(Airport and Ground Equipment - AGP)
Overview
The aviation industry in Serbia comes under the principal jurisdiction and management of the Civil Aviation Directorate of Serbia (CAD). The major air transport carrier in Serbia is Yugoslav Airlines (JAT), accounting for 98% of passenger traffic.
According to CAD, in 2009 the total airport throughput reached 2.34 million and is expected to increase to over 3 million by 2010. The total throughput air cargo is estimated to rise around 15% each year, achieving approximately 70,000 tons in 2010.
Currently there are 20 international air routes operating in Serbia. The country currently operates two major civil airports, the primary airport is located in Belgrade and the secondary airport is located in Nis. Belgrade Airport “Nikola Tesla” is the largest airport and air-traffic center in the former Yugoslavia. It handles almost 75% of Serbia’s international passenger traffic.
Serbian aviation experts and government authorities are aiming to transform the country into a regional hub. Upgrade of the transport infrastructure --road, rail, water, air-- is a priority.
There are significant foreign investment and export opportunities in this sector. While the majority of investment involves local construction materials and services, the United States is an important player in exporting products ranging from ground support to security equipment.
The primary source for financing this development will come from the national budget, foreign official development assistance loans, and export credits. Procurement in the aviation sector is mainly carried out through open local or international competitive biddings.
Competitive Situation
The major competitive factors for securing contracts in the aviation sector in Serbia include a good reputation, competitive pricing, and a willingness to build long-term strategic partnership.
Domestic Production
Airport runway systems and air traffic control equipment manufactured in Serbia accounted for only 7.5% of the total market in 2009. Serbian companies or foreign subsidiaries could meet about 6% to 8% of total demand by manufacturing and/or assembling airport and air traffic equipment locally and by outsourcing some of the related services to small local private companies. None of the Serbian companies are presently serious competitors to U.S. firms, but they could be considered viable partners in providing the accompanying after sale services, as well as designing, manufacturing and assembling subcomponents.
U.S. Market Position
From 2002 through 2009, the United States accounted for approximately 30% of Serbia’s imports of airport equipment and air traffic control equipment. U.S. firms are expected to increase their exports over the next two to five years. U.S. exports have been primarily radar and navigational equipment, supplied by such firms as Hughes/Raytheon (civil aviation).
Third Country Imports
Over 70% of the airport runway systems and air traffic control equipment imported into Serbia from 2002 to 2009 were imported from third countries. Third country imports are expected to grow over the next two years at an average rate 20% to 25%.
The largest source of Serbia's imports of airport equipment traditionally comes from Germany, followed by France, the United States, and Italy.
Major foreign suppliers include the firms Siemens-Cardion and Thales, which supplies lightning systems and radio-navigation and communication systems, and Mannesman, which is supplying the passenger and cargo ground transportation equipment. The French company Telefles is supplying the flex bands for transportation of passenger and luggage and cargo.
Best Products/Services
Over the short and medium term, demand is estimated to be highest for airport and air traffic control equipment and related services; services related to concession of airport activities; cargo handling outsourcing and management; runway systems improvement; and safety and security equipment.
The following products represent the best prospects for U.S. firms exporting to Serbia: passenger bridges, firefighting trucks, metal detectors, electronic sniffers, baggage X-ray inspectors, etc.
U.S. airport equipment firms primarily compete with companies from Israel, Denmark and Italy. Due to the competitive nature of the market and the high cost of capital in Serbia, firms providing the most attractive financing arrangements will generally be the most competitive. Because most of Serbia’s formal bidding procedures are related to tenders, U.S. suppliers should contact the U.S. Commercial Service early to find out about timing, strategy, and the levels of available assistance.
Foreign companies winning bids are typically associated with local firms. In the case of international bids, supplying goods and services for specific government projects, successful bidders are required to have local representation. Since the open period for bidding is often as short as one month; a partner resident in Serbia, able to act on tenders as soon as they are announced, is critical.
Opportunities
The international airports are the most important users of airport and air traffic control equipment and related services. Procurements by the newly spun-off airport service providers are expected to increase in number as airport services are increasingly being outsourced. The biggest customer will be Belgrade Airport. The second most important users of airport equipment will be major international air carriers such as DHL, FEDEX, Lufthansa, Austrian, Air France, British Air, Swissair, Alitalia. Foreign and Serbian air carriers use equipment and services provided by the airports. The airlines’ greatest needs are for better and faster passenger and luggage check-in handling, transportation to and from the airport, professional catering services, and safer and faster fuel supply. To meet these needs new and modern equipment, technology, and know-how are required.
Resources
Airport “Nikola Tesla” Belgrade
Dr. Velimir Radosavljevic, Deputy Director
Director General – Currently Vacant,
Fax: (+381 11) 209 4802
e-mail: kabinetl@beg.aero
Government contacts:
Ministry of Infrastructure
Of the Republic of Serbia
Mr. Milutin Mrkonjic, Minister
Mr. Radoslav Tomasevic, Assistant Minister
Belgrade, 22-26 Nemanjina St.
Tel: 3616-426; 3616-431
Fax: 3617- 486
E-mail : cabinet@mi.gov.rs
(Medical Equipment - MED)
Overview
The growing demand for medical equipment in Serbia, as well as in many developing Balkan states, indicates a strong prospect for companies in the broader Balkan region.
According to Episcom sources, the Serbian market for medical equipment was estimated at USD186 million in 2009. Imports account for approximately 90% of the Serbian medical market. The primary suppliers of medical equipment are manufacturers from the EU such as from Germany and Italy. A lesser share comes from the United States, which comprises about 15% of Serbia’s imports in this sector. The actual share of U.S. imports is much higher than what is indicated in official statistics because a large percentage of imported medical equipment is produced by European subsidiaries of U.S. firms and thus registered as originating in the EU.
The Serbian import market for medical equipment is growing at a rate of 12% annually. This development is largely a result of the Serbian public sector, which is characterized by constant restructuring in order to become more effective and productive in servicing the needs of Serbian public. Therefore, the ability of the public sector to become more flexible in adopting systems, practices, and policies that have been applied successfully in many foreign countries, is a fundamental condition for achieving the desired growth. One method for growth that is often discussed is through the implementation of Public Private Partnerships (PPP).
Public expenditure for healthcare is low, amounting to 3.4% of GDP in 2008. The Serbian government has committed to improving and modernizing their nationalized healthcare system, which is in desperate need of reform. Equipment upgrades are part of the goal. According to the National Investment Plan adopted in June 2006, around USD 500 million was spent in this sector in 2007 and 2008. The process of modernizing the Serbian healthcare system was slowed in 2009 due to the lack of funds. Less than EUR 300 million were spent for reconstructing several health-care centers and purchasing new equipment.
The Ministry of Health is the major player in the Serbian medical equipment market. The Ministry develops health policies establishing fundamental objectives for health care, proposes the health care budget and the investment program for the sector, and monitors the work of state-owned health institutions. Equipment purchases and other major investments are financed from the government’s budget. The Act on Public Procurement requires open tenders for all purchases of goods and services exceeding a certain amount. Currently most purchases are made by publicly owned institutions, but private medical practices have created some space for sale of equipment such as for dialysis, diagnostic imaging, etc.
The Institute of Health Insurance in Serbia administers healthcare systems which are based on compulsory payroll contributions from both employers and employees. Serbia has opted to retain a predominantly publicly-funded health system, with an increasing degree of private services.
Best Prospects/Services
U.S.-manufactured medical equipment enjoys an excellent reputation in Serbia for its state-of-the-art technology, quality, and reliability. However, medical equipment importers and specialists emphasize the real and perceived lack of technical assistance and service support as one of the main obstacles to further growth of U.S.imports on the market. The Serbian market for medical equipment is still very price-sensitive because of limited resources.
Best sales prospects for U.S. medical equipment are expected to be cardiovascular diagnostic equipment, non-invasive surgical devices, anesthesia and intensive care equipment, diagnostic imaging (CTs, MEIs) and radiation therapy equipment, as well as for ultrasound equipment, urology equipment, laboratory and testing equipment, tissue and blood bank related equipment. Also, there are good prospects for products such as: ultra-violet of infra-red apparatus used in medical, surgical, dental, or veterinary sciences, as well as apparatus based on the use of X-rays of alpha, beta or gamma radiations, whether or not of medical, surgical, dental or veterinary uses, needles, catheters, cannulae and the like, used in medical and surgical procedures, medical lasers, endoscopes, and laser instruments.
GE Healthcare products are well known in Serbia. In addition, U.S. companies Medtronic and Boston Scientific have established strong positions in the sale of cardiovascular diagnostic equipment, pacemakers, and stents. U.S. Alcon is well represented in the area of ophthalmology.
Local distributors of medical products and equipment claim that there is a large demand for diagnostic tests for drugs, pregnancy, and various illnesses. Local distributors also expressed willingness to import what they refer to as “hit” products (i.e., new U.S. products for which equivalents do not exist in Europe).
Opportunities
There are good opportunities in the Serbian market for US manufacturers of sophisticated diagnostic equipment such as electrocardiographs, endoscopes, scanners, computer tomograph imaging equipment, pace makers, digitalized x-ray equipment, nuclear medical instruments and clinical laboratory equipment.
The Ministry of Health is also looking for innovative ways to work with medical equipment suppliers. They are considering the option of public-private partnerships in which a company would equip and administer a certain medical center or hospital unit. At this early phase of this project the Ministry is willing to listen to different proposals.
Hospitals suggest that several sub-sectors will be especially significant in the near future. The biggest opportunities for the coming years are likely to be in the following medical equipment sectors: health informatics equipment, home health care and rehabilitation equipment, pathology equipment and services, diagnostic imaging equipment, especially ultrasonic diagnostic equipment, patient monitoring systems including intensive care units, dialysis equipment, day hospital and day surgery concepts.
Medium and long-term procurements will be made for information systems developed for the National Health Insurance Fund, as well as training, public information and technical assistance, and support for outpatient and inpatient care. Hospitals perform regular procurements of diagnostic equipment, modern patient monitoring systems, and hospital management systems.
The proposed donor program for Serbia represents a best market opportunity for U.S. companies. In total, donations/grants/loans are expected to be around $145 million and will focus on: pharmaceutical support, health IT systems, medical equipment and civil works, policy development and capacity building, as well as health information system design. Additional funding is expected from pre-accession EU funds in the next three years.
Resources
Other resources can be found at the following websites:
Ministry of Health and Social Welfare of Serbia: www.zdravlje.gov.rs
Health Fund of the Republic of Serbia: rswww.rzzo.gov.rs
Velefarm: www.velefarm.co.yu
Association of Medical Devices Distributors in Serbia www.pks.rs
Pharmaceutical - DRG
Overview
The total market size for pharmaceutical products in Serbia is estimated at around USD one billion in 2009. Although Serbia is one of the biggest countries in the Balkans, drug consumption per capita is around USD 173, which lags behind most Central Eastern European markets.
The market is dominated by local producers for generic products: Hemofarm, Actavis (owns Zdravlje-Leskovac) and Galenika, who account for 70% of the market share in value terms. Despite active local manufacturing, foreign producers account for more than 90% of the market for innovative medicines. Imports are highly concentrated, the majority of which come from these top four groups: Roche (Swiss), Pfizer (USA), Novartis (Danmark), and GSK (UK). According to local statistics, the United States exported USD 29 million worth of pharmaceutical preparations to Serbia in 2008, versus USD 10 million in 2003. U.S. firms also imported products from manufacturing facilities located in other countries.
Generics play a significant role in the market, owing largely to the low spending power of both the government and consumers. Domestic production of generics has increased steadily in recent years, accounting for about 45% of total output, although, overall, imports are making significant inroads.
Growth in pharmaceuticals should reach at least six to eight percent a year for the next five years. Several foreign companies, like Actavis and Stada, made local acquisitions, providing further opportunities for foreign stakeholders. Privatization of state enterprises will continue, and the sector will attract a considerable amount of foreign investment.
Serbia operates a nationalized healthcare system, in which the government sets prices and subsidies prescription medicines.
Compared to the other countries in the region, the wholesale market is still fragmented and the presence of foreign-based wholesale players is rather limited so far. Distribution markups (6% for wholesale and 12% for retail) are relatively low in regional comparison.
Best Prospects/Services
Among European countries, Serbia has one of the highest rates of cardiovascular disease, cancer, liver disease and cirrhosis. Poor diet, smoking, and other unhealthy habits are often cited as causes. Pharmaceuticals that address these conditions, as well as their precursors e.g., hypertension, high cholesterol, etc., are in demand. With the market for pharmaceuticals, especially vitamins and minerals, growing steadily, (almost doubling in the last four years) local distributors are in constant search of new U.S. suppliers.
Opportunities
The market for natural medicines expanded significantly in recent years. While a U.S. supplier should be able to offer a full range of food supplements, there are a couple of products that are particularly in demand (calcium citrate/acetate/lactate, iron sulfate, glucosamine sulfate). There is a significant demand for oncology products, vitamins/minerals and natural medicines aimed at prevention of diseases, as well as for drug/alcohol tests.
The Serbian Law on Drugs prohibits sales of any type pharmaceuticals, including OTC, outside pharmacies.
Resources
Other resources can be found at the following websites:
Ministry of Health and Social Welfare of Serbia: www.zdravlje.gov.rs
Health Fund of the Republic of Serbia: rswww.rzzo.gov.rs
Velefarm: www.velefarm.co.yu
Association of Pharmaceuticals of Serbia: www.farmacija.org
Agency for Drugs Registration: www.alims.gov.rs
Computer Hardware and Peripherals - CPT
Overview
In 2009, the IT market in Serbia, including services, reached an estimated value of around USD 350 million. Hardware comprised 70% of the total market, while software constituted 16.5%, and IT services the remaining 13.5%. Independent experts estimate that IT spending in Serbia dropped by 20% in 2009 due to the global economic downturn. Some recovery and return to 2008 level is expected in 2010.
Serbia’s current IT consumption per capita of USD 50 is much lower than in neighboring countries in the region and the IT market in Serbia is still in the process of reconstructing itself along with the entire economy. Major attention is still focused on the development of basic infrastructure with hardware purchases at the core. Once these infrastructure improvements are in place and have a chance to function for some time, attention will begin to shift to IT services and software solutions aimed at maximizing initial investment. As most companies do not have defined IT budgets, cash flow problems and a sluggish economy make IT one of the first areas cut from investment plans.
The emerging and but still immature (in terms of market penetration) PC market offers great growth potential in the long term. Businesses and public administration will continue to improve their basic infrastructure as their IT requirements increase. Moreover, households will seek greater internet access. In 2001, the value of the hardware market in Serbia was USD 120 million and has grown to an estimated USD 350 million in 2009.
The top 10 suppliers dominate a market of about 200 companies. Competition is intense. During the previous decade, computer hardware was imported from Asia. Some of that hardware was poor quality, and many users desired better quality, even at a higher price. In 2004, the government fostered the computer market by abolishing the 20% sales tax. Despite introduction of an 18% VAT on January 1, 2005, this sector achieved growth of around 20% in 2006 and continued in 2007 and 2008 at an average rate of 13%. In 2009, the Government of Serbia decided to reduce VAT for hardware and software to 8%.
Statistical data is not yet reliable for analysis, but experts estimate that U.S. companies had a significant percentage of the total market in 2009 (rough estimates are up to 30%). Hewlett-Packard, IBM, Compaq, Dell, Gateway, Xerox, and Cisco continue to be among the market leaders in Serbia. Toshiba, Siemens and Acer are the main competitors to U.S. equipment suppliers on the SAM computer market, while the main competitors to U.S. companies for peripherals sales are Canon, Epson, and Minolta.
The government, state enterprises, large and small commercial enterprises, and commercial banks are highly receptive to U.S. computer technology. The total number of computers in Serbia is estimated to be 500,000, representing a remarkably low 5% penetration rate. A conservative 10% annual growth is expected over the next couple of years. Growth is expected to come from new market segments like small- and medium-sized enterprises, home users, as well as from continuing needs for computers and peripherals for commercial banks, big infrastructure projects, and further information technology needs of the Government administration. In November 2009, Serbian government officials announced that they will allocate funds from a EUR 200 million loan from EIB in 2010 for the projects in the area of science and technology, as well as for e-government projects. Part of this loan will be earmarked for purchase of hardware and software.
The three most important competitive factors in the Serbia’s computer hardware and peripherals market are price, quality, and after sales support.
Best Prospects/Services
Best prospects include data communications and network equipment. Best prospect sub-sectors for U.S. suppliers include personal computers, servers, laptops, modems, printers and scanners.
Opportunities
The government and many domestic companies are in the process of introducing computer technology in their operations. Significant funds will be invested in equipment by such firms.
Serbia has free trade agreements with most of neighboring countries in the Balkans (CEFTA), with Russia (the only country in the Balkans to have a free trade agreement with Russia), and is negotiating an agreement with Belarus.
Some local experts predict strong spending in the IT security and data protection segments. Spending on IT security is expected to double in the coming three years.
The health-care sector could be of interest for the American IT industry to enter projects financed by international institutions. For example, the World Bank in Serbia approved a USD 13.5 million loan in additional financing for its Serbia Health Project that seeks to help develop a sustainable, performance-oriented healthcare system. The project will finance information technology management for hospitals and the state Health Insurance Fund as well as technical assistance to hospitals, the Fund, and the Health Ministry to support the introduction of a new payment system that would increase their efficiency and productivity.
Resources
http://www.export.gov/marketresearch.html
Ministry of Telecommunications and Information Society
Ms. Jasna Matic, Minister
Mr. Nebojsa Vasiljevic, Deputy Minister for IT
Address: Marsala Birjuzova
3-5
11000 Belgrade
Tel: +381 11 2020 057
Fax: +381 11 2020-059
E-mail: nebojsa@mtid.gov.rs
Web site: http://www.mtid.gov.rs
Serbian Agency for Telecommunications RATEL
Mr. Jovan Radunovic, President of Managing Board
Address: Visnjiceva 8
11000 Belgrade
Tel: +381 11 3242 673
Fax: +381 11 3232 537
E-mail: ratel@N0SPAM.ratel.rs
Web site: www.ratel.rs
Chamber of Commerce and Industry of Serbia
Association of ICT
Terazije 23, 11000 Belgrade
Phone: (381 11) 3304 558; Fax: (381 11) 3304 556
Association of ICT -- JISA
11000 Belgrade, Zmaj Jovina 4/VI
Tel:+381 11 3281 727
E-mail: jisa@N0SPAM.jisa.rs
Web: www.jisa.rs
Information Society of Serbia
11000 Belgrade, Kneza Milosa 9
Mr. Nikola Markovic, President
E-mail: nimar@N0SPAM.afrodita.rcub.bg.ac.rs
For more information on market entry strategies contact:
E-mail: zorica.mihajlovic@N0SPAM.mail.doc.gov
Telecommunications Equipment and Services - TEL
Overview
Note: Data regarding the imports from the United States relates to equipment shipped from the United States. Many U.S. companies are distributing equipment from their “outsourcing” countries, which are not treated as U.S. exports by official statistics.
The telecommunications sector is probably the most dynamic component of Serbia’s economy, and definitely one that is receiving priority attention from the government. The telecom sector already contributes approximately 2.5% to Serbian Gross Domestic Product (GDP) and is growing fast. Over the last five years, it has experienced impressive growth, offering Serbia the latest technologies in most branches of telecommunications. Although the telecom sector has a high annual growth rate of 18.3% and projected 5-year compounded annual growth rate of 15%, its further development to reach the level of developed economies requires urgent improvement of regulatory environment. Expected changes in the regulatory and business environment in the next two years will bring greater than average value growth
For additional information on the background of this industry, see Chapter 1, Market Opportunities.
During the last five years, mobile telephone services have developed rapidly in Serbia. The average annual increase in mobile subscribers is 30%. At the end of 2009, the country’s total number of subscribers exceeded 9 million subscribers.
Serbia’s mobile penetration is estimated at 115%. Telenor (acquired domestic operator Mobtel in 2006), Mobile Telephony of Serbia (MTS), the mobile phone arm of state telecom provider Telekom Srbija, and Mobilkom Austria share the mobile market in Serbia. They strongly compete in the introduction of new technology and new high-profit value added services. Significant opportunities for U.S. companies in this sector will be influenced by privatization of the telecom sector and need to modernize existing, and in some areas obsolete, equipment.
State telecom provider Telekom Srbija, which currently has 4.9 million subscribers, plans to increase the figure to over 5 million in 2010. Telekom has more than 700,000 post-paid customers but its goal is to double the number because post-paid users are a more reliable source of revenue. The company launched Serbia’s first 3G network and already has 20,000 users, approximately 2,000 video calls are made each day.
Telekom Srbija has invested heavily in modern data networks, and its mobile operations unit is gaining market share. The company returned to profitability in 2005 and 2006. Tariff rebalancing, which started late 2008, will provide a substantive boost, as 80% of traffic is domestic. Reduction in tariffs on international calls will not negatively impact profitability as most international calls have been switched over to VoIP over the past year. Transmission facilities are comprised of a national and international backbone consisting of about 3,000 km of optical cables for digital transmission systems with 2.5 Gbit/s and 622 Mbit/s capacities.
Serbia is the only country which due to the economic crisis imposed a tax of 10% for mobile telephony in 2009. The impact of such a measure is not yet known, but mobile operators expect this should only be a temporary measure.
The rapidly growing cable television sector also provides opportunities for investment. There are telecommunications equipment manufacturers with innovative solutions for the particular problems of undeveloped countries: low-cost solution for line doubles (party lines); low cost small scale digital exchanges; home grown ADSL solutions, etc. Mostly European companies are present in this sector (Siemens, Alcatel, Ericson), while there is enough space for the presence of U.S. products.
U.S. telecommunications equipment is very well received in the Serbian market. U.S. telecommunication equipment manufacturers represented in Serbia include Hewlett Packard, Cisco, Juniper, 3Com, and Bay Networks. However, European producers such as Siemens, Ericsson, Nokia and Alcatel heavily dominate the Serbian market.
Latest positive developments:
The Ministry of Telecommunications and Information Society was pro-active during 2009, proposing the Government of Serbia adopt the following strategies:
- Strategy for Regulatory Reform from 2008 to 2011, envisaging regulatory cuts till the end of year 2009 by eliminating redundant regulation and changing deficient one.
- Strategy for Digital Switch-Over which should improve technological progress in the country by digital switch over, starting in April 2012. By doing that, part of the spectrum currently used by broadcasters will be freed up to engage in other technologies offering high speed services, and improve spectrum use. Switching from analogue to digital TV will be a great opportunity for U.S. companies.
- Strategy for Development of Broadband and Strategy on Development of E-Government
Another positive development relates to Telekom Srbija and Media Works acquiring licenses for fixed wireless access (FWA) for public telecommunication network and services in the range of 411,875 – 418,125 /421,875 – 428,125 MHz for the territory of Serbia.
Best Prospects/Services
The best market prospects are for Internet-related equipment such as routers, switches, access servers, equipment for mobile telephony, cable operators’ equipment for transmission and fixed wireless equipment. There are also lucrative business opportunities for U.S. companies with technical skill and expertise in Internet applications. In particular, as GPRS usage becomes widespread and UMTS cellular telephony is introduced, there will be good prospects for the business-to-consumer market for publishing via Internet
Opportunities
Significant opportunities for U.S. companies in this sector are related to the modernization of equipment, but competition is fierce, mostly from European companies, as stated above.
Three other major factors contributing to market growth are the continued increase in Internet users, the substantial increase in mobile phone use, and the increase of services offered by the cable TV operators, private radio stations, and TV broadcasting operators. These factors should help create expanded demand for U.S. providers of advanced telephone service solutions, as well as value-added telecommunications services. Other best prospect sub-sectors include Internet services, wireless and broadband Internet access technologies, cable television, and voice-over-Internet.
The project for replacing analogue broadcasting with digital television, which should be completed by June 2015, will cost approximately $60 million. U.S. companies, a leader in producing equipment for such a project, are seen as a potential supplier.
Resources
Ministry of Telecommunications and Information Society
Ms. Jasna Matic, Minister
Mr. Nebojsa Vasiljevic, Deputy Minister for IT
Address: Marsala Birjuzova
3-5
11000 Belgrade
Tel: +381 11 2020 057
Fax: +381 11 2020-059
E-mail: nebojsa@mtid.gov.rs
Web site: http://www.mtid.gov.rs
Telekom
Srbija
Mr. Branko
Radujko, General Manager
Address: Takovska 2
11000 Belgrade
Tel: +381 11 3616 273
Fax: +381 11 3616 273
E-mail: kabinet@telekom.rs
Web site: www.telekomsrbija.com
Serbian Agency for Telecommunications RATEL
Mr. Jovan Radunovic, President of Managing Board
Address: Visnjiceva 8
11000 Belgrade
Tel: +381 11 241 786
Fax: +381 11 241 805
E-mail: ratel@N0SPAM.ratel.rs
Web site: www.ratel.rs
For more information on market entry strategies contact:
E-mail: zorica.mihajlovic@N0SPAM.mail.doc.gov
Franchising - FRA
Overview
Consumer and economic conditions in Serbia are developing quite favorably for the entry of international franchising. The U.S. Commercial Service has been very proactive in developing this market segment in Serbia in that we helped create a Center for Franchising in 2008 with the Serbian Chamber of Commerce and the Serbian Franchise Association in 2009. In addition, we embarked on a 13-city tour around Serbia to educate local entrepreneurs and small and medium sized enterprises (SMEs) on the benefits of importing U.S. franchise concepts. Moreover, in conjunction with the Serbian Chamber of Commerce, the Belgrade Fair, and the newly established Serbian Franchising Association, we plan to host the first ever Franchise Trade Show in Belgrade in Autumn of 2010.
Business and government experts generally agree that the foreign franchising industry will be the pioneer of further economic growth and technical development.
Serbian customers are intrigued by a variety of new products as both quality merchandise and quality services are still lacking in the market. Therefore, new marketing ideas, promoted through franchised systems, are welcome. Awareness of how successful franchising is in the United States is very strong and many Serbian businesses are interested in acquiring the rights to operate American franchises, especially in the services sectors.
In spite of the current economic crises, Serbia still has a large number of companies and private entrepreneurs with sufficient funds to commence small size franchising operations without having to borrow money. As a result, the current economic crisis may not have as big an impact on this segment as one might expect. On the other hand, obtaining financing for more expensive concepts is also possible, but in light of the current global financial crisis could become more difficult. However, the key to success can be offering more single-unit contracts, instead of going for the master franchise agreements, which drastically limits the pool of potential franchisees.
Best Products/Services
There is a strong potential market for franchises in services, food, and apparel sectors. Serbians spend a disproportionate amount of their income on eating out. Typical Serbian restaurants are heavy on meat. Italian and French cuisines are very popular, but few Asian or Mexican restaurants exist in Serbia. Currently, there are three U.S. fast food chains: McDonalds, with several restaurants throughout Serbia; Pizza Hut, with one restaurant in Belgrade; and Kentucky Fried Chicken, also with one restaurant in Belgrade. The number of foreigners living in Serbia is increasing, which is another target market for franchisers. The U.S. Commercial Service in Belgrade has been approached by several Serbian businessmen inquiring about possibilities of obtaining a U.S. franchise in these sectors. One of the primary success factors is location. Real estate owners are well aware of this fact and are pricing their property accordingly. Our office has not seen any drop of prices caused by the current crisis.
The apparel sector is another good prospect for U.S. franchisers. Other than the establishment of retail outlets, production franchises would support the government strategy and revive the deeply troubled textile sector.
Franchising concepts such as dry cleaning, fitness facilities, pet grooming, etc., that have lower buy-in costs than restaurants; probably have the strongest potential in Serbia. There is a general lack of consistency across local service providers, making franchised concepts potentially popular.
Opportunities
Generally speaking, the business community in Serbia is relatively familiar with the concept of franchising, as it is understood in developed markets in Europe. Awareness of franchise businesses in the United States is very strong among local consumers who traditionally associate such U.S. brands with superior quality, excellent customer service, and a western lifestyle.
Though Serbia has no specific franchise laws (it is regulated by the Law on Contracts and Torts), both government officials and business circles agree that the foreign franchising industry could be the pioneer of new investment as interest in franchising is growing daily. Given the importance of trade secrets and trademark protection, substantial work has also been done on IPR protection, both in legislative and enforcement aspects. Careful choice of local partners, protection of IPR and a smart pricing policy remain critical to success.
For more information on franchising opportunities please read the separate market research report: “Franchising Market in Serbia” in the market research library database.
Resources
Serbian Chamber of Commerce - Franchising Center
Ms. Marica Vidanovic, Head of Center
Phone: +381 11 3304 518
E-mail: marica.vidanovic@pks.co.yu
Center for Franchising website: pks.komora.net/fransizing
For more information on market entry strategies contact:
E-mail: boris.popovski@mail.doc.gov
Agricultural Sectors
Serbia’s agricultural sector, including hunting and forestry, contributed about 11.3% percent to gross domestic product (GDP) in 2009. Total agricultural production rose only 2.6%, compared to 2008, mostly due to unfavorable weather conditions during the growing season and problems resulted from the world economic crisis. Agricultural exports continued to grow and contributed about 23% of total Serbian exports, reaching record surplus of about 720 million USD in 2009.
As per current statistical data, 529,326 citizens or 26% of Serbia’s labor force are actively employed in agriculture. Serbia has 4.2 mil ha of arable land (0.56 ha per citizen); 90% is privately owned and 10% belongs to the government; about 450,000 registered households of which about 120,000 are retired farmer’s households.
Despite the obvious potential, this sector bears a huge burden of economic, social and political nature. In order to turn domestic agriculture into a modern, state of state of the art and market oriented sector, the Ministry of Agriculture started to implement a new policy with three basic frameworks reflected in: legal framework, institutional changes, and creation and implementation of adequate agrarian policy.
The most important work that the Ministry of Agriculture undertook in 2009 was the completion of the 15 agriculture laws in spring 2009. The most important laws that were passed includes: Law on Food Safety, Law on Public Warehouses for Agricultural Products, Law on Plant Health, Law on Agriculture and Rural Development, GMO Law, Law on Amendments to the Law on Agricultural Land. Except for the GMO Law that is not WTO compliant, set of agriculture laws adopted in 2009 will improve overall environment for agricultural producers in Serbia and will ensure greater compliance of Serbian agricultural practices with rules enforced by international organizations such as WTO and UPOV, and enable harmonization with different EU rules.
Among fifteen agricultural-related laws adopted in 2009 is a contradictory GMO Law, which prohibited the growing and trading of GMO and products containing GMO for commercial use in Serbia. The new GMO restrictions are not in line with WTO regulations and is negatively affects Serbia's WTO negotiations. The restrictions also surpass those currently imposed by the EU. Beside U.S. Government, the EU and other WTO members strongly expressed their dissatisfaction with the new Law on GMO. The scientifically unjustified law also bans import of genetically engineered soybean meal, which was the only biotech product Serbia imported prior to the ban.
In 2009, the Serbian government provided several policy measures to support agriculture production that included subsidized short and long-term loans for registered farmers. The assistance measures also included: direct payment to registered farmers totaling 10,000 din per ha (USD 165) for grain and other field crops; funds for development and improvement of stock-farming (breeding efficiency, preserve genetic resources of domestic animals, increase milk production); subsidized export of certain agriculture and food commodities; premium for tobacco production, stimulus for development and improvement of production of wine, brandies and food with geographic origin; subsidies for organic food production as well.
The negotiations of Serbia's accession to the World Trade Organization (WTO) also continued in 2009. The new GMO restrictions that are not in line with WTO regulations are representing obstacle and have negative affects on Serbia's WTO negotiations.
Serbia's total agricultural exports reached about 2 billion USD, at the same level as in the previous year. Serbia's agricultural exports consisted mostly of grains, fruits and vegetables (fresh and frozen), sugar and beverages. The biggest surplus in foreign trade of agriculture product came from grain and grain products (USD 363.4 mil), fruit and vegetables (USD 341 mil.). The majority of Serbia's agricultural and food exports went to the CEFTA countries, including Montenegro, Macedonia, and Bosnia-Herzegovina, as well as to the EU. The biggest production and export potential of Serbia agriculture are fruits and vegetable, non-alcoholic beverages, water, and confectionary industry.
Serbian food imports decreased in 2009 mainly affected by the world financial crisis, lower purchasing power and weaken demand of the local consumers. Agricultural imports are mostly high-value food items; with European products dominating the import market. Total agriculture imports in 2009 were estimated at 1.33 billion USD, decrease of 10.6% compared to previous year. Serbia registered highest ever trade surplus with agriculture and food products of 720 million USD in 2009. It is expected that agriculture imports will grow in 2010 due to better economic situation and overall demand for high quality consumer oriented products that is expected to slightly increase.
Total agriculture imports from the U.S. were estimated at about 25.3 million USD, or about 2% of Serbia's agricultural import market. U.S. agricultural exports consisted mainly of almonds, tobacco, dietetic foods and concentrated proteins without dairy fats, alcoholic drinks, hake, frozen fish and seafood, dried fruit, pistachios, and planting seeds. U.S. exports of these products to Serbia are expected to continue to grow in the short term. In the medium term, Serbia is likely to increase imports of fish and fishery products, poultry meat for processing and high value consumer products and beverages. Possibilities also exist for expansion of U.S. exports of high value products, such as tree-nuts, raisins, snacks, beverage basis, bovine semen and embryos, flavor and fragrances and plant seeds.
The following table represents the most important items of U.S. agricultural and food products exported to Serbia in 2009:
FAS Office Contact:
U.S. Officer:
Hoa Van Huynh,
Region Agricultural Attaché (residing in Sofia, Bulgaria)
US Embassy
Sofia, Bulgaria
Tel: +359-2-939-5704
Fax: +359-2-939-5744
E-mail: AgBelgrade@usda.gov
FAS Office in Belgrade:
Address:
U.S. Embassy Belgrade
USDA/FAS Office
50, Kneza Milosa Street
11 000 Belgrade
Tel: +381-11-306-4802
Fax: +381-11-306-4922
Local employees:
Tatjana Maslac
Agricultural Specialist
Tel: +38-11-306-4927
E-mail: Tatjana.Maslac@usda.gov
Darko Lojen
Agricultural Specialist
US Embassy in Belgrade
Tel: +38-11-306-4754
E-mail: Darko.Lojen@usda.gov
Zlatko Jovanovic, MBA Agr.
Agricultural Specialist
Tel: +381-1-306-4813
E-mail: Zlatko.Jovanovic@usda.gov
Nadezda Dimitrijevic
Admin Assistant
Tel: +381-1-306-4802
E-mail: Nadezda.Dimitrijevic@usda.gov
Useful Links:
USDA sites:
USDA: www.usda.gov
FAS Attaché Reports: www.fas.usda.gov/scriptsw/attacherep/default.asp
Ag Exporter Magazine: http://www.fas.usda.gov/info/fasworldwide/maghome.htm
Serbian Gov sites:
Ministry of Agriculture (in Serbian): www.minpolj.gov.rs
Marketing Information System site (in Serbian, some features in English) : www.stips.minpolj.gov.rs/stipsnews.htm
Republic Statistical Office (in English and Serbian): http://webrzs.stat.gov.rs/axd/en/index.php
Non-Gov Ag sites:
Commodity Exchange Novi Sad, Serbia (in English and Serbian): www.proberza.co.rs
Database of Serbian Agricultural Companies (in English and Serbian): www.hranaipice.com
NGO “Agronet” involved in agriculture work: www.agromreza.org.rs