Croatia is moving ahead

By Nigel Davies, Head of the Infrastructure Focus Group, British Croatian Business Club (BCBC)

Croatia joins EU celebration London

The BCBC was formed in 2013 by two UK-based Croatian businessmen determined to optimise the potential for increased bilateral trade and investment activity between the UK and Croatia.  2013 was a key year for the Republic of Croatia, when it became the newest member of the EU after several years of legislative and economic reforms needed to meet the EU’s strict membership criteria. 

So whether you are a UK or Croatian business interested in exporting to Croatia or importing from Croatia, investing in businesses and/or real estate, or finding partners to add cost and quality competitiveness to your supply chain, we can help you.

Picture: The Croatian Embassy in London hosted a celebration on Croatia joining the EU in July 2013. 

The British Croatian Business Club has organised several inward trade missions in the UK from cities such as Zadar as well as supporting UK missions into Croatia, most recently in May by the London Southside Chamber of Commerce, with follow up business-to-business meetings continuing right now.  We work closely with both the Croatian Embassy in London and the British Embassy in Zagreb, and our representatives spoke at several corporate, infrastructure and energy investment events held both in London and Zagreb in 2013 to mark EU membership. 

BCBC Trade Fair and Gala Dinner

Trade Fair and Gala Dinner – Franko Cetinich, BCBC Chairman, with other committee members and guests, London 2013

BCBC Nigel Davies

Nigel Davies chairs a 'Private-Public Partnership Funding in South East Europe' panel, Zagreb, July 2013 

The BCBC is a UK-based membership organisation promoting bilateral trade and investment.  There is a similar organisation based in Croatia, the British Business Centre in Croatia (BBCC), which supports inbound UK investors and represents the British businesses active in the Croatian economy to the national authorities on issues such as legislative and tax reform. The BCBC and BBCC are separately run but work closely together to optimise our respective links and know-how for our members.

In June 2015, members of the BCBC leadership team attended the Queen’s Birthday Party celebration in Zagreb as part of a series of regular business related meetings we coordinate, and had the chance to meet the new British Chargé d’Affaires, Ian Cliff, who has just recently taken over from the previous ambassador, David Slinn.

In the same month, HE Dr Ivan Grdešić, Ambassador of the Republic of Croatia to the United Kingdom, issued an excellent article on the merits of investment into his country, highlighting a highly skilled, competitively priced workforce, abundant natural resources and an important strategic position in the region. His article, which originally appeared in the June issue of London Business Matters, can be read in full here.

What more can we say of Croatia’s commercial appeal to UK business?

BCBC Exhibition

New trade and investment opportunities with the EU's newest member

Croatia, like many countries, has rather stagnated in the past few years due to the European economic slowdown but the latest IMF mission to the country in May 2015 now sees “positive signs for Croatia’s economy”. The reform efforts, post-accession investments into Croatia by the EU, and the re-start of global economic growth give a real chance for the Croatian economy to move forward. Domestic retail sales are up as is employment, exports and foreign direct investment are increasing, and both private and public sector profits are recovering.  

There remain some big questions for South East Europe as a whole – the Greek question with the recent announcement (and pending reaction from the country’s creditors) of the austerity referendum, the growing economic muscle of Turkey and emerging influence of Azerbaijan once gas starts to flow to South East Europe through the Trans-Adriatic Pipeline, as well as the geo-political theatre between Russia and the West. 

So how big is Croatia and what are its main advantages?  Croatia is a key country in former Yugoslavia.  It has 4.3 million citizens, a Gross Domestic Product of around US$60 billion, ranks 77th out of 144 countries in the World Economic Forum’s Global Competitive Index and sits 61st in Transparency International 2014 Corruption Perception Index.  It is one of the larger countries in the region, alongside neighbours Slovenia, Bosnia and Herzegovina, Serbia and Montenegro with Hungary on its northern border.  UKTI has a wider definition of “Emerging Europe” which represents 100 million consumers just 2 to 3 hours flying time from London.*

The importance of Croatia’s regional position and immediate neighbour market access has been demonstrated by British American Tobacco (BAT) which has recently announced its intention to acquire the Croatian tobacco company TDR for €550 million, with market leading brands domestically as well as brands of scale in Serbia and Bosnia.  In a press release on 1 June, BAT quotes the attractions as including “highly skilled people, well established brands, enhanced regional leaf processing capabilities, a local high quality factory and print facility."  Croatia has the advantage of being in the EU already whereas countries such as Albania and Serbia are not expected to join the EU until 2020 at the earliest.     

Most people will correctly think of Croatia as a tourist destination with an extensive coastline along the Adriatic Sea with a legacy of wonderful UNESCO heritage sites such as Trogir, Split and Dubrovnik.  Croatia’s food and wine exports to the UK are gaining momentum and UK companies are investing in food production in Croatia.

Trogir, Croatia

UNESCO site at Trogir on the Adriatic Coast

While tourism is a major economic activity on the mainland and its extensive island network such as Hvar and Korcula, further inland Croatia benefits from a highly educated, often English-speaking workforce still very competitively priced compared to Western European employees.  So general manufacturing is a key sector, as is food and agribusiness.  The coastline and Croatia’s location at the core of South East Europe also gives it an important position for sea freight and associated logistics with six major sea ports. Croatia has an excellent network of road and rail connections which continue to attract EU and private sector investment. The Adriatic Sea also holds major oil and gas reserves where concessions are being awarded now and in the future, which is attracting UK interest.  The Croatian Hydrocarbon Agency has just this month announced the first ever onshore licence round in the Pannonian Basin and more are expected.    

Real estate in Croatia, especially hotels, represents a major investment target for UK and other investors.  Because of the economic slowdown, a number of high quality hotel developments have been suspended and several excellent hotels are currently on the market. There are also several Croatian businesses with good prospects but with an overhang of excessive debt.  This is an opportunity for specialist distressed assets investors to step in and restructure their balance sheets and operations and restart growth and employment.  Distressed investors in London, coupled with UK turnaround expertise working alongside local Croatian professionals, is another opportunity we are seeing emerging in 2015.   

Croatia has a specialist Agency for Investment and Competitiveness (AIK) which showcases many state-owned and private sector business investment opportunities and which provides a lot of helpful on-line information about investment and trade across a wide range of industries.  When BCBC visited AIK earlier in mid-June, we were advised that an updated eCatalogue of investment opportunities will be published very shortly. 

The British Croatian Business Club is happy to discuss your trade and investment interests.  We are organised in sector focus groups, such as real estate, infrastructure, health and general tourism, food and wine, so that our business-to-business links concentrate on qualified targets and potential partners directly relevant for your specific business interests, rather than just a generalist networking platform.  Although we are UK-based, we have several pro-active board members resident in Croatia with extensive business connections. We will shortly host a health tourism seminar and continue to support investor interest into several other sectors targeting both the UK and Croatian markets.  We will help you connect to the British Embassy and Croatian Embassy commercial sectors, as well as the British Business Centre in Croatia.  But we strongly recommend you tap into the BCBC’s extensive network of business partners and extended principal and intermediary relationships in order to validate your commercial interests and connect with potential business and financing partners.  We are a membership organisation but have very modest joining fees.    

BCBC Henley Regatta

BCBC members and guests enjoy quality time and competition at the Henley Royal Regatta each year

At the time of writing, we are preparing for our annual BCBC celebration at Henley Royal Regatta where we invite not just British and Croatian business and embassy representatives, but also representatives from other countries as well as business partners with a wider South East European interest.  We strongly believe in the merit of a regional approach to showcase the combined commercial strengths and larger aggregate market size.  Sport is a fantastic platform as the London 2012 Olympics demonstrated.  While the Great Britain Rowing Team is a major force, it was excellent to see Croatia take Olympic Gold in the quadruple sculls event and congratulations to the Sinkovic brothers who are showing fantastic form in the current World Cup events, key for qualification for the Rio Olympics in 2016.  For those of you who are interested, here is a link to the brothers winning the most recent World Cup event in Varese, Italy, by a significant margin and in a World Best Time. 

Croatia is moving ahead!

* UKTI’s definition of Emerging Europe comprises Austria, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia 

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