Doing Business in Croatia
Croatia 2015 Country Commercial Guide – Market Overview
With Croatia’s EU Accession on July 1, 2013, the need for product double-testing and customs clearances when distributing goods and services between EU countries and Croatia has been eliminated. U.S. companies already exporting to the EU now have an additional market opportunity, accessible without any further administrative burden. Also, significant EU funding has become available to support a variety of development projects in Croatia, creating numerous opportunities for U.S. companies.
Croatia is a small and complex market, but plays an important role in the economic and political stability of Southeast Europe. This region, the size of Texas in area, represents a market of roughly 60 million people and over $600 billion in GDP. It has significant growth potential, as its integration process into the European Union continues and as local populations strive to achieve the lifestyle of the more developed Western European countries that have three-four times higher GDP per capita.
Croatia is in an excellent geographic position to serve as a regional hub for U.S. companies. Zagreb, its capital, is only about a four-hour drive away to Vienna, Venice, Budapest, or Belgrade, and only a two-hour drive from the beautiful Adriatic coast. Croatia has excellent roads, sound ICT infrastructure, and a competitive white-collar workforce. The quality of life in Croatia is very high: it is a safe country, with tasty food, well-preserved nature, a mild climate, and abundant historical sites and other tourist attractions.
Unfortunately, Croatia has not fully completed the transition to a market economy. A socialist mindset still prevails in parts of Croatian society. The income of the majority of Croatians still comes from the government budget, social insurance, or public monopolies, not from revenues of truly competitive companies that operate strictly on market-based principles. So, any reforms that address public overspending, corruption, or bureaucratic and judicial inefficiency usually face strong resistance from the privileged majority, and can take a long time to implement.
Fortunately, there is also a growing number of vibrant, innovative entrepreneurs leading small-and-medium-sized, sophisticated, and internationally-competitive companies across many industry sectors in Croatia. These companies have strong potential to grow, and could become the locomotive of the Croatian economy and the catalyst in the transformation of Croatian society. As they tend to buy state-of-the-art, cost-effective equipment and technology, they also represent excellent potential partners for U.S. suppliers already present in the European market, adjusted to the EU technical and safety standards and providing after-sales services from locations in or near Croatia.
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