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CROATIAN ECONOMIC ANALYSIS FOR 2016 → IT sector, Hospitality & accommodation sector and catering services saw the most positive trends PAGES 2-5

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GOLDEN KUNA AWARDS → Awards given to the most successful companies. We are yet to face a test of our maturity, says Burilović PAGES 6-11

CROATIAN CHAMBER OF ECONOMY OPENS OFFICE IN CHINA → Doors to the worlds’ largest economy for local exporters PAGES 16-17

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

December 2017, Year X, No 275

CROATIAN BUREAU OF STATISTICS

Economic growth at 3.3%

A 5.7% increase in the export of goods and services the largest contributor to GDP growth in the third quarter of 2017 by Ilijana Grgić

n the third quarter of this year the Croatian economy grew by 3.3% in real terms in relation to the same period of 2016. Seasonally adjusted GDP quarter showed a positive 0.9% rate in relation to the same period of the year before, and in relation to the same quarter of 2016, 3.2% higher in real terms. This is the 13th consecutive quarter that has seen GDP growth. It is also the third highest growth level since the beginning of the crisis, said the Director of the Croatian Bureau of Statistics, Marko Krištof, who pointed out that based on revised data, GDP growth increased across the whole of last year from 3% to 3.2%. This year it increased from 2.8% to 3% in the second quarter. A 5.7% increase in the export of goods and services was the largest contributor to GDP growth in the third quarter of 2017.

The contribution of nett foreign demand was negative considering that imports grew more than exports; imports increased by 9.5%. The contribution of local demand was positive. Household spending (+3.7%) had the strongest impact on economic activity.

INVESTMENTS CONTINUE GROWING Investment growth had a positive effect on GDP growth. Gross investment into ﬁxed capital increased in the past quarter by 3.4% on a year-on-year level, which is now the ninth consecutive quarter of growth, albeit slightly faster than in the past quarter (3.3%). In the third quarter, state spending increased by 2.3%, slightly more than the 1.7% growth in the previous quarter. The initial estimate shows that quarterly gross added value in the third quarter of 2017 was 2.6% higher in real

terms compared with the same period of 2016, based on original data. Accommodation and activities related to food and beverage preparation also had a large inﬂuence on growth. Croatia is seeing growth in all other activities, except agriculture, which has seen a 3.1% fall for the third consecutive quarter, mainly due to the consequences of the drought. Krištof also highlighted that this will be the 10th consecutive time that Croatian GDP will grow faster than the EU average. Based on data published by Eurostat, GDP of EU member countries grew 0.6% on a quarterly level and 2.5% year-on-year. In terms of economic growth, Croatia is in the middle with the Netherlands, Spain and Austria. Romania, Latvia and the Czech Republic have the strongest growth rates, with Great Britain, Denmark and Bulgaria having the slowest growth rates.

CROATIAN ECONOMIC ANALYSIS FOR 2016

POSITIVE TRENDS CONTINUE

Hospitality & accommodation sector, IT sector and catering services saw the most positive trends concerning employment, exports and investment. On the other side, trade and production saw the most negative trends by Branimir Kovačić, Bisnode

Small- and microcompanies were the greatest contributors to the moderate growth of employment, but large companies registered a negative trend

inally, 2016 brought stabilisation of the majority of key quantitative indicators of the Croatian economy with strong growth in cumulative profitability. Although companies, which file their annual financial reports, showed a moderate fall in achieved income over 2015, numbers employed slightly increased and cumulative nett profits doubled. Furthermore, exports continue to increase, a multi-year trend. On the other hand, business quality analysis still shows problems in average payment times, but liquidity and indebtedness improved compared with 2015. Based on data provided by Bisnode, 2.8% more companies filed their annual financial

2 | PVinternational | December 2017 | No 275

reports in 2016. A moderate increase in the employment rate was also seen; a total of 895,000 employed in companies which ﬁled their annual reports. This marks the trend of the growing aggregated number of those employed in Croatian companies which started in 2015. It is interesting that small-sized and micro-companies were the largest contributors to this moderate increase in employment, whereas large-sized companies saw a downward trend.

MODERATE FALL IN INCOME, GROWTH IN CUMULATIVE NETT PROFITS Total achieved income from Croatian companies saw a slight 1.7% decrease, to €84.9 bil-

lion. This means that the average income per company decreased. Cumulative nett profits doubled to €4.4 billion. On the other hand, cumulative operating profits, which measure profitability based exclusively on business activity, came in at €3.4 billion, a 4.5% decrease in relation to 2015. Operating margins were 4.1%. The ratio of loss-makers to profit-makers remained at the level of 2015, that is, there are three profitable companies to two loss-makers, on average. Additionally, medium-sized companies, all companies, categorised by size, saw a cumulative positive nett and operating profits. Exports have continued their multiyear growth in value, although at a slightly lower rate in relation to 2015. Total value of the growth registered with companies that filed their annual report was €15.9 billion, 3.6% growth in relation to 2015. Slightly over half of exports relate to large companies; the only companies that saw an export decrease were smallsized companies, micro-companies and medium-sized companies, although medium-sized companies saw the highest growth rate (26.9%).

IN 2016 INVESTMENTS OF THE CROATIAN COMPANIES THAT FILED THEIR ANNUAL REPORTS TOTALLED €13 BILLION Based on the new method of identifying investments, it is impossible to compare them with previous years. In 2016, investment by Croatian companies ﬁling their ﬁnancial reports was €13 billion, which is almost double the amount invested in 2015. Furthermore, all three size categories of companies had the same share. As previously mentioned, the majority of the qualitative indicators showed positive in relation to 2015. Average current liquidity increased from 1.01. to 1.09. Total value of short-term assets was 9% higher than total short-term obligations. Large, small and medium sized companies had average current liquidity between 1.15 and 1.35, and micro-companies an aver-

Activities of operating margins of Croatian businesses 7,0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0%

Total

small-sized

medium-sized

large

-1.0% -2.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Bisnode

Activity of current liquidity of Croatian businesses 1.40

Total

small-sized

medium-sized

large

1.30 1.20 1.10 1.00 0.90 2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Bisnode

age of 0.84. Considering the fact that the recommended value of the current liquidity is minimally 1.5, it is clear that the majority of Croatian companies do not have appropriate liquidity levels.

FALL IN AVERAGE CORPORATE INDEBTEDNESS The average indebtedness of Croatian companies continued falling last year, just as the years before. On average, they ﬁnance 55% of their assets through external sources, which is a moderate decrease compared to 2015. Large companies (42%) are the least dependant on external ﬁnancing. Medium-sized companies have a slightly higher average of 52%, whereas the average indebtedness of small-sized companies is 74%. Although all three categories of companies decreased their indebtedness, it is obvious that small-sized companies are not sufficiently capitalised, which

diminishes their possibility of ﬁnding additional ﬁnancing sources when required. Payment, as a serious problem for the majority of Croatian companies, had an average identical to the one in 2015, measured in terms of average days of maturity it came in at 90 days in 2016, as in 2015. It is logical that larger companies should have shorter average collection

COLLECTION MEASURED IN AVERAGE DAYS TO MATURITY WERE 90 DAYS IN 2016 WHICH IS THE SAME AS IN 2015 December 2017 | No 275 | PVinternational | 3

CROATIAN ECONOMIC ANALYSIS

periods due to their better negotiating position. With large and medium-sized companies, collection ranges around 80 days but is 109 days with small-sized companies. All three categories had the exact average of this indicator. On the other hand, average payments totalled 79 days, similar to the level of 2015. The deviations between the categories of companies in terms of size are enormous considering that the average of smallsized companies is over 50 days longer than in the case of large and medium sized companies.

WE EXPECT AND ANTICIPATE THAT 2017 WILL ALSO END WITH UPWARD MOVING TRENDS Average nominal salary increased 1.7% in 2015 and stood at around €667. With large companies the average nett salary was the highest at €828, and mediumsized companies at €719, slightly over average, and small companies saw a salary of €569. For three consecutive, the inﬂuence of tourism is visible in the positive movements of aggregated data of the economy. The hospitality and accommodation sector registered the most positive trends 4 | PVinternational | December 2017 | No 275

FOR 2016

Activity of the average days to maturity and obligations of Croatian organisations 105 100 95 90 85 80

receivables

liabilities

75 2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Bisnode

concerning employment, exports and investments. In addition to tourism, the IT sector and catering services also saw positive trends. On the other side, trade and production registered the worst trends. This clearly shows the Croatian market’s tendency of switching from traditional industries to new “soft” industries.

POSITIVE TRENDS CONTINUE Last year’s analysis clearly showed that 2015 brought positive trends, and that they must continue in 2016. We can conclude that this is exactly what happened, which is reassuring for the forthcoming

years. We can expect and anticipate that 2017 will also ﬁnish with upwards trends which will contribute to the country’s economic recovery. In compliance with its corporative values, Bisnode will continue following and analysing economic trends and current affairs, offering full support to entrepreneurial organisations and economic institutions through business information management. The ultimate goal is to help optimise sales and increase income as well as minimise risk for the purpose of greater success of individual business operators, and ultimately the entire economy.

Leading Croatian profit-makers in 2016 (first 100 of top 400) RANK

FIRM

PLACE

PROFIT AFTER TAX

RANK

FIRM

PLACE

PROFIT AFTER TAX

HEP

ZAGREB

1,323,818,373

MÜLLER TRGOVINA ZAGREB

ZAGREB

66,818,520

ZAGREB

908,796,891

ZAGREBAČKI HOLDING

ZAGREB

65,443,204

HEP-OPERATOR DISTRIBUCIJSKOG SUSTAVA

ZAGREB

667,086,760

64,935,870

AUTOCESTA RIJEKA-ZAGREB

ZAGREB

589,711,097

PLIVA HRVATSKA

ZAGREB

554,754,256

HEP-PROIZVODNJA

ZAGREB

428,288,087

HS PRODUKT

KARLOVAC

377,922,402

VALAMAR RIVIERA

ŽBANDAJ

336,657,721

JANAF

ZAGREB

290,492,210

HOPS

ZAGREB

271,672,952

LIDL HRVATSKA D.O.O.

VELIKA GORICA

236,799,750

ADRIS GRUPA

ROVINJ

235,724,920

ALPE-ADRIA POSLOVODSTVO

ZAGREB

221,890,508

H-ABDUCO

ZAGREB

214,687,640

ENERGIA NATURALIS

VUKOVAR

209,353,473

PODRAVKA

KOPRIVNICA

190,576,114

PLINACRO

ZAGREB

188,869,930

ZAGREBAČKA PIVOVARA

ZAGREB

186,195,641

PRVO PLINARSKO

VUKOVAR

179,872,944

ZAGREBAČKE OTPADNE VODE

ZAGREB

179,174,426

HRVATSKE ŠUME

ZAGREB

174,801,636

SUPER SPORT

ZAGREB

169,064,119

INA

ZAGREB

160,021,170

TANKERSKA PLOVIDBA

ZADAR

153,888,099

DUKAT

ZAGREB

143,474,616

GRAND HOTEL LAV

PODSTRANA

139,389,359

KONČAR-ENERGETSKI TRANSFORMATORI

ZAGREB

133,220,236

MAISTRA

ROVINJ

130,536,977

TOMMY

SPLIT

113,080,770

JADRANSKI LUKSUZNI HOTELI

DUBROVNIK

111,789,636

ERICSSON NIKOLA TESLA

ZAGREB

109,566,640

ZAGREB

107,899,295

VETROPACK STRAŽA

HUM NA SUTLI

105,828,061

OMCO CROATIA

HUM NA SUTLI

104,722,956

PLAVA LAGUNA

POREČ

100,717,565

PETROL

ZAGREB

99,076,081

KFK

RUGVICA

92,574,445

JGL

RIJEKA

91,302,466

NAŠICECEMENT

ZOLJAN

87,749,109

ZRAČNA LUKA SPLIT

KAŠTEL ŠTAFILIĆ

85,537,413

ZRAČNA LUKA DUBROVNIK

MOČIĆI

85,015,938

AGENCIJA ALAN

ZAGREB

81,163,156

ATLANTIC TRADE

ZAGREB

76,753,932

PLODINE

RIJEKA

76,191,789

ISTRATURIST UMAG

UMAG

73,843,349

DM-DROGERIE MARKT

ZAGREB

73,583,218

HUP-ZAGREB

ZAGREB

NOVI AGRAR

OSIJEK

64,913,504

LTH METALNI LIJEV

BENKOVAC

62,578,284

STUDENAC

OMIŠ

60,472,773

BELUPO

KOPRIVNICA

60,296,671

MLINAR

ZAGREB

58,466,503

CRODUX DERIVATI DVA

ZAGREB

58,400,819

FERO-TERM

DONJI STUPNIK

57,508,758

INTERIGRE

ZAGREB

57,270,466

LESNINA H.

ZAGREB

57,205,990

DS SMITH BELIŠĆE CROATIA

BELIŠĆE

55,540,756

L OREAL ADRIA

ZAGREB

55,226,736

ORBICO

ZAGREB

55,131,361

NEW YORKER CROATIA

ZAGREB

52,779,228 52,699,206

HEINEKEN HRVATSKA

KARLOVAC

PORSCHE CROATIA

VELIKA GORICA

51,387,301

MEDIKA

ZAGREB

50,704,045

MESNA INDUSTRIJA BRAĆA PIVAC

VRGORAC

50,602,083

HATTRICK-PSK

DUGOPOLJE

50,070,542

VIPNET

ZAGREB

46,547,778

TOKIĆ

SESVETE

46,357,981

KLIMAOPREMA

GRADNA

46,306,418

SIEMENS

ZAGREB

46,033,478

GRADSKA PLINARA ZAGREB-OPSKRBA

ZAGREB

44,498,529

ĐURO ĐAKOVIĆ TEP

SLAV. BROD

43,184,406

TIFON

ZAGREB

42,843,818

TANKERSKA NEXT GENERATION

ZADAR

40,607,823

CALUCEM

PULA

40,160,099

VALALTA

ROVINJ

40,149,651

NEXE GRUPA

NAŠICE

39,950,694

BAUHAUS-ZAGREB

ZAGREB

38,900,124

CEDEVITA

ZAGREB

38,880,403 38,520,954

IBM HRVATSKA

ZAGREB

HRVATSKA LUTRIJA

ZAGREB

38,440,718

GLOBALNA HRANA

ZAGREB

38,425,953

AD PLASTIK

SOLIN

38,346,695

MEĐUNARODNA ZRAČNA LUKA ZAGREB

VELIKA GORICA

38,346,527

AUTOCESTA ZAGREB-MACELJ

ZAGREB

38,015,309

VIRO TVORNICA ŠEĆERA

ZAGREB

37,232,143

GUMIIMPEX - GRP

VARAŽDIN

37,200,227

GENERAL ELECTRIC HRVATSKA

KARLOVAC

36,932,852

YTRES

DONJI KNEGINEC

36,490,800

ODAŠILJAČI I VEZE

ZAGREB

36,056,088

KONČAR - DISTRIBUTIVNI I SPECIJALNI TRANSFORMATORI

ZAGREB

35,930,157

TURISTHOTEL

ZADAR

70,975,829

AKD

ZAGREB

35,782,950

LPT

PRELOG

69,094,081

ROTO DINAMIC

ZAGREB

34,843,236

HRVATSKA KONTROLA ZRAČNE PLOVIDBE

VELIKA GORICA

68,972,956

MERCURY PROCESSING SERVICES INTERNATIONAL

ZAGREB

34,758,515

HOSPIRA ZAGREB

PRUDNICE

68,811,304

100

JYSK

ZAGREB

34,481,818

Source: Bisnode

December 2017 | No 275 | PVinternational | 5

THE CROATIAN CHAMBER OF ECONOMY: GOLDEN KUNA AWARDS GIVEN

BURILOVIĆ: WE ARE YET TO FACE A TEST OF OUR MATURITY A deeper and a more dynamic change is required in order not to become mired at the bottom of the rankings within the EU concerning development. A more effective and encouraging public administration, a stable legislative framework and educational system aimed at meeting the requirements of the labour market are imperative in order to achieve this goal, noted the President of the Croatian Chamber of Economy by Krešimir Sočković

Exports are a fundamental component on which the development of the Croatian economy needs to be based, intended to create value added products and lead towards economic growth and higher living standards. Kolinda Grabar Kitarović, the Croatian President

he Croatian Chamber of Economy recently presented Golden Kuna awards to the most successful companies and individuals. The most successful large company was Maistra, involved in tourism industry, the most successful medium-sized company was Pet minuta, an IT company, and the best small business was the agency Bruketa&Žinić&Grey. These companies were awarded for their extraordinary business results achieved and the impact exerted on the overall Croatian economy. The awards, presented by the Croatian Chamber of Economy at the ceremony held at the Zagrebbased National and University Library. For banks, the Golden Kuna award was given to Privredna banka Zagreb; the most successful insurance company was Wiener osiguranje (Wiener Insurance) Insurance Vienna Insurance Group. The Golden Kuna for innovation was given to Altpro, a manufacturer of signalling and safety systems for rolling stock and railway infrastructure. In the new category of Post Start-Up, a Golden Kuna was awarded to the technology company Axilis. This year the Recognition for the Promotion of Entrepreneurship was awarded for the ﬁrst time to Rimac Automobili. The Golden Kuna Lifetime Achievement Award was granted to Stjepan Šafran, founder of Metal Product and one of the best-known Croatian craft business owners and entrepreneurs. Over the years he succeeded in transforming a simple metal processing and machining workshop into a business system

6 | PVinternational | December 2017 | No 275

covering three companies with over 210 staff that successfully operates on Croatian, European and African markets.

CO-OPERATION BETWEEN STATE, THE ACADEMIC COMMUNITY AND THE ECONOMY IS VITAL, STRESSED KOLINDA GRABAR KITAROVIĆ EXAMPLES OF BEST PRACTICES IN THE CROATIAN ECONOMY The Croatian Chamber of Economy, as a representative of the Croatian economy, points out the examples of best practices, candidates eligible for the prestigious Golden Kuna award, aiming both to award them, and to encourage them to maintain the continuity of success. The list of nominees for Golden Kuna award is based on a calculation of established indicators, whilst the overall corporate image is also evaluated, as well as the impact exerted by companies on the development of the activity in which they are involved, and the impact on the development of the overall Croatian economy.

TO THE MOST SUCCESSFUL COMPANIES

GOLDEN KUNA

A symbol of success and quality in business The Croatian Chamber of Economy, as a representative of the Croatian economy and with 165 years of tradition, is delighted to highlight the examples of best practices, candidates eligible for the noteworthy Golden Kuna award, working to award them and encourage them to maintain their continuity of success. The Golden Kuna award is granted for success in business and high impact exerted on the

overall Croatian economy, since Croatian independence. The idea behind the award originated from the wish that the economy of what at the time was the newly established Republic of Croatia, would assume the features of the pine marten from its very inception, which is considered as a symbol of endurance, adaptability, adroitness and astuteness, as well as welfare and fertility. The first Kuna awards (Golden, Silver and

Bronze) were awarded in 1993. The award has since become a symbol of success and quality in business. Candidates eligible for this prestigious award are solely those who show excellence in business, which is evaluated based on the calculation of established indicators. Consecutive standing as a candidate or the winning of a Golden Kuna award contributes to significant improvement in a companyâ&#x20AC;&#x2122;s respectability and provides encouragement to others to achieve similar success.

December 2017 | No 275 | PVinternational | 7

CCE: GOLDEN KUNA AWARDS “Education needs to be our instrument for the creation of a more effective and a far more resilient system”, Luka Burilović, President of the CCE during the award presentation ceremony. “The Chamber has offered a model of dual vocational education intended to transform available human assets. Consequently, we can state that we are only about to sit for an examination of our social and political maturity. The problems faced by business people do not and must not be permeated by politics”, stressed Burilović, inviting all stakeholders in society to joint action and synergy between government and opposition. “A deeper and a more dynamic change is required in order not to become mired at the bottom of the rankings in the EU concerning development. A more effective and encouraging public administration, a stable legislative framework and educational system aimed at meeting

AWARD HOLDERS AND NOMINEES Category: large companies

Category: small companies

• Maistra, Rovinj • Dukat, Zagreb • Končar Distributivni i specijalni transformatori (Distribution and Special Transformers), Zagreb • Podravka, Koprivnica • Valamar Riviera, Žbandaj

• Bruketa&Žinić& Grey, Zagreb • 404, Zagreb • Amphinicy Technologies, Zagreb • Kod savjetovanje (Code Consulting), Vukovar • Microblink, Zagreb

Category: mediumsized companies

• Altpro, Zagreb • Tehnix, D. Kraljevec

• Pet minuta, Zagreb • Industrius, Obrovac Sinjski • Lipik Glas, Lipik • Sobočan-interijeri (Sobočan Interiors), Mursko Središće • Trade Air, Velika Gorica

• Axilis, Zagreb • Agrivi, Kutina • Include, Solin • Viagemit, Zagreb

8 | PVinternational | December 2017 | No 275

Category: Innovation

Category: Post start-up

Category: Bank • Privredna banka Zagreb, Zagreb • Erste&Steiermärkische Bank, Rijeka • Raiffeisenbank Austria, Zagreb • Splitska banka, Split • Zagrebačka banka, Zagreb

Category: Insurance companies • Wiener osiguranje (Wiener Insurance) Vienna Insurance Group, Zagreb • Allianz Zagreb, Zagreb • Croatia osiguranje (Croatia Insurance), Zagreb • Euroherc osiguranje (Euroherc Insurance), Zagreb • GRAWE Hrvatska (GRAWE Croatia), Zagreb

the requirements of the labour market, are imperative in order to achieve this goal. Candidates for, and laureates of, the Golden Kuna award and the success achieved by them are the best indicators of the potential of the Croatian economy. All nominees show the real potential of Croatian society and provide examples of best practices within the Croatian economy to be taken as role models in order to remain the masters of our own fate”, emphasised Burilović. “Exports are the fundamental component on which the development of the Croatian economy needs to be based, intended to create value added products and lead towards economic growth and higher living standards”, noted the Croatian President, Kolinda Grabar Kitarović. “Hence, co-operation between state, the academic community and the economy is vital. I would simultaneously like to thank all the business people who have

followed me on official visits throughout the world and supported my efforts for

DURING THE FORTHCOMING PERIOD WE WILL CONTINUE IMPLEMENTING THE NATIONAL REFORM PROGRAMME, ANNOUNCED PLENKOVIĆ the promotion of economic exchange”, stated Kolinda Grabar Kitarović.

CONNECTING THEORY AND PRACTICE “The government will continue performing the activities and implement all the measures intended to assist Croatian business people in building their businesses against a backdrop of a stable and reliable legal framework, as well as a predictable ﬁscal framework”, announced the Prime Minister, Andrej Plenković. “During the forthcoming period, we will continue implementing the national reform programme, which I believe is the best guarantee for the demographic recovery of our country”, added Plenković. Gordan Jandroković, Speaker of the Croatian Parliament, extended his best wishes to all award winners and highlighted the example of Canada, whose university system successfully combines theory and practice. “This is the model we need to work to adopt. Students are taught to be innovative and globally connected, which are the features of our

STJEPAN ŠAFRAN, WINNER OF THE GOLDEN KUNA LIFETIME ACHIEVEMENT AWARD

Courage or AN ardent wish are imperative in entrepreneurship One of the doyens of croatian craft businesses and entrepreneurship, Stjepan Šafran, was born in 1945 near Varaždin. the story of his business started in 1967 when he opened his own metal processing and machining workshop. He launched his business from confined garage premises and employed just one worker, whilst his current business system comprises of Alu Product and Metal Product, as well as Ljevaonica Tržec (Tržec Foundry), employing over 210 workers. He manufactures electrical equipment and mechanical equipment through casting. At the start, his workshop delivered electrical equipment to Elektroprivreda BiH (Electric Power Utility of Bosnia and Herzegovina). At the end of 1979, in co-operation with Energoinvest from Sarajevo, they delivered insulator pins to the African market. Since the number of orders grew constantly, they decided to expand the business and con-

structed three production facilities covering an area of 3,600 m2, near Zagreb. Since 1994, the company has been a subcontractor to the reputable German company Tyco Electronics Raychem for the manufacturing and distribution of heat-shrinkable cable accessories. Moreover, it has co-operated with a Finnish partner ABB on manufacturing medium voltage disconnectors. They also signed a co-operation agreement with Norwegian Siemens. In 1996, they opened a company in Sarajevo and in 2001, jointly with their Italian partner, Wam Group, they opened a factory near Varazdin. In 2014, they recorded saw revenue of €10 million, exporting over 70% of their products. A decade ago, Šafran decided to revive the family tradition through the launch of a winery in which he produces Rajnski rizling, Graševina and Muškat. His wines have already found their way to international customers. Šafran’s business has been a family business since its inception, since his wife,

two sons-in-law and recently two grandsons have been involved in the company’s operations, which means the third generation has started taking over the business. Whilst he was expressing his gratitude for the award, Šafran pointed out that courage or an ardent wish are imperative in order to become involved in entrepreneurship. “That was exactly what I had at the age of 22 when I borrowed the finance to open my first workshop in a garage. I currently employ 230 staff and export over 70% of output. That was all achieved primarily due to the help of my associates and business partners and it is a result of long term patient work. If I had the opportunity to live my life again, I would do it all again. It is a fact that we are currently faced with a shortage of quality workers and I believe that, were I given the opportunity to go through all this again, I would even more ardently promote vocational education which I have supported throughout my life”, noted Šafran.

December 2017 | No 275 | PVinternational | 9

CCE: GOLDEN KUNA AWARDS award winners. Do not expect others to solve our problems. We all need to jointly invest 100% of our efforts and use all our knowledge in order for our society and the state to prosper”, noted Jandroković. The CCE is an excellent example of the successful transition from national to a European chambers’ system, which even the older members of Eurochambres need to consider and learn from,

WORDS from THE Tomislav Popović, President, Management Board, Maistra: Winning the award makes one highly delighted when the nominees are such large and reputable companies. I would like to thank all members of Maistra staff, since this success is primarily the result of their work. We have jointly achieved our success against the backdrop of Adris potential and investment value implemented, due to which we are recognisable and visible as one of the most successful Croatian companies. This award will certainly help us continue where we stopped and I am primarily referring to ten years of continued growth. I am convinced we will continue recording similar results as those shown to date.

Luka Abrus, Director, Pet minuta: noted the President of Eurochambres, Richard Weber. “The CCE has raised its 165 year-long tradition of provision of services to business people to another level. Consequently, it is being lobbied for in Brussels, which hosts the key political decisionmaking institutions. The CCE is a distinguished and a highly active member of Eurochambres and it regularly informs us about the requirements of the Croatian economy, business people and the Forum of Adriatic Chambers. It is important to point out yet another important experience concerning which the CCE can act as a role model for other European chambers, and that is how to successfully operate under political pressure. Every economy needs a strong and independent chamber system, since it has proved to positively affect economic development”, concluded Weber. 10 | PVinternational | December 2017 | No 275

This award is for our 140 employees who keep successfully ignoring all the obstacles encountered and continue working, conquering the world from their offices in Croatia, as well as abroad, growing into one of the world’s greatest experts. It is a great honour to be standing here now in front of them and my partner, Viktor Marohnić to accept this award. This is only the start of our journey, as is the case of around a hundred other companies that have joined the Croatian Independent Software Exporters. This is a huge incentive for us to continue playing our game.

Davor Bruketa, Director, Bruketa & Žinić & Gray Agency: We have finally received this award. What we have been trying to prove is that it is possible to do the job you love even

in Croatia and from Croatia, provided you invest an adequate amount of effort and focus on those who are willing to help you, rather than those who are striving to build obstacles for you. I do hope we will meet again here next year.

Božo Prka, President, Management Board, Privredna banka Zagreb: It is a great honour for us to accept this award by the Croatian Chamber of Economy. Privredna banka Zagreb traditionally supports the Croatian economy and we have recently started a vigorous regional expansion. We have been operating in Bosnia and Herzegovina for four years. This year, through the takeover of Banka Koper we have strengthened our market share in Slovenia, primarily moving to provide the best possible services for the Croatian economy. I would like to thank you all for the confidence you have placed in us, primarily the employees, management, business partners and the general public.

Walter Leonhartsberger Schrott, President, Management Board, Wiener osiguranje (Wiener Insurance) Vienna Insurance Group: We are delighted that the work performed by us over the last several years has now been officially recognised. The fact that the quality of our work has also been recognised by our clients brings us immense satisfaction and so I would hereby like to express my gratitude for the trust they have placed in us on behalf of Wiener Insurance. Our successful sales partners and excellent co-operation with Erste Bank played a crucial role in our success story. I would primarily like to express my gratitude to our 700 employees who invest their committed work and their professionalism on a daily basis to build a successful company.

winners Mate Rimac, Director, Rimac Automobili: Some people consider awards as a sign that the goals have been achieved and that the end of the journey has been reached. We are currently still far from achieving our goals and what we consider as real success. Nevertheless, my team of 250 people, and I are satisfied with our achievements, yet I believe we will achieve much more in the future. There is a long road ahead for us and we currently have over 100 new recruitment tenders and next year we are planning to create 150 new jobs, both in Croatia and in several other countries globally. We have big plans, but that is the specific features of start-up companies and one simply has to tolerate that. We are about to face huge challenges

and obstacles, yet we have so far faced a large number of them and have managed to tackle them successfully. There is a long road ahead of us – do not congratulate us at this point – it is too early for that.

Zvonimir Viduka, Director, Altpro: The development of our society needs to be based on companies like us who invest all they have into the development of products for export. This type of production requires employees to be prepared for a huge investment into knowledge, professionalism and innovation. Adrenaline is also required on the market. If your innovative product is not on the market, it is as if you have an excellent sportsperson who is not winning. 20 years ago, the Croatian Chamber of Economy gave us our first opportunity to visit fairs in Bosnia and Herzegovina. I would like to express my gratitude to the Chamber

that has been recognising our work for years and we will aim to show our gratitude by staying and investing in Croatia, whilst developing new products and creating new jobs.

Bruno Kovačić, President, Management Board, Axilis: It is a great honour for me to accept this award. Axilis is a company involved in software development, which is currently a highly competitive field, and becoming prominent on the international market is also a huge challenge. Our road to success in this market has been neither easy nor short, yet we currently generate over 90% of our revenue from abroad. Our target market is the US and last year we opened an office there, in order to strengthen our position. I would like to thank our employees for their meritorious service, as well as the Croatian Chamber of Economy that has recognised our efforts.

December 2017 | No 275 | PVinternational | 11

INTERVIEW

DAVOR KARNINČIĆ, MEMBER,

It is a fact that Croatian olive oil is overly expensive, although we operate with the lowest profit margins in this case

renton is involved in olive oil production, with a 17% share of the Croatian market, packaged table olives (market share exceeds 40%), various spreads based on seafood, salted ﬁsh and other products having a lesser market share. The company has operated from several locations and following a large-scale investment of €2.5 million implemented four years ago, it relocated to the Prisike Business Zone in Gizdavac. A new facility was constructed and equipped during that period. Davor Karninčić, member of the Management Board of Trenton, has high expectations from the Unfair Commercial Practices Act, which is intended to regulate relations between producers and traders. Privredni vjesnik spoke with him about current market conditions, as well as new products and the current state of agriculture and the food processing industry.

 How satisfactory was this fiscal year? I believe I can state that it has been excellent and that we will complete it with revenue of around €5.9 million, mainly due to an excellent tourist season. The tourist season beneﬁts the overall economy and thereby producers. We have seen

THE TOURIST SEASON BENEFITS THE OVERALL ECONOMY AND HENCE ALSO PRODUCERS an increase both in turnover and proﬁtability. Nevertheless, it has to be stressed that the upwards trends concerning our productivity have also resulted from our internal reorganisation.

 Has the visitor-structure changed? In my opinion, it has slightly changed, but remained similar. The number of visitors has been increasing and this has exerted the greatest impact on the season. I am delighted that the proportion of young visitors is the highest. This 12 | PVinternational | December 2017 | No 275

MANAGEMENT BOARD, TRENTON

We need figures, rather than empty phrases Experts need to provide calculations of production costs of local products and compare them with foreign counterparts, and thereafter publicly present their conclusions and explanations. Why do our neighbours from all directions sell their products at more affordable prices? It is an issue that needs to be addressed by Jozo Vrdoljak may come as a surprise, but I have to point out that young people make very good consumers.

 What increase in turnover was recorded in the restaurant and catering sector? This is a difficult question, yet, according to some discussions and estimates, I believe that they have seen growth ranging from 20% to 30%. This was partly the result of an increase in the number of visitors and partly due to a rise in prices.  It would appear that the increase of VAT on restaurant and catering services has not prevented this sector from recording a successful season? Economic analysts need to be consulted concerning this issue, having portrayed the VAT increase as a catastrophic measure. They may currently provide a different explanation. It was believed it would lead to the end of tourism, the overall season and catering itself, to name a few. I would like to hear them comment on the current numbers and proﬁts generated.  However, those involved in the restaurant and catering industries protested, since all neighbouring countries have a significantly lower VAT rate compared with Croatia. One earns as much as one can and one decides freely on the pricing. Hence, the price of French fries in an Austrian ski resort is €4, whilst in

Croatia it is €2. Croatia is certainly not an expensive destination concerning restaurants and catering. If I could sell olive oil at a price of €13, I would deﬁnitely do that, but it is a fact that I cannot. Pricing policy is fundamental in business. The number of tourists who use restaurant and catering services has risen and the prices of these services have increased. Nevertheless, I believe in some restaurant and catering facilities further price increases are not an option.

 Let’s return to Trenton. How many staff do you employ? What new products are currently on the market? We currently employ 56 staff. It is important to point out our new product Mediterranean hummus intended for vegetarians. In addition, in some of our spreads we have expanded our product range and quantities. Our exports have risen signiﬁcantly in that segment.  What are your export markets? We export substantially through Lidl and hence our products can be purchased in Denmark and Bulgaria and in a large number of other countries where Lidl operates. Furthermore, we produce labels for Lidl and it offers limited assortment of such items on a weekly basis in different countries. There are also companies we co-operate with in Slovenia, Bosnia and Herzegovina, Montenegro, Switzerland and Serbia, amongst others.

2,5

€ million the value of investment implemented into a new facility 4 years ago

5,9

€ million expected revenue this year

56 6 staff employed by Trenton

December 2017 | No 275 | PVinternational | 13

INTERVIEW

My expectations from the Unfair Commercial Practices Act are high. It will enter into force on 1st January 2018. All our contracts will then be adapted to it. It is important to highlight that this Act places suppliers, producers and traders on an equal footing

 How do you view your co-operation with Lidl? Lidl takes ﬁrm stances concerning both prices and standards. It does not compromise concerning its requirements, yet when you eventually ﬁnd a common language or impose yourself with a product, it opens its doors to you. The Croatian branch opens the doors of its entire European network. This is not often the case with other retail chains. Consequently, I do not have to visit Lidl Romania to arrange and agree on supplies for the Romanian market. This can all be arranged from Croatia. Hence, getting your product on their shelves is a highly challenging task, yet once you have done it, they provide all the required support and assistance for you.  Are there any problems concerning payment? There are no problems on this issue. Lidl meets all obligations without delay or the need for telephone reminders. Both Spar and Metro have also proved themselves as partners that enable exports to other countries. There is currently a large number of retail chains that can be considered as high quality partners.  Which aspects of your business are you planning to develop further in the future? There are plans for comprehensive product range development, yet we will primarily focus on our spreads, which have the highest value added.  You indicate your expectations from the Unfair Commercial Practices Act are high. Certainly, my expectations are high. It will enter into force on 1st January 2018. All our contracts will then be adapted to it. It is important to highlight that this Act places suppliers, producers

PRICING POLICY IS FUNDAMENTAL IN BUSINESS. THE NUMBER OF TOURISTS WHO USED RESTAURANT AND CATERING SERVICES HAS RISEN AND THE PRICES OF THESE SERVICES HAVE INCREASED 14 | PVinternational | December 2017 | No 275

Hummus has been enhanced by Mediterranean flavour

What is Mediterranean hummus? - It is a highly popular product whose basic ingredients are chickpeas and ground sesame seeds. It is an Arabian product that is popular amongst vegans and vegetarians globally. We have enhanced it with a Mediterranean flavour, by adding olives and olive oil and adapting it. Following the entering into force of the Unfair Commercial Practices Act we are planning to start selling it and our expectations are high. It has to be pointed out that we have been working on the development of several more, new products.

and traders on an equal footing. That means it is expected to help good producers in making a step forward. It regulates everything.

 Do you have a view on why this law was not enacted sooner? I have no answer to this. We can only make assumptions, since this is a law that needed to be enacted, in order for Croatia to harmonise with EU laws. It was our obligation. All EU member states have implemented the rules concerning unfair commercial practices into their national legal systems. The Croatian Unfair Commercial Practices Act is the most similar to the Hungarian act concerning the same issue and it was supposed to enter into force on 1st January this year.  Does the Croatian Unfair Commercial Practices Act place local producers in a more favourable position in relation to international producers? Its role is not to separate local producers from international producers, yet it creates equal conditions for both the small-scale and largescale producers. Since Croatian producers are normally small-scale, they expect it to exert a positive impact. Consequently, retail chains may focus more on local producers, since they are nearby and there will no longer be much need for large stocks. I believe we need not ex-

pect the same goods provided by different producers to show drastically different proﬁt margin percentages. That would make a substantial difference in prices of shelved products.

 What is the most serious problem facing local food producers and local agriculture? We have been tackling the issue of competitiveness for 25 years, yet no one is asking the right questions or giving the right answers. Why are Croatian agricultural products not competitive irrespective of the fact that the transportation of products from, for example, Greece or Holland

WE HAVE BEEN TACKLING THE ISSUE OF COMPETITIVENESS FOR 25 YEARS, YET NO ONE IS ASKING THE RIGHT QUESTIONS OR GIVING THE RIGHT ANSWERS is rather expensive? Why are potatoes from Holland more affordable on Croatian shelves, although their transportation costs are almost on a par with their value? If that is cost-effective for them, it means that potato production costs in Croatia are double. Answers to such questions need to be given. Perhaps they can be provided by the producers, or perhaps experts or officials. Someone needs to provide an answer. Or why are local apples uncompetitive and are not on Croatian shelves? What could be the reason? Apple producers should also be able to provide some reasons for this state of affairs. We are aware of the fact that, due to local customer loyalty, prices of local products are 10% or even 20% higher and there are no transportation costs. Why is there no one willing to provide some answers concerning that? Or why is Croatian milk uncompetitive? Experts need to provide calculations of production costs of local products and compare them with foreign products and subsequently publicly present their conclusions and explanations. We need ﬁgures, rather than empty phrases concerning this matter. Why do our neighbours in all directions sell their products at more affordable prices? It is an issue that needs to be addressed.

 So why are answers not being provided? Perhaps no one is willing to face the truth. If producers are faced with a lack of ﬁnance they

need to be provided incentives. These are normally taken out of the pockets of the Croatian general public and hence nothing has been solved. The problem remains and it becomes even more severe.

 What is the current situation with olive oil? We sell olive oil from Croatia, Spain and Greece. It is a fact that Croatian olive oil is overly expensive, although we operate with the lowest profit margins in this case. Nevertheless, it is still too expensive for consumers. I do not know why we keep on claiming that Greek olive oil is lower quality compared with ours, when olives were actually brought here by the Greeks.  Why is Greek olive oil more affordable compared with locally produced olive oil? It is due to the fact that a Greek family that makes a living from olive growing owns a plantation that has perhaps 20,000 trees, whilst a typical Croatian plantation contains several hundred olive trees. This is primarily the reason why they generate higher profits compared with Croatian olive growers and producers, irrespective of their substantially lower profit margins. Both Greek and Spanish olive growers and producers are organised into co-operatives that sell their oil on the market. This is not the case in Croatia. In our case those who have joined co-operatives are also involved in independent sales.  And the situation with fish? The blue fish that we process is small and it is actually not adequate for processing. It is used for tuna feeding and the worst thing is that one is granted incentives for that. It should be allowed to grow instead.  Could the establishment of a closed season provide a solution? A closed season is certainly one of the solutions, yet the incentives for blue fish caught, which actually should not be processed or consumed, need to be abolished. That would decrease the interest in catching tiny fish.

Lidl takes a ﬁrm stance concerning both prices and standards. It does not compromise concerning its requirements, yet when you eventually ﬁnd a common language or impose yourself with a product, it opens its doors to you. The Croatian branch opens the doors of its entire European network k

 What about investment plans? Our plans certainly include investment concerning capacity increase, yet we have been waiting to ease the burden resulting from investment that will occur in 2019. We will start with the implementation of investment slightly before that, since we have already obtained a location permit. We would not want to start earlier due to our concerns over liquidity issues. Hence, it is all supposed to occur by the end of next year. December 2017 | No 275 | PVinternational | 15

CROATIAN CHAMBER OF ECONOMY OPENS OFFICE IN CHINA

DOORS TO THE WORLDS’ LARGEST ECONOMY Non-defined certificates and procedures for certain products present the most serious difficulties for local exporters to China, but these will be one of the priorities that the CCE will try to solve together with the institutions of the two countries, Burilović announced by Krešimir Sočković small numbers should play the quality card, Burilović highlighted. The niches for our exporters could come in the shape of premium products placed to targeted customers with higher purchasing power – from food companies, equipment and machine producers, IT companies, and premium quality as well as good marketing strategy is the key for success. Non-deﬁned certiﬁcates and procedures for certain products present the biggest difficulties to local exporters to China, but these problems will be one of the priorities that the CCE will try to solve together with the institutions of the two countries, Burilović announced.

LIMITLESS BUSINESS POSSIBILITIES

CCE’S CHINA OFFICE WILL WORK ON PROMOTING THE IMAGE AND BRAND OF CROATIA AND ITS PRODUCTS

he opening of the CCE Office in Shanghai marks 25 years of economic relations between China and Croatia, and I am convinced that CCE’s presence will improve economic relations between our countries, said CCE President Luka Burilović at the Croatian-Chinese economic forum held at the opening of the CCE office in Shanghai. Given the vast potential of the Chinese market, the trade exchange between Croatia and China is far from satisfying, since it totalled just €656 million last year. The main products Croatia exports to China are mainly beech wood, machines for shaping rubber and plastic mass, ﬁre ﬁghting vehicles, leather products and medicine. There are not too many products with higher added value, and this is something which should be changed. The Chinese market is enormous, but also saturated. Croatia, as a country of

16 | PVinternational | December 2017 | No 275

20% of the global population lives in China. This is 2.6 larger than the whole of Europe, and their standards and economy are continuously growing. There is vast potential for selling quality products and services that Croatia undoubtedly has to offer. Therefore, the CCE’s China office will work on promoting the image and brand of Croatia and its products. It is not easy in China to do business, but the $13 trillion economy sends a clear message - that we should be here and we have something to offer, says Croatian Ambassador to the People’s Republic of China, Nebojša Koharović. He is convinced that the office will help solve the problems of certiﬁcates and prevent missing out on opportunities to enter this market. Podravka and Badel have been present on the Chinese market for years now. The Chinese market is vast and full of potential, so we believe that the Chamber’s office in Shanghai

INVESTMENT OPPORTUNITIES

Chinese investors interested in port infrastructure The Croatian-Chinese business forum confirmed the interest of Chinese investors for port infrastructures in Croatia, especially Zadar and Rijeka, and they are also interested in investing in infrastructure and tourism. Nikolina Brnjac, State Secretary with the Ministry of Sea, Transport and Infrastructure, presented traffic advantages of Croatian ports and the Zagrebačka obala project (Zagreb Shore) of Luka Rijeka. She also praised the interest of Chinese investors for investing in the development of Zadar Port, in which Chinese investors are currently

negotiating. At the last year’s meeting in Riga, Croatia and China signed a Memorandum of Understanding on co-operation between ports and port industrial parks, and the Croatian Government is ready to co-operate with China in conjunction with the One Belt, One Road initiative. State Secretary with the Ministry of Tourism, Frano Matušić praised the activities of the Chinese SE European Business Association (CSEBA), and highlighted the investments of Zhongya Nekretnine (realestates) and explained why the construction permit for their project was running

will help penetrate it. We hope that we will be able to use its potential in the years to come despite obstacles and challenges, said Podravka’s Vice-President for International Markets, Danijel Kocijan. The Director for Development of New Markets and Projects

BUSINESS IN CHINA COULD BE SIMPLIFIED BY SPECIAL ECONOMIC ZONES FOCUSED ON FREE TRADE

late. Actually, this is the first Chinese investment in Croatia, with CSEBA acting as agent, and it concerns taking over Hotel Toplice which will become a premium fourstar destination.

Chinese world. We are interested in cooperation, investment in tourism and infrastructural projects. Croatian products are welcomed in China and I invite Chinese investors to invest in Croatia, said the Chamber’s President for International Trade in Shanghai (CCPIT and COIC), Yang Jianrong. Croatia is a small country, but it is becoming more popular, especially among friends who are golf lovers. We would invest in golf courses if the Croatian government would offer good terms to investors. There are 480 golf courses in China and there is no more room for them in China so we are interested in Croatia, said investor Li Wei from L&L Golf.

CONNECTING MARKETS

Luka Burilović i Yang Jianrong

with Badel, Damir Butković claims there is potential. The possibilities are limitless. The most important thing to have before entering the market is a Chinese partner with inﬂuence. One should be present here, live and work here, Butković stressed. Shanghai is the business centre of the

Business in China could be simpliﬁed by special economic zones focused on free trade where special economic measures for promoting business would be implemented. Burilović reminded that Croatia is the only country with both sea and continental ports on the Danube (Osijek and Vukovar). This creates additional logistical possibilities and strengthens Croatia’s position within the framework of President Xi Jingping’s initiative Maritime Silk Road which will encompass over 60% of the world population and over a third of global economic production. This is an opportunity for regional markets to connect in terms of traffic and economy and attract more Chinese capital, Burilović highlighted. A Co-operation Agreement between the CCE and CCPIT COIC was signed at the Croatian-Chinese forum in which over a hundred Chinese entrepreneurs participated.

The niches for our exporters could come in the shape of premium products placed to targeted customers with higher purchasing power – from food companies, equipment and machine producers, IT companies, and premium

quality as well as good marketing strategy is the key for success Luka Burilović, CCE President

December 2017 | No 275 | PVinternational | 17

SHIPBUILDING

A YEAR CHALL

Uljanik is entering the restructur currently building 19 new vessels Brodotrogir order book is also ful by Jozo Vrdoljak

epending on the year, the Croatian shipbuilding had a 0.8%-1.8% share of GDP, and a 10%-15% share of exports. The Croatian shipbuilding is well-established, and is an extremely important industrial branch, very much oriented towards exports, and with strong inﬂuence on the country’s balance of trade and employment considering that many ship equipment suppliers assist in the production and equipping of vessels. Due to the companies’ strong orientation towards exports, it is crucial for them to participate at international fairs. Croatia is trying to keep up with European trends of shipbuilding, which relate to the increasing demand for cruisers, polar expeditions vessels and offshore wind power plants. The order books of Croatian shipyards are all full for the next three years, noted Gordana Ribarić, Manager of the Department for Processing Industry of the CCE’s Sector for Industry and IT, at Europort 2017, an international exhibition for maritime technology and complex shipbuilding, held in Rotterdam.

ULJANIK GROUP IS DECREASING CAPACITIES The Uljanik Group consists of Uljanik and its branches, and all of them are 100% owned by the Uljanik Group, except for Brodogradilište 3. maj. Based on the report for the third quarter of this year, Uljanik Group employs 4,546 workers. During the ﬁrst nine months of this year the Group delivered three ships and generated sales income of €126 million, which is €80 million more over the same period of the year before. The analysed period shows that the Uljanik Group generated an operating loss 18 | PVinternational | December 2017 | No 275

R FULL OF LENGES

ring process with full slipways and order book. The Brodosplit Group is and its order book contains many other non-shipbuilding projects. The ll of €19.7 million, with consolidated nett ﬁnancial expenditure of €6.6 million and a nett loss of €26.3 million. The restructuring of Brodogradilište 3.maj is moving according to plan. The restructur-

WE WILL FOCUS ON CONSTRUCTING STATEOF-THE-ART SHIPS WHICH WILL SECURE OUR SURVIVAL ON THE MARKET, MARKULINČIĆ SAYS ing programme of Uljanik Brodogradilište is in its preparation stage, and the ﬁnal impact will be seen in two years. It should be highlighted that Uljanik Brodogradilište is the only Croatian shipping yard which has not been restructured and which is now entering this stage under different circumstances – with full shipways and order book. The situation on the global market is complex. The crisis which began in 2009 and its consequences are serious. On such a sensitive market it will not be easy to establish a new position, but that does not mean it is impossible. Uljanik has a clear vision, and our restructuring plan implies redeﬁning capacity, said Hrvoje Markulinčić, Manager of Corporate Communications with the Uljanik Group. Capacity will be reduced during the restructuring process of Uljanik,

Markulinčić says. We will focus on building state-of-the-art vessels, which will ensure our survival on the market. Everything which is being built in Pula is highly sophisticated, and the idea is to include 3.maj in this type of business, Markulinčić says.

19 NEW SHIPBUILDING PROJECTS FOR BRODOSPLIT The Brodosplit Group finished 2016 with a €4.5 million profit. Its capital and reserves from the year preceding the privatisation, tripled to €123 million. It is currently building 19 new ships and its order book contains many non-shipbuilding projects. As they say in Brodosplit, this will secure the jobs of their workers for the next three years, and some contracts reach out until 2022. The order book currently contains five sailing ships, (three-masted schooners). The first of the series of five sailing vessels, 64 metres long is in the construction phase. Each has the capacity for 36 passengers and nine crew. They are also building the hull and superstructure for a polar yacht, 88.5 metres long and 16.3 metres wide. They are also building a passenger cruiser, the largest sailing ship in the world, 162.2 metres long and having five masts. They are also building a passenger cruiser for 159 passengers. This is 105 metres long, with four decks and 80 luxury cabins. There is also a passenger cruiser for polar cruising. It will be able to take 196 passengers in 85 cabins and is 107 metres long. The order book also contains five patrol ships for the Ministry of Defence (MORH) and four vessels for transporting containers as well as one vessel intended for nautical tourism which was ordered by a customer from Krilo Jesenice.

Brodosplit Group profit for 2016 at

€

44 million

During the first 9 months of 2017,

126

€ million

from selling the Uljanik Group

€

58.000 profit for Brodotrogir

December 2017 | No 275 | PVinternational | 19

SHIPBUILDING THE BACKGROUND FOR SUSTAINABLE BUSINESS HAS BEEN MET According to Tomislav Debeljak, Board President of Brodosplit, the restructuring is going according to plan and the agreed dynamics. Based on the contract of sales and transfer of shares, Brodosplit is required to perform consolidated positive business from 2016 forward, which we have succeeded without state support. By signing the sales contract in 2013, the shipyard from Split managed to avoid bankruptcy and guarantee liquidation. It should also be noted that not all shipyards in Croatia received the same treatment, nor did they start restructuring from the same positions of principles, Debeljak explains. Debeljak also added that after almost ﬁve years of restructuring, the preconditions for sustainable business on the open world market have been met. I am proud of the efforts of all of our shipbuilders. A lot of work and hours have been put into many projects during the past ﬁve years. From construction design, interiors and other project

BRODOSPLIT SECURED EMPLOYMENT FOR THE NEXT THREE YEARS, AND SOME CONTRACTS REACH OUT TO 2022 departments and workers of all production vocations, our employees are the most important part of our successful and strong development. Positioning Brodosplit in the niche of state-of-theart custom-made passenger ships of small-sized and medium-sized dimensions up to 250 metres long, is our primary goal. Due to the increased global demand for polar cruising, we started a completely new programme, taking on everything required in terms of organisation, production and commercialisation, with a desire to prove ourselves on this market with our quality, deadlines and prices, Debeljak highlighted. According to him, the construction of the 20 | PVinternational | December 2017 | No 275

largest sailing vessel in the world and one for cruising the Artic and Antarctic, Brodsplit is making strong progress in terms of achieving its plans and position as an important European shipyard which builds complex highly competitive ships.

BRODOTROGIR: CHALLENGING PROJECTS Brodotrogir has recently delivered a tanker for transporting chemical and oil products, of 45,000 tonnes, intended for transporting IMO II products in 20 tanks. It is 183 metres long and 32.2 metres wide. The hull was built ten years ago in the shipyard JSCo PO Sevmash in the area of Arkhangelsk, based on a project by the Norwegian contractor, one of the world’s largest owners of chemical tankers. In its shipyard, Brodotrogir is in the final phase of constructing another tanker, Novogradnja 339 for the same customer. This was also partially built and equipped by JSCo PO Sevmash. They are also constructing an Arctic tanker, (the bow of the ship), 167 metres long, for transporting condensates, icebreaker ARC 7, with a capacity of 44,000 tonnes. This icebreaker, which should be able to work at minus 50 degrees Celsius, presents a huge challenge for construction solutions, choice of materials, welding technology and the performance of welded joints. The order book also contains Novogradnja 345 and 346. These ships will cruise the Adriatic. With the construction of these, Brodotrogir, (Hrvatska brodogradnja Trogir) contributed to the developing industry of nautical tourism in Croatia. Brodotrogir should soon complete its order book with a further vessel. Work in the Trogir service centre intensified after the season. The working capacity is full until June 2018. Trogir Marina sold all its berths for next season. Even the dry-storage area of the marina came to life as yachts are now being pulled in to the dry docks. The fleet of company Trogir Maritima now owns two chemical tankers of 5, 000 DWT, now in long-term charter. Part of the production capacities is temporarily used by other shipyards. By 30th June 2017, the consolidated business results of Brodotrogir concluded with profit of €58,000.

European order book (September 2017) – capacity (t) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Zemlja Rusija Hrvatska Španjolska Rumunjska Njemačka Turska Finska Italija Nizozemska Francuska Norveška Poljska Bugarska Grčka Velika Britanija Ostali TOTAL

t 777.599 739.684 724.904 408.570 283.555 173.386 120.800 107.680 100.541 100.472 60.429 32.820 4.300 2.500 1.700 270 3.639.210

% 21,37% 20,33% 19,92% 11,23% 7,79% 4,76% 3,32% 2,96% 2,76% 2,76% 1,66% 0,90% 0,12% 0,07% 0,05% 0,01% 100,00%

Source: Hrvatska brodogradnja-Jadranbrod

SPECIAL RESTRUCTURING PROGRAMME Unlike other shipyards, the restructuring programme of Brodotrogir is based on diverse activities, large investment, great personal contribution and relatively low subsidies. We managed to implement the diversification of activities, but not entirely. The goal was that new activities have a 50% share in total income over five years. However, we did not achieve this, so it is something that we will leave for the upcoming period. Much was invested in the promotion of shipbuilding activity, overhaul, service activity, nautical marine and the shipping company, that is, construction of ships for our personal company. We did not achieve all our plans, but what we did achieve can be literally seen flying over Trogir. We encountered great obstacles relating to the regulation of spatial planning, physical plans and licences. This especially concerns the completion of the second phase and start of the third – investing in the Trogir service centre, explains Mateo Tramontana, Board Member of Brodotrogir. Total capital, envisaged by the re-

Global order book (September 2017) – capacity (t) Zemlja 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Kina Japan Južna Koreja Filipini Vijetnam Brazil Tajvan Rusija Hrvatska Španjolska SAD Rumunjska Njemačka Indonezija Turska Argentina Finska Italija Nizozemska Francuska Ostali TOTAL Europa

76.384.707 48.834.009 40.878.622 5.471.591 2.174.398 1.486.869 1.055.000 777.599 739.684 724.904 570.881 408.570 283.555 181.860 173.386 162.664 120.800 107.680 100.541 100.472 571.330 181.309.122 3.639.210

42,13% 26,93% 22,55% 3,02% 1,20% 0,82% 0,58% 0,43% 0,41% 0,40% 0,31% 0,23% 0,16% 0,10% 0,10% 0,09% 0,07% 0,06% 0,06% 0,06% 0,32% 100,00% 2,01%

Source: Hrvatska brodogradnja-Jadranbrod

structuring programme, is €0.19 billion. According to Tramontana, 82% of this amount had been achieved by August this year, and the remainder by 6th April 2018. We have been operating without

subsidies for two years now. This is not an easy thing to do considering the competition of our business environment in relation to the world market. All those who produce in Croatia for the world market, with competition from Europe, the Middle East and the rest of the world, know very well how much knowledge and skill it takes to succeed, Tramontana highlighted.

EXPECTATIONS BASED ON ANALYSIS AND KNOW-HOW Tramontana says the market deﬁnes all present and future plans of Brodotrogir. We do not have a crystal ball, but we do base our expectations on analyses and know-how, and we always hope that luck helps the brave. In terms of our shipbuilding activities, we made progress in co-operation with the Finish shipyard. This was supported by President Grabar Kitarović and President Putin. We hope this co-operation will continue with new projects, and we offer the construction of docks and special purpose vessels to the Russian market. The number of projects for the offshore market is growing. This concerns our West European buyers and we hope that some of these projects will be contracted and accomplished. We put a lot of effort into vessels intended for cruising from the Artic to the Antarctic. The

projects, which we have been known for during the past decade, we also offer to companies from the Persian Gulf. The potential of the yacht service and repair department is unquestionable, with the growing trend and development which we hope to preserve in the future. The potential of Croatian nautical tourism, especially in our location, does not require additional elaboration. The

ALL PRESENT AND FUTURE PLANS OF BRODOTROGIR ARE DEFINED BY THE MARKET, TRAMONTANA HIGHLIGHTS aim of our production is to enter one of the West European markets and start generating additional income. This especially relates to the activity of anticorrosive protection and metal activities which are in deﬁcit throughout the EU, Tramontana says. He also hopes that freighters for IMO 2 chemical tankers will increase.

SITUATION ON THE GLOBAL MARKET

1,385 ships delivered by the end of August Based on data collected by Hrvatska brodogradnja - Jadranbrod, global shipyards delivered 1,385 vessels of around 75.7 million DWT by the end of August 2017. This year Croatian shipyards delivered six units of around 82,600 DWT. By the end of September 2017, the construction of 571 ships was contracted, a 31% increase over 2016. The market recovery is partially reflected on the gradual increase in freighters and the price of new building. Of the total amount of vessels contracted in 2017 (measured in cGTs), around 32% were for tankers, 21% for bulk cargo vessels, around 17% for passenger vessels, around 12% for container ships, around 8% for LNG gas tankers, around 3% for offshore vesse-

ls, around 2% for LPG gas tankers and around 1% for RO-RO ships. At the beginning of 2017 stagnation seemed to be the trend with a decrease in demand for all types and sizes of vessels, except for passenger ships and cruisers. However, the negative trend reversed in March and the market is currently experiencing a stable, although less expressive upward trend. In relation to the same period of 2016, the largest fall in units contracted in 2017 was seen in vessels for transporting refrigerated cargo – not one contracted ship. This is followed by the decrease in offshore ships (by 33%), container ships (31%), passenger ships (30%), RO-RO ships (21%) and chemical and specialised tankers (8%). Other types of ve-

ssels saw an increase of between 25% and 225%. The highest percentage here concerns ships for bulk cargo. The contracting of LNG gas tankers also increased, by a significant 185%.

December 2017 | No 275 | PVinternational | 21

THE CCE: BUY CROATIAN – CROATIAN PRODUCTS FOR CROATIAN TOURIS

Tourism changes the world and in our situation, it also changes the economy Some companies involved in tourism use 90% local products and I believe many more companies can follow suit, stated Gari Cappelli by Krešimir Sočković

two-day special campaign Buy Croatian – Croatian Products for Croatian Tourism has recently been organised by the Croatian Chamber of Economy at the Zagreb-based Plaza Event Centre. “This special campaign is in its second year, but has already yielded concrete results in bringing together local production and tourism”,

THE INITIATIVE SAW ONLY 65 EXHIBITORS, BUT THEY WERE REPRESENTATIVES OF ALL HOTEL CHAINS, A LARGE NUMBER OF THOSE INVOLVED IN HOSPITALITY, SERVICE PROVIDERS AND 16 FINANCIAL INSTITUTIONS stressed the President of the Croatian Chamber of Economy, Luka Burilović. “The importance of tourism for our economy is immense and, in addition to exports, tourism is the most important aspect of the Croatian economy. It is one that is the prerequisite for a recovery in the overall Croatian economy. Consequently, all 22 | PVinternational | December 2017 | No 275

Roman Pfeifer, Pfeifer family farm Our family farm has focused on the production of high quality products in limited quantities. We produce traditional dry cured meat products that we already sell through the tourism sector in co-operation with several restaurants in Dalmatia and through direct sales, where we are able to sell them at prices in accordance with their superior quality. We are planning to continue pursuing this path in the future, whilst simultaneously searching for those who are prepared to co-operate with us in this way. The method of presentation adopted at this event is excellent for establishing new business partnerships.

opportunities need to be exploited to promote local production through tourism. Reduction of imports, a higher level of self-sufficiency and the completion of the production-sales process, that is normally referred to as from the field to the table is our ultimate objective. We are working to bring together public and private, sea and mainland, large and small producers, in order to jointly contribute to our common goal and use the vast potential of our country”, he emphasised. Due to the confined premises, the campaign saw only 65 exhibitors, but they comprised of representatives of all the hotel chains, a large number involved in hospitality, service providers and 16 financial institutions, and hence everyone involved in tourism was given the opportunity to negotiate new contracts. “This event by the CCE was intended to help negotiate new contracts and establish partnerships, since local products need to be the key to identifiable Croatian tourism”, concluded Burilović. Gari Cappelli, the Tourism Minister, stated that the Croatian tourism is prepared to present the potential of Croatia as an entirety, which is a step forward. “We have been working on the preparation of the law on the provision of services in tourism intended to promote its development and I hope it will be passed by the end of the year. After a decade of standstill, it will open up the possibility for private hospitals and polyclinics to become involved in health tourism; we are currently developing the legal framework and enabling them to sell their health tourism packages. We are finally launching an activity that can be performed throughout the year and in addition to providing services, we are also selling the expertise with which we are on a par with other regional countries”, pointed out Cappelli, adding that after this year’s investment into tourism worth €880 million, planned investment value for next year will reach around €930 million plus around €350 million of investment into health tourism. “Some companies involved in tourism use 90% local products and I believe many more companies can follow suit. The year is not yet over and we are expecting a dynamic and quality post-season and are also planning to strengthen promotional activities. Next season we are expecting to show 3% to 5% growth and, following the announcements from the British market, which are expected to exceed 15%

Mario Lacić, Feravino Dika and Miraz are our wines that we are highly delighted with, and we have already seen substantial export results, in addition to being intensely focused on the HoReCa sector. During the last several years, as the largest small winery in Croatia, we have managed to reach levels where we are able to meet market requirements both with quality, which we have provided for many years, but also with the quantities provided.

growth, we are expecting a very good season in which there will be sufficient room for the sale of Croatian products. Tourism changes the world and in our situation, it also changes our economy”, concluded Capelli.

CROATIAN PRODUCTS TOWARDS A COMPLETE TOURISM PROGRAMME DEVELOPMENT “Zagreb County is primarily a rural area, which is an advantage for the development of family farms. The development of wine and cheese “roads” includes projects that bring together our producers and enable them to create original products intended to attract new tourists”, stressed Stjepan Kožić, the Prefect of the Zagreb County. Concerning continental Croatia, there is vast potential in health tourism development, which records 20% annual growth globally. Since such tourists normally stay in the destinations on average for 20 days, this is an excellent growth potential”, added Kožić, highlighting that cycle routes also provide a huge development opportunity in continental Croatia. Marko Jurčić, Economic Affairs Adviser to the Croatian President, stated that he was delighted with this initiative, since it provides a proactive approach to this frequently addressed issue. “We are not talking about Croatian products in the sense of food and accommodation; more, we are considering a full tourism programme development. This approach will also strengthen other sectors and provide value added to the entire economy. Tourism needs to double its revenue, yet it needs to provide the way to reducing its total share in the Croatian economy”, he noted, adding that in future we need to consider the issue of Croatian product sales globally, which the CCE has been intensely working on through opening of its representative offices throughout the world.

LOCAL PRODUCTS NEED TO BE THE KEY TO IDENTIFIABLE CROATIAN TOURISM, EMPHASISED BURILOVIĆ

December 2017 | No 275 | PVinternational | 23

9TH CONFERENCE ON CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility FOR THE FUTURE Joint work on the creation of an encouraging environment for those involved in environmental protection and social development is imperative and similar conferences are an opportunity to bring together all stakeholders in this system, noted Mustač by Krešimir Sočković

From a global perspective, sustainability initiatives have been exerting an increasingly signiﬁcant impact on corporate operations. Companies need to adapt in order to survive, rather than being exclusively focused on prospering on the global market. Tomislav Radoš, Vice-President of the CCE for Industry and IT, Energy and Environmental Protection

24 | PVinternational | December 2017 | No 275

he Croatian Business Council for Sustainable Development recently organised the ninth consecutive Conference on Corporate Social Responsibility. The Conference brought together experts and all those actually involved in corporate social responsibility, as well as those who believe sustainable development provides potential for development and progress. This was the ﬁrst time that the Conference covered 2 days and brought together over 300 participants. During the opening, Robert Mustač, President of the Adminis-

trative Council of the Croatian Business Council for Sustainable Development (HR PSOR), pointed out that HR PSOR has been committedly working on sustainable development in Croatia for the last two decades. “The economic climate has been developing in a positive direction. Irrespective of the fact that we cannot be satisﬁed with the speed of change that has occurred, signiﬁcant progress has been achieved in combating corruption and illiquidity. In addition, a higher level of effectiveness of the judiciary has been achieved, whilst competitive conditions in the European market have been achieved through the creation of a system for increasing competitiveness and the available energy generating products and motivated labour. Nevertheless, we lack optimism, since we do not emphasise sufficiently what we are good at and thus

AWARD-WINNER’S OPINION

Marta Brkić, Dvokut-ecro This has been the fourth award for us and I am delighted. Our first award received in 2011, as well as all the other awards received thus far, are an assurance for us that all the policies implemented by the company have resulted from continuous development and the right decisions that we have made thus far. Hence, we will continue committedly pursuing this path in our small company, in our small collective.

we need to make a step forward concerning mutual encouragement. We have managed to put Croatia on the right path and we have recorded significant growth rates. Consequently, I am convinced we will continue following this path. Furthermore, we need to continue the joint work on the creation of an encouraging environment for those involved in environmental protection and social development, since that is imperative. Conferences of this type are an opportunity to bring together all stakeholders”, stated Mustač. Tomislav Radoš, Vice-President of the CCE for Industry and IT, Energy and Environmental Protection, stressed that the Conference regularly provides encouragement to the frontrunners of corporate social responsibility practices. “This is the first year when companies are obliged to submit non-financial reports about their operations, which encourages them to become more intensely involved in corporate social responsibility. From a global perspective, sustainability initiatives have been exerting an increasingly significant impact on corporate operations. Companies need to adapt in order to survive, rather than being exclusively focused on prospering on the global market”, highlighted Radoš, adding that the CCE, in co-operation with HR PSOR, promotes business practices based on sustainability.

ASSESSMENT OF CORPORATE SOCIAL RESPONSIBILITY PRACTICES Index CSR Awards, granted by HR PSOR in co-operation with the CCE, were presented at the Conference. This is a method for the assessment of corporate social responsibility practices implemented in the operations of Croatian companies. It was developed based on similar interna-

tionally accepted methodologies and primarily in accordance with Business in the Community CR Index. It provides a comprehensive insight into corporate social responsibility practices implemented in companies and a comparison with results achieved by other companies in Croatia. The assessment is performed of activities in six ﬁelds which includes the focus of the company on economic sustainability, the inclusion of corporate social responsibility and sustainable development into the business strategy, corporate social responsibility workplace policies and practices, corporate social responsibility policies and environmental management policies, CSR in market relations and corporate social responsibility community relations. Index CSR has been recognised also in the strategic documentation of the Croatian government as one of the tools for combating corruption. The winner of Index CSR Best Progress Award is AquaﬁlCro, whereas Ikea Hrvatska (Ikea Croatia) was awarded for Corporate Social Responsibility Policies and Diversity, as well as the Protection of Human Rights. Inkasator was awarded in the category of Corporate Social Responsibility Community Relations, whereas Cemex Hrvatska (Cemex Croatia) was awarded in the category Corporate Social Responsibility Workplace Policies and Practices. Heineken Hrvatska (Heineken Croatia) was awarded in the category Corporate Social Responsibility Policies and Environmental Management Policies. The best CSR in the public company category was Odašiljači i veze (Transmitters and Communications), Dvokut-ecro in small business category, Končar Electrical Engineering Institute in medium-sized company category and Vetropack Straža in the category of large companies.

Siniša Marijan, Končar Electrical Engineering Institute One continuously wonders whether one deserves it for there is always room for improvement within the company. We are aware that the shortcomings in our company can be improved and we are perhaps even slightly embarrassed due to that. Nevertheless, we will continue working on them, striving to receive this award yet again.

Tihomir Premužak, Vetropack Straža Companies currently doing business are faced with many challenges and being involved in CSR suggests even more challenges. I am delighted that we are surrounded by companies actively involved in CSR. Moreover, it has to be highlighted that we manage to operate with responsibility towards the owner, the employees, the community and the customers. I believe we have been granted this award for our overall operations.

Milan Gjuranić, Odašiljači i veze (Transmitters and Communications) I am delighted that the efforts invested by our company in CSR, as well as our internal objectives, have been identified. We are working to promote, improve and integrate corporate social responsibility in order to increase the level of our competitiveness and responsibility towards our employees, the environment and the community in which we operate.

December 2017 | No 275 PVinternational | 25

25TH ANNIVERSARY OF INTERNET IN CROATIA

A part of our daily lives for a QUARTER OF A CENTURY On 17th November 1992, the Rector’s Office of the University of Zagreb saw the official commissioning of the Croatian Academic and Research Computer Communications Network and its first Internet connection. The first Internet connection between Croatia and the rest of the world was established with the University of Vienna by Boris Odorčić

T 2,93 billion revenue generated by ICT sector in Croatia

around

24.000 people

employed in i ICT iin Croatia i

1,1 million fixed and 3.4 million mobile Internet users in Croatia

wenty five years have passed since 17th November 1992, when the Rector’s Office of the University of Zagreb saw the official commissioning of the Croatian Academic and Research Computer Communications Network, based on IP protocols and its connection to the global Internet network. It marked the official start of the Internet Age in Croatia. The first Internet connection between Croatia and the rest of the world was established with the University of Vienna. The connection was established within the project of building the national academic network – Croatian Academic and Research Network - CARNet. “The speed of the digital revolution greatly impacts our future and our adjustment to the digital society”, noted the President of the Croatian government, Andrej Plenković, at a ceremony held in the Zagreb-based National and University Library to mark the 25th anniversary of the Internet in Croatia. During the initial period, in addition to building a computer communications network that connected almost all academic institutions in Croatia, there were two major breakthroughs: in addition to establishing the first Internet connection between Croatia and the rest of the world, and several months later, 27th March 1993 saw the registration and operation of the national top-level internet domain.hr. At the time, the CARNet network actively moved data about the events that occurred during the Croatian War of Independence and broke the media blackout faced by the newlyestablished state. Internet access was made available to the general public through a public computer at

26 | PVinternational | December 2017 | No 275

the Zagreb-based University Computing Centre (Srce). “At the start of the technical building of the network, the building and development of the ﬁrst Internet services for whole academic community was simultaneously launched. In addition, user education was provided, primarily at an individual level and for representatives of joint institutions. Consequently, Srce organised Internet courses lasting for several days that addressed the basics of IP networks and services for the administration of the Ultrix operating system. Moreover, the ﬁrst helpdesk was established in Srce during that period. A large number of enthusiasts from academic institutions began using the Internet intensively, as well as using and establishing services that started appearing on the Internet, such as gopher and web”, pointed out the CEO of Srce Zoran Bekić.

AN UNAVOIDABLE MEDIA “The international communication connection that connected the Zagreb-based CARNet hub with Austria was established 25 years ago with a speed of 64 kbps. Thus, Croatia officially became integrated into the international computer network referred to as the Internet. The Croatian Academic and Research Network – CARNet was ﬁrst and over subsequent years also the only Internet service provider in the country. The Internet became a part of our daily lives and an unavoidable media for informing, communicating and educating. CARNet played an important role and its importance always exceeded that of a network or an Internet Services Provider. I am delighted to say that currently CARNet is contributing to

the development of a digitally mature society through its activities. Furthermore, it works on the comprehensive building of the IT structure in the educational and science system in Croatia. In the field of implementation of information communications technology CARNet connects over 3,500 institutions, whilst simultaneously providing over 70 different services that include network development, ICT infrastructure, e-services, cyber security and customer support”, pointed out the Managing Director of CARNet, Goran Kezunović. It is important to note that the information and telecommunications industry employs around 24,000 people in Croatia. The revenue generated exceeds €2.93 billion. There are currently almost 1.1 million fixed and around 3.4 million mobile Internet users in Croatia. The latest findings by Google Internet Consumer Study 2017, conducted globally by Kantar TNS agency on behalf of Google, show the online services used in Croatia, as well as the frequency of use and devices opted for to access the Internet. The research shows that 74% of the public regularly connect to the Internet for personal use. They also use an increasing number of devices to access the Internet: 68% of users opt for smartphones, 55% laptops and 40% smart TVs. Moreover, Croatian respondents use netbooks, Chromebooks, e-books, smart watches

and trackers, which they also use to access the Internet.

THROUGH SMARTPHONE TO THE INTERNET An increasing number of the general public use their smartphones to connect to the Internet and 2017 saw 24% of Internet users opting on a par for a computer, tablet or smartphone for access. 30% of Internet users pointed out that a smartphone was their preferred device. Online behaviour of members of the public in Croatia is in accordance with global trends. Hence, Croatian Internet users most frequently browse for information (81%), for entertainment (81%), for posting of online tasks (63%), uploading online content (18%) and helping others by providing online explanations on how to do something (42%). On a monthly level, 78% of Croatian Internet users search for information about goods and services, 70% use maps for ﬁnding a location or a route, with 46% being involved in online purchases. The most popular online activities include the use of a browser (94%), social networks (74%) and online video watching (89%). Respondents from over 63 countries participated in Google Internet Consumer Study 2017. The research was conducted in Croatia from 1st April to 30th June in the form of a personal interview, of a sample comprising of 1,000 respondents, aged 16 years and over.

INTERNET ACCESS WAS MADE AVAILABLE TO THE GENERAL PUBLIC THROUGH A PUBLIC COMPUTER AT THE ZAGREBBASED UNIVERSITY COMPUTING CENTRE (SRCE).

December 2017 | No 275 | PVinternational | 27

SLAVONIJA SLAD

MALT FROM THE SALA The factory in Nova Gradiška is ready to provide top quality malted barley from Croatian fields solely for craft breweries by Goran Gazdek

55.000 to 60.000 tonnes

of malt annually produced in Slavonia

around

40.000 tonnes

of barley annually produced by 300 subcontractors

roatian craft beer producers could soon make beer from the malt produced exclusively for them in Slavonija slad from Nova Gradiška, the only factory in Croatia which produces this ingredient which creates alcohol in the beer, and is an important contributor to taste and colour. The craft festival, recently held in Slavonia encompassed 15 micro-beer producers from across Croatia. Vlado Bićanić, CEO of Slavonija Slad, used this opportunity to announce that they are ready to provide top quality malted barley from Croatian ﬁelds since they use state-of-the-art technology, which in combination with tradition, experience and co-operation with scientists guarantees top quality products. “We wish to brand the product exclusively for craft beer-makers. We have the potential and resources; we have created all the preconditions for starting production if micro-beer producers are really interested. We have been developing relations with subcontractors for twenty years. We

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WE WILL TRY TO BRING THE MOST OUT OF IT SINCE MALT IS WHAT GIVES BEER ITS UNIQUENESS, BIĆANIĆ HIGHLIGHTS know each and everyone of them; we can keep up with them in terms of production and have malt from the salaš of Tunja” as Bićanić describes the initiative.

QUALITY AND MARKETING PROMOTIONS The idea is to find farmers among subcontractors who will produce barley at an exactly defined location and which will respond to all specific characteristics of craft beer. This would result

AŠ OF TUNJA in authenticity and the consumer would know the exact origin of the raw materials required for production. He would also know who produced it, under what conditions, and know its characteristics. This is not a hypothetical origin but real, tangible and material one. There are no limits to the production technology and we will try to bring the most out of it, since malt is that which gives beer its uniqueness. Even though the same type of barley has its distinct characteristics, every yield is different since it is cultivated under different conditions, on different locations, even across Slavonia alone. This cannot be done in one move. We will use the experience of our French colleagues, who have been doing this for three years, and we will adapt to the demands of the craft breweries, Bićanić explained. He also highlighted that, in addition to the quality, this type of beer production opens the possibility for a series of new marketing promotions. Slavonija slad has already had a similar experience. At the initiative of Heineken Hrvatska and in co-operation with experts at the Agricultural Institute Osijek, barley has been produced exclusively for the Karlovačko brand since 2014. This is clearly marked on the label: Beer made from 100% Croatian barley. The initiative is supported by the Ministry of Agriculture and the Croatian Chamber of Economy.

NEW ADDED VALUE OF BEER Slavonija slad was founded in 1997 as an offshoot of the Boortmalt Group, continuing the tradition of beer and malt production, which started in Nova Gradiška back in 1870 with the Lobe brewery and continued to the 1970’s with Saturn, the first modern malt factory. Meanwhile, the company merged with Axereal, the largest agricultural cooperative in France and Europe. In its beginnings it produced only five to six tonnes of local barley and 15,000 tonnes of malt which was insufficient for the booming beer industry in Croatia at that time. Today, they produce 55,000 to 60,000 tonnes of malt annually, some 80% of Croatian total demand. They cover over 75% of the local market and around 50% of their production is exported worldwide, mainly in the surrounding countries, South and Central America, Africa and the Middle East. Around three hundred subcontractors produce around 40,000 tonnes barley annually on 10,000 hectares. The majority of them are from the County of Osijek and Baranja, Vukovar and

Srijem, Slavonski Brod and Posavina, Požega and Slavonia. However, others come from the County of Međimurje, Bjelovar, Sisak, Virovitica, Istria and Zagreb. The average yield per hectare is about five tonnes. However, there are years of drought or heavy rain when the yield barely reaches two tonnes. Based on the assessment of the Agricultural Institute Osijek, the quality of barley in Croatia meets the high standards set by the beer industry, so it is expected the same situation will be with the malt for craft producers. Craft breweries are highly delighted with the initiative. The pioneer of the Croatian craft revolution, Mario Bošnjak from Bošnjak brewery in Nova Gradiška, says that craft beer made using Croatian malt will be recognised as a product from field to glass. “We have already done this with the raw materials we produce on our family farm. I am pleased that large corporations share the same opinion”, Bošnjak says. One of the doyens of craftsmen, the beer master of Daruvarska pivovara, Krešo Marić, believes this type of beer will gain new added value. The chain of control will be fully established. All new types of malt that will be produced will also be promoted which will connect raw materials to production. “It is pleasant to meet a man who produces beer, but it will be even better to meet the man who has made the barley for the beer’s malt. What is important is that beer producers will be able to produce their own raw material with which they will be satisfied. This means they will make a product that satisfies them, and which will ultimately lead to satisfied consumers, Marić concludes.

THE CHAIN OF CONTROL WILL BE ESTABLISHED COMPLETELY, SAYS BEER MASTER MARIĆ

CRAFTSMEN IN CROATIA

40 craft breweries have a 1.5% share of the beer market There are currently 40 craft breweries registered in Croatia and they have a 1.5% share of the beer market. Based on the statements by small beer producers, there is room for more. It is expected that the demand for craft beer will increase as people are ready to pay more for quality and original products. This means

that family-owned breweries could take up to 10% of the market in five to seven years.

December 2017 | No 275 | PVinternational | 29

HOLIDAY SPENDING

WE ARE SPENDING INCREASINGLY MORE Let’s buy local products during the holidays. By doing so, we give to those we love and to the Croatian economy, Tomislava Ravlić said by Krešimir Sočković

I We appeal to the public, sellers and customers to buy local products, increasing their spending, and other positive trends which boost economic recovery Ema Culi, Director to the CCE Trade Sector

n December, Croats will spend €1.7 billion, up 4.2% compared with December 2016, based on an assessment of the Trade Sector by the Croatian Chamber of Economy. In December, people mainly buy toys, cosmetic products, clothing, shoes, food, alcoholic and non-alcoholic beverages, electronics, books and decorations, said Deputy Director to the CCE Trade Sector, Tomislava Ravlić. December shopping is also an occasion to support local products, and the Croatian economy is keeping up with the trends seen across Europe, where there is a growing tendency to buy local products. “Let’s buy local products during the holidays. That way we give to those we love and to the Croatian economy”, Tomislava Ravlić highlighted.

OFFER MORE QUALITY CROATIAN PRODUCTS The Director of the CCE Trade Sector, Ema Culi, pointed out that the rate of retail was growing. Based on growth rates from the beginning of the year to date, we may anticipate this rate will range slightly over 5% year-onyear. Based on the available data, the reliability index, spenders’ mood and their expectations are growing marginally, which reﬂects positively on spending. The growth of retail and spending are a consequence of three factors – a record tourist season, the economic recovery and tax reform, she added. Based on the CCE data, the largest

30 | PVinternational | December 2017 | No 275

Martina Sokač Saraga, Ema Culi and Tomislava Ravlić

share (29.5%) of spending of an average Croatian household goes to food and non-alcoholic drinks, which puts them well above the EU average. Additionally, there are living expenses, transport, energy (a 30% share of the household budget), followed by clothing and footwear (8.5%), recreation (6.7%) and culture (5.9%).

WE WILL SPEND €1.7 BILLION IN DECEMBER, UP 4.2% MORE COMPARE WITH DECEMBER 2016 “Our wish is to systematically promote Let’s Buy Croatian over the next 20 years, and that our market offers more quality Croatian products. We appeal to the public, sellers and customers to buy local products, increasing their spending and other positive trends which boost economic recovery”, Ema Culi says. Based on a survey, over 80% of Croats are willing to pay more for Croatian products of the same quality as foreign ones. However, in order to achieve this, it is important that traders contribute with adjusted offers. The CCE assess that “Black Friday”, despite the 10%-40% discounts, signiﬁcantly lower than is usually offered on this day in other foreign markets, people spent around €67 million, 15% more compared with 2016.