Doing Business with Croatia
|Language||Croatian, English is widespread|
|Religion||86.28% Catholic, 4.44% Orthodox, 1.47% Muslim, 3.81% no religion and atheist|
|State system||Parliamentary republic|
|Head of State||Zoran Milanovic|
|Head of government||Andrej Plenković|
|Currency name||Croatian kuna (HRK)|
|Time shift||The same time as in the Czech Republic|
|Nominal GDP (billion USD)||68.1|
|Economic growth (%)||10.4|
After the breakup of Yugoslavia in the early 1990s and the declaration of independence on June 25, 1991, the Republic of Croatia became a democratic parliamentary republic. Executive power is in the hands of the president and the government. The president is elected for a period of five years in direct presidential elections, from February 2020 the office of president is held by Zoran Milanović. Since the parliamentary elections in July 2020, Croatia has been ruled by a coalition of center-right parties and national minorities, led by the Croatian Democratic Union (HDZ). The ruling coalition has only a narrow majority of 77 out of 151 votes in the parliament, but it is stable in the long term thanks to a weakened opposition. Disputes between the president and the government have significantly affected the political dynamics in the last two years, especially in the area of defense and foreign policy. Territorially, Croatian foreign policy is defined by EU and NATO membership and proximity to the Western Balkans region. The traditional role in Croatian foreign policy is played by the transatlantic link with the USA and, in recent years, also the effort to get closer to the Franco-German core of the EU. Croatia aspires to become a member of the Eurozone, which it should enter in 2023. It seeks to enter the Schengen area, and accession negotiations to the OECD began this year.
The economy is heavily dependent on tourism, which accounts for almost 25% of the GDP. Croatia was visited by over 1million tourists in 2021 (70% compared to 2019), revenues from tourism amounted to over HRK 9.1 billion. Last year was very successful for the Croatian economy, the economy grew by 10.4%, which is the largest GDP growth in the country’s history (GDP in 2021 was EUR 57.3 billion). This happened after the largest ever economic decline of -8.1% in 2020 due to the adverse effects of the COVID-19 pandemic and two devastating earthquakes that hit Croatia in 2020. GDP should grow between 2.4% and 3% annually in the next four years. A very good tourist season is also expected this year, Russian aggression in Ukraine, EU sanctions against Russia and retaliatory measures by Russia in the area of strategic supplies of natural gas and oil remain a risk. At the end of 2021, public debt represented 77.8% of the country’s GDP, which is a decrease of 2.6% compared to 2020. The state budget deficit at the end of 2021 was HRK 1 billion (2.9% less than in 2020). Inflation should also increase this year, up to 8% (it reached 7.3% in March).
Croatian exports in 2021 reached EUR 19.1 billion, accounted for 52.4% of GDP, imports increased to EUR 28.3 billion (GDP share is 53.4%). The turnover was EUR 47.4 billion (the highest recorded value), the trade balance deficit EUR -9.2 billion. This is compensated by a surplus balance of services (tourism) in the amount of EUR billion (3.4% of GDP). Croatia exports the most to Italy (12%), Slovenia (12%) and Germany (11%). Mainly machinery and equipment, chemical and mineral products are exported. As for imports, they are mainly imported from Germany (16%), Italy (13%) and Slovenia (11%). Imports are dominated by means of transport, machinery and equipment, metals, pharmaceuticals and petrochemical products. Trade exchange between the Czech Republic and Croatia for the year 2021 reached almost EUR 868 million. The value of Czech exports amounted to EUR 66 million, an increase of almost three times over the last ten years. The Czech Republic traditionally has a positive trade balance with Croatia (it amounted to EUR 867.6 million in 2021). Czech exports are dominated by automobiles and parts, telephone equipment, broadcasting and communication equipment, cleaning products, automatic data processing machines, medicines, electrical integrated circuits, and live cattle. Prospective sectors are the transport industry and infrastructure, railway and rail transport, water management and waste industry, energy, healthcare and tourism.
In Croatia, normal business practices do not differ in any way from standard southern European business practices. It is always good to be informed about the territory and the situation in the field. It is good to try to base the business culture on seriousness and honesty, building personal relationships is important. Especially in the case of government contracts, it is essential to have a quality sales representative who knows the local market very well. On the part of the Croatian partners, you have to expect reactions that are not always quick, you have to be patient and persistent. A personal presence and meeting is always better than email communication.
Practical telephone numbers (emergency services, police, firemen, information lines, etc.)
Emergency line – the EU’s unified integrated rescue system (State Administration for Protection and Rescue – the unique European emergency number): 112 (valid for all crisis situations)
Police (Policija): 192
Firefighters (Firefighters): 193
First aid ): 194
Rescue and search service at sea (National center for coordination of towing and rescue at sea): 195
Decompression chambers: PULA tel./fax: +385 52 217 877. 24572, mobile: +385 98 255 945. +385 98 219 225, SPLIT + 385 21 354 511, +385 21 361 355, +385 21 343 980.
Important web links and contacts
Predjesdnik Republike Hrvatske (President of the Republic of Croatia) www.predsjednik.hr
Vlada Republike Hrvatske (Government of the Republic of Croatia) www.vlada.hr
Hrvatski sabor (Parliament of the Republic of Croatia) www.sabor.hr Ministronia
od odvnej i eurovijas pošno (Ministry of Foreign Affairs and European Affairs ) www.mvep.gov.hr
Ministry of Internal Affairs
www.mup.hr Ministry of Finance www.mfin.hr
Ministry of Finance www.porezna-uprava.hr
Ministry of Justice
www.pravosudje.hr Ministry of Labor and Pension System www.mrms.hr
Ministry of Economy, Business and Trade www.mingo.hr
Ministry of the Sea, Transport and Infrastructure www.mppi.hr
Ministry of Tourism www.mint.hr
Ministry of Regional Development and EU Funds
www.razvoj.gov.hr Ministry of Agriculture www.mps.hr
Ministry of Environment and Energy www.mzoe. gov.hr
Ministry of Construction and Spatial Planning www.mgipu.hr
Ministerstvo hrvatskih branitelja (Ministry of Croatian Defenders / Veterans) www.branitelji.gov.hr
Ministarvo znanosti i obravanje (Ministry of Science and Education) www.mzo.hr
Ministarvo kulture (Ministry of Culture) www.min-kulture.hr
Ministarvo obrane (Ministry of Defense ) www.morh.hr
Ministaro državne kompeti (Ministry of State Administration) www.imovina.gov.hr Ministroja
za demografiju, obitelj, mlade i socijal politiku (Ministry of Demography, Family, Youth and Social Policy) www.mdomsp.hr
Hrvatska gospodarska komora – HGK (Croatian Chamber of Commerce) www.hgk.hr
Državni závod za statistiku (State Statistical Office) www.dzs.hr
Hrvatska javnobežilnička komora (Croatian Chamber of Notaries) www.hjk.hr
Hrvatska odvjetnička komora (Croatian Bar Association) www.hok-cba.hr
Hrvatska obrtnička komora (Croatian Chamber of Commerce) www.hok.hr
Hrvatska udruga ompodola (Croatian Employers’ Association) www.hup.hr
Državni zavod za mjeriteljstvo (State Office for Standardization, Metrology and Testing) www.dzm.hr
Carina HR (Customs Administration) www.carina.hr
Tvrtke – slobnoša služanica (business search engine – search for companies in Croatia) www.tvrtke.com
Hrvatski závod za mirovinsko osiguranje (Pension Insurance) www.mirovinsko.hr
Hrvatski závod za zdravstvo osiguranje (Croatian Health Insurance Office) www.hzzo.hr
Agencija za investije i kontaktivje (Agency for Investments and Competitiveness) www.aik-invest.hr
Department for Investment Promotion (Department for Promotion of Investments in Croatia) www.investincroatia.hr
Narodne novine (Legislative Gazette) www.nn.hr
Nekretnina HR ( Real estate) www.nekretnina.hr
Večernji list (Croatian daily) www.vecernji.hr
Jutarnji list (Croatian daily) www.jutarnji.hr.
PaulSourcing: Ten Commandments for Doing Business with Croatia
The PaulSourcing agency has prepared ten recommendations for doing business with Croatia for Czech entrepreneurs interested in business relations with Croatia. In 2020, it was supplemented with 4 current tips.
4 recommendations for entering the Croatian market during the coronavirus pandemic situation:
- Search for business partners In the first step, search for suitable contacts for potential business partners, preferably through paid local or even global databases. Free databases usually offer only non-updated data and are therefore outdated and incomplete. Relying only on classic Google and keyword searches is also not recommended, because sometimes companies on the web look very serious thanks to good site design, but often they are already defunct companies or small companies without any business share and/or just beginners in the market.In the first step, the foreign office of PaulSourcing Zagreb (ZK Zagreb) can help you with the use of its paid database and not only search for companies according to the subject of activity, but also check their economic indicators, history and describe their profile in more detail. To compile a basic long list, ZK Zagreb needs a description of your product, which you plan to import to Croatia, and a profile of the desired potential partner. In the case of their public availability, the contact details of the responsible persons of the searched companies are also an integral part of the long list.
- Selection of suitable business partners The second step is the selection of suitable candidates from the long list. At this stage, ZK Zagreb can support you with knowledge of the local market and the recommendation of partners, but from the industry point of view, a decision must be made on your side. The Croatian market is small and most entrepreneurs from the same field know each other personally, and therefore it is not recommended to approach all interesting companies en masse at once, but to phase the contacting according to established priorities. ZK Zagreb also draws attention to the current efforts of the public and business associations and institutions to support local production and supply at the expense of imports.
- Contacting the companies The third step is to contact the selected companies by phone, send the materials by e-mail, and then verify the interest in the product/service by phone again. This step is very difficult given the current situation in the country, as many companies operate only in a limited home office mode and it is often impossible to contact key employees. Even under normal circumstances, Croatian companies react rather clumsily to being contacted and it is necessary to repeat the contact through several channels.On the other hand, ZK Zagreb recommends that the Czech company prepare marketing materials (presentations, references, websites, etc.) in the meantime, preferably in Croatian, at least in English. English is the usual means of communication with foreign partners in the Croatian economic and administrative environment. Here, ZK Zagreb can, for example, help you with translations into Croatian and recommend high-quality translators, because a poor quality translation (e.g. using expressions from a related Serbian language) can cause Croatian entrepreneurs to be reluctant to communicate right from the start.It is possible to try to directly address selected companies, but in this extraordinary situation, priority should be given to the preparation of quality marketing material. Business trips to Croatia and personal meetings are possible now.
- Finding information You can find more interesting information about trading in the “coronavirus era”, the impact of the pandemic on the economy and the support provided on the website of the Croatian Chamber of Commerce. Do not hesitate to contact ZK Zagreb with any questions.
Ten points for doing business with Croatia
- Be well informed about the territory and the situation in the field Thorough preparation and relevant information save time and money.
- Find a suitable local partner Choose your partner well, do not trade behind his back, the market is small and negative information will quickly spread to neighboring countries.
- Be patient Be patient and persistent, invest in building your business position or brand.
- Pay attention to translations Although English is used in all serious companies, in the case of first contact and acquisition materials, Croatian is clearly a better choice. However, pay attention to the quality of the translations, use local interpreters. Possible “Serbisms” can cause embarrassing situations.
- Offer financing Offer financing that is welcomed as added value. Financial resources are more expensive in Croatia than elsewhere in the European Union.
- Croats appreciate personal dealings Deal with potential partners in person. Only written or e-mail communication is mostly ineffective. It pays to be seen and to communicate.
- Set aside time for the meeting Set aside enough time for the meeting. The meeting will certainly be followed by an invitation to lunch and dinner. Don’t refuse. All conversation topics are allowed, but avoid discussing the war and relations between Croats and Serbs.
- Don’t be caught off guard by obstacles Be aware of possible obstacles. The occurrence of problems with corruption, non-transparency of public contracts and preferences of local companies is gradually weakening in parallel with the implementation of the EU legal order.
- Longer maturity is an advantage Provide longer maturity. In Croatia, a maturity of 30 days is a rare minimum, 60 days is the standard and 90 days is a welcome advantage.
- Secure payment with appropriate tools Croatia has a very poor payment ethic. Request a letter of credit, a guarantee or, in Croatia, a common debt security instrument “zadužnica” (debt note).