Saturday, 13 April 2019

Retail Giant LC Waikiki Coming to Croatia

With the growth of retail sales for more than 50 months in a row and the growth of the purchasing power of citizens and consumer optimism, retailers are becoming more optimistic about doing business in Croatia. In addition to the Italian discounter Eurospin, the retail giant LC Waikiki, owned by two Turkish families Kucuk and Dizdar, will soon come to Croatia, reports Večernji List on April 13, 2019.

The first store in Croatia will be opened at the Arena Centre in Zagreb in mid-May. According to advertisements for future employees which have been appearing on Croatian websites since the beginning of this year, the chain will also open a shop in Split. This is the leading Turkish retail chain, whose largest individual shareholder is Mustafa Kucuk, worth 1.1 billion dollars. This year, the company will have more than three billion dollars in total revenues, half of which from abroad. They have decided that it is worth investing in a small market such as Croatia, where already there are rivals such as H&M, C&A, Kika, Pepco and others.

The largest clothing retail chain by the number of shops has already opened a number of stores in neighbouring Bosnia and Herzegovina and Serbia. Currently, it is trading in more than 45 countries, with around 1,000 stores and the approach that “everyone deserves to dress well” and at affordable prices. In addition to Croatia, this year they plan to expand to China, India and Malaysia. In 2017, about 12 million people a week bought clothes at their stores, and each minute they sold 1,724 products.

The Waikiki brand was established in 1988 by French designer Georges Amouyal with partners called Les Copains - Friends (LC), adding the name of the famous Hawaiian Waikiki beach. In 1997, it became the Turkish brand LC Waikiki Magazacılık Hizmetleri Ticaret. It started its European expansion in Romania in 2009, and the goal is to become one of the three most successful clothing retailers in Europe by 2023.

Four years ago, the 100th shop abroad was opened in Mostar, and the company is also present in Albania, Azerbaijan, Bulgaria, Morocco, Georgia, Iraq, Iran, Kazakhstan, Kosovo, Macedonia, Egypt, Poland, Russia, Saudi Arabia, Ukraine, and since 2017 in Indonesia and Kenya.

The year before, LC Waikiki also entered the home textile category under the brand LCW HOME. With more than 1.25 million square metres, their stores in 2017 covered the area larger than 175 football stadiums.

Translated from Večernji List (reported by Jolanda Rak Šajn).

More retail news can be found in the Business section.

Wednesday, 3 April 2019

Swedish Company Transcom WorldWide Opens Zagreb Office, Fourth in Croatia

ZAGREB, April 3, 2019 - The Swedish company Transcom WorldWide opened its office in Zagreb on Tuesday, its fourth in Croatia, and plans to hire about 300 people to provide customer support services, which will bring the total number of its employees in Croatia to about 1,200.

Transcom WorldWide is a global company operating in 20 countries on three continents, providing customer support services, telemarketing and direct sale services to customers in the telecommunications, finance, tourism, insurance and retail sectors.

The company has been operating in Croatia since 2005 when it opened its office in Vukovar. It has also opened offices in Osijek, Pula and Vinkovci, providing its services in Croatian, Italian, German and other European languages. Its largest client in Croatia is Tele 2, and from Croatia it also provides services to Tele 2 Germany.

It opened the office in Zagreb because of the good geographic position of the Croatian capital and its increasing popularity among tourists. The office spreads over 2,000 square metres and about 50 people currently work there. The company plans to increase the number of staff to 300 by the end of the year.

According to Zolt Benes, the head of sales for Transcom Croatia, Serbia and Hungary, wages in Croatia range from 3,200 kuna (432 euro) for Croatian language and up to 5,500 kuna (743 euro) for German. The average wage is 3,800 kuna (513 euro).

The opening ceremony was attended by Transcom CEO Michael Weinreich, who expressed satisfaction with business in Croatia, where he said that they saw possibilities for development and expansion.

Petter Nilsson, First Secretary at the Swedish Embassy in Zagreb, said they were very proud that Transcom was doing such good business in Croatia, as were 50 other Swedish companies operating in the country.

Nilsson said that the Swedish companies employed about 10,000 people in Croatia and had invested 767 million euro, adding that they would continue to invest and support Croatia in its economic development.

More news about Sweden and Croatia can be found in the Business section.

Tuesday, 26 March 2019

Tourism Investments Likely to Go Down 20% This Year

ZAGREB, March 26, 2019 - The tourism economy expects an increase of 7% in earnings this year compared to 2018 however, an 8.6% increase in labour costs will reduce the profit by 5%, which leads to a 20% decline in tourism investments, the Croatian Tourism Association (HUT) said on Tuesday.

Therefore, having in mind a deceleration in bookings and uncertainties, repeating last year's results will not mean failure, the association said.

HUT president Veljko Ostojić commented on the forecasts for this year's tourism at a presentation of a quarterly publication on tourism results in Q1 2019 prepared by the HD Consulting company.

"The projected increase in labour costs in the tourism sector this year in the largest tourism companies that we polled, are greater than the expected increase in income, which is mostly due to increased wages without which it would be difficult to attract workers," Ostojić said, noting that this would affect investments.

"The reason for fewer investments lies in uncertainties, slowing down and redirection of demand which has impacted almost all Mediterranean tourism countries, with the exception of Turkey, which continues to be the most competitive in Croatia's business environment," Ostojić said. He warned that a fall in tourism investments can be expected in the 2020 - 2021 period by about 33% compared to 2018 - 2019.

A survey was conducted of 15 leading tourism companies in Croatia, which Ostojić said accounted for 40% of the total tourism revenue and about 80% of overall profit.

They all expect slowing down in income growth, the profit margin and investments and do not expect a much better annual occupancy compared to last year's, which was the highest in hotels (44%) and expect a similar result this year again.

"The highest increase in income per bed/person this year is expected in camps (13%), followed by hotels (6%) and in resorts (3%) compared to 2018. The analysis showed the increase in revenue mostly refers to an increase in prices outside accommodation seeing as occupancy is stagnating or barely increasing," he underscored.

More news about the tourism industry in Croatia can be found in the Travel section.

Thursday, 21 March 2019

Investment Issues: Croats Do Not Want to Work, Complain All the Time

The InvestCro conference on investment issues in Croatia was held in Zagreb, attended by representatives of large companies, governments and local administration units, reports Večernji List on March 21, 2019.

“We expect big investments, but really important are those investors who hire two or three people. Bjelovar had investments worth 100 million euro last year, mostly from small businesses. We want to send a message to investors that their kuna is worth more in our town than elsewhere. We do not invest money in buying voters, but in development, we now have 750 more employees in the town than before, and the budget revenues are growing,” said Dario Hrebak, the mayor of Bjelovar.

"Bjelovar quickly reached the top ten towns by investments. Construction permits are issued within 15 days. We want to achieve standardisation, so investors are no longer dependent on the goodwill of municipal employees. The only chance is to digitise all the processes in the state administration system, which demands the political will. While the government is dealing with rescuing Uljanik, we have to stop projects because we do not have enough money. By the way, Bjelovar is the first town in Croatia by the number of cafes. We have to create the ideal of work since about 40 per cent of Croats do not want to work at all,” said Hrebak.

Zdenko Lucić, state secretary at the Ministry of the Economy, said that Croatia should be branded as a desirable destination for investments, just as it has managed to become branded as a tourist country. “We have over 500 self-government units. Digitisation will help us have a standardised service level. Quick results will be visible with the introduction of an online establishment of businesses. We are sometimes shy to say that our investment promotion law is the best in Europe," Lucić said.

Viktor Pavlinić, the CEO of Tele2, said digitalisation was an opportunity, but a change in the pattern of behaviour was needed. He pointed out that the government in 2014 tripled the charges for telecom operators. “That was no longer a stimulating investment environment. This government has resolved this problem and returned the levies to the previous levels, which are still higher than in other countries. Now, Tele2 is employing 40 per cent more people, and the market competition is better. Encouraged by this optimism, the owner has decided to double the amount of investment. Achieving economic growth of five per cent is possible. Although we have a good staff in the ICT sector, the labour costs have become a serious problem. There is a need to revise the tax rate, to lower income tax if we want our workers to stay here,” said Pavlinć.

Regional Director of Dogus Holding, Burak Baykan, said that the experiences of the hotel company in Zadar and Šibenik are positive and must be transferred to new investors as well. “I would not say bureaucracy here is worse than in other countries. We have a hard time finding the right employees, we do not have enough people for greenfield investments, and construction costs have grown tremendously, as in Western countries, but with lower revenues here. The return on investment is meagre, we need to think about direct incentives,” said Baykan.

Zdenko Adrović, director of the Croatian Bank Association, complained about high fees for bankers, whose regulatory cost is three times higher than in Germany, and there is a problem with parafiscal charges as well, with the Ministry of Tourism attempting to increase the amount of tourist board fees.

Mladen Fogec, president of the Association of Foreign Investors in Croatia, said that foreigners are worried because Croats just complain. “We are too burdened with negativity, although there are many good examples. Why are investments in Međimurje or Istria possible but not in the south? Local units should act in favour of investors, both Croatian and foreign. Our capacity to change is currently not strong enough. Croatia has a great chance, but we need political courage," Fogec said.

Translated from Večernji List (reported by Ana Blašković).

More news about investment in Croatia can be found here.

Wednesday, 20 March 2019

Taavura and Hyundai Explore Investment Opportunities in Croatia

ZAGREB, March 20, 2019 - Executives of Taavura Holdings, one of Israel's largest road haulage and logistics companies, and Hyundai Motor Europe have visited Croatia to explore investment opportunities, the Ministry of Economy, Entrepreneurship and Crafts said in a statement on Tuesday.

The representatives of the two companies met with Minister of Economy, Entrepreneurship and Crafts Darko Horvat and Prime Minister Andrej Plenković.

Plenković said that with its policy of fiscal consolidation and tax cuts Croatia was trying to improve the business framework for new investment, particularly in areas that implied the development of new technologies.

Horvat presented Croatia's comparative advantages for investment and opportunities provided under the Investment Stimulation Act and the State Aid for Research and Development Projects Act.

The Israeli delegation was led by the CEO of Taavura Holdings, Zvika Livnat, management board member Shay Livnat and management board vice-president Eitan Damry.

"Expressing their readiness for new investments, such as the opening of a new sales and repair centre and future headquarters of Hyundai Croatia in Zagreb, they supported government efforts to invest in the education of young people, notably in the ICT sector," the ministry said in a press release.

One of the reasons for the meeting was the opening of the new sales and repair centre and the headquarters of Hyundai Croatia in Zagreb's Jankomir district. The grand opening will be attended by Minister Horvat.

More news about investment opportunities can be found in the Business section.

Sunday, 24 February 2019

Croatian Diaspora Remittances Higher than Foreign Investments

The investment climate in Croatia is improving, but other countries are growing faster than us, and they are becoming more desirable and more competitive for investors. Currently, the Croatian diaspora remittances are higher that foreign investments in Croatia, it was said at the panel "How to attract new investments" held in Zagreb, reports on February 24, 2019.

Jako Andabak, a member of the Executive Board of the Croatian Employers' Association and chairman of the Sunce Group Supervisory Board, said that some problems are actually changing for the worse. But what is constant is the non-functional bureaucracy and unresolved land-legal issues.

Goran Pauk, president of the Croatian County Association, believes that the state is too centralised and that it should work toward decentralisation. But he also warned that there is a need for constant communication between the central government and local self-government units in order for the legislation to meet the needs of people.

“Building permits are issued quickly, within eight days, if all the documentation is in order. However, many of the Adriatic counties are burdened with unresolved property issues, legalisation and similar problems that make it difficult to enforce a quick administrative procedure,” said Pauk.

Mladen Fogec, the president of the Association of Foreign Investors in Croatia, warned that Croatia was reforming very slowly. “We have long ago transformed from socialism into a market economy, but socialism has not left our heads even after 30 years. The fact that the current focus of our economy and politics is the shipbuilding problem, and not what will happen in 5 or 10 years, is enough to tell us where we are. And with regards to the investment climate, it is enough to say that the remittances sent by Croatian diaspora are higher than foreign investments. The remittances reach the amount of two billion euro annually, while the investments do not exceed 1.7 billion,” said Fogec.

Christoph Schoefboeck, the CEO of Erste Bank, pointed out that Croatia has progressed and that they see it through cooperation with their clients, mostly small and medium businesses. “The problem is that Croatia is growing, but too slow. Other countries are growing better and faster. I am sure that Croatia could rise by 15 to 20 positions in the investment rankings in just a year or two,” said Schoefboeck. One of the measures proposed is that all investors in Croatia should be treated as strategic investors.

Translated from (reported by Darko Bičak).

More news about Croatian diaspora can be found in the dedicated section.

Tuesday, 19 February 2019

Croatian President Invites German Business People to Invest in Croatia

ZAGREB, February 18, 2019 - Croatian President Kolinda Grabar-Kitarović said in Berlin on Monday at an annual event organised by small and medium-sized businesses that she wanted to encourage German entrepreneurs to intensify their investments in Croatia.

"Economic cooperation with Germany is very important to Croatia, as Germany is Croatia's fourth most important investment partner," Grabar-Kitarović said at the conference of the German Association for Small and Medium-Sized Businesses in the capital city. She underscored that Croatia's export to Germany had been growing following Croatia's EU entry.

Grabar-Kitarović said Croatia's priorities were entering the euro area and the Schengen zone, as well as the Organisation for Economic Cooperation and Development (OECD), thanking Germany for supporting Croatia's aspirations.

Grabar-Kitarović stressed that the next objective was to increase the annual economic growth rate to 5%.

She also said Croatia was strongly against the policy of protectionism and was completely sided with Germany on that issue.

The Croatian president also spoke about the construction of an LNG terminal in Croatia, saying it would contribute to the energy efficiency of the EU and its neighbours.

At the end of her speech, Grabar-Kitarović expressed hope her two-day visit to Germany and the announced visit of Germany President Frank-Walter Steinmeier to Croatia would contribute to the development of the two countries economic ties.

Addressing the press before the start of the conference, Grabar-Kitarović highlighted the objections which German investors doing business in Croatia have. "I think that red tape is the biggest problem," Grabar-Kitarović said, and also mentioned the changeability of the laws and a slow judiciary. "We change our laws and administrative rules too often," she warned.

"Corruption is not such a big problem as is the slowness of the judiciary. We must make judicial proceedings faster," the president added.

She is also due to meet representatives of the Croatian expat community in Berlin and Bundestag President Wolfgang Schauble.

More news about relations between Croatia and Germany can be found in the Politics section.

Monday, 18 February 2019

President Meets with Turkish Business People in Istanbul

ZAGREB, February 18, 2019 - Croatian President Kolinda Grabar-Kitarović on Sunday evening met a group of Turkish business people in Istanbul where she arrived for participation in a gathering of the World Business Angels Investment Forum (WBAF), the office of the Croatian head of state said in a press release.

"Throughout the years, Croatia and Turkey have nurtured a strong friendship, understanding and closeness in their ties, which is reflected in cooperation in the framework of international forums and especially in key areas of joint interest," the Croatian President was quoted as saying in her address to the Turkish business people.

"The economy is one of the areas of cooperation to which President Recep Tayyip Erdogan and I have devoted a lot of attention at our meeting last month," Grabar-Kitarović said.

She invited Turkish business people to invest in Croatia and explore new business opportunities and projects that the country offers, and said that "Croatia highly appreciates the activities of Turkish companies in the country, lends its full support and respects Turkish investments in Croatian tourism, banking and energy – areas that have special importance for the development of the Croatian economy".

The Croatian president thanked executives of the Foreign Economic Relations Board of Turkey (DEIK) and the Croatian-Turkish Business Council for efforts in establishing cooperation between the companies of the two countries and developing new business projects.

Grabar-Kitarović is due to address the Grand Opening of World Congress of Angel Investors of WBAF in Istanbul on Monday morning.

More news about relations between Croatia and Turkey can be found in the Politics section.

Friday, 15 February 2019

Investors to Build "City within the City" in Zagreb?

Zagreb Mayor Milan Bandić allegedly wants to build a new city within Zagreb, on the 1.1 million square metre plot of land between the Sava River, Većeslav Holjevac Avenue and Dubrovnik Avenue, and the total investment of the project will not be less than 500 million euros, reports Jutarnji List on February 15, 2019.

These plans are part of the public call that the city administration issued in recent days to potential investors to participate in the development and realization of the project “City within the City”, aiming to transform this part of the town into a "new, innovative urban area, with mixed and diverse complementary services, which would improve the overall quality of life of the inhabitants, become a tourist attraction, and form the centre of Novi Zagreb with its many diverse functions.”

This is perhaps the most attractive property owned by the city authorities, and it is currently occupied by the Zagreb Fair, the Hippodrome and the football complex used by the Lokomotiva Football Club.

What is interesting in Bandić’s latest ambitious “plan” is an exceptionally short deadline for submitting letters of intent. Anyone who wants to participate must respond urgently by March 1, which is less than 15 days away.

The transformation of this area has been talked about for years, but investments and the possible removal of a number of current buildings there have been prevented by the conservation regulations. The city authorities allegedly held several meetings with Middle East investors, which were looking for locations for more substantial investments. In addition to the Arab investors, there were also people from China who were looking for projects worth more than 50 million euros.

The new “city” would include residential and business buildings, promenades, parks, new streets, shopping centres, catering facilities, as well as a number of public spaces for citizens.

If the project is every realised, which is not certain at all and does not seem particularly likely, it would be funded as follows. After the further development of detailed plans, which would determine the needs of both the city and the investor, the value of the land would be assessed. The city would then invest the land, while the private investors would finance the construction of the buildings and other facilities.

"The Hippodrome will most likely have to be moved from the area. It restricts the development of this part of the town,” said sources, adding that the Hippodrome would be moved to a location in the western or eastern part of the city, or perhaps to the area around Brezovica. On the other hand, the Zagreb Fair, which has been defined in numerous planning documents as a strategic area, has not been fully modernised for decades.

Companies which want to apply for the public call will have to fulfil several conditions. In addition to being very quick in developing plans in order to submit them to the city in less than two weeks, they must have developed similar projects in the last five years in the amount of least 500 million euro. They also must have experts who have implemented projects worth over 200 million euros over the past five years, of which at least two projects must refer to the urban transformation of a city.

Translated from Jutarnji List (reported by Tomislav Mamić).

More news about Zagreb and its “mega-projects” can be found in the special Zagreb section.

Saturday, 2 February 2019

Croatian Mandatory Pension Funds Diversifying Investments

ZAGREB, February 2, 2019 - Mandatory pension funds in Croatia have been diversifying their investments, which means that they are turning away from investments in state bonds and turning to other investments, including investments on the Slovenian capital market, the Croatian Financial Services Supervisory Agency (HANFA) said in a press release on Friday.

There are four mandatory pension funds in Croatia – AZ OMF, Raiffeisen OMF, PBZ/CO and Erste Plavi – and their assets are valued at 99.7 billion kuna, HANFA CEO Ante Žigman said, adding that the amount would exceed 100 billion kuna after February wages were paid.

Pension funds have earned almost 30 billion kuna since 2002 (30% of the amount) while 68.5 billion kuna refers to contributions paid by employers, Žigman said, adding that pension funds had made payments in the amount of about 5 billion kuna for people who had retired. He added that the share of pension funds in GDP was around 27%.

HANFA official Tomislav Ridžak said that pension funds were increasingly investing in shares in local companies such as Hrvatski Telekom, INA, Podravka, Atlantic Group, Končar and Adris.

Slovenia's Krka company ranks fourth among the top 10 companies Croatian pension funds invest in. Among those companies is also Slovenia's Nova Ljubljanska Banka.

More news on the pension funds in Croatia cane be found in the Business section.

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