Ivan Barbarić, Vice President of HGK for International Affairs: Go global – Go virtual

Results of initial surveys conducted by the Croatian Chamber of Commerce (HGK) demonstrated that our entrepreneurs currently show the most interest in the markets of Slovenia, Russia, Austria, Germany, the Višegrad group countries and Israel

One of our most important missions is to encourage and promote export. We are systematically working on this and we are trying to include absolutely everyone who’s interested in entering the international economic waters, Ivan Barbarić, Vice President of HGK for International Affairs, stated for Diplomacy&Commerce. We will place special emphasis on SMEs because they need help the most due to limited financing options.

  1. Croatian Chamber of Commerce initiated the “Go global – Go virtual” project with the support of European Entrepreneurship Network (EEN), with which they seek to accelerate the recovery of the domestic economy after the corona crisis. What is it really about and what is the idea and goal of the project?

Due to the limited possibility of physical meetings of businessmen during the epidemic, with this project HGK enables virtual connecting of companies from Croatia and foreign countries, i.e. contact with potential foreign partners and holding direct online business meetings. We realized that such a platform is actually an ideal opportunity for our entrepreneurs to find new associates, suppliers and customers and thus use the post-crisis period to rearrange supply chains and business processes. Our goal is for as many Croatian companies as possible to export to developed markets, not only because of the direct profit for our economy, but also because of the invaluable experience that doing business with the best brings to domestic entrepreneurs.

  1. How does the project function and who is involved in the project?

In the project announcement, we conducted a survey among our entrepreneurs to see which markets are most interesting to them and we organized the meetings accordingly. Each cycle includes a plenary section with introductory speeches, followed by B2B talks during which entrepreneurs establish direct contact with potential partners from the industries they are interested in and present their products and services.

We cooperated with numerous institutions through the project, from embassies, chambers of commerce, to various business associations of countries with which we organized meetings. We have included everyone who has the know-how to make it easier for entrepreneurs to enter new markets and help them find the right partners in their industry.

  1. Which countries do Croatian entrepreneurs have the most interest in cooperating with and in which areas?

Results of initial surveys demonstrated that our entrepreneurs currently show the most interest in the markets of Slovenia, Russia, Austria, Germany, the Višegrad group countries (Czech, Slovakia and Poland) and Israel, so we followed that when organizing the meetings. Talks have already been held with all these countries, and due to great interest we decided to expand the project and continue B2B talks, so the next cycle is focused on the markets of Italy and Latin America.

Until now, almost a thousand companies from very diverse branches took part in the project, so it’s difficult to specify particular sectors that are in the lead. We had companies from the agri-food and metal industry, industry 4.0, tourism, renewable energy sources and environmental protection, health and pharmaceuticals… The interest is really great and almost all segments of the economy are covered, which makes us especially happy because we should not limit ourselves to established practices in this global rearrangement.

  1. International cooperation is something that the Croatian Chamber of Commerce insists on and it is one of the primary tasks of the chamber. Who can get involved in HGK projects and how when we talk about this topic?

Yes, one of our most important missions is to encourage and promote export. We are systematically working on this and we are trying to include absolutely everyone who’s interested in entering the international economic waters. We are placing special emphasis on SMEs because they need assistance the most due to limited financing options.

We are offering numerous specialized services. For example, through the “Exporting Entrepreneur” (Poduzetnik izvoznik) service, we provide members with individualized proposals of potential partners with contact information in the countries of their interest so that they can offer them their products and services. We provide information, analytical descriptions of the economic and political situation in individual foreign markets, information on the legal business framework (labor law, procedures, customs regime, etc.) and we organize numerous seminars and educational workshops for them on how to export to individual markets. We would also like to single out our Tenderi.hgk.hr service for all the member companies designed to facilitate and automate access to available information on specific business opportunities in foreign markets, i.e. information on foreign public procurement tenders, according to the individual needs and wishes of each member. In addition to specialized services, there are individual projects, such as the HR.izvoz – with HGK to foreign markets (HR.izvoz – s HGK do stranih tržišta ) project, in which 805 companies participated, and it is one of the projects of the Croatian Chamber of Commerce for which we withdrew EU funds.

We are helping them also through the work of HGK offices abroad, whose employees provide the solution for specific problems of Croatian companies with their very presence in the field. At the moment, HGK has open representative offices in Bruxelles, Moscow, Shanghai, Belgrade, Sarajevo and Mostar.

Economic diplomacy also includes the organization and co-financing of joint appearances of Croatian companies at foreign fairs in order to enable them to present their products and find new customers abroad. In 2019, the appearance of Croatian companies was organized at more than 150 fairs, and more than 2,800 companies participated in these events.

  1. The Croatian Chamber of Commerce has prepared a study that analyses export potentials of the wood industry and furniture production in Croatia. Which product groups have the greatest export potential and how big that potential is, and which export markets our producers should target?

We realized that companies need information that would direct them to products that they can produce competitively, and are currently in demand abroad, and analyses of foreign markets where they can place them most successfully. Therefore, we started making analyzes of export opportunities of individual sectors of the Croatian economy with the Fit4Globe project. The first analysis was made for wood processors, and the results show that the untapped export potential of the domestic wood sector exists in 33 countries totaling $328 million. The highest probability of increasing export is to the markets of Slovenia, Austria, China, US and Germany. The total value of exports of the domestic wood sector is 8.1 billion kuna, and if we were to use all the opportunities offered to us, we would increase it by as much as 26 percent.

Products with the greatest untapped export potential are seats, joinery and construction products, wood (including plates and parquet blocks) and other furniture and parts. The untapped potential of the group of products with higher value-added (furniture, parquet, joinery and wood products for construction) amounts to €106.3 million, and its implementation would increase the export of this group of products by almost 38 percent.

Analysis shows that we must increase the productivity of the sector and change the structure of exports because we currently have a high share of low value-added products, while furniture export is represented by only a small part. Such a structure is present in most of the most important export markets, except for exports to the Czech Republic and Germany, where furniture accounts for 80 and 52 percent of exports of the wood sector, respectively. Only about nine percent of higher value-added products are exported to Italy, which is our most important market. Therefore, we need as much product finalization as possible, and we must pay special attention to the national and international branding of our wood industry.

The aim of the analysis is to strengthen the domestic wood sector and its export diversification, because our export potential is currently concentrated in only about 20 companies, which make up almost 80 percent of total exports.

  1. Which other industry branches are important for Croatia and its development, and which seem that they are not getting enough attention? What are the benefits and potentials in these sectors?

As part of our Fit4Globe project, we are working precisely on ways to detect untapped potential in various sectors and help entrepreneurs realize them to the end. In addition to the aforementioned wood processing industry, we have just completed an analysis of Croatian machine construction, which showed that we have almost $400 million in untapped export potential in this sector as well. We will continue to perform these analyses in other sectors since they provide a detailed overview of the situation in the sector being analyzed in the Republic of Croatia, the situation on the world market and analysis of selected product groups with the greatest export potential through the review of ten most important importing countries, the value of our export and of total export and untapped potential for the top ten leading countries. We also prepare a detailed overview of the most important markets, which includes general economic indicators and the most important fairs and competitors.

  1. How do you estimate the year 2021 to develop in economic sense, and do you expect a recovery to begin after the pandemic crisis? What do the figures look like this year compared to last year when it comes to domestic economy?

EC’s estimates from a few days ago showed that the Croatian economy and the economy of the Union last year was slightly better than predicted, but also that there was a certain deterioration of estimates for this year, primarily due to the current pandemic. As for 2020, for the EU this estimate has increased from -7.4 percent to -6.3 percent, and for Croatia from -9.6 percent to -8.9 percent. The third quarter, i.e. a significantly better tourist season than expected had the biggest impact on such trends for Croatia. The situation was somewhat better in most of the fourth quarter, but at the end of the year, as in most of the EU, the economy closed again, which had a negative impact on GDP. This was also reflected in the forecasts for this year, so the growth estimate for the EU was reduced from 4.1 to 3.7 percent, and estimates for Croatia from 5.7 to 5.3 percent.

An estimate for 2022 has been published, according to which the EU should grow by 3.9 percent, and Croatia by 4.6 percent. More precisely, according to new estimates, real GDP in Croatia in 2022 should be only 0.3 percent higher than in 2019.

Of course, these estimates will depend on the development of the pandemic, but we must do everything possible to welcome the end of this global plague fully prepared and take advantage of all possible opportunities that will surely open up for us. If we play the cards dealt to us well, I am convinced that we will far exceed the figures mentioned by the Commission and recover at a much faster pace.