Central and Eastern Europe Hold Opportunities for U.S. Exporters

March 17, 2010
The “other Europe” comprises a $2 trillion market, as business regulation reforms over the past five years have made this region much more accessible and easier for U.S. companies to do business with

As director of the Central and Eastern Europe/Russian region of the U.S. Commercial Service, the trade promotion arm of the U.S. Commerce Department’s International Trade Administration, I oversee our work to help U.S. companies connect with international buyers. The estimated $2 trillion Central and Eastern European market encompasses countries with tremendous diversity in size, industries and culture. Despite this diversity, the countries in the region also have much in common, making it an excellent place in which to do business:

● Business regulation reforms over the past five years have made Central and Eastern Europe much more accessible in terms of ease of doing business.
● The region’s growing middle-class is spending its new disposable income on long deferred consumer goods. The significance of the middle class is now an important and permanent factor in these economies.
● Low-cost access to the huge European Union (EU) market also makes the region an attractive base for serving EU-wide clients.

While a number of the countries in the region are EU members with euro-based economies, others hope to join this club in the near future. The established market economies such as Poland, Czech Republic and Hungary may be easier, more traditional markets for U.S. exporters, but the transitional economies like Bulgaria and Romania offer their own opportunities, such as major infrastructure projects.

Looking to highlight examples of key markets for U.S. businesses, we asked several of our senior commercial officers in the U.S. Embassies in the region to give their perspectives on some of these opportunities. Readers will discover that despite the economic slowdown, it’s an opportune time for U.S. businesses to position themselves to take advantage of new long-term sales opportunities through the export counseling, business matchmaking and other services offered by the U.S. Commercial Service.

Austria’s historical and economic ties to the growth markets of Eastern and Southeastern Europe make it a well-known base for serving those markets, says senior commercial officer Christopher Quinlivan. “At present, approximately 350 U.S. firms have subsidiaries, affiliates, franchisees and licensees in Austria, of which about 150 have regional responsibilities for Central European, Eastern European, or Balkan countries,” he says. “If your company is planning to expand its activities in Europe, the Austrian market deserves attention.”

U.S. products and services enjoy a good reputation in Austria where quality is as important as price. Along with its 8.3 million affluent German speakers, Austria is a dynamic and fully integrated member of the European Union. According to Quinlivan, the country’s manageable size and stable business environment make it an attractive market for U.S. exporters, as well as a useful test market for U.S. firms with an eye toward expansion into neighboring Germany and Switzerland.

Best prospects for U.S. exports: renewable energy, electric vehicle technology, electricity infrastructure, medical devices, drugs and pharmaceuticals, information technology, software, aircraft and parts, and outdoor equipment.

For more information on Austria, contact Christopher Quinlivan at [email protected], or visit www.buyusa.gov/Austria.

Nearly three years after joining the EU, Bulgaria is on the radar screen of U.S. firms for investment and business opportunities due to its political stability and steady economic growth, says Scott Pozil, senior commercial officer. “The Bulgarian Government introduced the lowest tax rates in the region—a 10% rate both on personal income and on corporate income, which contributed to strong foreign investment inflows,” he says. “Although the global financial crisis has slowed investment growth, particularly in the real estate and manufacturing sectors, U.S. companies are successfully conducting business across many sectors of the economy.”

Pozil adds that EU membership has brought up to 13 billion euros for infrastructure projects from 2007-2013. Bulgaria is also an excellent launching pad for sales into the European Union, Russia, Turkey and the Middle East. “The general attitude in Bulgaria is pro-American, and the Bulgarian market is receptive to American goods and services.”

Best prospects for U.S. exports: automotive parts and accessories, aerospace and defense, environmental technologies, franchising, medical, infrastructure projects, information and communication technologies, renewable energy and energy efficiency, safety and security, and travel and tourism. For more information on Bulgaria, contact Scott Pozil at [email protected], or visit www.buyusa.gov/Bulgaria.

Known to many as a tourist destination, Croatia is also known for its well developed ports and modern transportation infrastructure and is achieving new success in niche manufacturing. “With continuing highway construction and increased air links, Croatia’s distribution network is among the best in the region, making Zagreb, Croatia’s capital, a logical choice as a sales and marketing hub for Southeast Europe,” says senior commercial officer Pamela Ward. “Together with its stable government and economy, Croatia’s importance in the region greatly exceeds its comparatively modest size and population.”

A member of the Central European Free Trade Agreement (CEFTA), which includes Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro, Serbia and Kosovo (UNMIK), Croatia has emerged from the breakup of the former Yugoslavia as a model of democratic progress. It gained NATO membership in 2009 and is well on its way to attaining EU accession, resulting in an increased focus on sectors such as agriculture and processed foods. All of these factors point to a return to the steady economic growth exhibited since 2000 that has been interrupted only by the current global economic downtown. Says Ward: “Croatia’s pro-American sentiment and impending integration into the EU offer abundant opportunities for U.S. firms and investors immediately and in the long term.”

Best prospects for U.S. exports: travel and tourism development, franchising, energy, safety and security, infrastructure development, agriculture, and processed foods. For more information on Croatia, contact Pamela Ward at [email protected], or visit www.buyusa.gov/Croatia.

Czech Republic
With a population of 10 million, the Czech Republic boasts one of the region’s most prosperous and industrialized economies, says senior commercial officer Greg O’Connor. Along with its productive workforce, excellent infrastructure and a well-educated population, the country is a member of the EU and has attracted more than 300 established American subsidiaries ranging from manufacturing facilities, sales and service centers.

“Foreign investment is boosting productivity, creating new jobs and raising wages and domestic consumption,” O’Connor says. “In addition to new manufacturing facilities, a growing number of American companies are establishing R&D and shared-services support centers. The country has also become a major hub for automotive and electronics manufacturing in Central Europe.”

O’Connor says there is intense competition from European companies which have close historical and economic ties to the market, but that high demand exists for U.S. products and services, which are known for their good quality and advanced technology.

Best prospects for U.S. exports: power generation equipment (including renewable energy), automotive parts, electronics, medical products, and telecommunications and IT equipment. For more information on the Czech Republic, contact Greg O’Connor at Greg.O’[email protected], or visit www.buyusa.gov/Czechrepublic.

Senior commercial officer Robert Peaslee says that in spite of the many challenges that accompany the global economic crisis, Hungary remains an attractive market for U.S. investment and exports. “Hungary’s strategic location in Europe, access to EU markets, highly skilled and educated workforce, and sound infrastructure have led major U.S. companies to do business here both in manufacturing and services,” he says. “U.S. exports to Hungary have topped US$1 billion in each of the last five years, led by IT equipment, automotive components, industrial engines and other manufacturing supplies.”

Peaslee notes that since joining the EU in 2004, EU funding has driven growth in key Hungarian industry sectors and will continue to do so. For example, as part of the National Development Plan (2007-2013), Hungary will allocate approximately €25 billion (US$36.8 billion) in projects aimed at improving the country’s overall infrastructure.

Peaslee’s advice: Companies involved in logistics should keep Hungary in mind when considering developing or expanding their business in the EU.

Best prospects for U.S. exports: pollution control, renewable energy, highways, telecommunications, healthcare, biotechnology, computer software, travel and tourism service, safety and security, and franchising. For more information on Hungary, contact Robert Peaslee at [email protected], or visit www.buysusa.gov/Hungary.

A highly diversified market of 38 million people in the heart of Europe, Poland has been a fully integrated member of the EU since 2004, adhering to common economic, structural and commercial policies. “The United States and Poland enjoy an extraordinarily close strategic and commercial relationship,” says senior commercial officer Jim Wilson. “When you consider Poland’s solid economic growth, the size and location of the market, and the access it affords to the larger EU market, it’s an excellent place to do business.”

According to Wilson, the EU has earmarked up to 67 billion euros for projects and activities in Poland through 2012. U.S. companies that have established a legal presence in the EU can potentially access these funds. In addition, NATO membership offers opportunities to help the Polish armed forces upgrade and modernize a range of weapons systems, logistic capabilities and training.

“Commercial construction is among the country's key sectors,” Wilson says. “Much of the country’s road, rail and airport infrastructure, and tourism and athletic facilities will be upgraded and expanded, consistent with EU commitments and plans to host the European Cup Soccer Championships in 2012. The Polish economy has weathered the global financial difficulties better than most and we encourage U.S. businesses to pursue business development opportunities here.”

Best prospects for U.S. exports: safety/security, renewable energy, airport technology/consulting, information and communication technology, automobile parts and components. For more information on Poland, contact Jim Wilson at [email protected] or visit www.buyusa.gov/Poland.

Romania offers significant opportunities to American businesses with products, services, or technologies that either meet growing private demand or contribute to the country’s development priorities. “While the tide of foreign investment may have ebbed somewhat, U.S. and European companies are drawn to Romania for its low operating costs, natural resources (oil, gas, agriculture) and multi-lingual, skilled workforce,” says senior commercial officer Keith Kirkham. “As one of the newest EU members, Romania is investing to upgrade its physical infrastructure and increase its productivity to align its economy with the rest of the EU.”

U.S. companies can expect to see opportunities stemming from the billions of Euros in funding from the EU for projects in the country, and Romania’s membership in NATO is driving demand for modern military and security equipment.

“Overall, consumer and industrial demand here has been robust and provided a market for a wide variety of products,” Kirkham says. “A real competitive advantage for U.S. companies is that Romanian businesses regularly express interest in U.S. suppliers as alternatives to European competitors.”

Romania has not yet entered the “Euro zone,” but has set 2014 as the target year to adopt the euro. U.S. businesses should note that the Romanian public sector plays a major role as purchaser and procurer of products and services. These projects are supported by funds from external sources such as the World Bank, European Investment Bank or European Bank for Reconstruction and Development (EBRD) or World Bank.

Best prospects for U.S. exports and investment: infrastructure, building materials, energy, environmental technologies, information technologies, defense, and packaging equipment. For more information on Romania, contact Keith Kirkham at [email protected], or visit www.buyusa.gov/Romania.

Serbia is the largest market in the Balkans (both in terms of population and market potential), has a free trade agreement with Russia and is the strongest member of the Central European Free Trade Agreement (CEFTA), says senior commercial officer Cameron Werker. While Serbia is not a member of the EU or the WTO, there is a strong push to enter both institutions. Serbia is receiving pre-EU accession funds, which will continue to be applied to infrastructure projects as well as legal and regulatory reform initiatives.

“Like with most countries, the economic crisis has stemmed the tide of foreign direct investment into the country, but the government is working to implement reforms—such as streamlining regulatory business procedures—that will make Serbia even more attractive once capital is more readily available,” Werker says. Large foreign investors such as U.S. Steel, Philip Morris, Ball Packaging and Coca-Cola continue to reap the rewards from their investments. “There is strong demand for U.S. products and services, and U.S. companies are expected to maintain and expand their market share in the coming years,” he says.

Most promising sectors for U.S. exports: healthcare equipment and pharmaceuticals, IT and telecommunications equipment and services, franchising, construction and engineering equipment, safety and security equipment and services, and consumer goods. For more information on Serbia, contact Cameron Werker at [email protected], or visit www.buyusa.gov/Serbia.

Slovakia is a country of 5.4 million strategically located at the geographic heart of Europe. According to senior commercial officer David Ponsar, Slovakia’s membership in the EU, NATO and OECD has helped transform the country into a business-friendly market with one of the fastest economic growth rates among EU countries over the past few years. On January 1, 2009, Slovakia became only the second “post-communist” country in the EU to adopt the euro as its currency. The result has been greater facilitation of trade through lower transaction costs, better pricing transparency, and greater monetary and overall economic stability.

“EU funds dedicated to carry out various programs and projects in Slovakia from 2007-2013 total 11.4 billion euros and provide significant potential opportunities for U.S. businesses,” Ponsar says. “Although a smaller market, many U.S. companies doing business here for the first time are often surprised at the level of opportunities available to them.”

Best prospects for U.S. exports: nuclear reactor technologies, electrical and electronic machinery and parts, optical and medical instruments, chemical products and automobile parts and aftermarket products. For more information on Slovakia, contact David Ponsar at [email protected], or visit www.buyusa.gov/Slovakia.

Reginald Miller is regional director, Office of Central and Eastern Europe/Russia, with the U.S. Commercial Service, based in Washington, D.C. The U.S. Commercial Service’s global network of trade professionals, located in 108 offices across the United States and in American Embassies and Consulates in nearly 80 countries, connects U.S. companies with international buyers.


This article originally appeared in the Logistics Today digital magazine. To read other articles from that issue, click here: http://penton.ebookhost.net/lt/ebook/14/

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