Conquering the Balkans

24. 08. 2011

Conquering the Balkans

Many Slovenian companies are looking southwards for investment opportunities, leading the charge into a relatively untapped market. Despite Slovenia's split with the other republics of the former Yugoslavia, relations with each constituent nation remain quite amicable. For many Slovenian businesses investing into a region that they already have some level of familiarity with presents a highly strategic advantage. Not only do these Slovenian businesses know their customers but these customers are familiar with these Slovenian businesses.


In recent decades the Western Balkans have attracted some of the lowest levels of foreign direct investment in Europe, due in part to the messy situation after the break up Yugoslavia. According to the latest Bank of Slovenia Direct Investment Report, by the end of 2009 Slovenian companies had invested 68.8 percent of the total FDIs received in the countries of the former Yugoslavia. All of these investments were in greenfield projects, while Slovenia's total contribution in Croatian and Serbian brownfield investments represented 24 percent and 21.2 percent respectfully.
Some of the most successful blue chip Slovenian companies are growing their businesses in the former Yugoslav countries. Although in some cases already having a presence in the region's markets before Yugoslavia's demise, most businesses are now engaging in more aggressive market expansion campaigns.



Back in time


Slovenia's companies already had a strong presence when it was still a part of Yugoslavia. Brands such as Slovenijales and Lesnina supplied wood products all over the Balkans; Peko and Mura sold high quality footwear and textile products; and Laško and Fructal beverages quenched the thirsts of most Yugoslavs from time to time. In the present day, all these companies besides Mura continue to operate and supply products to most of the former Yugoslav markets. There are of course others that have failed to survive but many new businesses have been quick to maintain and strengthen Slovenian business presence in the region.


What the future holds


Despite varying levels of importance placed on the ex-Yugoslav markets, most large Slovenian businesses and exporters couldn't imagine not having some kind of cooperation with their southern neighbours. The Merkur Group, a hardware and electronics retailer with a 115-year history, has been opening branches in the ex-Yugoslav states since the 1980s. Despite strong local competition, the company is today one of the largest hardware and electronics chains in the region.Other enterprises which have similar ambitions are showing that their first important trade partners are those from the Balkans. Perutnina Ptuj, a poultry food processing company has subsidiaries in most former Yugoslav countries and is arguably the best producer of poultry products in the region.However it is not always success for Slovenian investors in ex-Yugolsav markets. Retailer Tuš tried expanding its supermarket store concept into the Serbian market recently but due to financial problems had to sell its Serbian supermarket chain to Croatian retail giant, Agrokor.Despite the warnings that come from the media and economists alike that Slovenian companies need to look beyond their comfort zone in the Balkans, many Slovenian companies still mainly turn to the region when expanding beyond Slovenia. Due to cultural similarities, investing in the Balkans is seen as less risky but also as the first stepping stone in the attempt to expand globally. The safe strategy has worked for many for now but what will work in the future is dividing opinion.


SOURCE: The Slovenia times


Conquering the Balkans