment in technology and education, amongst others. Nevertheless, the issue of the grey market whose share has been continuously increasing, is normally addressed only superﬁcially and discussions concerning this issue are frequently based on weak or even nonexistent arguments. “Both legal and large producers, as

SUSTAINABLE BUSINESS, WHERE THE SHARE OF THE GREY MARKET IS SO SUBSTANTIAL IS BECOMING MORE AND MORE TROUBLESOME, EMPHASISED JOZO RABUŠIĆ well as co-operatives, are continuously inspected and controlled. They are controlled by sanitary, wine sector, market and labour inspections several times each year, and are frequently penalised for minor non-compliance reasons. Furthermore, institutions insist on all producers affixing labels and cards on wine bottles, with each bottle being comprehensively controlled upon inspection. Nevertheless, these measures appear ineffective considering that data shows between 30% and 40% of uncontrolled wine quantities are eventually sold on the market”, highlighted Lordan Ljubenkov, Director of Co-operative Alliance of Dalmatia, stating publicly available data.

Jozo Rabušić, Director of Putniković Agricultural Co-operative, noted that both producers and their associations are unable to tackle this issue without the support provided by institutions. “Anyone operating in compliance with the law, which not only includes co-operatives, but also most wine producers, is currently inclined to start thinking about withdrawal. Sustainable business is impossible against the backdrop of such a high volume of the grey market. Statistics in this case are rather simple. The surface area of vineyards is multiplied by the minimum quantity of litres per hectare and the sum is then divided by 0.7 which gives the average ratio of wine production. Thus, according to this simple calculation, annual wine production stands at 175 million litres. The Institute for Viticulture and Wine Production provided data on legal wine trade ranging between 50 and 60 million litres. Consequently, according to our calculations, legal production ranges between 35% and 45%. Hence, the question arises concerning the reasons why legal wine producers pay to be granted the label that is supposed to protect them from the illegal market. It is evident that payment for such eligibility is ineffective and should consequently be abolished. It also results in additional costs concerning sales, taxes, labour and risk. Doing business in this sector is clearly becoming more fraught”, noted Rabušić. January 2017 | No 265 | PVinternational | 23

FOOTWEAR PLANT MALA SUBOTICA-BASED HAIX OBUĆA (HAIX FOOTWEA

CROATIAN FOOTWEA The company is considered as a Međimurjebased miracle having reversed all the rules of economics. It exports its footwear to China and to 75 other countries globally by Miro Soldić soldic@privredni.hr

TWO YEARS AGO, HAIX PRODUCED OVER 1 MILLION PAIRS OF FOOTWEAR IN ITS TWO PLANTS LOCATED IN GERMANY AND CROATIA

eeing the Mala Subotica-based Haix Obuća (Haix Footwear) plant located near Čakovec, is to be astounded; such sights are unfortunately rather seldom seen in Croatia. Its modern factory covers an area of several tens of thousands of square meters similar to those located in Asian countries and China. It is even more surprising to know that this company is considered as a ‘Međimurjebased miracle’ reversing all the rules of economics. It exports its footwear to China where ‘Made in Croatia’ footwear is sold. This applies not just to China, since Haix exports its functional footwear to over 75 countries globally. “Chinese firefighters have to date purchased over 20,000 pairs of our boots proving that one can operate in ways that differ greatly from the norm”, explained Markus Lins, Managing Director at Haix Obuća, whilst comprehensively explaining all aspects of the production process with great enthusiasm. “Production is in full swing, and all the footwear we are currently manufacturing will be sold by mid-February. Our order book is excellent”, Lins pointed out with great satisfaction. “Machinery may be purchased and installed anywhere, but the workers are fundamental and have a central role both in the production process and unless they are high quality, no plans will be implemented”, Lins pointed out, adding that the specific objective of Haix is to produce the best footwear globally, in addition to innovativeness, technologically enhanced production and competitive prices, where highly skilled labour is imperative.

WORKING DURING HOLIDAYS Haix started in 1948 when Xaver Haimerl founded a family-owned company involved in footwear production that was taken over by his son in 1992, who was soon considered a reputable maker on the specialised footwear market. He worked as a firefighter and, being dissatisfied with low quality boots on the market, he decided to focus production primarily to meet the needs of services such as firefighters, police and military. Having 24 | PVinternational | January 2017 | No 265

AR) PLANT

AR SOLD IN CHINA to its German plants, the company considered opening a new factory in Europe. The region of Međimurje was attractive due to its skilled labour, since there used to be a developed footwear industry. “We manufacture top quality footwear and so skilled labour has a crucial role. In the former Yugoslavia, a wide cross-section of large companies were involved in the production of textile, leather and footwear in this region, and so we were able to hire sufficient skilled employees and the required accompanying infrastructure which helped in launching the business. We believed that as we were only 600 kilometres away from our Mainburg-based parent company, it was highly important and thus we could easily send workers there for bi-directional training”, emphasised Lins.

AESTHETICS WITH FUNCTIONALITY

been well aware of the requirements for on-site footwear, he provided a better solution. Gore-Tex waterproof leather boots soon became extremely popular with German firefighters, yet he had no intention of stopping but continued with the implementation of a highly distinctive marketing campaign. He planned holidays in destinations where he intended to present his products to firefighting services, whilst his wife and children were relaxing. His idea proved valid, since, two years ago, Haix produced over 1 million pairs of footwear in its two plants in Germany and Croatia. The company currently employs 1,100 staff and last year it generated turnover of €100 million. Haix started operating in Croatia in 2005, several years after the opening of its distribution centre in the US. Due to the large demand, in addition

In March last year the factory expanded to three facilities covering a total area of 12,000 m2 with daily production of 10,000 pairs of footwear (it currently produces around 5,000 pairs of footwear daily). The value of investment in Croatia thus far exceeds €30 million and new machinery worth over €2 million will be delivered soon. The factory currently employs 782 workers, as well as 34 apprentices and performs all the work, from design and development to final production and distribution. It aims to launch at least two or three entirely new models each year. “The most important feature of our footwear is functionality, it is our priority, yet we do not ignore aesthetics either. Our work&safety footwear is not ‘boring’ nor exclusively safety-oriented, as it is also comfortable, lightweight and appealing”, stressed Lins. A range of testing methods are implemented, as shown by the large number of certificates awarded to the company, with the BSCI certification particularly highlighted, since it is the only company in Croatia that currently holds this certification, proving its corporate social responsibility and on-going care for employees. Lins pointed out the fact that this certificate is a huge challenge. Every two years the company is visited by independent inspectors from the German TÜV Institute who hold separate interviews with employees and inspect the entire factory and all documentation prior to issuing a certificate showing compliance with BSCI standards based on the guidelines provided by the International Labour Organisation. “We are totally convinced of the importance of sustainable development and we aim to preserve both environment and health to the maximum, both of our employees and customers. Consequently, during the proJanuary 2017 | No 265 | PVinternational | 25

FOOTWEAR PLANT

The value of investment made in Croatia exceeds €30 million and new machinery worth over €2 million is soon to be delivered

SOME DATA ABOUT THE COMPANY...

1,100 employees employed by Haix in Germany and Croatia €100 million turnover last year 782 workers and 34 apprentices employed in Croatia 5000 pairs of footwear produced daily

duction of all the parts of our footwear that come into contact with the skin when being worn, we use water-based adhesives without strong chemicals. Moreover, the entire factory located in Croatia is cooled by underground water that we restore to nature, unpolluted. In addition, we use external heating sources for only three months, as the remaining heating is provided via our machinery. Furthermore, we use rainwater to ﬂush toilets which is collected near the factory and we fully focus on minimising any environmental impact. Thus, we have shown that we have come to Croatia to stay and achieve long-term success”, highlighted Lins, adding that the company is extremely careful in selecting its suppliers as it primarily considers their compliance with high standards. Affordable prices are not given precedence over the results of due diligence analysis performed amongst the suppliers, which results in 95% of their suppliers originating from the EU and the remainder from the rest of Europe.

THE HIGH LEVEL OF CORRECT ATTITUDE In addition to impressive machinery, production lines and quality organisation, it is important to note the relationship between employer and employees. Since there is ample cynicism in Croatia concerning this issue, there are no shortcomings in Haix’s attitudes. Several workers contacted expressed their delight both with work conditions and their employers, which is not surprising, since they are given the opportunity to agree on whether they will work overtime, for which they are regularly 26 | PVinternational | January 2017 | No 265

paid and also decide on when it will be done. Moreover, where they manage to implement innovations or improve the processes in their production area, they receive incentives which may exceed their salary. Furthermore, the employer pays 50% of their contributions into the third pillar of their retirement plan, plus they all have 24-hour accident insurance coverage, and are all entitled to a holiday and Christmas bonus plus travel expenses and a cooked meal expense are also covered. They are provided with all the beneﬁts which an average Croatian employee in the private sector can only wish for. In addition, the company occasionally organises trips to the coast for all employees and their children. Moreover, they are also offered free computer courses, as well as free foreign language courses. All the instructions in the factory have been written both in German and Croatian. “Hence, no one can say they did not understand what they need to do”, noted Lins, adding that special attention is paid to young employees and their training. Schools in Međimurje have not provided vocational education for footwear manufacturers for over eight years and only after an inquiry was submitted to the Ministry of Education by Haix, was the programme launched in several schools. The company currently employs virtually the entire class who attended this programme. In addition, young people from Germany come to attend the vocational programme, since the footwear industry has been non-existent in Germany since the 1980’s. “We are aiming to show young people that they are able to lead decent lives working in footwear industry. Irrespective of the fact that many of them are aiming to opt for more appealing occupations, an increasing number of them eventually opt for this occupation and we are delighted. Firstly, we take them on a tour throughout the plant to identify their interests and we keep them busy, since it is the easiest way to retain them”, concluded Lins.

WIN-WIN SITUATION The fact that the company and its workforce have excellent relations and that jointly they are creating a success shows it is possible to have a win-win situation. It is possible to have a globally competitive company that provides decent salaries, whilst being involved in a sector which, in Croatia, has been considered a failure for years. It is to be hoped that other foreign investors, as well as local entrepreneurs follow the example of Haix; it appears that local entrepreneurs have somewhat forgotten that workers are the cornerstone both of a company and the production processes, rather than another item of expenditures.

INTERNATIONAL ANTI-CORRUPTION DAY

Combating corruption According to the perceived level of corruption, Croatia has only recently ranked among those less corrupt countries, against a backdrop of an increasing number of charges, accusations and corruption convictions in Croatia by Krešimir Sočković

ccording to the Corruption Perception Index (CPI), published by Transparency International, Croatia ranks 50th with 51 points, showing a move of 3 points over the previous year, and crossing the 50-point threshold, so ranking amongst the less corrupt countries. The least corrupt countries in 2015 were again Denmark, Finland, Sweden, New Zealand, Holland and Norway. Corruption is a global problem that needs to be addressed openly in the context of the Croatian economy, pointed out the Vice President of CCE for Tourism, Trade and Finance, Josip Zaher, opening a recently held public-private dialogue Strengthening the Integrity

CORRUPTION IS A SERIOUS CHALLENGE FOR ALL SOCIETIES AND ITS COSTS THE EU LEVEL ARE €120 BILLION, CONCLUDED MIRELLA RAŠIĆ of Croatian Companies in Combating Corruption – Challenges and Opportunities, to mark the International Anti-Corruption Day organised by the International Chamber of Commerce Croatia and CCE in co-operation with the Embassy of the Kingdom of Norway. “Corruption permeates all segments of society, it poses a direct threat to human rights, with fatal consequences on moral and social values, development of entrepreneurship and in general on the prosperity of a country. Consequently, decisive, effective and systematic

action is imperative in order to prevent such occurrences. Only a system exempt from corruption can provide all the participants with the opportunity to equally participate in market competition, and strive towards boosting profits and achieving higher competitiveness, reducing risk, attracting investors and employing top-quality staff”, stressed Zaher. Corruption is a serious challenge for all societies and its costs at EU level are €120 billion, concluded Mirella Rašić, Head of Department for Political Reporting and Analysis Unit at the European Commission Representation in Croatia. “According to research conducted in 2015 that focused on companies involved in crucial economic sectors, four out of 10 companies claimed that corruption is a significant problem, albeit not the principal one”, she added.

CROATIA STRENGTHENING THE FIGHT AGAINST CORRUPTION Addressing the issue of the results of research on estimates of corruption in Croatia in 2016, Ana Hećimović, a Po-

licy Researcher at Partnership for Social Development, stated that pressure in Croatia increased throughout 2016, which was evident by requests for bribes from the general public, yet they are no longer willing to become involved. During the panel discussion entitled Legal Framework for Fighting Corruption it was emphasised that the integrity of the Croatian state has been strengthened in the fight against corruption ranging from its legal framework to court practice. Croatia has harmonised her national legislation with European legislation and has developed a legal framework to combat corruption. From 2002 to 2010 the number of corruption charges rose from 872 to 1,433 reports, the number of accusations was up from 295 to 467, whilst the number of people convicted increased from 111 to 236. Moreover, the importance of corporate transparency and corporate social responsibility policy has been particularly highlighted. Around 200 companies in Croatia have identified the importance of non-financial impacts, whereas 2017 will see 70 large Croatian companies subject to reporting obligations in accordance with the EU Non-Financial Reporting Directive. January 2017 | No 265 | PVinternational | 27

CROATIAN EMPLOYERS’ ASSOCIATION (HUP) SCORE

IMPLEMENTATION OF TAX AND OTHER REFORMS IMPERATIVE According to entrepreneurs, the general state of the economy has been given an average grade of 2.46. The Croatian Employers’ Association (HUP) Score has increased by one point, yet Croatia still lags behind Romania, Bulgaria, Slovenia and Estonia, whilst Lithuania is beyond reach by Krešimir Sočković

usiness optimism is increasing, yet the government needs to take advantage of currently favourable circumstances to implement large-scale reforms and measures that will ensure sustainability and higher economic growth rates, as stated during the recently held traditional meeting of the Croatian Employers’ Association members. The Croatian Employers’ Association (HUP) Score and the results of the research on economic expectations of Association members were presented during the meeting. GDP growth over eight consecutive quarters resulted in rising optimism amongst both employers and the general public, yet entrepreneurs still show caution since 2017 may bring a large number of challenges that still need to be tackled by the government, stated the President of the Croatian Employers’ Association Gordana

Deranja. “We are delighted with the announcement made by the government about GDP growth exceeding 3% in 2017, but are concerned that it is primarily based on an expected increase in consumption. We cannot be satisﬁed with the fact that plans for a more vigorous ﬁscal consolidation were abandoned immediately upon facing some sluggish growth, which resulted in reduced budget expenditure. Nevertheless, they may unfortunately increase yet again”, warned Gordana Deranja, adding that there is a wide range of problems that have been present for some twenty years that need to be addressed, as no one has thus far been prepared to deal with them. “If we are striving to prosper and move away from the bottom rungs of the economic ladder in the European Union, we need to tackle our problems rather than continue avoiding them. The government introduced a tax reform at the start of its

mandate, yet as one swallow does make a summer, one reform is not sufficient to implement all the required changes. Previous governments did not address the issue of reforms, as they normally opted for some easier solutions. Consequently, we are faced with our current problems”, concluded Gordana Deranja.

SCORE IMPROVED The Croatian Employers’ Association presented the new results of their HUP Score. According to the latest results, Croatia has improved its position in relation to other transitional countries, EU member states, by only one point. The Croatian Score came in at 34. Meanwhile, the Romania scored 50, Bulgaria 51, Slovenia 59, Estonia 68, and Lithuania reached 69. “The results achieved by Croatia are certainly not satisfactory. They show exactly that we must not be in-

EBRD PROJECT

Connecting entrepreneurs and young people Entrepreneurs were also presented with the preliminary results of the joint project of the European Bank for Reconstruction and Development and the Croatian Employers’ Association. The initiative of the private sector intended for young people is a project aiming to connect higher education institutions with companies in order to provide young people with the opportunity of attending practical classes and doing prac-

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tical work during their studies, to be able to acquire practical knowledge and skills that will increase their employment prospects. 21 educational institutions and 110 companies are already involved in the project that was launched in October 2016. Due to a high turnout of companies, over 500 positions are available for students to do their practical work and this number is expected to increase, as companies currently still have the

opportunity to apply for participation in the project. The first practical training will be provided in February 2017, following organised training sessions for mentors in order to guarantee a high level of usefulness of the practical work both for the students and forthe employers through implementation of the best European experiences.

AGREEMENT BETWEEN CROATIAN CHAMBER OF TRADES AND CRAFTS AND CROATIAN EXPORTERS’ ASSOCIATION

Joint activity to increase exports

fatuated with our current growth. Croatia is currently still considerably far from the zone of safe and stable vigorous growth she requires and which she is striving to achieve. The real foundations are yet to be laid and hence substantial changes need to be implemented prior to that – through a combination of small-scale and largerscale reforms. Unless these reforms are implemented, the Croatian stagnation and lagging behind other countries will only continue”, pointed out the Director of the Croatian Employers’ Association Davor Majetić.

STATE OF THE ECONOMY – MINIMUM PASS The employers also presented the results of the research conducted amongst the Association members on the state of the economy in 2016 and expectations for 2017. The general state of the economy in 2016 was given an average grade by members, of 2.46 on a scale from 1 to 5; this is the best grade of the general state of the economy over the last ﬁve years since the research has been conducted. Most respondents, 47.1%, rated the state of the economy in 2016 as “mediocre”. Concerning expectations for 2017, 64% of those questioned stated they expected a slight improvement over 2016. Entrepreneurs involved in production and business services sector, trade and tourism showed the greatest level of optimism, as well as those amongst medium-sized and large businesses and in two Croatian regions: North Adriatic and in the North-West.

SA Co-operation Agreement between economic associations signed by the Croatian Chamber of Trades and Crafts and Croatian Exporters’ Association establishes a programme of co-operation in areas of common interest. The partnership is expected to be based on joint initiatives and a mutual exchange of information on activities intended to enhance the business environment for domestic entrepreneurs both in Croatia and globally. “It is said a wise man learns from the environment and so when selecting our partners, we opted for exporters with extensive experience. Their experience in entering new markets and in overcoming bureaucratic hurdles will be of immense value for our members - artisans”, emphasised the President of the Croatian Chamber of Trades and Crafts, Dragutin Ranogajec, adding that he believes a strong partnership will be established over time resulting in an increase in Croatian exports. “Partnership between similar groups is natural, since exporters are increasingly often faced with the fact that

when applying for tenders and entering into contracts they need to provide names of veriﬁed suppliers. Due to this partnership, we will be in the position to meet our requirements in a more straightforward manner”, explained Darinko Bago, President of the Croatian Exporters Association, adding that exporters are the most resilient segment of the Croatian economy. “The demand for the services provided by our artisans is constantly rising, as Croatia is being increasingly integrated into the EU. Thus, we are striving to deepen and strengthen this co-operation”, stated Bago. In order to facilitate the communication amongst the members and protect their common interests, the Croatian Chamber of Trades and Crafts and the Croatian Exporters’ Association will publish the news on the partnership on its official website. In addition, they will jointly appear before competent state institutions when necessary. Additional joint activities are also planned through professional workshops and training sessions. (M.S.)

January 2017 | No 265 | PVinternational | 29

FISH FARMING PP ORAHOVICA OPEN A FRESHWATER FISH PROCESSING UN

FISH VIA AN OPTICAL FIBRE CABLE NETWORK The new plant is valued at €3.5 million. Fish ponds are equipped with cutting edge technology, a HACCP system is in place in the fish processing function, which ISO 22000 certification ranging from raw material entry to final product distribution by Goran Gazdek

The investment aims to promote the restoration of freshwater fish farming to its former level reached at a time when Croatia was the largest producer of freshwater fish in the region. Through investment in the latest fish farming technologies and the freshwater fish processing factory we are striving to reduce production costs and hence boost competitiveness. Vlado Čondić Galinčić, President of the Management Board of PP Orahovica

new factory for freshwater fish processing has recently been opened by PP Orahovica in Čačinci in Virovitica-Podravina County. Its total value is €3.5 million, of which 50% was provided through the IPARD Programme and the remainder through a credit line from the Croatian Bank for Reconstruction and Development (HBOR). Due to its production of around 1,000 tonnes of edible and young fish produced in fish ponds covering 5,000 hectares and located in Grudnjak, Jasinje, Donji Miholjac, Pisarovina, Lipovljani and Kopačevo (Baranja fish ponds), PP Orahovica is the largest freshwater fish producer in Croatia. Since mid-2010 the value of investment into fish pond reconstruction and fish farming development was around €5 million. At Grudnjak, the central fish pond (covering an area of 1,024 hectares), has been reconstructed and all mud completely removed. The latest fully automated technology has been installed enabling electrical charging throughout the pond and an optical network connecting all ponds into a unique automatic feeding management system. The ponds are equipped with cutting edge technology, a HACCP system has been installed in the fish processing area, which meets ISO 22000 certification, ranging from raw material entry to final product distribution. “The investment is aimed at promoting the restoration of freshwater fish farming to its former level, reached at the time when Croatia was the largest producer of freshwater fish in the region. Through investment in the latest fish farming technologies and freshwater fish processing factory, we are striving to reduce production costs and thereby boost our competitiveness”,

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stated Vlado Čondić Galinčić, President of the Management Board of PP Orahovica. In PP Orahovica, through the process of hatching fish roe under controlled conditions, has the advantage of enabling the reproduction processes to be fully exploited, which also provides the opportunity for the more effective utilisation of both roe and milt, as well as a coherent implementation of genetic improvement methods, striving to provide offspring from preselected female fish. Consequently, any loss is substantially reduced through the optimisation of incubation conditions of fertilised roe and the initial rearing of fish larva.

ACCELERATED CYCLE The fish hatchery is located in Baranja and comprises of two separate recirculating systems. One is used for the preparation of female fish for breeding, whilst the other is intended for roe incubation and the rearing of larva. The use of sophisticated technology has reduced the duration of the fish breeding cycle from three to two years, prevented food waste and decreased fish deaths. The system has continuous access to data on water quality parameters (oxygen, pH values, temperature), which enables the monitoring of fish development and ensures optimum conditions resulting primarily in the normal healthy development and rapid growth of Orahovica carp. High quality food for carp ensures a high protein content in their flesh. Only the highest quality young carp, of a species that traditionally lives in that region, is selected in the company’s own fish hatchery for further raising. The quality of carp produced by PP

NIT Orahovica due to a reduced fat level and a defined light taste, has been widely identified and is an extremely popular ingredient in the preparation of traditional Croatian dishes such as fish stew, carp in wooden fork, “drunken carp” and a large number of other gastronomic specialties. Consequently, in 2013, PP Orahovica was awarded the Croatian Origin label by the Croatian Chamber of Economy due to the extraordinary quality. In addition to carp, other fish species are bred by PP Orahovica, such as grass carp, silver carp, pike, catfish and zander, black bullhead, bream and roach. The fish is sold on the market through retail centres and sports fishing societies, with 70% of the products being exported to Hungary, Bosnia and Herzegovina, Italy, Serbia, the Czech Republic and Bulgaria. Production is exclusively to order. The fish caught is processed on the same day, placed in cold storage plants and sold on the market the following day. The shelf-life of such products, depending on the packaging, ranges between six and seven days. In 2015, PP Orahovica sold over 1,091 tonnes of fish.

A STEP CLOSER TO CUSTOMERS The premises used for fish processing has been very confined, and hence a fresh fish only programme was opted for, as there was no opportunity for freezing and smoking, and the location did not have potential for expansion. “The cleaned fish was cut into cutlets, fillets and so-called ‘chips’, since it is tasty and crispy when baked, and after packaged into bags and

trays. In addition to fresh fish products, the new factory will enable us to provide frozen fish, as well as smoked carp. We will start with cutlets and fillets and subsequently adapt to the market requirements. Our team will provide recipes and prepared dishes, ranging from pâtés to other fish delicacies. There are a large number of ideas, yet we are going step by step since we would like to be sure of what we are selling”, noted Nataša Tomac, Head of Production. Per capita freshwater fish consumption in Croatia is only 1.5kg, as opposed to the international standard of 17.8 kg and 23.3 kg in the EU. Fish has disappeared from the menu amongst young Croatian families, and PP Orahovica expressed their belief that its availability in retail centres may positively impact the current habits of young Croatian families. The new factory is the first step towards achieving the long-term goal of increasing freshwater fish consumption. “Fish markets provide only live fish. Nevertheless, against a backdrop of the extremely fast pace of modern life, people cannot afford to take time and purchase fresh fish at the market. Hence, we are aiming to make fish available through retail shopping centres. Retail stores do not need to comply with special conditions as is the case with fish markets. The former only need to be provided with a refrigerated cabinet of up to 4 degrees Celsius, y in which to place fish trays and thereby make fish more easily available to cun stomers who visit shopping centres in search of ingredients and supplies. Se-

condly, the issue of ﬁsh cleaning and waste management has also been tackled in this way. We are striving to provide customers with products they will only need to season and prepare in the desired way”, explained Nataša Tomac. Factory construction began in October 2015 and was completed last autumn. Its annual capacity stands at 3,000 tonnes of processed ﬁsh, and currently employs 15 workers with growth tendencies proportionate with the production programme expansion.

THE PANNONIAN SEA HERITAGE The company operates on the remnants of the former Pannonian Sea, surrounded by immense plains, forests and lakes. The Pannonian Sea withdrew to leave a rich heritage of flora and fauna. Hence, PP Orahovica is focused on the preservation of this valued heritage, promoting it and delivering its products to those interested. Against a backdrop of this mission, the company provides new products under the Panona Mare Project. “We are aiming to raise the awareness of fish consumption which is a dedicated and long-term mission. Continuous work is imperative and we are aware results will not be achieved overnight. We are planning to launch training programmes starting from kindergartens and schools, presenting fish as a healthy food”, explained PP Orahovica.

A RICH PROGRAMME OF PP ORAHOVICA

From hazelnut to wine PP Orahovica is located in pristine nature in Eastern Croatia, between the River Drava on the north and the slopes of Papuk and Krndija in the north-west, on the border with Papuk Nature Park. It is a location of striking beauty and natural diversity. Hence, PP Orahovica focuses on sustainable development, which suggests the optimal use of natural resources, as well as the preservation of both natural and cultural heritage. PP Orahovica covers an area of 12,000 hectares. Its hazelnut plantation covers 320 hectares, and 190 hectares of its vineyards. The most important wines produced are Green Silvanac, top quality Graševina, Frankovka, Grey Pinot and Chardonnay. An area of 7,000 hectares is used for agricultural production (corn, wheat, soya, as well as sugar beet and rapeseed). The company employs 240 staff, and revenue generated last year was €18 million. “If I had to briefly present PP Orahovica and state its competitive

advantages, I would certainly mention Green Silvanac wine, hazelnuts, freshwater fish and, most importantly, its hard-working employees. We are the leader and the most important company involved in freshwater fish production and processing in Croatia. We primarily opted to invest into our new factory in order to provide a response to market requirements to the accelerated pace of life, as well as striving to meet customer requirements concerning the finished and semifinished top quality products, to improve the selling price of our products and provide a wider and a higher quality fish product range”, noted the President of Management Board, Vlado Čondić Galinčić.

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BEER MARKET INNOVATION AND THE FUTURE OF THE BREWING INDUSTRY

RECESSION, REC COMPETITION A The number of gyms has been rising globally as people are increasingly aware of their nutrition. The trend is to opt for natural ingredients, rather than being processed. Thus, there are now interesting opportunities for breweries, since beer is produced from natural ingredients and after reducing its alcohol content, it can replace any sports drink intended for electrolyte replacement, pointed out the President of the Management Board of Carlsberg Croatia, Helle M. Petersen piše Miro Soldić soldic@privredni.hr

T €0.3 3 billion revenue generated by the brewing industry for 2015

€43 million the positive consolidated financial result for 2015

€1,200 average monthly nett salary in brewing industry for 2015

rends in the global beer market clearly show an increasing market share of both craft beers and premium segment beers, with demand largely fuelled by emerging markets against a backdrop of further consolidation amongst international brewers. According to the leading players in the Croatian brewing industry, the Croatian market follows suit, yet it also has speciﬁc features which were addressed during the recently held Opatija-based HoReCa Conference, by senior executives of three leading companies on the Croatian market. Helle M. Petersen, President of the Management Board of Carlsberg Croatia, Miroslav Holjevac, a member of the Management Board of Zagrebačka pivovara (Zagreb Brewery) and the President of the Management Board of Heineken, Boris Miloushev, pointed out that the ﬁnancial year 2015 saw highly satisfactory results, and expressed optimism for 2017.

RECESSION FOLLOWED BY RECOVERY According to data released by the Financial Agency, 2015 saw total revenue generated by entrepreneurs in beer production of €0.3 billion, an increase of 7.7% over the previous financial year. Moreover, in 2015 entrepreneurs reported an overall positive consolidated financial result of €43 million, s 8.2% up in relation to 2014. The highest amount was shown by Zagrebačka pivovara (Zagreb Brewery) of €132.5 million, with Heineken Croatia second (€91 million), Carlsberg Croatia third (€44 million), Agrolaguna (€14.7 million), and finally Prvo hrvatsko pivo 1664, €11.7 million). Miloushev explained that both industry and the economy are recovering after several

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years of sinking during recession. Holjevac was of the same opinion, adding that solid results achieved were additionally enhanced by the European Football Championship during which beer consumption increased considerably. Nevertheless, notwithstanding the fact that in 2015 the Croatian market saw a 5.5% rise in nett proﬁt (from €43.5 million to €45.9 million) only 16 Croatian companies operated

BOTH INDUSTRY AND THE ECONOMY ARE RECOVERING AFTER A MULTI-YEAR SLUMP, NOTED MILOUSHEV proﬁtably, whilst 23 companies showed losses. In 2014, losses were €3.7 million, but 2015 saw losses reduce sharply by 24.4%, to €2.7 million.

HIGH EXPORT COSTS An excellent tourist season also positively affected the results achieved by brewers. Tourism is a speciﬁc target of the brewing industry, since Croatian beers are exported through tourism, without incurring the costs of conventional export logistics. “The export of beer as a local product is highly challenging due to high costs. Local brands are popular internationally among the Croatian diaspora, as by doing so they maintain at least some contact with Croatia. Consequently, we export our products only to those markets with a large number of Croa-

COVERY, ND QUALITY

January 2017 | No 265 | PVinternational | 33

BEER MARKET €38.7 million. It has to be highlighted that in 2015 over 1,600 people were employed in the brewing industry.

SEVERE COMPETITION

If brewers wish to remain proﬁtable, they need to diversify their product range in speciﬁc segments. The area with the greatest potential is in the increased consumption of craft beers, which is an indicator of client preparedness to increase spending on industrially brewed premium beer. Boris Miloushev, President of the Management Board of Heineken

tian expats, as otherwise it would not be costeffective. Our exports are actually through tourism and so tourism greatly impacts on our business”, explained Holjevac, adding that during the last several years Zagreb has been increasingly identiﬁed as a tourist destination and hence a large number of additional opportunities are being provided. Helle M. Petersen also emphasised that the Croatian market needs to be considered through the lens of both local customers and tourists. “Tourists are currently far more demanding compared with a decade ago, and they need to be provided new services in order to be attracted”, noted Helle M. Petersen who has extensive work experience of the Asian market and she consequently fully addressed the issue of tourists originating from this region whose purchasing power is solid and their needs far exceed the mere spending of time on the beach. She gave the example of Korean tourists who are currently still an enigma for local entrepreneurs, as the average budget of these middle-class tourists on their journeys reaches around €100,000. “According to my personal experience, such tourists wish to gain new experiences and they are prepared to spend copiously for that purpose. I am delighted with the number of tourists in Croatia, yet I believe we are rather lazy in studying their habits. They need to be encouraged to spend more, rather than in other markets they are visiting. Hence, top quality products are imperative, primarily in gastronomy, since they are not reluctant to spend substantially on well prepared food and drinks”, stated Helle M. Petersen. According to the results reported in 2015, a certain level of Croatian beer is exported with a value of €40.5 million, an increase of 12.4% over the previous year, whilst imports rose by 2.4% to

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Concerning market consolidation, the three senior executives expressed slightly different opinions. Miloushev believes that market consolidation will not significantly affect the European market, since it is already a developed market. The Croatian market is similar, due to the fact that there is currently severe competition. On the other hand, according to Holjevac through market consolidation and globalisation, Zagrebačka pivovara will be provided with the knowledge and technology to make it more competitive locally. “Being a part of a large corporation is fundamental, since this is where a vast store of knowledge lives. As a segment of such a large system, we are able to provide our customers with some opportunities that we could not previously”, stated Holjevac. Helle M. Petersen warned that market consolidation will continue, due to the fact that margins in the brewing industry are not large. “The trends we are witnessing globally will certainly continue. Large brands are acquiring craft breweries and thereby entering this segment, which clearly suggests that consolidation will continue”, she stressed, pointing out that the established players both on European and Croatian markets need to pay attention to new Asian companies with high ambitions which could be interested in increasing their share of international markets, irrespective of the fact that their local potential is currently burgeoning. It has to be said that in 2015 the average monthly nett salary in the Croatian brewing industry was €1,200, 5.4% up compared with 2014 and almost 80% up in relation to the average monthly nett salary of those employed by Croatian entrepreneurs. In 2015, the average monthly nett salary in Zagrebačka pivovara, which employs 540 staff, was €1,626, as opposed to a salary of €1,476 received by those employed in Heineken. When asked, the representatives of the leading companies suggested they were not seriously worried about the loss of skilled labour due to migration against the backdrop of such high salaries, nor were negative demographic trends seen as a serious problem. “The salaries of our employees are definitely excellent and so we have been identified as good employers. Being part of a large corporation, it is not a problem for us to pay and attract staff, and we have been planning to employ them after graduation”, noted Holjevac. Miloushev expressing a similar opinion concerning these issues. “We normally attract staff through global programmes within the corporation, yet we also focus both

on attraction and education of our employees locally. Irrespective of migrations, there is still high quality labour and, in our experience, people are prepared to return to Croatia when provided with adequate opportunities”, he pointed out. “Croatians migrate and this adversely affects employee attraction, due to the polarisation of population into the young and the elderly, the North and the South, the rich and the poor, which is a serious problem. We need to be aware of the fact that salaries are not crucial and that employee development is also fundamental. In my opinion, young Croatians are willing to learn and develop and our industry is able to give them the opportunity to become managers of the future”, emphasised

BEING A PART OF A LARGE CORPORATION IS FUNDAMENTAL, SINCE THIS IS WHERE AN EXTENSIVE FONT OF KNOWLEDGE LIVES, STRESSED HOLJEVAC Helle M. Petersen who expressed her delight with the fact that innovations are welcomed by Croatian consumers who are open to tasting new and different types of beer.

HIGHER PRICE, HIGHER QUALITY Innovation is the future of the industry, primarily through development of de-alcoholised beer as sports drinks. This includes not only having a beer after participating in a sport, but the development of an entire range of specialised products aiming to exploit the currently dominant trend among customers who care about their health and appearance. Although the connection between alcohol and health may initially appear contradictory, Helle M. Petersen explained this issue. “The trend of focusing on health has been present both locally and globally. The number of gyms has been rising across the world, and people are increasingly aware of their nutrition. They opt increasingly for natural ingredients, without much processing. Thus, there are currently signiﬁcant opportunities for breweries, since beer is produced from natural ingredients and after reducing its alcohol content, it can replace any sports drink intended for electrolyte replacement. I believe that the consumption of low-alcohol content beer will certainly in-

crease under such circumstances. Moreover, low-alcohol beer market will also develop substantially”, she anticipated. Holjevac also expressed a similar opinion, adding that beer is an entirely natural product having a high vitamin B content. Miloushev pointed out that if brewers wish to remain profitable, they need to diversify their product range in specific segments. According to him, the area with the greatest potential is in the increased consumption of craft beers, which he believes is an indicator of client preparedness to increase spending on industrially brewed premium beer. “It certainly all depends on customer purchasing power, yet I believe in general there is potential for development of slightly more expensive products which are also higher quality”, he stressed, adding that Heineken has recently acquired a craft brewery in the US. He stressed that the craft beer upswing is based on the commoditisation of an industry that seldom provides high quality products and is primarily focused on affordable mainstream products. “Customers require quality and this is evident on the market. If one considers the American market with its craft beer boom, one will realise it provides low levels of quality industrially brewed beer. On the other hand, the Belgian market has not seen a significant increase in consumption of craft beer, since it is a market on which premium beer is traditionally popular”, pointed out Miloushev. Helle M. Petersen added that the Croatian market is faced with a similar situation, explaining that the discount market segment has been reducing, as customers are prepared to increase their spending on premium products. “I hope that our industry will exploit this opportunity by increasing our focus on premium beers and hence increasing our margins”, she concluded.

Local brands are popular internationally amongst the Croatian diaspora who drink it as a way of maintaining at least some contact with Croatia. Consequently, we export our products only to those markets with a large number of Croatian expats, as otherwise it would not be cost-effective. Miroslav Holjevac, a member of the Management Board of Zagrebačka pivovara

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PRIVREDNI VJESNIK

ZAGREB AGAIN VOTED BEST EUROPEAN CHRISTMAS MARKET DESTINATION N

Advent in Zagreb the most beautiful in the world Zagreb won the competition among 54 European cities, following votes cast by 188,000 people from 124 countries. Votes for Zagreb were also cast from Jamaica and Antarctica (only one per each of these two countries, yet not the least valuable) by Sanja Plješa

ce Park on King Tomislav Square, Fuliranje event (Fooling Around) in Tomićeva and Kurelčeva Streets, various events in Zrinjevac Park, on both Strossmayer and European Squares, as well as in New Zagreb, appealing Christmas events in the Upper Town, in Grič tunnel and in the courtyards scattered throughout the Upper Town attracted an increased number of visitors during the Advent season. No one appeared bothered by the packed streets – a large number of passers-by walked around even in the middle of

Fashion Advent in the Oktogon 36 | PVinternational | January 2017 | No 265

the traffic in the evenings, especially at weekends, encountering cars and horse-drawn carriages. Lipizzaner horses were clattering around Zrinjevac Park pulling Father Christmas’s carriage, murmur sounds were mixed with the sounds of the jingling bells and it was all permeated with the seductive scent of mulled wine, punch and fritule – Croatian mini doughnuts (and the slightly less appealing smells of gas heaters and all types of sausage). Hence, the magical and seductive Croatian capital was declared Best European Christmas Market Destination in 2015 and in 2016 once again. Visitors were given the opportunity to vote on the pages of the Belgian portal Best Places to Visit in Europe - Europe’s Best Destinations and from 2nd to 12th December 2016 visitors could cast their votes for the city they believed had the best Christmas market and provided the broadest range of events. Zagreb won the competition from 54 European cities, following the votes cast by 188,000 people from 124 countries. Furthermore, Zagreb also ranked ﬁrst by the number of votes, having received a total of 33,607 votes. The French cities of Strasbourg and Colmar ranked second and third respectively, whilst London was not in the top 20 Best European Christmas Market Destinations. Votes cast in Europe accounted for 79% of the overall total, and the remaining votes were cast across the world. It has to be noted that Zagreb also received one vote from Antarctica and Jamaica respectively.

1. Ice park, King Tomislav Square; 2. Advent in Tunnel, Grič Tunnel; 3. Fooling around, Tomićeva and Kurelčeva Streets

A CHRISTMAS CAROL IN THE TUNNEL Another new appealing event that has to be highlighted in Advent in Zagreb was Christmas Carols in Grič Tunnel. Through the use of lighting that changed the colours of concrete walls, an underground tunnel connecting Mesnička Street with Ilica and Radićeva Street was transformed into a magical place in the depths of a silver ﬁr forest surrounded by icebergs. Typical Christmas motifs such as snow, frosty forests and frozen lakes were designed around the entry into the central part of the tunnel. The Christmas atmosphere was enhanced also by an art installation that dominated the tunnel premises, whilst special illumination provided the desired effect of a 3D sculpture. In addition to the visual features, the magical atmosphere was additionally enhanced by the sound of music and singing

choirs with repertoires covering both Christmas and classical tunes. A large number of solo singers and small ensembles also performed in the tunnel. Last year Zagreb Oktogon became the central venue for fashion and design. 12 Croatian designers presented their collections that were exhibited in handmade wardrobes. 2016 saw yet another innovation in the Zagreb-based Advent events entitled Advent in Design District in Martićeva Street. In addition to classical gastronomy and wine programmes, there were also daily children workshops, as well as workshops for adults still young at heart. Thus, participants were given the opportunity to learn how to make masala tea, healthy juices, as well as personalised packaging for Christmas and New Year gifts. Another special feature of Advent in Zagreb was the fact that it was held until 8th January 2017..

Advent on European Square

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CHRISTMAS COLLECTION OF DESIGNER MONIKA SABLIĆ

FANI ČAPALIJA AS INSPIRATION Fani’s beauty was timeless, so she was perfect for this mini-campaign, which is a gift to all my clients and the ladies who admire my brand, pointed out Monika Sablić Feminine and sexy are synonyms for the creations by the Split-based designer Monika Sablić, whose new Christmas mini collection was inspired by one of the most beautiful Croatian Queen of Beauty title holders - Fani Čapalija. “Fani’s beauty was timeless so she was perfect for this mini-campaign, which is a gift to all my clients and the ladies who admire my brand”, pointed out Monika Sablić. The collection includes a black sparkling overall worn by Fani throughout the campaign, as well as a white cocktail dress with ornaments around the neck and arms, Bordeaux lace trousers and a white shirt. This time, Fani posed for the popular young fashion photographer

Danijel Galić, following several years of her absence from public life. .

MORO&KUNST IN CROATIA

13-kilos of gold looks small Most gold reserves are stored in the US depository – 8,133.5 tonnes. On the other hand, according to data provided by the World Gold Council, Croatia has no gold reserves Gold, weighing 12.44 kg, and worth over €500,000 has recently been presented in Zagreb to mark the occasion of the entry of Moro&Kunst, a leading bullion and other precious metal trader, to the Croatian market. The entry of leading bullion traders to the Croatian market in Southeast Europe suggests the entry of products from the 800 year old Austrian Mint - Münze Österreich. “Following Croatian EU accession, we and the Austrian Mint jointly analysed the strategy for Croatian market entry that we have ﬁnally achieved. We provide the opportunity of high 38 | PVinternational | January 2017 | No 265

quality and reliable trading for all investors in accordance with the highest international standards”, noted the owner of Moro&Kunst, Ivan Moro. A signiﬁcant percentage of monetary reserves of several countries is stored in gold. Most gold reserves are stored in the US depository – 8,133.5 tonnes of gold. On the other hand, according to data provided by the World Gold Council, Croatia has no gold reserves. The gold bullion presented on this occasion is of extreme purity and is primarily purchased by states for their gold reserves. Due to its size, it could easily ﬁt into a lady’s handbag, even if it would be extremely difficult to carry. (I.G.)