Bulgarian Attitudes Towards Foreign Partners

An interesting survey conducted in February 2019 by the Bulgarian Chamber of Commerce and Industry (BCCI) has studied the attitudes of Bulgarian companies in cooperating with foreign partners. The survey has shown that over 76% of Bulgarian businesses have interested in developing partnership with foreign companies. In particular, the research has underlined that 36% of companies are looking for a good partner for imports; 28% need a partner for joint investment in Bulgaria, and 12% are looking for partners to invest in a new foreign country.
China is the most favourite business destination, quoted by 54% of interviewed. Germany remains second most desired destination among the included countries, and the most preferred within the EU.
Other selected business destinations are Italy, Serbia, Romania, North Macedonia and Russia. In comparison to 2018’s survey, a growing interest towards North Macedonia is analysed, explained by the recently ratified friendship agreement: the Neighbourhood Treaty between Bulgaria and North Macedonia.
Among all the interviewed, approximately 40% of those interested in business trip abroad have an interest in meeting companies from the following industrial sectors/priorities: machine-building, food and beverages, textile, and electronics.
The Market Answer of Matchub.net
Following the new results of the recent survey conducted by the BCCI, Matchub.net is supporting SMEs in increasing their network and developing new potential partners in an open, simple and cost effective manner. Thus, registering in Matchub portal and posting new interesting business proposals a company can get new contacts through which it can start working on new business horizons.
According to what we have read here above, Matchub.net is covering several of the main countries of interest of Bulgarian businesses: Italy, North Macedonia and Romania.
Matchub is supporting SMEs business development using a double approach, including an online and offline strategy. Both approaches aim to spread around the business proposals of a company which is willing to find a new partner abroad. The online strategy is focused on various online actions (social media, blog, advertisement, specific emailing, etc.) while the offline strategy is focused on networking personal contacts that the International Business Matching Unit is following and developing for each new user of the portal.
In addition to this double approach which aims to boost the international business network of each registered user of the portal, Matchub is offering several other services which can support and facilitate the access of a SME in a new country: Country Market Analysis, Country Sectorial Analysis, Legal & Policy Analysis; Public Tender Reporting; Country Leads Creation; Cold-Calling activities; Commercial actions; B2B meetings; etc.
Contact us for any further detail…

Trends of the Bulgarian Foreign Trade Balance

In the first trimester of this year (January – March 2019), Bulgaria’s exports to EU countries increased by 7% compared to the same period in 2018. The amount of exported goods increased to a total of 4.9 billion euro. Bulgaria’s main trading partners are Germany, Romania, Italy, Greece, France and Belgium, which hold 67.3% of exports to EU countries. The sector of mineral fuels, mineral oils and all the products related to their distillation marks the greatest growth – 75.4% – while the one of oils, fats and waxes of animal or vegetable origin is declining of 8.4%. In this first trimester, imports from the EU also increased by 0.3% on an annual basis and reached to 5.01 billion euro. During this period, Bulgaria mainly imports from Germany, Italy, Romania, Greece and Hungary. The greatest growth in sales was recorded in the Beverage (alcoholic and non-alcoholic) and Tobacco sector (+50%) and the largest drop was seen in the Raw materials sector (excluding fuels) which has decreased by 29.4%.

In the period January-April 2019, exports to non-EU countries grew by 14.7% compared to the same period in 2018 and amounted to 3.02 billion euro. Among the non-EU countries, Bulgaria has mainly exported to Turkey, China, Serbia, United States, Russian Federation and North Macedonia, which hold 51.9% of the total exports to non-EU countries. In non-EU countries, the largest growth is seen in the sectors of mineral fuels, mineral oils and all the products related to their distillation (54.8%) and of oils, fats and waxes of animal or vegetable origin (40.2%). In the period from January to April 2019, imports from non-EU countries grew by 9.1% and reached to 161.7 million euro. Bulgaria imports mainly from the Russian Federation, Turkey, China and Egypt. The largest growth was recorded again by the sectors of alcoholic and non-alcoholic beverages and tobacco (32.3%), food and live animals (23.1%) and mineral fuels, mineral oils all the products related to their distillation (21.2%). The greatest drop is observed in the sector of oils, fats and waxes of animal or vegetable origin (-9.6%). In the January-April period total Bulgarian exports amounted to 9.54 billion euro and grew by 9.5% compared to the same period of 2018. In the same period the total Bulgarian imports amounted to 10.54 billion euro, or 4.6% growth on an annual basis. The total balance of foreign trade of the Country is negative, minus 994 million euro, while at FOB / FOB prices the balance is minus 277 million euro.

The positive trends of industrial and manufacturing sectors in Bulgaria

For years, the economy of Bulgaria has undergone a lasting restructuring process whereby some industries are growing rapidly and are increasing their share in the economy, while others are shrinking and reducing their burdens. Industry is among the growing branches of the Bulgarian economy, which has developed at a good pace since 2000 and increases its gross benefit, excluding the crisis period (2009-2010). Its share in the economy has also risen since the millennium - from 21% in gross value added in 2000, the industry in 2017 already accounts for a 24% share.

In addition to industrial goods, Bulgaria's economy also produces more and more services, which also often remain unnoticed. The ICT sector, the outsourcing of business services and the financial sector are among the increasingly important sectors of the economy, if we judge from their contribution to it. The ICT sector already has a share of 5.5% in gross value added (compared with 3.2% in 2000), outsourcing - 6,1%, and Finance and Insurance - 7.5%. At the same time, the sector that has been "losing ground" most visible in the local economy for the past 17 years is agriculture - despite the huge subsidies for it under the Common Agricultural Policy and national supplementary payments. In public services (administration, health, education, etc.) and real estate there is also a drop in shares, but much less.

In addition, here is what goods are being produced more and more in Bulgaria. The industry's most prominent developments since 2000 include metal products, electrical equipment, furniture, rubber and plastics, car parts, machinery, equipment and weapons, computer and communication equipment, wheels, paper and board.

In the above-mentioned processes, the increase of production from the beginning of 2000 to January 2018 is far above the average for the manufacturing industry and in some cases it reaches 3-4 times (see the information below). The reason for expansion is usually high competition in the foreign markets and significant export output, which is also confirmed by export data.

Change in Manufacturing Production (January 2018 vs. January 2000),%

Processing industry:                                                                                                              125.7 %

Manufacture of food products:                                                                                            112.8%

Manufacture of beverages:                                                                                                   10.6%

Manufacture of tobacco products                                                                                       -54.8%

Manufacture of textiles and textile products, except apparel                                         48.2%

Production of clothing                                                                                                           58.0%

Leather processing, Manufacture of footwear and other articles of leather                8.4%

Manufacture of wood and of products of wood, except furniture                                 75.1%

Manufacture of paper, paperboard and other paper products                                        219.2%

Printing and reproduction of recorded media                                                                   72.8%

Manufacture of chemical products                                                                                     65.8%

Manufacture of medical substances and products                                                         18.0%

Manufacture of rubber and plastic products                                                                     399.5%

Manufacture of other non - metallic mineral products                                                    139.6%

Manufacture of basic metals                                                                                               156.0%

Manufacture of fabricated metal products, except

machinery and equipment                                                                                                    370.7%

Manufacture of computer and communication equipment,

electronic and optical products                                                                                           252.0%

Manufacture of electrical equipment                                                                                 494.6%

Manufacture of machinery and equipment, general and special                                  284.8%

Manufacture of motor vehicles, trailers and semi - trailers                                          385.5%

Manufacture of motor vehicles and not motor vehicles                                                278.9%

Furniture manufacturing                                                                                                      398.2%

Production not elsewhere classified                                                                                  349.2%

Machinery and equipment maintenance and installation                                              88.7%

Consumer durables                                                                                                              513.1%

Products for intermediate consumption                                                                           122.2%

Consumer non - durable products                                                                                     60.6%

Energy products                                                                                                                     10.0%

Source: NSI, calendar-adjusted data

The only sector with a decline in production since 2000 has been tobacco products - because of health policies, the rise in prices due to the increase in excise duties, the illegal market and, in general, the shrinking consumption of such products throughout Europe and the developed countries. Among sub-sectors with relatively low performance (i.e. growth below the average for the whole sector) are leather, textiles, shoes, wood, beverages, food, etc. All of them traditionally belong to goods with a relatively low processing rate and relatively low benefit respectively. By contrast, most of the sectors that have grown sharply since 2000 are those adopted for sectors with high benefit, such as machinery, electrical equipment, computer and communication equipment, car components, bicycles, and more. They have increased their share of exports more than double since 2000 - from 11 to nearly 26%.

It is remarkable that all investment goods subsectors increase their share in the country's exports without exception. This restructuring towards commodities with higher benefit occurs at the expense of all other major product groups - energy resources, consumer goods, raw materials and materials. This does not mean that their exports are declining, on the contrary - its growth is relatively slower than that of investment goods. However, it is important to note that in the three groups mentioned above, whose share of total exports shrinks, and there are products that enjoy increasing weight in external sales. For example, in consumer goods, the proportion of food is rising; the same applies to feedstock, which also have a significantly higher share in 2017.

Overall, GDP, industrial output and exports data show the following:

1 / Bulgarian industry has been developing well since 2000 and has increased its weight in the economy, largely due to the expansion of the manufacturing industry;

2) In the manufacturing industry there is a steady trend of restructuring towards a higher share of high added value sub-sectors at the expense of those with a lower processing rate;

3) This restructuring process is mainly dictated by foreign markets and reflects the competitiveness of Bulgarian producers of commodities with relatively high benefit.