April the 6th, 2022 - Croatian companies are set to have much easier access to the much desired and very demanding American market.
As Poslovni Dnevnik/Ana Blaskovic writes, in the shadow of the current war in Ukraine following the Russian invasion and potential threats to Europe, security dominated the topics of the recently held Croatian-American Business Forum, which began in the City of Zagreb on Monday, on the anniversary of the founding of NATO. Opening the meeting, President Zoran Milanovic pointed out that Croatia joined the North Atlantic Alliance because of the United States.
"Only because of American help and protection, Croatia is in NATO, not because of London, not even because of the constructive and friendly Berlin, but exclusively because of the United States," he said, thanking the United States for being the ''only country in the 1990s as a state to have provided support to Croatia''. Speaking on video, US Secretary of State Anthony Blinken sent a strong message that "an attack on you is an attack on us", adding that the United States will "always have Croatia's back''.
Commenting on the recent NATO meeting, President Milanovic said that it didn't mention countries "that have a problem with their own identity, affiliations, and awareness of who is their friend and who is their enemy", especially emphasising the commonly problematic neighbouring Serbia as a country that Croatia wants as a "good neighbour". He told Belgrade to ask itself if it was a part of the West or not, and to declare where it felt it belonged and not to cause continued confusion. He criticised NATO for not talking about the Western Balkans, while discussing countries such as Georgia and Moldova. "Is now the time to root out the malignant Russian influence (in the region, op. cit.) that we've been hearing about for years?" Milanovic asked.
The security aspect is a key precondition for the development of business ties, and the abolition of the visa regime and the finalisation of agreements on the avoidance of double taxation will contribute to the strengthening of economic cooperation, providing a spring in the step of many Croatian companies. The head of the American Chamber of Commerce (AmCham) Andrea Doko Jelusic said that the agreement was "in process and that the Ministries of Finance in both nations are negotiating the terms of the agreement", but that it should happen "very soon" after which it must be confirmed by the Parliament and the Senate.
It is difficult to say exactly how many American companies operate in Croatia because many operate through European subsidiaries.
"I think at least a third of our chamber operates like that. If you look in the court register you'll see that the country of origin is the Netherlands or the United Kingdom. We've calculated that the volume of trade between companies connected to Croatia and the United States is approximately 9 percent of Croatia's GDP,'' said Doko Jelusic, noting that companies on both sides of the Atlantic employ about 20,000 workers. "With the entry into force of this contract, it will be much easier, especially for smaller Croatian companies. American companies usually work through large European headquarters, so it may not be so critical for them. It's to be expected that Croatian companies will be able to enter the American market in a much more easy way,'' she said.
How much can Croatia, a small European country with a chronic problem of non-competitiveness, provide to the huge American market with about 326 million inhabitants?
"Ireland is small, too. However, it's a question of focusing on certain industries, high added value where you can be competitive, where you can sell expensively, have expertise, so why wouldn't it have something to offer?'' asked Doko Jelusic.
Mihael Furjan, the leader of Pliva and HUP (Croatian Employers' Association) pointed out at the panel discussion that it is impossible to be a global player in business without a focus on the American market.
"It's crucial for the investor to be safe, so it's important that Croatia is part of NATO and the EU, and soon Schengen. It's important that investors see that there is a secure business climate, legal system and framework, otherwise they just won't come. There are many wonderful places around the world where a much better yield can be made than in Croatia, so it's important that as a small country we're part of a secure system,'' said Furjan, adding that he thinks Croatia could learn a lot from the United States.
“When it comes to where the US is best when compared to others, it's definitely in terms of innovation and education. We can debate a lot about education, but the fact is that the best business schools are in the US. We need to ''copy-paste'' that,'' added Furjan, emphasising that there needs to be a ''critical mass'' in order to penetrate the American market, and he sees the potential for strengthening economic ties in the IT segment, in energy, and in the pharmaceutical industry.
"Croatia is home to less than 1 percent of the EU's population, we can't export large volumes to the United States because we can't meet their demand. We have to find a niche to be a big player because we can't go to the US market with small volumes, which is important to be efficient,'' he said.
Koncar CEO Gordan Kolak agrees that security is paramount.
"Many investors when asked about investing in Croatia mention the safrty aspect,'' said Kolak, adding that in the last two years, Koncar has been forced to withdraw teams from Africa and Scandinavia and to stop talks with partners in Ukraine. "Without security, you can't count on business prosperity," he said. Koncar concentrates on renewable energy sources and digital solutions in the energy sector, counting on several decades of experience in hydro and wind energy. "We have the knowledge and the technology, we're counting on that when we talk about expanding our business in the American market, where we have several projects," noted the head of Koncar.
Silvio Kutic from Vodnjan's Infobip, the first Croatian unicorn, commented on the fact that his company, which today employs 2,600 workers, is in the acquisition phase. He said that with a good idea, a company can cause a disruption in the market, especially emphasising the advantage of the American market in the form of abundant capital available for financing innovative ideas.
"Everything that can facilitate the mobility of companies to the United States is important, I urge everyone, especially in the IT sector, not to look at it (the absence of a double taxation agreement, opa.a.) as an obstacle. We're counting on it to make the situation easier for us in the future,'' stated Kutic.
Ruza Tomic Fontana, President of the Management Board of Coca-Cola HBC Adria, pointed out that Croatia as a country should strengthen its education system according to the needs of the business environment, but that employers must also contribute.
“We need more dialogue between the business and private sectors about the business environment, anything that can help when it comes to creating a more stable environment. I would focus on the amount of the total tax burden and solve the problem of labour shortages,'' she said.
For more on Croatian companies, check out our business section.
